January 31, 2010 - Investigators from the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), the Milwaukee Police and Fire Departments and the Wisconsin Department of Criminal Investigation (DCI) announced today that ATF is posting a reward of up to $10,000 for information leading to the arrest of the person or persons responsible for the Jan 19 arson fire that destroyed several North Avenue businesses including Pizza Man, Cush Lounge, Grecian Delight, Black and White Café and several upstairs apartments.
More than 150 Milwaukee Fire Department firefighters responded to the early morning fire at the intersection of North and Oakland Avenues that resulted in an estimated loss of $3 million dollars.
Investigators are seeking the public’s help in solving this crime and are hopeful that the reward will provide additional leads in this investigation.
ATF Special Agent in Charge Bernard J. Zapor stated, “Arson is a crime of violence. This incident has also caused an economic hardship for the community.”
“We have had strong cooperation from our law enforcement partners to investigate the Pizza Man fire. Now we need the public’s cooperation to provide information on who is responsible for setting it,” said Milwaukee Police Chief Edward A. Flynn.Anyone having information about the arson should call the anonymous toll free Wisconsin Arson hotline at (800) 362-3005
Sunday, January 31, 2010
ATF Announces Opening of New Office in Imperial County, To Help Combat Firearms Trafficking
January 31, 2010 - Special Agent in Charge John A. Torres, of the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) Los Angeles Field Division, today announced that ATF has expanded operations in Imperial County by opening up a new office in the city of Imperial.
The office will be staffed with special agents, industry operations investigators and an intelligence research specialist. The investigative priorities of the office are to further ATF’s Project Gunrunner program. Project Gunrunner is ATF’s initiative targeting the illegal trafficking of firearms into Mexico. The Imperial office is part of ATF’s strategic deployment of resources on the Southwest Border to deny firearms to criminal organizations operating in Mexico and along the border. This strategy will also aid in the reduction of firearms-related violence affecting communities on both sides of the border.
ATF agents and investigators will share their knowledge and expertise in identifying and investigating firearms and explosives violations to local, state, and federal law enforcement agencies operating in and around Imperial County.
“With the opening of our new office and the additional personnel assigned, ATF is significantly increasing its presence in the Imperial Valley,” said Special Agent in Charge John A. Torres. “We see ourselves as being part of this community and encourage the public to join us in a combined effort to rid our neighborhoods of gun traffickers and violent criminals.”
ATF agents assigned to the Imperial Field Office recently led an investigation that culminated in a federal search warrant which led to the seizure of six rifles, two California assault rifles, one shotgun, two handguns, more than 2,500 rounds of ammunition, and four marijuana plants from a two-time convicted felon. ATF agents also seized three additional California assault weapons, a shotgun and three handguns from other suspects. This investigation spanned from Winterhaven, Calif. to Yuma, Ariz. and involved firearms trafficking between the two states. Other agencies participating in this case included the Imperial Valley Drug Coalition, Yuma Police Department, Yuma County Sheriff’s Department, and ATF’s Yuma Satellite Office.
Anyone with information about firearms trafficking or the illegal possession of firearms is encouraged to call ATF at 1-800-ATF-GUNS (800-283-4867). Callers can remain anonymous.
The office will be staffed with special agents, industry operations investigators and an intelligence research specialist. The investigative priorities of the office are to further ATF’s Project Gunrunner program. Project Gunrunner is ATF’s initiative targeting the illegal trafficking of firearms into Mexico. The Imperial office is part of ATF’s strategic deployment of resources on the Southwest Border to deny firearms to criminal organizations operating in Mexico and along the border. This strategy will also aid in the reduction of firearms-related violence affecting communities on both sides of the border.
ATF agents and investigators will share their knowledge and expertise in identifying and investigating firearms and explosives violations to local, state, and federal law enforcement agencies operating in and around Imperial County.
“With the opening of our new office and the additional personnel assigned, ATF is significantly increasing its presence in the Imperial Valley,” said Special Agent in Charge John A. Torres. “We see ourselves as being part of this community and encourage the public to join us in a combined effort to rid our neighborhoods of gun traffickers and violent criminals.”
ATF agents assigned to the Imperial Field Office recently led an investigation that culminated in a federal search warrant which led to the seizure of six rifles, two California assault rifles, one shotgun, two handguns, more than 2,500 rounds of ammunition, and four marijuana plants from a two-time convicted felon. ATF agents also seized three additional California assault weapons, a shotgun and three handguns from other suspects. This investigation spanned from Winterhaven, Calif. to Yuma, Ariz. and involved firearms trafficking between the two states. Other agencies participating in this case included the Imperial Valley Drug Coalition, Yuma Police Department, Yuma County Sheriff’s Department, and ATF’s Yuma Satellite Office.
Anyone with information about firearms trafficking or the illegal possession of firearms is encouraged to call ATF at 1-800-ATF-GUNS (800-283-4867). Callers can remain anonymous.
Saturday, January 30, 2010
Former Webster Bank Employee, Husband, and Ex-Husband Charged with Defrauding Bank of Nearly $6.2 Million
January 30, 2010 - Nora R. Dannehy, United States Attorney for the District of Connecticut, announced that a federal grand jury sitting in Hartford returned an indictment today charging three individuals with defrauding Webster Bank of nearly $6.2 million.
The indictment charges SUSAN A. CURTIS, 48, her husband GARY J. STOCKING, 43, both of Naugatuck, and CURTIS’ former husband, KEVIN W. CAFFREY, 45, of Wolcott, with one count of bank fraud and one count of conspiracy to commit bank fraud.
The indictment alleges that CURTIS was employed in the Property Services Division of Webster Bank with responsibilities that included negotiating and managing bank property leases where Webster Bank was a landlord or tenant. The indictment further alleges that CURTIS, STOCKING and CAFFREY established two companies called New House, LLC and Equity Realty, LLC, which CURTIS falsely represented to Webster Bank’s Vendor Management Department were landlords, an exempted category for due diligence and annual review.
As part of the alleged scheme, CURTIS submitted paperwork to Webster Bank’s Accounts Payable Department in which she falsely represented that New House and Equity Realty were due a fee in approximately 109 real estate related transactions involving 67 properties. As a result, Webster Bank made payments of approximately $5.04 million to New House and Equity Realty. In addition, the indictment alleges that CURTIS caused a landlord, who was a lessor of property leased to Webster Bank, to send approximately $703,620 in lease improvement payments directly to CURTIS. CURTIS and STOCKING are alleged to have altered the checks from the landlord to make them payable to Webster Bank c/o Equity Realty, and then deposited the checks to an Equity Realty account at another bank.
The indictment also alleges that CURTIS falsely represented to other landlords or their counsel, who were dealing with Webster Bank, that a $450,000 check for property improvements should be paid directly to Equity Realty c/o Webster Bank. CURTIS and STOCKING then deposited the check into the Equity Realty bank account.
Finally, the indictment seeks the forfeiture of an interest up to an amount of $456,790.79 in real property in East Hampton, Connecticut, three automobiles, two Harley Davidson motorcycles, a Steinway piano, and $746,977.03.
If convicted, each of the defendants faces a maximum term of imprisonment of 30 years on each count.
U.S. Attorney Dannehy stressed that an indictment is only a charge and is not evidence of guilt. The defendants are entitled to fair trial at which it will be the Government’s burden to prove guilt beyond a reasonable doubt.
U.S. Attorney Dannehy noted that the investigation into this alleged scheme is ongoing.
This matter is being investigated by the Federal Bureau of Investigation and the Internal Revenue Service – Criminal Investigation Division.
The indictment charges SUSAN A. CURTIS, 48, her husband GARY J. STOCKING, 43, both of Naugatuck, and CURTIS’ former husband, KEVIN W. CAFFREY, 45, of Wolcott, with one count of bank fraud and one count of conspiracy to commit bank fraud.
The indictment alleges that CURTIS was employed in the Property Services Division of Webster Bank with responsibilities that included negotiating and managing bank property leases where Webster Bank was a landlord or tenant. The indictment further alleges that CURTIS, STOCKING and CAFFREY established two companies called New House, LLC and Equity Realty, LLC, which CURTIS falsely represented to Webster Bank’s Vendor Management Department were landlords, an exempted category for due diligence and annual review.
As part of the alleged scheme, CURTIS submitted paperwork to Webster Bank’s Accounts Payable Department in which she falsely represented that New House and Equity Realty were due a fee in approximately 109 real estate related transactions involving 67 properties. As a result, Webster Bank made payments of approximately $5.04 million to New House and Equity Realty. In addition, the indictment alleges that CURTIS caused a landlord, who was a lessor of property leased to Webster Bank, to send approximately $703,620 in lease improvement payments directly to CURTIS. CURTIS and STOCKING are alleged to have altered the checks from the landlord to make them payable to Webster Bank c/o Equity Realty, and then deposited the checks to an Equity Realty account at another bank.
The indictment also alleges that CURTIS falsely represented to other landlords or their counsel, who were dealing with Webster Bank, that a $450,000 check for property improvements should be paid directly to Equity Realty c/o Webster Bank. CURTIS and STOCKING then deposited the check into the Equity Realty bank account.
Finally, the indictment seeks the forfeiture of an interest up to an amount of $456,790.79 in real property in East Hampton, Connecticut, three automobiles, two Harley Davidson motorcycles, a Steinway piano, and $746,977.03.
If convicted, each of the defendants faces a maximum term of imprisonment of 30 years on each count.
U.S. Attorney Dannehy stressed that an indictment is only a charge and is not evidence of guilt. The defendants are entitled to fair trial at which it will be the Government’s burden to prove guilt beyond a reasonable doubt.
U.S. Attorney Dannehy noted that the investigation into this alleged scheme is ongoing.
This matter is being investigated by the Federal Bureau of Investigation and the Internal Revenue Service – Criminal Investigation Division.
Milford Resident Charged with Illegal Possession of Firearm
January 30, 2010 - Nora R. Dannehy, United States Attorney for the District of Connecticut, today announced that ALEXANDER DeFELICE, 32, of West Avenue, Milford, has been charged by federal criminal complaint with one count of possession of a firearm by a previously convicted felon.
According to court documents and statements made in court, on January 28, 2010, law enforcement personnel from the Federal Bureau of Investigation and the Milford Police Department executed a court-authorized search warrant at DeFELICE’s residence at 184 West Avenue in Milford. The search is alleged to have revealed one Remington Model 1100 shotgun, as well as several rounds of .50 caliber ball ammunition, which were larger than ammunition that would match the Remington shotgun. The search also revealed other rounds of live ammunition, more than a dozen cut open .20 gauge shotgun shells, one large soup bowl that appeared to contain powder from the cut open shells, and another large soup bowl that appeared to contain lead shots from the cut open shells.
It is alleged that DeFELICE has been convicted of felony offenses in Connecticut Superior Court, including third degree burglary, weapon in a motor vehicle, and first degree failure to appear (twice). It is a violation of federal law for a person previously convicted of a felony offense to possess a firearm or ammunition that has moved in interstate or foreign commerce.
DeFELICE was arrested yesterday evening. This morning, DeFELICE appeared before United States Magistrate Judge Joan G. Margolis in New Haven. Based on the Government’s motion, DeFELICE is detained pending a detention hearing that is scheduled for Monday, February 1, at 3:30 p.m.
The charge against DeFELICE carries a maximum term of imprisonment of 10 years and a fine of up to $250,000.
U.S. Attorney Dannehy stated that a complaint is only a charge and is not evidence of guilt. A defendant is entitled to have his matter presented to a grand jury and, in the event an indictment is returned, he is entitled to a trial at which it will be the Government’s burden to prove guilt beyond a reasonable doubt.
This case is being investigated by the Federal Bureau of Investigation, the Bureau of Alcohol, Tobacco, Firearms and Explosives, and the Milford Police Department. The case is being prosecuted by Assistant United States Attorney Henry K. Kopel.
According to court documents and statements made in court, on January 28, 2010, law enforcement personnel from the Federal Bureau of Investigation and the Milford Police Department executed a court-authorized search warrant at DeFELICE’s residence at 184 West Avenue in Milford. The search is alleged to have revealed one Remington Model 1100 shotgun, as well as several rounds of .50 caliber ball ammunition, which were larger than ammunition that would match the Remington shotgun. The search also revealed other rounds of live ammunition, more than a dozen cut open .20 gauge shotgun shells, one large soup bowl that appeared to contain powder from the cut open shells, and another large soup bowl that appeared to contain lead shots from the cut open shells.
It is alleged that DeFELICE has been convicted of felony offenses in Connecticut Superior Court, including third degree burglary, weapon in a motor vehicle, and first degree failure to appear (twice). It is a violation of federal law for a person previously convicted of a felony offense to possess a firearm or ammunition that has moved in interstate or foreign commerce.
DeFELICE was arrested yesterday evening. This morning, DeFELICE appeared before United States Magistrate Judge Joan G. Margolis in New Haven. Based on the Government’s motion, DeFELICE is detained pending a detention hearing that is scheduled for Monday, February 1, at 3:30 p.m.
The charge against DeFELICE carries a maximum term of imprisonment of 10 years and a fine of up to $250,000.
U.S. Attorney Dannehy stated that a complaint is only a charge and is not evidence of guilt. A defendant is entitled to have his matter presented to a grand jury and, in the event an indictment is returned, he is entitled to a trial at which it will be the Government’s burden to prove guilt beyond a reasonable doubt.
This case is being investigated by the Federal Bureau of Investigation, the Bureau of Alcohol, Tobacco, Firearms and Explosives, and the Milford Police Department. The case is being prosecuted by Assistant United States Attorney Henry K. Kopel.
Federal Inmate Sentenced for Possession of Heroin
January 30, 2010 - Steven G. Roden, 32, Federal Correctional Complex, Terre Haute, Indiana, was sentenced to 27 months in prison today by U.S. District Judge Larry J. McKinney following his guilty plea to possessing contraband in prison, announced Timothy M. Morrison, U.S. Attorney for the Southern District of Indiana. This case was the result of an investigation by the Federal Bureau of Investigation and Federal Bureau of Prisons.
On January 4, 2009, Federal Correctional Complex inmate Roden was visited by Kimberly M. Clark, at the Federal Correctional Institution component of the institution. During the visit, Clark passed four small balloons from her right hand to his left hand. Roden then swallowed the balloons. Based upon the observations of this conduct by Bureau of Prisons staff, Roden was placed in a dry cell status. Approximately four days later, Roden passed the balloons. A field test, and later laboratory tests, indicated that the balloons contained heroin.
In a statement to officers shortly after the event, Roden admitted knowingly receiving the contraband. In a later statement to the FBI, he admitted anticipating that the balloons would contain heroin. Clark has pled guilty to providing the heroin to Roden and is scheduled to be sentenced on March 24, 2010.
According to Assistant U.S. Attorney James M. Warden, who prosecuted the case for the government, Judge McKinney also imposed three years supervised release following Roden’s release from prison.
On January 4, 2009, Federal Correctional Complex inmate Roden was visited by Kimberly M. Clark, at the Federal Correctional Institution component of the institution. During the visit, Clark passed four small balloons from her right hand to his left hand. Roden then swallowed the balloons. Based upon the observations of this conduct by Bureau of Prisons staff, Roden was placed in a dry cell status. Approximately four days later, Roden passed the balloons. A field test, and later laboratory tests, indicated that the balloons contained heroin.
In a statement to officers shortly after the event, Roden admitted knowingly receiving the contraband. In a later statement to the FBI, he admitted anticipating that the balloons would contain heroin. Clark has pled guilty to providing the heroin to Roden and is scheduled to be sentenced on March 24, 2010.
According to Assistant U.S. Attorney James M. Warden, who prosecuted the case for the government, Judge McKinney also imposed three years supervised release following Roden’s release from prison.
Federal Inmate Sentenced for Possession of Weapon
January 30, 2010 - Flavio Pelayo-Torres, 42, Federal Correctional Complex, Terre Haute, Indiana, was sentenced to 30 months in prison today by U.S. District Judge Larry J. McKinney following his guilty plea to possessing contraband in prison, announced Timothy M. Morrison, U.S. Attorney for the Southern District of Indiana. This case was the result of an investigation by the Federal Bureau of Investigation and Federal Bureau of Prisons.
Pelayo-Torres is an inmate housed at the United States Penitentiary component of Federal Correctional Complex, Terre Haute. On April 20, 2009, Pelayo-Torres and other inmates were subjected to searches following the discovery by officers of a homemade weapon in the housing unit where Pelayo-Torres was assigned. The officer searching Pelayo-Torres located a weapon hidden in the waistline of the inmate’s pants. The weapon was a metal object, approximately eight inches in length, sharpened to a point, with cloth attached to the opposite end to serve as a handle.
At his subsequent disciplinary hearing, and in a later statement to the case agent, Pelayo-Torres admitted possession of the weapon.
According to Assistant U.S. Attorney James M. Warden, who prosecuted the case for the government, Judge McKinney also imposed three years supervised release following Pelayo- Torres’s release from prison. Pelayo-Torres is subject to deportation to Mexico following his release.
Pelayo-Torres is an inmate housed at the United States Penitentiary component of Federal Correctional Complex, Terre Haute. On April 20, 2009, Pelayo-Torres and other inmates were subjected to searches following the discovery by officers of a homemade weapon in the housing unit where Pelayo-Torres was assigned. The officer searching Pelayo-Torres located a weapon hidden in the waistline of the inmate’s pants. The weapon was a metal object, approximately eight inches in length, sharpened to a point, with cloth attached to the opposite end to serve as a handle.
At his subsequent disciplinary hearing, and in a later statement to the case agent, Pelayo-Torres admitted possession of the weapon.
According to Assistant U.S. Attorney James M. Warden, who prosecuted the case for the government, Judge McKinney also imposed three years supervised release following Pelayo- Torres’s release from prison. Pelayo-Torres is subject to deportation to Mexico following his release.
Producer of Gang Videos Convicted
Baltimore TTP Bloods Leader who Produced “Stop Snitching” Videos and Eastern Shore TTP Leader Convicted of Racketeering Activities
Ronnie Thomas Produced and Appeared Prominently in “Stop Snitching” Videos
January 30, 2010 - A federal jury convicted Sherman Pride, a/k/a Dark Black and DB, age 35, of Salisbury, Maryland; and Ronnie Thomas, a/k/a Rodney Thomas, Skinny Suge and Tall Vialz, age 36, of Baltimore, yesterday evening of participating in a racketeering conspiracy through the Tree Top Piru Bloods (TTP Bloods), which engaged in narcotics trafficking, conspiracy to commit murder and robbery. Pride also was convicted of conspiring to distribute cocaine.
The jury verdict was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Baltimore City State’s Attorney Patricia C. Jessamy; Special Agent in Charge Theresa R. Stoop of the Bureau of Alcohol, Tobacco, Firearms and Explosives - Baltimore Field Division; Special Agent in Charge Ava Cooper-Davis of the Drug Enforcement Administration - Washington Field Division; Special Agent in Charge Richard A. McFeely of the Federal Bureau of Investigation; Baltimore Police Commissioner Frederick H. Bealefeld III; Chief James W. Johnson of the Baltimore County Police Department; Wicomico County State’s Attorney Davis Ruark; Wicomico County Sheriff Mike Lewis; the Washington County Narcotics Task Force led by Washington County Sheriff Douglas Mullendore; Anne Arundel County Police Chief James Teare, Sr.; Acting Salisbury Police Chief Ivan E. Barkley; and Hagerstown Police Chief Arthur Smith.
“Many dangerous criminals have been convicted and removed from Maryland as a result of superb work by police and prosecutors on the TTP Bloods investigation,” said U.S. Attorney Rod J. Rosenstein. “Racketeering cases often are time-consuming, but they make a dramatic contribution to public safety.”
“Violent gangs are no longer isolated to our inner cities, they are invading communities throughout Maryland and across our nation,” says ATF Special Agent in Charge Theresa R. Stoop. “We are relentlessly working to stop their spread of violence; and no matter where they set up shop, ATF will shut them down.”
TTP Bloods, a violent gang, originated from a street gang known as “the Bloods” that was formed in Los Angeles, California in the early 1970s. The Bloods broke into individual “sets” including a subset known as Tree Top Pirus (TTP). TTP spread throughout the country, including Maryland. TTP in Maryland has its roots in a local gang which began in the Washington County Detention Center in Hagerstown, Maryland in about 1999. The gang was formed for mutual protection in response to the aggression of other inmates from Baltimore and spread throughout Maryland mostly by recruiting from inside Maryland prisons.
According to trial testimony, from 2005 to February 2008 Pride and Thomas were members of TTP. In letters written by TTP leaders, Pride was identified as the leader of the Maryland Eastern Shore set of the TTP and Thomas was also identified as a gang leader in Maryland. Thomas produced both “Stop Snitching” videos. Thomas discussed with another gang member retaliating against a store owner who refused to sell his “Stop Snitching 2” video.
Testimony was also introduced at trial that: Pride was arrested after attempting to toss a bag containing crack and drug paraphernalia into a car to hide it from police; and that Pride told a fellow prisoner in a jailhouse that he was a high-ranking Blood on the Eastern Shore and had arranged the transport of kilograms of cocaine from California to Salisbury, Maryland.
Pride and Thomas face a maximum sentence of 20 years in prison for the RICO conspiracy. Pride also faces a maximum sentence of life in prison for the drug conspiracy. U.S. District Judge William D. Quarles, Jr. scheduled sentencing for April 23, 2010 at 1:00 and 2:00 p.m.
Twenty-five additional gang members have been charged in the racketeering conspiracy. Fourteen defendants have pleaded guilty to the RICO conspiracy and 10 of those have been sentenced to between 21 months and 30 years in prison. Five defendants charged with racketeering conspiracy, Keili Dyson, Anthony Fleming, Michelle Hebron, Tavon Mouzone and Keon Williams, are scheduled for trial starting March 22, 2010. Four defendants have pleaded guilty to gun or drug offenses.
In addition to Thomas, eight other individuals connected with the “Stop Snitching” videos have been prosecuted in federal court. Co-defendant Van Sneed, who testified in the instant trial that he appeared in the original video, pleaded guilty to racketeering charges. His sentencing has not yet been scheduled. Akiba Matthews, the cameraman who appeared in the original video, was convicted of drug and gun offenses and sentenced in August 2008 to 30 years in prison. Sherman Kemp, who was prominently featured in the original video, pleaded guilty to drug and gun offenses and was sentenced in October 2008 to 15 years in prison. George Butler, who appeared in the original video, pleaded guilty to conspiring to distribute drugs and was sentenced to 10 years in prison. Warren Polston, who speaks in the original video, pleaded guilty to drug trafficking and was sentenced to five years in prison. Eric Bailey, who proclaimed “rat poison” the cure for cooperators in the original video, was sentenced to 37 months for a gun crime. Former Baltimore City police officers William King and Antonio L. Murray, whose names were featured in the original “Stop Snitching” video, were convicted of robbery, drug trafficking and firearms offenses and sentenced in June 2006 to 315 years and 139 years in prison, respectively.
Mr. Rosenstein and Ms. Jessamy gave special thanks to Secretary Gary Maynard of the Maryland Department of Public Safety and Correctional Services; Commissioner J. Michael Stouffer of the Maryland Division of Correction; Director Patrick McGee of the Maryland Division of Parole and Probation; and the officers at the Western and North Branch Correctional Institutions and the Wicomico County Detention Center for their work in the investigation and prosecution of this case.
Mr. Rosenstein and Mrs. Jessamy also thanked Assistant U.S. Attorney Michael Hanlon, and Special Assistant U.S. Attorney Christopher Mason, a cross-designated Baltimore City Assistant State’s Attorney, who are prosecuting the case and Assistant State’s Attorney LaRai Forrest who assisted in the prosecution.
Ronnie Thomas Produced and Appeared Prominently in “Stop Snitching” Videos
January 30, 2010 - A federal jury convicted Sherman Pride, a/k/a Dark Black and DB, age 35, of Salisbury, Maryland; and Ronnie Thomas, a/k/a Rodney Thomas, Skinny Suge and Tall Vialz, age 36, of Baltimore, yesterday evening of participating in a racketeering conspiracy through the Tree Top Piru Bloods (TTP Bloods), which engaged in narcotics trafficking, conspiracy to commit murder and robbery. Pride also was convicted of conspiring to distribute cocaine.
The jury verdict was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Baltimore City State’s Attorney Patricia C. Jessamy; Special Agent in Charge Theresa R. Stoop of the Bureau of Alcohol, Tobacco, Firearms and Explosives - Baltimore Field Division; Special Agent in Charge Ava Cooper-Davis of the Drug Enforcement Administration - Washington Field Division; Special Agent in Charge Richard A. McFeely of the Federal Bureau of Investigation; Baltimore Police Commissioner Frederick H. Bealefeld III; Chief James W. Johnson of the Baltimore County Police Department; Wicomico County State’s Attorney Davis Ruark; Wicomico County Sheriff Mike Lewis; the Washington County Narcotics Task Force led by Washington County Sheriff Douglas Mullendore; Anne Arundel County Police Chief James Teare, Sr.; Acting Salisbury Police Chief Ivan E. Barkley; and Hagerstown Police Chief Arthur Smith.
“Many dangerous criminals have been convicted and removed from Maryland as a result of superb work by police and prosecutors on the TTP Bloods investigation,” said U.S. Attorney Rod J. Rosenstein. “Racketeering cases often are time-consuming, but they make a dramatic contribution to public safety.”
“Violent gangs are no longer isolated to our inner cities, they are invading communities throughout Maryland and across our nation,” says ATF Special Agent in Charge Theresa R. Stoop. “We are relentlessly working to stop their spread of violence; and no matter where they set up shop, ATF will shut them down.”
TTP Bloods, a violent gang, originated from a street gang known as “the Bloods” that was formed in Los Angeles, California in the early 1970s. The Bloods broke into individual “sets” including a subset known as Tree Top Pirus (TTP). TTP spread throughout the country, including Maryland. TTP in Maryland has its roots in a local gang which began in the Washington County Detention Center in Hagerstown, Maryland in about 1999. The gang was formed for mutual protection in response to the aggression of other inmates from Baltimore and spread throughout Maryland mostly by recruiting from inside Maryland prisons.
According to trial testimony, from 2005 to February 2008 Pride and Thomas were members of TTP. In letters written by TTP leaders, Pride was identified as the leader of the Maryland Eastern Shore set of the TTP and Thomas was also identified as a gang leader in Maryland. Thomas produced both “Stop Snitching” videos. Thomas discussed with another gang member retaliating against a store owner who refused to sell his “Stop Snitching 2” video.
Testimony was also introduced at trial that: Pride was arrested after attempting to toss a bag containing crack and drug paraphernalia into a car to hide it from police; and that Pride told a fellow prisoner in a jailhouse that he was a high-ranking Blood on the Eastern Shore and had arranged the transport of kilograms of cocaine from California to Salisbury, Maryland.
Pride and Thomas face a maximum sentence of 20 years in prison for the RICO conspiracy. Pride also faces a maximum sentence of life in prison for the drug conspiracy. U.S. District Judge William D. Quarles, Jr. scheduled sentencing for April 23, 2010 at 1:00 and 2:00 p.m.
Twenty-five additional gang members have been charged in the racketeering conspiracy. Fourteen defendants have pleaded guilty to the RICO conspiracy and 10 of those have been sentenced to between 21 months and 30 years in prison. Five defendants charged with racketeering conspiracy, Keili Dyson, Anthony Fleming, Michelle Hebron, Tavon Mouzone and Keon Williams, are scheduled for trial starting March 22, 2010. Four defendants have pleaded guilty to gun or drug offenses.
In addition to Thomas, eight other individuals connected with the “Stop Snitching” videos have been prosecuted in federal court. Co-defendant Van Sneed, who testified in the instant trial that he appeared in the original video, pleaded guilty to racketeering charges. His sentencing has not yet been scheduled. Akiba Matthews, the cameraman who appeared in the original video, was convicted of drug and gun offenses and sentenced in August 2008 to 30 years in prison. Sherman Kemp, who was prominently featured in the original video, pleaded guilty to drug and gun offenses and was sentenced in October 2008 to 15 years in prison. George Butler, who appeared in the original video, pleaded guilty to conspiring to distribute drugs and was sentenced to 10 years in prison. Warren Polston, who speaks in the original video, pleaded guilty to drug trafficking and was sentenced to five years in prison. Eric Bailey, who proclaimed “rat poison” the cure for cooperators in the original video, was sentenced to 37 months for a gun crime. Former Baltimore City police officers William King and Antonio L. Murray, whose names were featured in the original “Stop Snitching” video, were convicted of robbery, drug trafficking and firearms offenses and sentenced in June 2006 to 315 years and 139 years in prison, respectively.
Mr. Rosenstein and Ms. Jessamy gave special thanks to Secretary Gary Maynard of the Maryland Department of Public Safety and Correctional Services; Commissioner J. Michael Stouffer of the Maryland Division of Correction; Director Patrick McGee of the Maryland Division of Parole and Probation; and the officers at the Western and North Branch Correctional Institutions and the Wicomico County Detention Center for their work in the investigation and prosecution of this case.
Mr. Rosenstein and Mrs. Jessamy also thanked Assistant U.S. Attorney Michael Hanlon, and Special Assistant U.S. Attorney Christopher Mason, a cross-designated Baltimore City Assistant State’s Attorney, who are prosecuting the case and Assistant State’s Attorney LaRai Forrest who assisted in the prosecution.
Mortgage Fraud Charges
Investigation by Federal, State, and Local Task Force Leads to Mortgage Fraud Charges Against Six People Involving Million-Dollar-Plus Houses Two Home Builders and Former Banker Charged
January 30, 2010 - A two-year investigation by the Greater Cincinnati Mortgage Fraud Task Force has resulted in a seven-count indictment charging two Cincinnati area home builders, a former Huntington National Bank vice president, and a self-employed tax preparer and interior designer with participating in a mortgage fraud scheme to sell four high-end luxury properties to “straw buyers.” A straw buyer is someone who is listed as the owner of a house, but is not really the one buying the house.
Carter M. Stewart, United States Attorney for the Southern District of Ohio, Ohio Attorney General Richard Cordray, Warren County Prosecuting Attorney Rachel Hutzel, and Keith L. Bennett, Special Agent in Charge, Federal Bureau of Investigation (FBI) and other task force participants announced the indictment today.
The grand jury returned charges against:
Eric D. Duke, 35, Newport, Kentucky. Duke is a self-employed tax preparer and interior designer. He also owned a property management company called Rivendale Property Management Group, L.P., in Maineville, Ohio.
Terrence J. Monahan Jr., 36, Cincinnati, formerly with Huntington National Bank.
Bernard J. Kurlemann, 56, of Mason, owner of Kurlemann Homes of Long Cove and Long Cove Management, LLC.
Bryan Sanneman, 38, of Mason, owner of Sanneman Homes, Inc.
The charges stem from the sale of four residential properties in 2006 to 2007, three of which were sold for approximately $2 million each. The indictment alleges that Monahan, Sanneman, and Kurlemann, each conspired with Duke to defraud lenders involved with the sales.
The scheme, as alleged in the indictment, involved Duke locating two people willing to buy the properties in name only and let their names be used on loan applications. The indictment alleges that Duke worked with a mortgage broker who submitted fraudulent loan applications that contained false income and assets. According to the indictment, Monahan gave Duke a customer bank account statement to be used as a “go-by” to create fictitious account statements to support fraudulent assets on the loan applications.
The indictment also alleges that Sanneman and Kurlemann provided documentation to the lenders falsely stating that they had received down payments from the borrowers when they had not. The indictment alleges that the defendants conspired with Duke to have the fraudulent loans approved in order to sell their properties.
The indictment alleges that the defendants benefitted from the scheme because they were able to sell their expensive properties, get out from under substantial mortgages, and receive additional loan proceeds.
The indictment charges all four defendants with conspiracy. Duke and Monahan are charged with conspiracy to commit wire fraud and wire fraud, both crimes punishable by up to 20 years' imprisonment.
Duke and Kurlemann are charged with conspiracy to commit loan fraud, punishable by up to five years' imprisonment, and two counts of loan fraud. Each count of loan fraud is punishable by up to 30 years' imprisonment.
Duke and Sanneman are charged with conspiracy to commit loan fraud and loan fraud.
The indictment also seeks forfeiture of any property or assets derived as a result of the crimes.
Loan proceeds from the alleged fraud totaled approximately $6.7 million.
Charges have been filed separately against the straw buyers. Francisca Webster, 46, of Cincinnati, has been charged in a separate information, with conspiracy to commit wire fraud punishable by up to 30 years' imprisonment. Christopher Gagnon, 37, of Florence, Kentucky has been charged with loan fraud, punishable by up to 30 years' imprisonment.
Stewart commended the investigation by the Greater Cincinnati Mortgage Fraud Task Force. The Greater Cincinnati Mortgage Fraud Task Force is a multi-agency, multi-jurisdictional initiative dedicated to combating the mortgage fraud problem in the Southern District of Ohio.
The defendants will be summoned for their initial appearances before a U.S. Magistrate Judge.
The case is being prosecuted by Assistant United States Attorney Jennifer C. Barry, and Special Assistant United States Attorneys Bruce McGary of the Warren County Prosecutor’s Office and Christopher Wagner with Ohio Attorney General Richard Cordray’s Office.
An indictment is merely an accusation. All defendants are presumed innocent unless and until proven guilty in court.
January 30, 2010 - A two-year investigation by the Greater Cincinnati Mortgage Fraud Task Force has resulted in a seven-count indictment charging two Cincinnati area home builders, a former Huntington National Bank vice president, and a self-employed tax preparer and interior designer with participating in a mortgage fraud scheme to sell four high-end luxury properties to “straw buyers.” A straw buyer is someone who is listed as the owner of a house, but is not really the one buying the house.
Carter M. Stewart, United States Attorney for the Southern District of Ohio, Ohio Attorney General Richard Cordray, Warren County Prosecuting Attorney Rachel Hutzel, and Keith L. Bennett, Special Agent in Charge, Federal Bureau of Investigation (FBI) and other task force participants announced the indictment today.
The grand jury returned charges against:
Eric D. Duke, 35, Newport, Kentucky. Duke is a self-employed tax preparer and interior designer. He also owned a property management company called Rivendale Property Management Group, L.P., in Maineville, Ohio.
Terrence J. Monahan Jr., 36, Cincinnati, formerly with Huntington National Bank.
Bernard J. Kurlemann, 56, of Mason, owner of Kurlemann Homes of Long Cove and Long Cove Management, LLC.
Bryan Sanneman, 38, of Mason, owner of Sanneman Homes, Inc.
The charges stem from the sale of four residential properties in 2006 to 2007, three of which were sold for approximately $2 million each. The indictment alleges that Monahan, Sanneman, and Kurlemann, each conspired with Duke to defraud lenders involved with the sales.
The scheme, as alleged in the indictment, involved Duke locating two people willing to buy the properties in name only and let their names be used on loan applications. The indictment alleges that Duke worked with a mortgage broker who submitted fraudulent loan applications that contained false income and assets. According to the indictment, Monahan gave Duke a customer bank account statement to be used as a “go-by” to create fictitious account statements to support fraudulent assets on the loan applications.
The indictment also alleges that Sanneman and Kurlemann provided documentation to the lenders falsely stating that they had received down payments from the borrowers when they had not. The indictment alleges that the defendants conspired with Duke to have the fraudulent loans approved in order to sell their properties.
The indictment alleges that the defendants benefitted from the scheme because they were able to sell their expensive properties, get out from under substantial mortgages, and receive additional loan proceeds.
The indictment charges all four defendants with conspiracy. Duke and Monahan are charged with conspiracy to commit wire fraud and wire fraud, both crimes punishable by up to 20 years' imprisonment.
Duke and Kurlemann are charged with conspiracy to commit loan fraud, punishable by up to five years' imprisonment, and two counts of loan fraud. Each count of loan fraud is punishable by up to 30 years' imprisonment.
Duke and Sanneman are charged with conspiracy to commit loan fraud and loan fraud.
The indictment also seeks forfeiture of any property or assets derived as a result of the crimes.
Loan proceeds from the alleged fraud totaled approximately $6.7 million.
Charges have been filed separately against the straw buyers. Francisca Webster, 46, of Cincinnati, has been charged in a separate information, with conspiracy to commit wire fraud punishable by up to 30 years' imprisonment. Christopher Gagnon, 37, of Florence, Kentucky has been charged with loan fraud, punishable by up to 30 years' imprisonment.
Stewart commended the investigation by the Greater Cincinnati Mortgage Fraud Task Force. The Greater Cincinnati Mortgage Fraud Task Force is a multi-agency, multi-jurisdictional initiative dedicated to combating the mortgage fraud problem in the Southern District of Ohio.
The defendants will be summoned for their initial appearances before a U.S. Magistrate Judge.
The case is being prosecuted by Assistant United States Attorney Jennifer C. Barry, and Special Assistant United States Attorneys Bruce McGary of the Warren County Prosecutor’s Office and Christopher Wagner with Ohio Attorney General Richard Cordray’s Office.
An indictment is merely an accusation. All defendants are presumed innocent unless and until proven guilty in court.
New Orleans Man Sentenced to Five Years in Federal Prison for Multiple Bank Robberies
January 30, 2010 - SHADRICK TRICHE, age 32 and a resident of New Orleans, Louisiana, was sentenced yesterday to five (5) years (60 months) of incarceration by U.S. District Judge Carl J. Barbier for multiple bank robberies, announced U.S. Attorney Jim Letten. Additionally, Judge Barbier ordered the defendant to serve three (3) years of supervised release during which time the defendant will be under federal supervision and risks additional imprisonment should he violate any terms of the release.
According to court documents, TRICHE previously plead guilty to one count of bank robbery in New Orleans and five counts of bank robbery arising out of the Northern District of Texas. He admitted that he robbed the OMNI Bank located at 285 W. Esplanade Avenue, Kenner, Louisiana on June 9, 2008 and that he committed five separate bank robberies in the Dallas, Texas area on the following dates: April 26, June 4, July 19, and October 15 of 2009, and February 18, 2009.
The case was investigated by the Federal Bureau of Investigation, the Kenner Police Department, and the Dallas Police Department and was prosecuted by Assistant U.S. Attorney Edward J. Rivera of the Violent Crime Unit.
According to court documents, TRICHE previously plead guilty to one count of bank robbery in New Orleans and five counts of bank robbery arising out of the Northern District of Texas. He admitted that he robbed the OMNI Bank located at 285 W. Esplanade Avenue, Kenner, Louisiana on June 9, 2008 and that he committed five separate bank robberies in the Dallas, Texas area on the following dates: April 26, June 4, July 19, and October 15 of 2009, and February 18, 2009.
The case was investigated by the Federal Bureau of Investigation, the Kenner Police Department, and the Dallas Police Department and was prosecuted by Assistant U.S. Attorney Edward J. Rivera of the Violent Crime Unit.
Madison Man Charged with Child Pornography Offenses
January 30, 2010 - Stephen P. Sinnott, Acting United States Attorney for the Western District of Wisconsin, announced that a federal grand jury sitting in Madison returned an indictment on January 27, 2010, charging Robin S. Bone, 43, Madison, with distribution and possession of child pornography. The indictment was unsealed today following the defendant’s arrest.
The indictment alleges that on April 17, 2005, Bone e-mailed sexually explicit images of minors to another individual. The indictment also alleges that on August 22, 2005, Bone possessed a CD ROM containing visual depictions of minors engaging in sexually explicit conduct.
If convicted, Bone faces a mandatory minimum penalty of five years and a maximum penalty of 20 years in federal prison on the distribution charge, and a maximum of 10 years in federal prison on the possession charge.
Bone appeared in U.S. District Court in Madison today. Magistrate Judge Stephen Crocker ordered him held in custody pending a detention hearing to be held next week.
The charges against Bone are the result of an investigation conducted by the Federal Bureau of Investigation, Madison Police Department, and U.S. Immigration and Customs Enforcement. The prosecution of this case has been assigned to Assistant U.S. Attorney Laura A. Przybylinski Finn.
You are advised that a charge is merely an accusation and that a defendant is presumed innocent until and unless proven guilty.
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 U.S. 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.
The indictment alleges that on April 17, 2005, Bone e-mailed sexually explicit images of minors to another individual. The indictment also alleges that on August 22, 2005, Bone possessed a CD ROM containing visual depictions of minors engaging in sexually explicit conduct.
If convicted, Bone faces a mandatory minimum penalty of five years and a maximum penalty of 20 years in federal prison on the distribution charge, and a maximum of 10 years in federal prison on the possession charge.
Bone appeared in U.S. District Court in Madison today. Magistrate Judge Stephen Crocker ordered him held in custody pending a detention hearing to be held next week.
The charges against Bone are the result of an investigation conducted by the Federal Bureau of Investigation, Madison Police Department, and U.S. Immigration and Customs Enforcement. The prosecution of this case has been assigned to Assistant U.S. Attorney Laura A. Przybylinski Finn.
You are advised that a charge is merely an accusation and that a defendant is presumed innocent until and unless proven guilty.
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 U.S. 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.
Missouri Man Sentenced for Bank Robbery
January 30, 2010 - Thomas E. Tucker, 45, Moscow Mills, Missouri, was sentenced to 108 months in prison today by U.S. District Judge Richard L. Young following his guilty plea to armed bank robbery and use of a firearm in relation to a crime of violence, announced Timothy M. Morrison, United States Attorney for the Southern District of Indiana. This case was the result of an investigation by the Federal Bureau of Investigation.
On April 21, 2009, Tucker entered the First Bank branch in Poseyville, Indiana wearing a mask and pointing a firearm at bank tellers. He demanded money and carried about $25,000 from the bank. Shortly after the robbery, a Gibson County Sheriff's Deputy stopped a vehicle matching the one the robber drove from the bank. Tucker was stopped along the side of the road changing clothes. Police found the firearm and the stolen money in the truck.
According to Assistant U.S. Attorney Todd S. Shellenbarger, who prosecuted the case for the government, Judge Young also imposed three years supervised release following Tucker’s release from prison.
On April 21, 2009, Tucker entered the First Bank branch in Poseyville, Indiana wearing a mask and pointing a firearm at bank tellers. He demanded money and carried about $25,000 from the bank. Shortly after the robbery, a Gibson County Sheriff's Deputy stopped a vehicle matching the one the robber drove from the bank. Tucker was stopped along the side of the road changing clothes. Police found the firearm and the stolen money in the truck.
According to Assistant U.S. Attorney Todd S. Shellenbarger, who prosecuted the case for the government, Judge Young also imposed three years supervised release following Tucker’s release from prison.
Federal Inmate Sentenced for Possession of Marijuana
January 30, 2010 - Arturo Cantu, 33, Federal Correctional Complex, Terre Haute, Indiana, was sentenced to seven months in prison today by U.S. District Judge Larry J. McKinney following his guilty plea to possessing contraband in prison, announced Timothy M. Morrison, U.S. Attorney for the Southern District of Indiana. This case was the result of an investigation by the Federal Bureau of Investigation and Federal Bureau of Prisons.
Cantu is an inmate housed at the Federal Correctional Institution component of the Federal Correctional Complex, Terre Haute, Indiana. On June 19, 2009, he was observed by an officer to have an inappropriately large bulge in the front area of his pants as he was walking through the institution. Based upon this observation, other officers ordered Cantu to submit to a body search. During the initial portion of the search, Cantu caused a bag to drop from his undershorts and then attempted to cover the bag with his shirt. When directed, Cantu handed the bag to an officer, who observed several small pieces of rolled paper in the bag. When asked what these were, Cantu replied that they contained marijuana. Laboratory analysis verified that the papers each contained a small amount of marijuana.
Cantu is an inmate housed at the Federal Correctional Institution component of the Federal Correctional Complex, Terre Haute, Indiana. On June 19, 2009, he was observed by an officer to have an inappropriately large bulge in the front area of his pants as he was walking through the institution. Based upon this observation, other officers ordered Cantu to submit to a body search. During the initial portion of the search, Cantu caused a bag to drop from his undershorts and then attempted to cover the bag with his shirt. When directed, Cantu handed the bag to an officer, who observed several small pieces of rolled paper in the bag. When asked what these were, Cantu replied that they contained marijuana. Laboratory analysis verified that the papers each contained a small amount of marijuana.
Redby Man Pleads Guilty to Assault
January 30, 2010 - A 31-year-old Redby man pled guilty today in federal court to assaulting another man without cause on September 2, 2009. Appearing before United States District Court Chief Judge Michael J. Davis in Minneapolis, Roy Randolf White, Sr., pled guilty to one count of aggravated assault. No plea agreement was filed. White was indicted on December 9, 2009.
The indictment alleges White assaulted the victim with a dangerous weapon by repeatedly kicking him. According to a Federal Bureau of Investigation affidavit, Red Lake tribal police were called to a residence on the Red Lake Indian Reservation on September 2, 2009. When they arrived, they found the 35-year-old victim lying on a cement porch in a pool of blood. Witnesses reported that White had kicked the victim numerous times in addition to repeatedly punching him.
As a result of the assault, the victim suffered a broken jaw and multiple facial fractures. He underwent surgery at the Hennepin County Medical Center. Two plates were inserted in his head to repair his face, and he had to be intubated for assistance in breathing.
After the assault, White fled but was located and apprehended by authorities while he attempted to hide in the back of his vehicle. Witnesses told police White was upset with the victim because the victim supposedly had dated one of White’s former girlfriends.
White faces a potential maximum penalty of 10 years in prison for his crime. Judge Davis will determine his sentence at a future date. This case is the result of an investigation by the Red Lake Tribal Police Department and the FBI. The federal government has primary law enforcement jurisdiction over the Red Lake Indian Reservation.
The indictment alleges White assaulted the victim with a dangerous weapon by repeatedly kicking him. According to a Federal Bureau of Investigation affidavit, Red Lake tribal police were called to a residence on the Red Lake Indian Reservation on September 2, 2009. When they arrived, they found the 35-year-old victim lying on a cement porch in a pool of blood. Witnesses reported that White had kicked the victim numerous times in addition to repeatedly punching him.
As a result of the assault, the victim suffered a broken jaw and multiple facial fractures. He underwent surgery at the Hennepin County Medical Center. Two plates were inserted in his head to repair his face, and he had to be intubated for assistance in breathing.
After the assault, White fled but was located and apprehended by authorities while he attempted to hide in the back of his vehicle. Witnesses told police White was upset with the victim because the victim supposedly had dated one of White’s former girlfriends.
White faces a potential maximum penalty of 10 years in prison for his crime. Judge Davis will determine his sentence at a future date. This case is the result of an investigation by the Red Lake Tribal Police Department and the FBI. The federal government has primary law enforcement jurisdiction over the Red Lake Indian Reservation.
St. Paul Man Sentenced for Robbing TCF Bank
January 30, 2010 - A 50-year-old St. Paul man was sentenced yesterday in federal court for robbing a TCF Bank in St. Paul on July 27, 2009. In Minneapolis, United States District Court Judge David S. Doty sentenced Frazier Eugene Turner to 40 months in prison on one count of bank robbery. Turner was indicted on August 19, 2009, and pleaded guilty on November 2, 2009.
In his plea agreement, Turner admitted taking $600 from the bank, located in a Cub Foods store at 1177 Clarence Street. At 9 a.m. on July 27, he walked into the bank and gave a teller a demand note that read, “I have a gun. Give me the money and no one gets hurt.” Turner then unfolded a newspaper, revealing a small, black handgun.
According to a Federal Bureau of Investigation affidavit, Turner left the bank with the cash provided. Subsequently, he was recorded on surveillance, driving off in a blue van. Later, police spotted a vehicle matching the description of the get-away car. It was located in the parking lot of the Phalen Golf Course, which is situated one mile north of the bank.
Officers observed Turner crossing the parking lot, carrying a golf bag. They immediately arrested him. They then recovered $570 from the golf bag and, in his vehicle, found clothing that matched what had been worn by the robber. They also found a black wig and four lottery tickets.
This case was the result of an investigation by the FBI and the St. Paul Police Department. It was prosecuted by Assistant U.S. Attorney Clifford B. Wardlaw.
In his plea agreement, Turner admitted taking $600 from the bank, located in a Cub Foods store at 1177 Clarence Street. At 9 a.m. on July 27, he walked into the bank and gave a teller a demand note that read, “I have a gun. Give me the money and no one gets hurt.” Turner then unfolded a newspaper, revealing a small, black handgun.
According to a Federal Bureau of Investigation affidavit, Turner left the bank with the cash provided. Subsequently, he was recorded on surveillance, driving off in a blue van. Later, police spotted a vehicle matching the description of the get-away car. It was located in the parking lot of the Phalen Golf Course, which is situated one mile north of the bank.
Officers observed Turner crossing the parking lot, carrying a golf bag. They immediately arrested him. They then recovered $570 from the golf bag and, in his vehicle, found clothing that matched what had been worn by the robber. They also found a black wig and four lottery tickets.
This case was the result of an investigation by the FBI and the St. Paul Police Department. It was prosecuted by Assistant U.S. Attorney Clifford B. Wardlaw.
Destin Physician Sentenced to Life in Prison for Illegal Distribution of Controlled Substances
January 30, 2010 - Thomas F. Kirwin, United States Attorney for the Northern District of Florida, announced today that Destin physician David Willis Webb (68) was sentenced to life in prison for distribution of and conspiracy to distribute controlled substances resulting in death.
At the conclusion of a two week jury trial in September of last year before Senior United States District Judge Lacey Collier, Webb was convicted of 36 counts of health care fraud, 90 counts of illegal distribution of controlled substances, two counts of conspiracy to commit those offenses, and two counts of identity theft. The jury also determined that Webb was responsible for the deaths of three of his patients that resulted from his commission of health care fraud, conspiracy, and distribution of controlled substances.
The evidence at trial showed that between 2002 and 2007, Dr. Webb, the owner operator of Destin Primary Care Clinic and Doctors on Call, prescribed controlled narcotics, sedatives, and stimulants in quantities and dosages that caused patients to abuse, misuse, and become addicted to these drugs. The substances the defendant frequently prescribed included oxycodone, hydrocodone, fentanyl, alprazolam, triazolam, and dextroamphetamine, better known by their brand names, Oxycontin, Percocet, Lorcet, Vicodin, Lortab, Duragesic, Xanax, Halcion, and Adderall. Even after his patients suffered overdoses or were admitted to drug rehabilitation programs to recover from their addictions, the defendant continued to prescribe these patients the same drugs they had been addicted to. Between 2003 and 2005, two of the defendant’s patients died of overdoses of the drugs he had been prescribing. Evidence introduced at trial indicated that one of these patients had been injecting drugs intravenously during the period that she was the defendant’s patient and had two separate surgeries to replace heart valves damaged as a result of heart infections she suffered from intravenous drug use. Although the defendant was aware of the heart infections and surgeries, he made no effort to obtain medical records pertaining to the patient’s heart condition and continued to prescribe the patient oxycodone. A third patient committed suicide by taking fatal doses of prescription drugs from the defendant along with other drugs and alcohol.
The evidence showed that the defendant failed to monitor his patients’ use of drugs even after he had been alerted that the patients were abusing drugs. The defendant also failed to document the patients’ files with sufficient medical justification for prescribing the drugs. In the case of more than one hundred of the patients to whom the defendant prescribed controlled substances, agents were able to find no evidence that the defendant kept any patient file at all.
For a thirty-day period between April and May 2005, the defendant was suspended from the practice of medicine for misconduct arising from his prescribing of controlled substances over the internet to patients he had never seen. During his thirty-day suspension, the defendant continued to see patients and prescribe them controlled substances even though he was prohibited by the Department of Health from doing so. When pharmacists became aware of the defendant’s suspension and refused to honor his prescriptions, the defendant used, without consent, the DEA number of another physician to continue to prescribe controlled substances to his patients. In the summer of 2005, this other physician filed a complaint advising the Board of Health that the defendant had fraudulently used her DEA registration number to prescribe drugs while he was suspended from practice.
During the pendency of the Board of Health complaint, and even after law enforcement served a search warrant on his home and office, the defendant continued to prescribe controlled substances to his patients without a legitimate medical purpose. In April 2007, another of the defendant’s patients died of an overdose of hydrocodone that the defendant had prescribed shortly before the patient’s death.
In addition to the life sentence, the defendant was ordered to serve concurrent sentences ranging from three to 20 years on the remaining counts of the indictment. He was also ordered to pay more than $27,000 in restitution to the health care benefit organizations he defrauded and to the family members of patients who died as a result of his criminal conduct.
In praising the sentence, Mr. Kirwin stated, “There were 4199 drug-related deaths reported in Florida during the first six months of 2009. The two drugs that caused the most deaths during this period were the same drugs that Dr. Webb prescribed: oxycodone and benzodiazepines. Of the 470 deaths statewide attributed to benzodiazepines between January and June of last year, 348 were caused by alprazolam. Prescription drug abuse is a nationwide epidemic and this Office will continue to vigorously investigate and prosecute those physicians who operate outside the usual course of medical practice to enrich themselves by exploiting their patients’ addictions.”
Mr. Kirwin commended the dedication and tenacity of the North Florida Health Care Fraud Task Force, the Federal Bureau of Investigation, the Drug Enforcement Administration, the National Drug Intelligence Center, the Defense Criminal Investigative Service, the Florida Department of Law Enforcement, the Florida Department of Financial Services, the Florida Attorney General’s Medicaid Fraud Control Unit, the Florida Department of Health, the Okaloosa County Sheriff’s Office, and the Walton County Sheriff’s office, whose joint investigation led to today’s conviction. Mr. Kirwin also praised the many pharmacies in Okaloosa and Walton Counties, whose assistance and cooperation made this investigation possible. The case was prosecuted by Assistant United States Attorney Karen Rhew-Miller.
At the conclusion of a two week jury trial in September of last year before Senior United States District Judge Lacey Collier, Webb was convicted of 36 counts of health care fraud, 90 counts of illegal distribution of controlled substances, two counts of conspiracy to commit those offenses, and two counts of identity theft. The jury also determined that Webb was responsible for the deaths of three of his patients that resulted from his commission of health care fraud, conspiracy, and distribution of controlled substances.
The evidence at trial showed that between 2002 and 2007, Dr. Webb, the owner operator of Destin Primary Care Clinic and Doctors on Call, prescribed controlled narcotics, sedatives, and stimulants in quantities and dosages that caused patients to abuse, misuse, and become addicted to these drugs. The substances the defendant frequently prescribed included oxycodone, hydrocodone, fentanyl, alprazolam, triazolam, and dextroamphetamine, better known by their brand names, Oxycontin, Percocet, Lorcet, Vicodin, Lortab, Duragesic, Xanax, Halcion, and Adderall. Even after his patients suffered overdoses or were admitted to drug rehabilitation programs to recover from their addictions, the defendant continued to prescribe these patients the same drugs they had been addicted to. Between 2003 and 2005, two of the defendant’s patients died of overdoses of the drugs he had been prescribing. Evidence introduced at trial indicated that one of these patients had been injecting drugs intravenously during the period that she was the defendant’s patient and had two separate surgeries to replace heart valves damaged as a result of heart infections she suffered from intravenous drug use. Although the defendant was aware of the heart infections and surgeries, he made no effort to obtain medical records pertaining to the patient’s heart condition and continued to prescribe the patient oxycodone. A third patient committed suicide by taking fatal doses of prescription drugs from the defendant along with other drugs and alcohol.
The evidence showed that the defendant failed to monitor his patients’ use of drugs even after he had been alerted that the patients were abusing drugs. The defendant also failed to document the patients’ files with sufficient medical justification for prescribing the drugs. In the case of more than one hundred of the patients to whom the defendant prescribed controlled substances, agents were able to find no evidence that the defendant kept any patient file at all.
For a thirty-day period between April and May 2005, the defendant was suspended from the practice of medicine for misconduct arising from his prescribing of controlled substances over the internet to patients he had never seen. During his thirty-day suspension, the defendant continued to see patients and prescribe them controlled substances even though he was prohibited by the Department of Health from doing so. When pharmacists became aware of the defendant’s suspension and refused to honor his prescriptions, the defendant used, without consent, the DEA number of another physician to continue to prescribe controlled substances to his patients. In the summer of 2005, this other physician filed a complaint advising the Board of Health that the defendant had fraudulently used her DEA registration number to prescribe drugs while he was suspended from practice.
During the pendency of the Board of Health complaint, and even after law enforcement served a search warrant on his home and office, the defendant continued to prescribe controlled substances to his patients without a legitimate medical purpose. In April 2007, another of the defendant’s patients died of an overdose of hydrocodone that the defendant had prescribed shortly before the patient’s death.
In addition to the life sentence, the defendant was ordered to serve concurrent sentences ranging from three to 20 years on the remaining counts of the indictment. He was also ordered to pay more than $27,000 in restitution to the health care benefit organizations he defrauded and to the family members of patients who died as a result of his criminal conduct.
In praising the sentence, Mr. Kirwin stated, “There were 4199 drug-related deaths reported in Florida during the first six months of 2009. The two drugs that caused the most deaths during this period were the same drugs that Dr. Webb prescribed: oxycodone and benzodiazepines. Of the 470 deaths statewide attributed to benzodiazepines between January and June of last year, 348 were caused by alprazolam. Prescription drug abuse is a nationwide epidemic and this Office will continue to vigorously investigate and prosecute those physicians who operate outside the usual course of medical practice to enrich themselves by exploiting their patients’ addictions.”
Mr. Kirwin commended the dedication and tenacity of the North Florida Health Care Fraud Task Force, the Federal Bureau of Investigation, the Drug Enforcement Administration, the National Drug Intelligence Center, the Defense Criminal Investigative Service, the Florida Department of Law Enforcement, the Florida Department of Financial Services, the Florida Attorney General’s Medicaid Fraud Control Unit, the Florida Department of Health, the Okaloosa County Sheriff’s Office, and the Walton County Sheriff’s office, whose joint investigation led to today’s conviction. Mr. Kirwin also praised the many pharmacies in Okaloosa and Walton Counties, whose assistance and cooperation made this investigation possible. The case was prosecuted by Assistant United States Attorney Karen Rhew-Miller.
Friday, January 29, 2010
Wanted: The "Average at Best Bandits"
January 29, 2010 - The Phoenix FBI Bank Robbery Task Force is seeking the public’s assistance in identifying the "Average at Best Bandits."
On January 19, 2010, two unknown males entered the Bank of America located at 340 N. Estrella Parkway in Goodyear. Suspect #1 approached the teller then presented a demand note and verbally demanded for the teller to hurry up. Suspect #1 received an undisclosed amount of money then wiped the counter before walking away. Suspect #2 approached a second teller and presented a demand note. Suspect #2 verbally demanded the teller to hurry up. Suspect #2 received an undisclosed amount of money and fled the bank with suspect #1 on foot. No vehicle or weapon seen.
Suspect #1 is described as a Black male, early 20’s, 5’9” – 5’11”, 160 lbs, dark complexion, thin mustache, black baseball cap with a white logo, a red “do-rag” under the hat, a maroon hooded sweatshirt, and dark baggie denim pants.
Suspect #2 is described as a Hispanic male, 19 – 21 yrs, 5’7”, 130 lbs., thin build, brown eyes, short brown hair, multicolored baseball cap, hooded sweatshirt, and baggie denim shorts.
On January 21, 2010, two unknown males entered the Bank of America located at 9910 W. McDowell Road in Avondale. Both suspects walked up to the merchant teller and were greeted by an employee. One of the unknown males stated he forgot his wallet and exited the bank with the other unknown male. A few minutes later they both returned and approached the victim teller. Suspect #1 presented a demand note and received and undisclosed amount of money. Suspect #1 fled the bank with suspect #2 on foot. No vehicle or weapon seen.
Suspect #1 is described as a Hispanic male, dark complexion, late teens – early 20’s, 5’7” 5’9”, 125 -140lbs, baggy clothes, dark colored hooded sweatshirt, black baseball cap, light acne scarring on face. Suspect may be the same as suspect #2 in 1/19/10 robbery.
Suspect #2 is described as a Hispanic male, mid 20’s, 5’7”- 5’9”, 180 lbs, dark long sleeve sweatshirt, purple baseball cap, and light blue sweat pants.
On January 21, 2010, two unknown males entered the Chase Bank located at 431 W. Southern Avenue in Mesa. Suspect #1 approached the teller and presented a demand note. Suspect #1 was given an undisclosed amount of money. A second unknown male hereafter referred to Suspect #2 was observed in the teller line. Suspect #2 did not approach the teller counter. Suspect #1 and #2 fled the bank on foot and were observed entering into a gold Dodge Intrepid. No weapon was seen.
Suspect #1 is described as a Hispanic male, 20-25 yrs, 5’9” – 5’10”, 150-160lbs., dark hooded sweatshirt, white Anaheim Angels baseball cap with blue bill, dark pants, and dark shoes. Suspect may be the same as suspect #2 in 1/19/10 robbery.
Suspect #2 is described as a Black male, 20-25yrs, black baseball cap, dark hooded sweatshirt, and white tennis shoes. Suspect may be the same as suspect #1 in 1/19/10 robbery.
The FBI Bank Robbery Task Force is comprised of the Phoenix Police Department, the Mesa Police Department, the Maricopa County Sheriff’s Office, the Scottsdale Police Department, and the FBI.
Please, contact the FBI at (602) 279-5511 or Silent Witness at 480-WITNESS if you have information about the Average at Best Bandits.
Chester Man Pleads Guilty to Possessing Stolen Equipment
January 29, 2010 - Acting United States Attorney Kevin F. McDonald stated that Dannie Gabriel Rhyne, age 45, of Chester, South Carolina, pled guilty in federal court to possessing stolen heavy equipment. Senior United States District Judge Matthew J. Perry accepted the plea and will sentence Rhyne in April.
Rhyne admitted having possession of four pieces of heavy equipment that had been reported stolen from North Carolina in 2006. The items included a flat bed truck, tractors, and an excavator, all valued at approximately $120,000.00. Rhyne was caught after he attempted to sell one of the items to a man whose wife was a Chester County deputy.
Rhyne faces a maximum sentence of ten years in federal prison and a fine of $250,000.00.
The case was investigated by agents of the FBI, SLED, and the Chester County Sheriff’s Department. Assistant U.S. Attorney Nathan S. Williams of the Columbia office is prosecuting the case.
Rhyne admitted having possession of four pieces of heavy equipment that had been reported stolen from North Carolina in 2006. The items included a flat bed truck, tractors, and an excavator, all valued at approximately $120,000.00. Rhyne was caught after he attempted to sell one of the items to a man whose wife was a Chester County deputy.
Rhyne faces a maximum sentence of ten years in federal prison and a fine of $250,000.00.
The case was investigated by agents of the FBI, SLED, and the Chester County Sheriff’s Department. Assistant U.S. Attorney Nathan S. Williams of the Columbia office is prosecuting the case.
Four Indicted for Witness Tampering and Obstruction of Justice
January 29, 2010 - Steven M. Dettelbach, United States Attorney for the Northern District of Ohio, and Ohio Attorney General Richard Cordray today announced that an indictment was unsealed following the arrests of B. Elise Miller, aka Barbara E. Miller, age 55, Coshocton, Ohio; Dana C. Campbell, age 50, Coshocton, Ohio; Douglas A. Bolden, age 55, Zanesville, Ohio; and James O. Ireland, age 39, Zanesville, Ohio. The indictment charges Miller with two counts of witness tampering, two counts of obstruction of an official proceeding, and one count of concealment of records. Miller’s husband, Dana C. Campbell, is charged with one count of concealment of records. Bolden and Ireland are each charged with one count of obstruction of an official proceeding.
The indictment alleges that from about 1987 to November 2008, Miller owned and operated Three Rivers Infusion and Pharmacy Specialists (Three Rivers), a medical infusion and pharmacy supply company located in Coshocton, Ohio. Miller’s husband, Dana C. Campbell, was the Vice President of Finance for Three Rivers.
In 2008, Three Rivers was under investigation by federal and state agencies for suspected over billing of medical insurance companies for services and drugs, including a drug called Synagis used to treat infants to help prevent influenza. In August 2008, the government searched Three Rivers and seized various files including some files of patients who received Synagis.
In December 2008, the government served Three Rivers with a subpoena to produce 118 patient files, but Three Rivers provided the government with only 21 such files. In December 2009, government agents found many of the subpoenaed patient files concealed in Miller’s and Campbell’s home in Coshocton, Ohio.
The Indictment further charges that Bolden and Ireland, who both worked for Miller, accused Miller of using Bolden’s name as the pharmacist who was dispensing the drug Synagis. It is charged that Miller then provided “severance” payments to both Bolden and Ireland in return for their silence about Miller’s activities.
If convicted, the defendants’ sentences will be determined by the Court after review of factors unique to this 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.
This case is being prosecuted by Assistant U.S. Attorney James C. Lynch and Special Assistant U. S. Attorney Constance A. Nearhood with the Ohio Attorney General’s Office, Columbus, Ohio, following investigations by the Ohio Attorney General’s Office, Medicaid Fraud Control Unit, the Ohio Department of Insurance, the United States Department of Health and Human Services, Office of the Inspector General, Columbus, Ohio, and the Federal Bureau of Investigation, Columbus, Ohio.
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.
The indictment alleges that from about 1987 to November 2008, Miller owned and operated Three Rivers Infusion and Pharmacy Specialists (Three Rivers), a medical infusion and pharmacy supply company located in Coshocton, Ohio. Miller’s husband, Dana C. Campbell, was the Vice President of Finance for Three Rivers.
In 2008, Three Rivers was under investigation by federal and state agencies for suspected over billing of medical insurance companies for services and drugs, including a drug called Synagis used to treat infants to help prevent influenza. In August 2008, the government searched Three Rivers and seized various files including some files of patients who received Synagis.
In December 2008, the government served Three Rivers with a subpoena to produce 118 patient files, but Three Rivers provided the government with only 21 such files. In December 2009, government agents found many of the subpoenaed patient files concealed in Miller’s and Campbell’s home in Coshocton, Ohio.
The Indictment further charges that Bolden and Ireland, who both worked for Miller, accused Miller of using Bolden’s name as the pharmacist who was dispensing the drug Synagis. It is charged that Miller then provided “severance” payments to both Bolden and Ireland in return for their silence about Miller’s activities.
If convicted, the defendants’ sentences will be determined by the Court after review of factors unique to this 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.
This case is being prosecuted by Assistant U.S. Attorney James C. Lynch and Special Assistant U. S. Attorney Constance A. Nearhood with the Ohio Attorney General’s Office, Columbus, Ohio, following investigations by the Ohio Attorney General’s Office, Medicaid Fraud Control Unit, the Ohio Department of Insurance, the United States Department of Health and Human Services, Office of the Inspector General, Columbus, Ohio, and the Federal Bureau of Investigation, Columbus, Ohio.
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.
Cleveland Man Arrested for His Alleged Involvement in Three Bank Robberies
January 29, 2010 - C. Frank Figliuzzi, Special Agent in Charge of the Cleveland Division of the Federal Bureau of Investigation (FBI), for the Northern District of Ohio, announces the arrest of John W. Mann, age 46, of Cleveland, Ohio, on January 29, 2010. Mann is charged with one count of federal bank robbery for his involvement in the robbery of the Fifth Third Bank, 3885 Rocky River Drive, Cleveland, Ohio, on January 16, 2010. Mann has charges pending in the robberies of the Key Bank, 2047 W. 25th Street, Cleveland, Ohio, on December 4, 2009, and the Charter One Bank, 17411 Lorain Avenue, Cleveland, Ohio, on January 27, 2010.
Mann was currently on federal probation for bank robbery convictions in 2004 and was released from prison in March of 2008. These bank robberies were investigated by the Cleveland Division of Police and the Cleveland Office of the FBI with the assistance of United States Probation Department, Cleveland, Ohio.
Mann will appear today in United States District Court, Cleveland, Ohio, for his initial appearance on the bank robbery charge.
Any questions regarding this news release can be directed to SA Scott T. Wilson at the Cleveland Office of the FBI, 216-522-1400.
Mann was currently on federal probation for bank robbery convictions in 2004 and was released from prison in March of 2008. These bank robberies were investigated by the Cleveland Division of Police and the Cleveland Office of the FBI with the assistance of United States Probation Department, Cleveland, Ohio.
Mann will appear today in United States District Court, Cleveland, Ohio, for his initial appearance on the bank robbery charge.
Any questions regarding this news release can be directed to SA Scott T. Wilson at the Cleveland Office of the FBI, 216-522-1400.
Public Corruption Conspiracy Indictment Unsealed
January 29, 2010 - United States Attorney A. Brian Albritton and James Casey, Special Agent in Charge, Federal Bureau of Investigation, Jacksonville Division, announced the unsealing of a 44-count indictment charging Tony DeVaughan Nelson (age 50, of Jacksonville), and Frank S. Bernardino (age 45, of Tallahassee) with various federal charges stemming from allegations of public corruption. The indictment names Nelson in all 44 counts and Bernardino in 36 counts. It alleges that both defendants committed conspiracy to commit mail fraud, bribery concerning programs receiving federal funds, and money laundering; and it charges both defendants jointly with 12 substantive counts of mail fraud, 11 substantive counts of bribery, and 11 substantive counts of money laundering. The indictment also names Nelson alone in seven additional substantive counts of mail fraud and one additional substantive count of making a false statement to the Federal Bureau of Investigation. If convicted on all counts, Nelson faces a maximum penalty of 715 years in federal prison and $13.5 million dollars in fines, and Bernardino faces a maximum penalty of 575 years in federal prison and $11.5 million dollars in fines. The indictment also notifies Nelson and Bernardino that the United States intends to seek forfeiture of $143,500, an amount alleged to be traceable to proceeds of the offenses.
According to the indictment, Nelson, while a board member for the Jacksonville Port Authority (Jaxport), corruptly demanded more than $100,000 from Subaqueous Services, Inc. (SSI), a company with Jaxport contracts, in exchange for influence in his duties as a board member. Nelson allegedly received the bribe money from Lance William Young, SSI’s owner. The indictment further alleges that Bernardino, a licensed lobbyist, acted as a conduit between Young and Nelson to hide and conceal the nature of the bribe payments.
The additional substantive mail fraud counts against Nelson alone stem from allegations of fraud connected to a November 2005 Jaxport dredging contract. The indictment alleges that Nelson wrongfully exploited a Jaxport small-business goal regarding the contract and forged signatures on fraudulent documentation submitted to Jaxport in connection with the contract. The charge against Nelson for making a false statement stems from allegations that Nelson represented to the FBI that a $50,000 bribe from Young was a loan when Nelson knew that statement to be false.
An indictment is merely a formal charge that a defendant has committed a violation of the federal criminal laws, and every defendant is presumed innocent unless, and until, proven guilty.
This case was investigated by the Federal Bureau of Investigation. It will be prosecuted by Assistant United States Attorneys Mac D Heavener, III, and Mark B. Devereaux.
According to the indictment, Nelson, while a board member for the Jacksonville Port Authority (Jaxport), corruptly demanded more than $100,000 from Subaqueous Services, Inc. (SSI), a company with Jaxport contracts, in exchange for influence in his duties as a board member. Nelson allegedly received the bribe money from Lance William Young, SSI’s owner. The indictment further alleges that Bernardino, a licensed lobbyist, acted as a conduit between Young and Nelson to hide and conceal the nature of the bribe payments.
The additional substantive mail fraud counts against Nelson alone stem from allegations of fraud connected to a November 2005 Jaxport dredging contract. The indictment alleges that Nelson wrongfully exploited a Jaxport small-business goal regarding the contract and forged signatures on fraudulent documentation submitted to Jaxport in connection with the contract. The charge against Nelson for making a false statement stems from allegations that Nelson represented to the FBI that a $50,000 bribe from Young was a loan when Nelson knew that statement to be false.
An indictment is merely a formal charge that a defendant has committed a violation of the federal criminal laws, and every defendant is presumed innocent unless, and until, proven guilty.
This case was investigated by the Federal Bureau of Investigation. It will be prosecuted by Assistant United States Attorneys Mac D Heavener, III, and Mark B. Devereaux.
Public Corruption Conspiracy Indictment Unsealed
January 29, 2010 - United States Attorney A. Brian Albritton and James Casey, Special Agent in Charge, Federal Bureau of Investigation, Jacksonville Division, announced the unsealing of a 44-count indictment charging Tony DeVaughan Nelson (age 50, of Jacksonville), and Frank S. Bernardino (age 45, of Tallahassee) with various federal charges stemming from allegations of public corruption. The indictment names Nelson in all 44 counts and Bernardino in 36 counts. It alleges that both defendants committed conspiracy to commit mail fraud, bribery concerning programs receiving federal funds, and money laundering; and it charges both defendants jointly with 12 substantive counts of mail fraud, 11 substantive counts of bribery, and 11 substantive counts of money laundering. The indictment also names Nelson alone in seven additional substantive counts of mail fraud and one additional substantive count of making a false statement to the Federal Bureau of Investigation. If convicted on all counts, Nelson faces a maximum penalty of 715 years in federal prison and $13.5 million dollars in fines, and Bernardino faces a maximum penalty of 575 years in federal prison and $11.5 million dollars in fines. The indictment also notifies Nelson and Bernardino that the United States intends to seek forfeiture of $143,500, an amount alleged to be traceable to proceeds of the offenses.
According to the indictment, Nelson, while a board member for the Jacksonville Port Authority (Jaxport), corruptly demanded more than $100,000 from Subaqueous Services, Inc. (SSI), a company with Jaxport contracts, in exchange for influence in his duties as a board member. Nelson allegedly received the bribe money from Lance William Young, SSI’s owner. The indictment further alleges that Bernardino, a licensed lobbyist, acted as a conduit between Young and Nelson to hide and conceal the nature of the bribe payments.
The additional substantive mail fraud counts against Nelson alone stem from allegations of fraud connected to a November 2005 Jaxport dredging contract. The indictment alleges that Nelson wrongfully exploited a Jaxport small-business goal regarding the contract and forged signatures on fraudulent documentation submitted to Jaxport in connection with the contract. The charge against Nelson for making a false statement stems from allegations that Nelson represented to the FBI that a $50,000 bribe from Young was a loan when Nelson knew that statement to be false.
An indictment is merely a formal charge that a defendant has committed a violation of the federal criminal laws, and every defendant is presumed innocent unless, and until, proven guilty.
This case was investigated by the Federal Bureau of Investigation. It will be prosecuted by Assistant United States Attorneys Mac D Heavener, III, and Mark B. Devereaux.
According to the indictment, Nelson, while a board member for the Jacksonville Port Authority (Jaxport), corruptly demanded more than $100,000 from Subaqueous Services, Inc. (SSI), a company with Jaxport contracts, in exchange for influence in his duties as a board member. Nelson allegedly received the bribe money from Lance William Young, SSI’s owner. The indictment further alleges that Bernardino, a licensed lobbyist, acted as a conduit between Young and Nelson to hide and conceal the nature of the bribe payments.
The additional substantive mail fraud counts against Nelson alone stem from allegations of fraud connected to a November 2005 Jaxport dredging contract. The indictment alleges that Nelson wrongfully exploited a Jaxport small-business goal regarding the contract and forged signatures on fraudulent documentation submitted to Jaxport in connection with the contract. The charge against Nelson for making a false statement stems from allegations that Nelson represented to the FBI that a $50,000 bribe from Young was a loan when Nelson knew that statement to be false.
An indictment is merely a formal charge that a defendant has committed a violation of the federal criminal laws, and every defendant is presumed innocent unless, and until, proven guilty.
This case was investigated by the Federal Bureau of Investigation. It will be prosecuted by Assistant United States Attorneys Mac D Heavener, III, and Mark B. Devereaux.
Texas Attorney Convicted for Role in Pump-and-dump Stock Manipulation Schemes
January 29, 2010 - A securities attorney was convicted today by a federal jury in Alexandria, Va., for participating in multi-million dollar pump-and-dump stock manipulation schemes, Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney Neil H. MacBride of the Eastern District of Virginia announced.
Phillip Windom Offill Jr., 51, of Dallas, was indicted on March 12, 2009, and today was found guilty of one count of conspiracy to commit registration violations, securities fraud and nine counts of wire fraud.
“It is a sad day when a former U.S. Securities and Exchange Commission (SEC) attorney uses what he learned in the government to later defraud the investing public,” said Assistant Attorney General Lanny A. Breuer of the Criminal Division. “As this case shows, individuals who illegally manipulate our securities markets to line their own pockets will be brought to justice.”
“As a former SEC lawyer, Mr. Offill knew the law – and he intentionally broke it and tried to hide his crimes,” said U.S. Attorney Neil H. MacBride of the Eastern District of Virginia. “He and his co-conspirators made millions while innocent investors were left with stock in worthless companies. We are committed to pursuing these cases aggressively to protect the public and the integrity of the securities market.”
According to court records and evidence at trial, Offill, an attorney in Dallas and a former attorney with the SEC, was retained by David Stocker, a Phoenix attorney who pleaded guilty in March 2009 in the Eastern District of Virginia to conspiracy to commit securities fraud. According to the indictment, from approximately March 2004 through October 2004, Offill and Stocker evaded federal securities registration requirements and provided co-conspirators with millions of unregistered and “free-trading” shares of nine companies’ common stock that the co-conspirators could not have otherwise legally obtained. Many of the shares were subsequently sold by co-conspirators to investors in the general public. By evading the registration requirements, the co-conspirators were able to hide from the investing public the actual financial condition and business operations of the companies. The companies included Emerging Holdings Inc.; MassClick Inc.; China Score Inc.; Auction Mills Inc.; Custom-Designed Compressor Systems Inc.; Ecogate Inc.; Media International Concepts Inc.; Vanquish Productions Inc.; and AVL Global Inc.
In connection with Emerging Holdings, MassClick and China Score, evidence at trial showed that Offill knowingly participated in a conspiracy known as a “pump-and-dump” scheme to manipulate the price of these companies’ securities. Co-conspirators falsely manipulated the price and volume of some of the companies’ stock by making materially false and misleading statements in press releases and in spam e-mails to tens of millions of e-mail addresses throughout the United States in an effort to create artificial demand for the three companies’ stock. After fraudulently “pumping” the market price and demand for the companies’ stock, co-conspirators “dumped” shares by selling them for large profits to the general investing public in the over-the-counter market through listings on Pink Sheets, an inter-dealer electronic quotation and trading system. These shares were purchased by unsuspecting investors, including investors in the Eastern District of Virginia, and were often rendered virtually worthless.
Offill, who was immediately remanded by U.S. District Judge Liam O’Grady, faces a maximum penalty of five years in prison on the conspiracy charge and 20 years in prison for each charged count of wire fraud. He will also be subject to up to $15 million in forfeiture. Sentencing has been scheduled for April 16, 2010, at 9 a.m., before Judge O’Grady.
Ten other defendants have pleaded guilty and eight of them have been sentenced in federal court in Alexandria, Va., for their roles in related stock manipulation schemes. David B. Stocker will be sentenced on March 8, 2010. Kenneth Owen pleaded guilty to conspiracy to commit securities fraud and will be sentenced in federal court in Los Angeles on Aug. 25, 2010. Michael R. Saquella was sentenced to 10 years in prison; Justin Medlin was sentenced to six years in prison; Steven P. Luscko and Gregory A. Neu were each sentenced to five years in prison; Lawrence Kaplan was sentenced to three years in prison; Brian G. Brunette was sentenced to a one year in prison; Anthony Tarantola was sentenced to six months in prison; and Henry “Hank” Zemla was sentenced to three months in prison.
The case, which was referred by the Market Regulation Department of Financial Industry Regulatory Authority (FINRA), was investigated by the FBI and the U.S. Postal Inspection Service, with assistance from FINRA’s Criminal Prosecution Advisory Group. The case is being prosecuted by Trial Attorney Patrick Stokes of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Ed Power of the Eastern District of Virginia. The Department of Justice acknowledges the substantial assistance of FINRA and the SEC in its investigation. It would also like to thank the Virginia State Corporation Commission, Division of Securities and Retail Franchising, for its assistance.
Phillip Windom Offill Jr., 51, of Dallas, was indicted on March 12, 2009, and today was found guilty of one count of conspiracy to commit registration violations, securities fraud and nine counts of wire fraud.
“It is a sad day when a former U.S. Securities and Exchange Commission (SEC) attorney uses what he learned in the government to later defraud the investing public,” said Assistant Attorney General Lanny A. Breuer of the Criminal Division. “As this case shows, individuals who illegally manipulate our securities markets to line their own pockets will be brought to justice.”
“As a former SEC lawyer, Mr. Offill knew the law – and he intentionally broke it and tried to hide his crimes,” said U.S. Attorney Neil H. MacBride of the Eastern District of Virginia. “He and his co-conspirators made millions while innocent investors were left with stock in worthless companies. We are committed to pursuing these cases aggressively to protect the public and the integrity of the securities market.”
According to court records and evidence at trial, Offill, an attorney in Dallas and a former attorney with the SEC, was retained by David Stocker, a Phoenix attorney who pleaded guilty in March 2009 in the Eastern District of Virginia to conspiracy to commit securities fraud. According to the indictment, from approximately March 2004 through October 2004, Offill and Stocker evaded federal securities registration requirements and provided co-conspirators with millions of unregistered and “free-trading” shares of nine companies’ common stock that the co-conspirators could not have otherwise legally obtained. Many of the shares were subsequently sold by co-conspirators to investors in the general public. By evading the registration requirements, the co-conspirators were able to hide from the investing public the actual financial condition and business operations of the companies. The companies included Emerging Holdings Inc.; MassClick Inc.; China Score Inc.; Auction Mills Inc.; Custom-Designed Compressor Systems Inc.; Ecogate Inc.; Media International Concepts Inc.; Vanquish Productions Inc.; and AVL Global Inc.
In connection with Emerging Holdings, MassClick and China Score, evidence at trial showed that Offill knowingly participated in a conspiracy known as a “pump-and-dump” scheme to manipulate the price of these companies’ securities. Co-conspirators falsely manipulated the price and volume of some of the companies’ stock by making materially false and misleading statements in press releases and in spam e-mails to tens of millions of e-mail addresses throughout the United States in an effort to create artificial demand for the three companies’ stock. After fraudulently “pumping” the market price and demand for the companies’ stock, co-conspirators “dumped” shares by selling them for large profits to the general investing public in the over-the-counter market through listings on Pink Sheets, an inter-dealer electronic quotation and trading system. These shares were purchased by unsuspecting investors, including investors in the Eastern District of Virginia, and were often rendered virtually worthless.
Offill, who was immediately remanded by U.S. District Judge Liam O’Grady, faces a maximum penalty of five years in prison on the conspiracy charge and 20 years in prison for each charged count of wire fraud. He will also be subject to up to $15 million in forfeiture. Sentencing has been scheduled for April 16, 2010, at 9 a.m., before Judge O’Grady.
Ten other defendants have pleaded guilty and eight of them have been sentenced in federal court in Alexandria, Va., for their roles in related stock manipulation schemes. David B. Stocker will be sentenced on March 8, 2010. Kenneth Owen pleaded guilty to conspiracy to commit securities fraud and will be sentenced in federal court in Los Angeles on Aug. 25, 2010. Michael R. Saquella was sentenced to 10 years in prison; Justin Medlin was sentenced to six years in prison; Steven P. Luscko and Gregory A. Neu were each sentenced to five years in prison; Lawrence Kaplan was sentenced to three years in prison; Brian G. Brunette was sentenced to a one year in prison; Anthony Tarantola was sentenced to six months in prison; and Henry “Hank” Zemla was sentenced to three months in prison.
The case, which was referred by the Market Regulation Department of Financial Industry Regulatory Authority (FINRA), was investigated by the FBI and the U.S. Postal Inspection Service, with assistance from FINRA’s Criminal Prosecution Advisory Group. The case is being prosecuted by Trial Attorney Patrick Stokes of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Ed Power of the Eastern District of Virginia. The Department of Justice acknowledges the substantial assistance of FINRA and the SEC in its investigation. It would also like to thank the Virginia State Corporation Commission, Division of Securities and Retail Franchising, for its assistance.
Former Willbros International Executives Sentenced to Prison for Their Roles in $6 Million Foreign Bribery Scheme
January 29, 2010 - Two former executives of Willbros International Inc. (WII), a subsidiary of Houston-based Willbros Group Inc. (Willbros), were sentenced today for their roles in a conspiracy to pay more than $6 million in bribes to government officials of the Federal Republic of Nigeria and officials from a Nigerian political party, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and Acting Assistant Director in Charge John G. Perren of the FBI’s Washington Field Office.
Jason Edward Steph, 40, was sentenced today to 15 months in prison by U.S. District Court Judge Simeon T. Lake III in Houston. In addition to the prison sentence, Judge Lake ordered Steph to serve two years of supervised release following his prison term and to pay a $2,000 fine. The court acknowledged at the sentencing hearing the assistance Steph provided in ongoing investigations.
Jim Bob Brown, 48, was sentenced today to 12 months and one day in prison by Judge Lake. In addition to the prison sentence, Judge Lake ordered Brown to serve two years of supervised release following his prison term and to pay a fine of $1,000 per month while Brown is on supervised release. The court acknowledged at the sentencing hearing the assistance Brown provided in ongoing investigations.
Steph and Brown both had pleaded guilty to one count of conspiracy to violate the Foreign Corrupt Practices Act (FCPA) before Judge Lake in U.S. District Court for the Southern District of Texas. In pleading guilty, Steph and Brown admitted that Willbros, a publicly traded company that provides construction, engineering and other services in the oil and gas industry, conducted its international operations through WII and that they were both employees of WII. Steph admitted that beginning in approximately late 2003, he conspired with others to make a series of corrupt payments totaling more than $6 million to various Nigerian officials and officials from a Nigerian political party to assist Willbros in obtaining and retaining the Eastern Gas Gathering System (EGGS) Project, which was valued at approximately $387 million.
Steph also admitted that in early 2005, he, along with former WII executive Brown and others, arranged for the payment of approximately $1.8 million in cash to government officials in Nigeria to further the conspiracy. Steph admitted that in order to make these payments, he obtained $550,000 in cash from another co-conspirator, for the purpose of paying that money to Nigerian government officials. He also admitted that he obtained approximately $350,000 from a petty cash account, which was raised over several weeks by falsely inflating petty cash funding requests transmitted to Willbros and by covering the inflated amounts with invoices from fictitious vendors representing purportedly legitimate business expenses.
Brown admitted that in early 2005, he conspired with others to pay bribes to government officials in Nigeria for the purpose of retaining the EGGS Project. Brown admitted that to further this conspiracy, he, with the assistance of others, obtained a suitcase filled with $1 million in cash from a WII’s German construction company partner, which Brown then paid to another co-conspirator for the purpose of forwarding that money to Nigerian government officials.
Brown also admitted that in at least 1996 and continuing through at least 2004, he conspired with others to negotiate lower federal and state tax obligations in exchange for corrupt, "under the table" payments to Nigerian revenue officials, including officials responsible for auditing and enforcing taxes , for the purpose of obtaining or retaining business and for securing an improper advantage. Brown admitted he also conspired with others to make corrupt payments to officials of the Nigerian judicial system in exchange for favorable action on pending cases, for the purpose of obtaining or retaining business and for securing an improper advantage.
Additionally, Brown admitted to making at least $300,000 in corrupt payments to Ecuadorian government officials affiliated with PetroEcuador and PetroCommercial, for the purpose of obtaining and retaining business for Willbros, WII and others, including the Proyecto Santo Domingo project. In connection with the Ecuador transaction, Brown and others agreed to pay $150,000 to the Ecuadorian officials up front and $150,000 at the project’s conclusion.
To date, in addition to Steph and Brown, the prosecution in this matter also includes:
• On Nov. 12, 2009, former WII consultant Paul Novak pleaded guilty to one count of conspiracy to violate the FCPA and one substantive count of violating the FCPA, in connection with his role in paying bribes to Nigerian government officials. Novak’s sentencing is currently scheduled for July 9, 2010.
• On Dec. 19, 2008, an indictment was unsealed against former Willbros executive Kenneth Tillery, charging him with conspiring to make more than $6.3 million in bribe payments to Nigerian and Ecuadoran officials; two individual counts of violating the FCPA in connection with the authorization of specific corrupt payments to officials in those countries; and one count of conspiring to launder the bribe payments through purported consulting companies. He remains a fugitive.
• On May 14, 2008, Willbros entered into a deferred prosecution agreement and agreed to pay a $22 million criminal penalty, in connection with the company’s payment of bribes to government officials in Nigeria and Ecuador.
This case was prosecuted by Assistant Chief Hank Bond Walther and Trial Attorney Laura N. Perkins of the Criminal Division’s Fraud Section and investigated by the FBI’s Washington Field Office squad that specializes in investigations of FCPA violations.
Jason Edward Steph, 40, was sentenced today to 15 months in prison by U.S. District Court Judge Simeon T. Lake III in Houston. In addition to the prison sentence, Judge Lake ordered Steph to serve two years of supervised release following his prison term and to pay a $2,000 fine. The court acknowledged at the sentencing hearing the assistance Steph provided in ongoing investigations.
Jim Bob Brown, 48, was sentenced today to 12 months and one day in prison by Judge Lake. In addition to the prison sentence, Judge Lake ordered Brown to serve two years of supervised release following his prison term and to pay a fine of $1,000 per month while Brown is on supervised release. The court acknowledged at the sentencing hearing the assistance Brown provided in ongoing investigations.
Steph and Brown both had pleaded guilty to one count of conspiracy to violate the Foreign Corrupt Practices Act (FCPA) before Judge Lake in U.S. District Court for the Southern District of Texas. In pleading guilty, Steph and Brown admitted that Willbros, a publicly traded company that provides construction, engineering and other services in the oil and gas industry, conducted its international operations through WII and that they were both employees of WII. Steph admitted that beginning in approximately late 2003, he conspired with others to make a series of corrupt payments totaling more than $6 million to various Nigerian officials and officials from a Nigerian political party to assist Willbros in obtaining and retaining the Eastern Gas Gathering System (EGGS) Project, which was valued at approximately $387 million.
Steph also admitted that in early 2005, he, along with former WII executive Brown and others, arranged for the payment of approximately $1.8 million in cash to government officials in Nigeria to further the conspiracy. Steph admitted that in order to make these payments, he obtained $550,000 in cash from another co-conspirator, for the purpose of paying that money to Nigerian government officials. He also admitted that he obtained approximately $350,000 from a petty cash account, which was raised over several weeks by falsely inflating petty cash funding requests transmitted to Willbros and by covering the inflated amounts with invoices from fictitious vendors representing purportedly legitimate business expenses.
Brown admitted that in early 2005, he conspired with others to pay bribes to government officials in Nigeria for the purpose of retaining the EGGS Project. Brown admitted that to further this conspiracy, he, with the assistance of others, obtained a suitcase filled with $1 million in cash from a WII’s German construction company partner, which Brown then paid to another co-conspirator for the purpose of forwarding that money to Nigerian government officials.
Brown also admitted that in at least 1996 and continuing through at least 2004, he conspired with others to negotiate lower federal and state tax obligations in exchange for corrupt, "under the table" payments to Nigerian revenue officials, including officials responsible for auditing and enforcing taxes , for the purpose of obtaining or retaining business and for securing an improper advantage. Brown admitted he also conspired with others to make corrupt payments to officials of the Nigerian judicial system in exchange for favorable action on pending cases, for the purpose of obtaining or retaining business and for securing an improper advantage.
Additionally, Brown admitted to making at least $300,000 in corrupt payments to Ecuadorian government officials affiliated with PetroEcuador and PetroCommercial, for the purpose of obtaining and retaining business for Willbros, WII and others, including the Proyecto Santo Domingo project. In connection with the Ecuador transaction, Brown and others agreed to pay $150,000 to the Ecuadorian officials up front and $150,000 at the project’s conclusion.
To date, in addition to Steph and Brown, the prosecution in this matter also includes:
• On Nov. 12, 2009, former WII consultant Paul Novak pleaded guilty to one count of conspiracy to violate the FCPA and one substantive count of violating the FCPA, in connection with his role in paying bribes to Nigerian government officials. Novak’s sentencing is currently scheduled for July 9, 2010.
• On Dec. 19, 2008, an indictment was unsealed against former Willbros executive Kenneth Tillery, charging him with conspiring to make more than $6.3 million in bribe payments to Nigerian and Ecuadoran officials; two individual counts of violating the FCPA in connection with the authorization of specific corrupt payments to officials in those countries; and one count of conspiring to launder the bribe payments through purported consulting companies. He remains a fugitive.
• On May 14, 2008, Willbros entered into a deferred prosecution agreement and agreed to pay a $22 million criminal penalty, in connection with the company’s payment of bribes to government officials in Nigeria and Ecuador.
This case was prosecuted by Assistant Chief Hank Bond Walther and Trial Attorney Laura N. Perkins of the Criminal Division’s Fraud Section and investigated by the FBI’s Washington Field Office squad that specializes in investigations of FCPA violations.
Thursday, January 28, 2010
Maryland Cardiologist Sentenced to Almost Four Years for Evading More Than $16 Million in Income Taxes
Did Not Report More Than $40 Million in Profits from Stock Trading
January 29, 2010 - U.S. District Judge Roger W. Titus sentenced Pradeep Srivastava, age 50, of Potomac, Maryland, a cardiologist who maintained offices in Greenbelt and Oxon Hill, to 46 months in prison, followed by three years of supervised release, for evading more than $16 million dollars in income taxes for the 1998 and 1999 tax years, and filing a false tax return for 2000. Judge Titus also entered an order of restitution against Srivastava in the amount of $16,110,160. Srivastava was convicted by a federal jury on October 8, 2009.
The sentence was announced United States Attorney for the District of Maryland Rod J. Rosenstein; Acting Assistant Attorney General John DiCicco of the Department of Justice Tax Division; Special Agent in Charge C. André Martin of the Internal Revenue Service’s Criminal Investigation Division; Special Agent in Charge Nicholas DiGiulio of the Department of Health and Human Services - Office of Inspector General; Special Agent in Charge Richard A. McFeely of the Federal Bureau of Investigation; and Special Agent in Charge Jill Maroney of the Office of Personnel Management - Office of Inspector General.
United States Attorney Rod J. Rosenstein said, “Dr. Pradeep Srivastava’s prosecution should serve as an example for anyone who considers cheating on their taxes.”
“No one is above the law,” said Assistant Attorney General John A. DiCicco. “Doctors and professionals, like workers from all walks of life, have to pay their fair share of income taxes. People who break these laws face serious felony charges, prison time and having to pay back all the taxes owed with interest and penalties.”
“Tax evasion is not a victimless crime; we all pay when others swindle the government,” stated C. André Martin, Internal Revenue Service-Criminal Investigation Special Agent in Charge.“This sentence should send a clear message; schemes to evade taxes are a violation of the federal tax laws and the consequences of such schemes can and will result in jail time.”
According to evidence presented at the six day trial, Srivastava conducted a huge volume of trading in stocks and stock options. During the “bull market” of the late 1990s, the evidence showed that he earned more than $40 million in short-term capital gains, much of them from trading in stock options involving high-technology stocks such as America Online, Dell Computer, Yahoo, Qualcomm and Inktomi. In preparation for filing his tax returns for 1998 and 1999, Srivastava provided his accountant with information about those trades that generated capital losses, but omitted providing information relating to the vast majority of his short-term capital gains. Srivastava then filed tax returns which omitted those capital gains and, according to trial testimony, understated his tax due by $164,756 in 1998 and $16,179,567 in 1999.
The evidence proved that in 2000, the value of Srivastava’s portfolio collapsed and he incurred massive capital losses. Disclosure of the full extent of those losses, however, would have potentially alerted the Internal Revenue Service to his massive, undisclosed short-term capital gains for 1998 and 1999, therefore, trial testimony showed that Srivastava filed a false tax return which understated his capital losses for 2000.
In a related investigation, in August 2007, Srivastava agreed to pay the United States $476,000 to settle claims that he fraudulently billed Medicare and the Federal Health Employees Health Benefits Program (“FEHBP”) over a three and a half year period. According to the settlement agreement, the government contended that Srivastava committed multiple billing abuses from November 1, 1999 to May 31, 2003, including billing for services not rendered; “unbundling,” a practice where a provider bills for multiple component parts of a procedure as opposed to billing one comprehensive CPT code; and upcoding, or billing for a service at a higher level than that which was furnished. Assistant U.S. Attorney Thomas F. Corcoran, handled the case.
Mr. Rosenstein and Mr. DiCicco thanked Assistant U.S. Attorney Stuart A. Berman and Trial Attorney John E. Sullivan, of the Department of Justice Tax Division, who prosecuted the tax case.
January 29, 2010 - U.S. District Judge Roger W. Titus sentenced Pradeep Srivastava, age 50, of Potomac, Maryland, a cardiologist who maintained offices in Greenbelt and Oxon Hill, to 46 months in prison, followed by three years of supervised release, for evading more than $16 million dollars in income taxes for the 1998 and 1999 tax years, and filing a false tax return for 2000. Judge Titus also entered an order of restitution against Srivastava in the amount of $16,110,160. Srivastava was convicted by a federal jury on October 8, 2009.
The sentence was announced United States Attorney for the District of Maryland Rod J. Rosenstein; Acting Assistant Attorney General John DiCicco of the Department of Justice Tax Division; Special Agent in Charge C. André Martin of the Internal Revenue Service’s Criminal Investigation Division; Special Agent in Charge Nicholas DiGiulio of the Department of Health and Human Services - Office of Inspector General; Special Agent in Charge Richard A. McFeely of the Federal Bureau of Investigation; and Special Agent in Charge Jill Maroney of the Office of Personnel Management - Office of Inspector General.
United States Attorney Rod J. Rosenstein said, “Dr. Pradeep Srivastava’s prosecution should serve as an example for anyone who considers cheating on their taxes.”
“No one is above the law,” said Assistant Attorney General John A. DiCicco. “Doctors and professionals, like workers from all walks of life, have to pay their fair share of income taxes. People who break these laws face serious felony charges, prison time and having to pay back all the taxes owed with interest and penalties.”
“Tax evasion is not a victimless crime; we all pay when others swindle the government,” stated C. André Martin, Internal Revenue Service-Criminal Investigation Special Agent in Charge.“This sentence should send a clear message; schemes to evade taxes are a violation of the federal tax laws and the consequences of such schemes can and will result in jail time.”
According to evidence presented at the six day trial, Srivastava conducted a huge volume of trading in stocks and stock options. During the “bull market” of the late 1990s, the evidence showed that he earned more than $40 million in short-term capital gains, much of them from trading in stock options involving high-technology stocks such as America Online, Dell Computer, Yahoo, Qualcomm and Inktomi. In preparation for filing his tax returns for 1998 and 1999, Srivastava provided his accountant with information about those trades that generated capital losses, but omitted providing information relating to the vast majority of his short-term capital gains. Srivastava then filed tax returns which omitted those capital gains and, according to trial testimony, understated his tax due by $164,756 in 1998 and $16,179,567 in 1999.
The evidence proved that in 2000, the value of Srivastava’s portfolio collapsed and he incurred massive capital losses. Disclosure of the full extent of those losses, however, would have potentially alerted the Internal Revenue Service to his massive, undisclosed short-term capital gains for 1998 and 1999, therefore, trial testimony showed that Srivastava filed a false tax return which understated his capital losses for 2000.
In a related investigation, in August 2007, Srivastava agreed to pay the United States $476,000 to settle claims that he fraudulently billed Medicare and the Federal Health Employees Health Benefits Program (“FEHBP”) over a three and a half year period. According to the settlement agreement, the government contended that Srivastava committed multiple billing abuses from November 1, 1999 to May 31, 2003, including billing for services not rendered; “unbundling,” a practice where a provider bills for multiple component parts of a procedure as opposed to billing one comprehensive CPT code; and upcoding, or billing for a service at a higher level than that which was furnished. Assistant U.S. Attorney Thomas F. Corcoran, handled the case.
Mr. Rosenstein and Mr. DiCicco thanked Assistant U.S. Attorney Stuart A. Berman and Trial Attorney John E. Sullivan, of the Department of Justice Tax Division, who prosecuted the tax case.
Former Pinal County Sheriff’s Deputy Sentenced to Prison for Possession of Child Pornography
January 29, 2010 - Roy Brown, 62, of Tucson, was sentenced today to 31 months' imprisonment for possession of child pornography, by U.S. District Court Judge Frank R. Zapata. Brown was previously employed as a deputy with the Pinal County Sheriff's Department.
In May of 2008, an FBI agent investigating the online trade of child pornography discovered that Brown was sharing images of child pornography via the Internet. A subsequent forensic examination of the defendant’s computer and a compact disk found at the defendant's home revealed that the defendant possessed 87 images of child pornography. On November 16, 2009, the defendant pleaded guilty to an indictment charging him with possession of child pornography.
Upon release from prison, Brown will be placed on lifetime supervised release. He will be required to register as a sex offender and to complete a sex offender treatment program.
The investigation leading to the conviction was conducted by the Federal Bureau of Investigation. The prosecution was handled by Angela Woolridge, Assistant U.S. Attorney, District of Arizona, Tucson.
In May of 2008, an FBI agent investigating the online trade of child pornography discovered that Brown was sharing images of child pornography via the Internet. A subsequent forensic examination of the defendant’s computer and a compact disk found at the defendant's home revealed that the defendant possessed 87 images of child pornography. On November 16, 2009, the defendant pleaded guilty to an indictment charging him with possession of child pornography.
Upon release from prison, Brown will be placed on lifetime supervised release. He will be required to register as a sex offender and to complete a sex offender treatment program.
The investigation leading to the conviction was conducted by the Federal Bureau of Investigation. The prosecution was handled by Angela Woolridge, Assistant U.S. Attorney, District of Arizona, Tucson.
Philadelphia Man Sentenced for His Involvement in Identity Theft Ring
January 28, 2010 - Richard S. Hartunian, United States Attorney for the Northern District of New York, John F. Pikus, Special Agent in Charge of the Federal Bureau of Investigation (FBI) Albany Division and Steven Heider, Chief of the Town of Colonie Police Department, announced today that JOHN W. WINDLE, 44, of Philadelphia, PA was sentenced by U.S. District Judge Gary L. Sharpe to 70 months of imprisonment for his involvement in an identity theft ring.
On September 6, 2007, WINDLE pled guilty to four felony offenses: one count of identification document fraud, one count of wire fraud, and two counts of aggravated identity theft, in violation of 18 U.S.C. Title 18, United States Code, Sections 1028(a)(5), 1343, and 1028A, respectively. WINDLE was sentenced to 46 months for the identification document fraud and wire fraud and 24 months for the aggravated identity theft counts, three years of supervised release, forfeiture, and full restitution to the victims of his crimes.
According to court documents, WINDLE admitted that he was a team leader in a so-called "flip, bite, and write" identity theft scheme in which ring members targeted elderly women shopping in grocery stores. Teams led by WINDLE traveled to locations where retail stores, usually one that sold groceries, were located in close proximity to stores where electronics could be purchased, such as Best Buy, Circuit City, or Sears. Typically, a member of WINDLE's team distracted the elderly female victim in the store ("the flip"), while WINDLE stole the woman's credit cards ("the bite"). WINDLE then went to his vehicle nearby and, using a laptop and ID printer, made a false identification document (ID) in the victim's name with a picture of one of the ring members traveling with him. The false identification documents WINDLE created included state driver's licenses and United States Armed Forces identification cards. Using the stolen credit cards and fake ID, WINDLE and his team members then purchased expensive electronics, miscellaneous merchandise, and gift cards, signing the victim's name to the credit card receipts ("the write"). WINDLE sold some of the electronics to KHURRAM FARID, who in turn sold them on the internet, while other proceeds were divided among the team members.
WINDLE admitted that he and ring member ANN M. GRICE carried out the identity theft scheme in the capital district region in July 2004, victimizing elderly women and businesses in Latham, Brunswick, Clifton Park, and Wilton, New York. WINDLE and GRICE were arrested by the New York State Police in Wappingers Falls, N.Y., after leaving this area and victimizing another elderly woman in a supermarket in Poughkeepsie, N.Y. WINDLE and GRICE were indicted by a federal grand jury in this District on February 16, 2007.* GRICE remains at large.
On October 12, 2006, NELSON SLAUGHTER, another team leader in the identity theft ring, pled guilty before Judge Sharpe to felony offenses related to his participation in the "flip, bite, and write" scheme and was sentenced to 73 months imprisonment on May 7, 2008. WINDLE and SLAUGHTER operated the scheme, which they developed with others, starting in at least 2001, and committed acts throughout the United States, including New York, California, Massachusetts, Connecticut, Pennsylvania, Ohio, Indiana, Virginia, and North Carolina. Additionally, on August 20, 2009, KHURRAM FARID was indicted by a federal grand jury in the Eastern District of Pennsylvania on charges of conspiracy and transportation of stolen property for receiving and reselling on the internet the stolen goods procured by WINDLE and SLAUGHTER.
The criminal investigation was conducted by the FBI, the Town of Colonie Police Department, the Social Security Administration Office of Inspector General, the Defense Criminal Investigative Service, and the New York State Police, and was prosecuted by Trial Attorney Nicola J. Mrazek of the Fraud Section of the Criminal Division of the U.S. Department of Justice and Assistant United States Attorney Tina Sciocchetti of the United States Attorney's Office for the Northern District of New York.
On September 6, 2007, WINDLE pled guilty to four felony offenses: one count of identification document fraud, one count of wire fraud, and two counts of aggravated identity theft, in violation of 18 U.S.C. Title 18, United States Code, Sections 1028(a)(5), 1343, and 1028A, respectively. WINDLE was sentenced to 46 months for the identification document fraud and wire fraud and 24 months for the aggravated identity theft counts, three years of supervised release, forfeiture, and full restitution to the victims of his crimes.
According to court documents, WINDLE admitted that he was a team leader in a so-called "flip, bite, and write" identity theft scheme in which ring members targeted elderly women shopping in grocery stores. Teams led by WINDLE traveled to locations where retail stores, usually one that sold groceries, were located in close proximity to stores where electronics could be purchased, such as Best Buy, Circuit City, or Sears. Typically, a member of WINDLE's team distracted the elderly female victim in the store ("the flip"), while WINDLE stole the woman's credit cards ("the bite"). WINDLE then went to his vehicle nearby and, using a laptop and ID printer, made a false identification document (ID) in the victim's name with a picture of one of the ring members traveling with him. The false identification documents WINDLE created included state driver's licenses and United States Armed Forces identification cards. Using the stolen credit cards and fake ID, WINDLE and his team members then purchased expensive electronics, miscellaneous merchandise, and gift cards, signing the victim's name to the credit card receipts ("the write"). WINDLE sold some of the electronics to KHURRAM FARID, who in turn sold them on the internet, while other proceeds were divided among the team members.
WINDLE admitted that he and ring member ANN M. GRICE carried out the identity theft scheme in the capital district region in July 2004, victimizing elderly women and businesses in Latham, Brunswick, Clifton Park, and Wilton, New York. WINDLE and GRICE were arrested by the New York State Police in Wappingers Falls, N.Y., after leaving this area and victimizing another elderly woman in a supermarket in Poughkeepsie, N.Y. WINDLE and GRICE were indicted by a federal grand jury in this District on February 16, 2007.* GRICE remains at large.
On October 12, 2006, NELSON SLAUGHTER, another team leader in the identity theft ring, pled guilty before Judge Sharpe to felony offenses related to his participation in the "flip, bite, and write" scheme and was sentenced to 73 months imprisonment on May 7, 2008. WINDLE and SLAUGHTER operated the scheme, which they developed with others, starting in at least 2001, and committed acts throughout the United States, including New York, California, Massachusetts, Connecticut, Pennsylvania, Ohio, Indiana, Virginia, and North Carolina. Additionally, on August 20, 2009, KHURRAM FARID was indicted by a federal grand jury in the Eastern District of Pennsylvania on charges of conspiracy and transportation of stolen property for receiving and reselling on the internet the stolen goods procured by WINDLE and SLAUGHTER.
The criminal investigation was conducted by the FBI, the Town of Colonie Police Department, the Social Security Administration Office of Inspector General, the Defense Criminal Investigative Service, and the New York State Police, and was prosecuted by Trial Attorney Nicola J. Mrazek of the Fraud Section of the Criminal Division of the U.S. Department of Justice and Assistant United States Attorney Tina Sciocchetti of the United States Attorney's Office for the Northern District of New York.
Wayne Resident Sentenced After Pleading Guilty to Tax Evasion
January 28, 2010 - Howard J. Cain, 61, of Wayne, PA, was sentenced today to 10 months in prison in connection with his guilty plea and conviction of one count of tax evasion in June 2008. As part of his guilty plea agreement, Cain admitted that, for the years 1991 through 2006, he filed no individual federal income tax returns, failed to report more than $1.6 million in personal income to the IRS, and paid none of the more than $400,000 in federal income taxes that he owed to the Internal Revenue Service.
Cain was a political campaign strategist and media consultant whose single largest source of income, during the years charged, came from contracts to provide services to the Pennsylvania Senate Democratic Appropriations Committee (“SDAC”), chaired by then-State Senator Vincent J. Fumo. As part of his plea agreement, Cain admitted that he engaged in a conspiracy with Fumo and others to defraud the Senate of Pennsylvania by submitting false invoices under the contract with the SDAC, resulting in fraud losses of more than $200,000. That uncharged criminal conduct was a consideration in determining the appropriate sentencing guidelines range of imprisonment and fine in this case.
In addition to the prison term, U.S. District Court Judge Michael M. Baylson ordered Cain to serve 3 years of supervised release, pay restitution to the Internal Revenue Service in the amount of $1,021, 499, and pay a special assessment of $100.
The case was investigated by the Federal Bureau of Investigation and Internal Revenue Service Criminal Investigation and is being prosecuted by Assistant United States Attorneys John J. Pease and Robert A. Zauzmer.
Cain was a political campaign strategist and media consultant whose single largest source of income, during the years charged, came from contracts to provide services to the Pennsylvania Senate Democratic Appropriations Committee (“SDAC”), chaired by then-State Senator Vincent J. Fumo. As part of his plea agreement, Cain admitted that he engaged in a conspiracy with Fumo and others to defraud the Senate of Pennsylvania by submitting false invoices under the contract with the SDAC, resulting in fraud losses of more than $200,000. That uncharged criminal conduct was a consideration in determining the appropriate sentencing guidelines range of imprisonment and fine in this case.
In addition to the prison term, U.S. District Court Judge Michael M. Baylson ordered Cain to serve 3 years of supervised release, pay restitution to the Internal Revenue Service in the amount of $1,021, 499, and pay a special assessment of $100.
The case was investigated by the Federal Bureau of Investigation and Internal Revenue Service Criminal Investigation and is being prosecuted by Assistant United States Attorneys John J. Pease and Robert A. Zauzmer.
Acting Boss of Genovese Crime Family Pleads Guilty in Manhattan Federal Court to Racketeering Offenses
January 28, 2010 - PREET BHARARA, the United States Attorney for the Southern District of New York, announced that an Acting Boss of the Genovese Organized Crime Family, DANIEL LEO, a/k/a "The Lion," and his nephew and primary lieutenant, JOSEPH LEO, pleaded guilty to racketeering charges today in Manhattan federal court.
According to the Indictment filed in Manhattan federal court:
Beginning in about 2005, DANIEL LEO became the Acting Boss of the Genovese Organized Crime Family, from his previous post as a member of the Family’s ruling panel. During the time DANIEL LEO served as Acting Boss, he continued to supervise a "crew" of Genovese Organized Crime Family members and associates, including JOSEPH LEO and others, who committed loansharking, extortion, and illegal gambling offenses under DANIEL LEO's direction.
Both defendants pleaded guilty today to Counts One and Two of the Indictment, which charged them with participating in, and conspiring to participate in, the affairs of the Genovese Organized Crime Family through a pattern of racketeering activity. Specifically, both defendants admitted during today's plea proceeding that they participated in the affairs of the Genovese Organized Crime Family by engaging in loansharking, and that they conspired to operate an illegal gambling business.
These two defendants entered their guilty pleas before United States Magistrate Judge RONALD L. ELLIS. They are scheduled to be sentenced by United States District Judge RICHARD J. HOLWELL on April 2, 2010. Each defendant faces a maximum sentence of 40 years in prison and a maximum fine of $250,000 or twice the gross gain or loss from the offense.
DANIEL LEO and JOSEPH LEO are currently serving prison sentences of 60 months and 46 months, respectively, based on their prior convictions in Manhattan federal court on extortion charges in October 2007.
Three other defendants charged in the Indictment have pleaded guilty: FELICE MASULLO, ANTHONY MASULLO, and ANGELO MASULLO. Each of them pleaded guilty on November 6, 2009, before Magistrate Judge THEODORE H. KATZ, to a superseding information captioned United States v. Felice Masullo et al., S2 08 Cr. 874 (RJH) (the "Information"). As alleged in the Information, FELICE MASULLO was an associate of the Genovese Organized Crime Family who had been proposed to be made a Soldier. FELICE MASULLO was charged with participating in, and conspiring to participate in, the affairs of the Genovese Organized Crime Family through a pattern of racketeering activity. In connection with his plea, FELICE MASULLO admitted that he participated in the affairs of the Genovese Organized Crime Family through his participation in a conspiracy to distribute cocaine, a conspiracy to extort a victim (identified as Victim-8 in the Information), and a conspiracy to operate an illegal gambling business. In addition, two of FELICE MASULLO's brothers—ANTHONY MASULLO and ANGELO MASULLO—also pleaded guilty to participating in a conspiracy to extort Victim-8.
FELICE MASULLO, ANTHONY MASULLO, and ANGELO MASULLO are scheduled to be sentenced by Judge HOLWELL on February 19, 2010. FELICE MASULLO faces a maximum sentence of 40 years in prison and a maximum fine of $250,000 or twice the gross gain or loss from the offense. ANTHONY MASULLO and ANGELO MASULLO face maximum sentences of 20 years in prison and a maximum fine of $250,000 or twice the gross gain or loss from the offense.
Mr. BHARARA praised the efforts of the Federal Bureau of Investigation and the New York City Police Department in this investigation.
Assistant United States Attorneys DAVID B. MASSEY, AVI WEITZMAN, BRIAN JACOBS, and SHARON FRASE are in charge of the prosecutions.
According to the Indictment filed in Manhattan federal court:
Beginning in about 2005, DANIEL LEO became the Acting Boss of the Genovese Organized Crime Family, from his previous post as a member of the Family’s ruling panel. During the time DANIEL LEO served as Acting Boss, he continued to supervise a "crew" of Genovese Organized Crime Family members and associates, including JOSEPH LEO and others, who committed loansharking, extortion, and illegal gambling offenses under DANIEL LEO's direction.
Both defendants pleaded guilty today to Counts One and Two of the Indictment, which charged them with participating in, and conspiring to participate in, the affairs of the Genovese Organized Crime Family through a pattern of racketeering activity. Specifically, both defendants admitted during today's plea proceeding that they participated in the affairs of the Genovese Organized Crime Family by engaging in loansharking, and that they conspired to operate an illegal gambling business.
These two defendants entered their guilty pleas before United States Magistrate Judge RONALD L. ELLIS. They are scheduled to be sentenced by United States District Judge RICHARD J. HOLWELL on April 2, 2010. Each defendant faces a maximum sentence of 40 years in prison and a maximum fine of $250,000 or twice the gross gain or loss from the offense.
DANIEL LEO and JOSEPH LEO are currently serving prison sentences of 60 months and 46 months, respectively, based on their prior convictions in Manhattan federal court on extortion charges in October 2007.
Three other defendants charged in the Indictment have pleaded guilty: FELICE MASULLO, ANTHONY MASULLO, and ANGELO MASULLO. Each of them pleaded guilty on November 6, 2009, before Magistrate Judge THEODORE H. KATZ, to a superseding information captioned United States v. Felice Masullo et al., S2 08 Cr. 874 (RJH) (the "Information"). As alleged in the Information, FELICE MASULLO was an associate of the Genovese Organized Crime Family who had been proposed to be made a Soldier. FELICE MASULLO was charged with participating in, and conspiring to participate in, the affairs of the Genovese Organized Crime Family through a pattern of racketeering activity. In connection with his plea, FELICE MASULLO admitted that he participated in the affairs of the Genovese Organized Crime Family through his participation in a conspiracy to distribute cocaine, a conspiracy to extort a victim (identified as Victim-8 in the Information), and a conspiracy to operate an illegal gambling business. In addition, two of FELICE MASULLO's brothers—ANTHONY MASULLO and ANGELO MASULLO—also pleaded guilty to participating in a conspiracy to extort Victim-8.
FELICE MASULLO, ANTHONY MASULLO, and ANGELO MASULLO are scheduled to be sentenced by Judge HOLWELL on February 19, 2010. FELICE MASULLO faces a maximum sentence of 40 years in prison and a maximum fine of $250,000 or twice the gross gain or loss from the offense. ANTHONY MASULLO and ANGELO MASULLO face maximum sentences of 20 years in prison and a maximum fine of $250,000 or twice the gross gain or loss from the offense.
Mr. BHARARA praised the efforts of the Federal Bureau of Investigation and the New York City Police Department in this investigation.
Assistant United States Attorneys DAVID B. MASSEY, AVI WEITZMAN, BRIAN JACOBS, and SHARON FRASE are in charge of the prosecutions.
Chicago Murder Suspect Arrested in New York
January 28, 2010 - Robert D. Grant, Special Agent-in-Charge of the Chicago office of the Federal Bureau of Investigation (FBI) was joined today by Joseph M. Demarest, Assistant Director-in-Charge of the FBI’s New York office, in announcing the arrest of a fugitive wanted for the December 2008 stabbing death of a Chicago man.
DAVID D. BELL, age 20, whose last known address was 5814 South Indiana in Chicago, was arrested late Tuesday evening, without incident, by FBI Special Agents and Detectives from the New York City Police Department. Bell was tracked to a public laundry located at 630 Eagle Avenue in the Bronx, where he was found doing his laundry. BELL has been the subject of a nationwide manhunt, coordinated by the Chicago FBI’s Violent Crimes Task Force (VCTF), since March of last year after being charged in a criminal complaint filed in U.S. District Court in Chicago with unlawful Flight to Avoid Prosecution (UFAP), which is a felony offense.
According to the complaint, in January of 2009 BELL was charged in Cook County Circuit Court with First Degree Murder for the stabbing death of Isiah Stroud, following an altercation between the two men in the 1500 block of West Jarvis in Chicago. After being charged with this crime, attempts by the Chicago Police Department to locate and apprehend BELL were unsuccessful. It was later learned that BELL had fled the state and the federal warrant charging him with Unlawful Flight was issued.
Subsequent investigation by the Chicago VCTF tracked BELL to New York City, were he was eventually arrested.
BELL is being held without bond in New York City at Manhattan Central Booking, pending his extradition to Illinois.
This case was investigated locally by the Chicago FBI’s Violent Crimes Task Force (VCTF) which is comprised of FBI Special Agents, Detectives from the Chicago Police Department and Investigators from the Cook County Sheriff’s Police. Detectives from the CPD, Area 3, also assisted in locating BELL.
The public is reminded that a complaint is not evidence of guilt and that all defendants in a criminal case are presumed innocent until proven guilty in a court of law.
EDITOR’S NOTE: Copies of the criminal complaint filed in this case are available from the Chicago FBI’s press office at (312) 829-1199.
DAVID D. BELL, age 20, whose last known address was 5814 South Indiana in Chicago, was arrested late Tuesday evening, without incident, by FBI Special Agents and Detectives from the New York City Police Department. Bell was tracked to a public laundry located at 630 Eagle Avenue in the Bronx, where he was found doing his laundry. BELL has been the subject of a nationwide manhunt, coordinated by the Chicago FBI’s Violent Crimes Task Force (VCTF), since March of last year after being charged in a criminal complaint filed in U.S. District Court in Chicago with unlawful Flight to Avoid Prosecution (UFAP), which is a felony offense.
According to the complaint, in January of 2009 BELL was charged in Cook County Circuit Court with First Degree Murder for the stabbing death of Isiah Stroud, following an altercation between the two men in the 1500 block of West Jarvis in Chicago. After being charged with this crime, attempts by the Chicago Police Department to locate and apprehend BELL were unsuccessful. It was later learned that BELL had fled the state and the federal warrant charging him with Unlawful Flight was issued.
Subsequent investigation by the Chicago VCTF tracked BELL to New York City, were he was eventually arrested.
BELL is being held without bond in New York City at Manhattan Central Booking, pending his extradition to Illinois.
This case was investigated locally by the Chicago FBI’s Violent Crimes Task Force (VCTF) which is comprised of FBI Special Agents, Detectives from the Chicago Police Department and Investigators from the Cook County Sheriff’s Police. Detectives from the CPD, Area 3, also assisted in locating BELL.
The public is reminded that a complaint is not evidence of guilt and that all defendants in a criminal case are presumed innocent until proven guilty in a court of law.
EDITOR’S NOTE: Copies of the criminal complaint filed in this case are available from the Chicago FBI’s press office at (312) 829-1199.
Attorney General Eric Holder Speaks at the National Summit on Health Care Fraud
Thursday, January 28, 2010 - Good morning. I’m pleased to join Secretary Sebelius in welcoming you, and I thank you all for participating in today’s important discussion.
Let me also thank the National Institutes of Health for hosting us. It’s fitting that we’ve gathered at NIH, where some of our nation’s most innovative and collaborative thinking about health care is done. As we turn our attention to the problem of health care fraud – one of our most urgent, destructive, and widespread national challenges – we have an opportunity to build on the record of achievement that’s been established here.
Today’s summit marks a critical step forward in the work being done by HEAT, our Health Care Fraud Prevention and Enforcement Action Team. In establishing this task force last May, the Departments of Justice and Health and Human Services were inspired by common cause – and by common sense. We realized that we have a serious problem on our hands, and we decided it was time to redouble our efforts. We also recognized that the best way to strengthen our individual work is to combine forces and collaborate.
HEAT represents our shared commitment to combating health care fraud and, specifically, to protecting taxpayer dollars and our Medicare and Medicaid programs. But it’s more than just a partnership between our agencies. It’s evidence of this Administration’s commitment to fiscal responsibility and accountability. And, over the last eight months, it’s become proof that – with more effective communication and more efficient cooperation – we can make measurable, meaningful progress in the fight against health care fraud.
But we cannot do it alone. We need help from state and local leaders, and engagement from across the insurance industry and health care-provider community. There’s no question that our ability to protect taxpayer dollars, to ensure the viability of our government health care programs, and to strengthen our national health care system depends on our ability to expand the discussion beyond the federal government.
That’s what this summit is all about. Your presence here today is proof of a shared commitment aimed at identifying, punishing and preventing health care fraud. Secretary Sebelius and I are so grateful for your help in this joint effort. And we expect your insights and recommendations to help guide and enhance HEAT’s critical work.
So far, HEAT has fostered new opportunities for collaboration. It’s enhanced our ability to bring abuse to light and criminals to justice. And it’s enabled the recovery of stolen funds and the return of millions of dollars to the U.S. Treasury. Together, we must continue to build on these achievements.
As many of you know, last year brought record levels of achievement in our fight against health care fraud. In 2009, the Justice Department reached an all-time high in the number of health care fraud defendants charged, more than 800. We also obtained more than 580 convictions. And on the civil enforcement front, our health care fraud recoveries last year under the False Claims Act exceeded a stunning $2.2 billion dollars.
Many of these successes can be attributed to our Medicare Fraud Strike Forces, which are at the core of HEAT’s law enforcement mission. These strike forces supplement the enforcement activities of United States Attorneys’ Offices in select cities where unexplained, aberrant billing rates indicate that health care fraud may be especially high. By fostering increased cooperation and collaboration across our agencies, HEAT has enabled our strike forces to act with greater speed and efficiency to root out criminals who purport to operate as legitimate health care providers and suppliers.
Since HEAT was launched, our Medicare Fraud Strike Forces have been strengthened. In the last eight months, we’ve filed more than 60 cases. We’ve charged 200 offenders and secured more than 50 guilty pleas. And we’ve uncovered more than a quarter of a billion dollars in fraudulent billings.
I’m proud of this great work performed by our prosecutors, agents, analysts and investigators -- and by our partners at HHS. And I’m confident that we’re on the right path. That said, we cannot yet be satisfied. We cannot become complacent. And we cannot ignore the unfortunate fact that health care fraud remains a significant problem.
The scope of the problem is simply shocking. One estimate suggests that more than $60 billion in public and private health care spending is lost each year to health care fraud. That is a staggering amount of money. It’s half the entire economy of Secretary Sebelius’s home state of Kansas. It’s more than the net worth of America’s eight largest private foundations. And it’s 33 times the amount of money that Avatar – now the highest-earning movie of all time – has made at the box office.
It doesn’t matter whether you’re covered by Medicare or Medicaid, or by one of the many insurance companies that are victimized by fraud each year. Losses on this scale affect all of us. Fraud isn’t just a drain on the Medicare or Medicaid programs; it drives up the price that all Americans must pay for health care.
The enormity of the health care fraud problem is equaled only by the audacity of some of the fraud schemes that we are confronting. To take a recent example, last week, the Department of Justice settled False Claims Act allegations against a dental management company that was operating nearly 70 clinics across the country. These "Small Smiles Centers" served young children in predominately low-income areas. But instead of treating kids, this company was exploiting them to siphon millions of dollars from Medicaid. Many of these centers performed unnecessary and often painful dental procedures on unsuspecting, helpless children. In some cases, parents were told that healthy teeth needed to be removed. For putting profits above patient safety, this company will pay a $24 million fine, plus interest. And we are continuing to investigate the individual dentists who participated in this scheme.
In another recent case, the Justice Department secured a $10 million consent judgment against two former hospital executives in Los Angeles who scammed our Medicare system by preying upon homeless people. Through kickbacks and coercion, these fraudsters were turning homeless people into hospital patients. Until we caught up with them and shut them down, they were charging Medicare for treatments these patients didn’t receive, didn’t request or didn’t need.
These cases, and countless other successful civil and criminal enforcement actions just like them, are proof that our collaborative efforts are working. We are striking a blow against fraud schemes across the country and, in so doing, are sending a clear message that health care fraud will not be tolerated.
So where do we go from here?
First, we must strengthen HEAT. We will continue to combine and leverage our agencies’ resources and expertise, including the FBI and the Office of Inspector General at HHS, to prevent and prosecute fraud. HEAT will continue to work closely with local U.S. Attorneys Offices to pursue both civil and criminal cases. And in bringing these fraudsters to justice, we will use the power of the Internet and the media to inform the public and the health care industry about how to prevent future fraud schemes.
Second, we’ll continue to support our Medicare Fraud Strike Forces and work to expand these teams to areas of the country where our efforts are most needed. These teams have changed the enforcement landscape. They’ve also demonstrated that, in the area of health care fraud, we must continue to think outside the box and pursue innovative investigative and prosecutorial strategies.
Third, we will continue to push for the investments necessary to meet our duties and do our jobs. I’m pleased that Congress and the Administration have provided strong support. In FY2010, the Administration’s fraud-fighting budget will increase from nearly $200 million to more than $300 million. This may seem like a lot of money – and it is. But I assure you that it’s a sound and prudent investment. For every dollar we spend combating health care fraud, we’re able to return four dollars to the U.S. Treasury and the American taxpayers.
Fourth, our agencies will continue to work with Congress to identify and pursue the legislative and regulatory reforms necessary to prevent, deter and prosecute health care fraud. These reforms range from removing barriers that impede information-sharing to increasing sanctions and penalties.
Finally, t he department will continue to engage the private sector in our anti-fraud efforts. We’ll seek out guidance from representatives of the insurance industry and in the health care-provider community, many of whom are here with us today. We know that the vast majority of those who work in the health care industry are honest people who want to help patients and follow the law. But we also know that a few bad actors have created an industry-wide problem. You all have a critical role to play in helping us to encourage good behavior, bring waste and abuse to light, and hold criminals accountable.
So long as health care fraud pays and these crimes go unpunished, our health care system will remain under siege. These crimes harm all of us – government agencies and programs, industries and individuals. But, through HEAT and with your support, we are fighting back. We welcome and need your help in this shared enterprise.
Your presence here today gives me great hope about our prospects for progress. I’m optimistic about what we can accomplish together, and I look forward to working with you all.
Let me also thank the National Institutes of Health for hosting us. It’s fitting that we’ve gathered at NIH, where some of our nation’s most innovative and collaborative thinking about health care is done. As we turn our attention to the problem of health care fraud – one of our most urgent, destructive, and widespread national challenges – we have an opportunity to build on the record of achievement that’s been established here.
Today’s summit marks a critical step forward in the work being done by HEAT, our Health Care Fraud Prevention and Enforcement Action Team. In establishing this task force last May, the Departments of Justice and Health and Human Services were inspired by common cause – and by common sense. We realized that we have a serious problem on our hands, and we decided it was time to redouble our efforts. We also recognized that the best way to strengthen our individual work is to combine forces and collaborate.
HEAT represents our shared commitment to combating health care fraud and, specifically, to protecting taxpayer dollars and our Medicare and Medicaid programs. But it’s more than just a partnership between our agencies. It’s evidence of this Administration’s commitment to fiscal responsibility and accountability. And, over the last eight months, it’s become proof that – with more effective communication and more efficient cooperation – we can make measurable, meaningful progress in the fight against health care fraud.
But we cannot do it alone. We need help from state and local leaders, and engagement from across the insurance industry and health care-provider community. There’s no question that our ability to protect taxpayer dollars, to ensure the viability of our government health care programs, and to strengthen our national health care system depends on our ability to expand the discussion beyond the federal government.
That’s what this summit is all about. Your presence here today is proof of a shared commitment aimed at identifying, punishing and preventing health care fraud. Secretary Sebelius and I are so grateful for your help in this joint effort. And we expect your insights and recommendations to help guide and enhance HEAT’s critical work.
So far, HEAT has fostered new opportunities for collaboration. It’s enhanced our ability to bring abuse to light and criminals to justice. And it’s enabled the recovery of stolen funds and the return of millions of dollars to the U.S. Treasury. Together, we must continue to build on these achievements.
As many of you know, last year brought record levels of achievement in our fight against health care fraud. In 2009, the Justice Department reached an all-time high in the number of health care fraud defendants charged, more than 800. We also obtained more than 580 convictions. And on the civil enforcement front, our health care fraud recoveries last year under the False Claims Act exceeded a stunning $2.2 billion dollars.
Many of these successes can be attributed to our Medicare Fraud Strike Forces, which are at the core of HEAT’s law enforcement mission. These strike forces supplement the enforcement activities of United States Attorneys’ Offices in select cities where unexplained, aberrant billing rates indicate that health care fraud may be especially high. By fostering increased cooperation and collaboration across our agencies, HEAT has enabled our strike forces to act with greater speed and efficiency to root out criminals who purport to operate as legitimate health care providers and suppliers.
Since HEAT was launched, our Medicare Fraud Strike Forces have been strengthened. In the last eight months, we’ve filed more than 60 cases. We’ve charged 200 offenders and secured more than 50 guilty pleas. And we’ve uncovered more than a quarter of a billion dollars in fraudulent billings.
I’m proud of this great work performed by our prosecutors, agents, analysts and investigators -- and by our partners at HHS. And I’m confident that we’re on the right path. That said, we cannot yet be satisfied. We cannot become complacent. And we cannot ignore the unfortunate fact that health care fraud remains a significant problem.
The scope of the problem is simply shocking. One estimate suggests that more than $60 billion in public and private health care spending is lost each year to health care fraud. That is a staggering amount of money. It’s half the entire economy of Secretary Sebelius’s home state of Kansas. It’s more than the net worth of America’s eight largest private foundations. And it’s 33 times the amount of money that Avatar – now the highest-earning movie of all time – has made at the box office.
It doesn’t matter whether you’re covered by Medicare or Medicaid, or by one of the many insurance companies that are victimized by fraud each year. Losses on this scale affect all of us. Fraud isn’t just a drain on the Medicare or Medicaid programs; it drives up the price that all Americans must pay for health care.
The enormity of the health care fraud problem is equaled only by the audacity of some of the fraud schemes that we are confronting. To take a recent example, last week, the Department of Justice settled False Claims Act allegations against a dental management company that was operating nearly 70 clinics across the country. These "Small Smiles Centers" served young children in predominately low-income areas. But instead of treating kids, this company was exploiting them to siphon millions of dollars from Medicaid. Many of these centers performed unnecessary and often painful dental procedures on unsuspecting, helpless children. In some cases, parents were told that healthy teeth needed to be removed. For putting profits above patient safety, this company will pay a $24 million fine, plus interest. And we are continuing to investigate the individual dentists who participated in this scheme.
In another recent case, the Justice Department secured a $10 million consent judgment against two former hospital executives in Los Angeles who scammed our Medicare system by preying upon homeless people. Through kickbacks and coercion, these fraudsters were turning homeless people into hospital patients. Until we caught up with them and shut them down, they were charging Medicare for treatments these patients didn’t receive, didn’t request or didn’t need.
These cases, and countless other successful civil and criminal enforcement actions just like them, are proof that our collaborative efforts are working. We are striking a blow against fraud schemes across the country and, in so doing, are sending a clear message that health care fraud will not be tolerated.
So where do we go from here?
First, we must strengthen HEAT. We will continue to combine and leverage our agencies’ resources and expertise, including the FBI and the Office of Inspector General at HHS, to prevent and prosecute fraud. HEAT will continue to work closely with local U.S. Attorneys Offices to pursue both civil and criminal cases. And in bringing these fraudsters to justice, we will use the power of the Internet and the media to inform the public and the health care industry about how to prevent future fraud schemes.
Second, we’ll continue to support our Medicare Fraud Strike Forces and work to expand these teams to areas of the country where our efforts are most needed. These teams have changed the enforcement landscape. They’ve also demonstrated that, in the area of health care fraud, we must continue to think outside the box and pursue innovative investigative and prosecutorial strategies.
Third, we will continue to push for the investments necessary to meet our duties and do our jobs. I’m pleased that Congress and the Administration have provided strong support. In FY2010, the Administration’s fraud-fighting budget will increase from nearly $200 million to more than $300 million. This may seem like a lot of money – and it is. But I assure you that it’s a sound and prudent investment. For every dollar we spend combating health care fraud, we’re able to return four dollars to the U.S. Treasury and the American taxpayers.
Fourth, our agencies will continue to work with Congress to identify and pursue the legislative and regulatory reforms necessary to prevent, deter and prosecute health care fraud. These reforms range from removing barriers that impede information-sharing to increasing sanctions and penalties.
Finally, t he department will continue to engage the private sector in our anti-fraud efforts. We’ll seek out guidance from representatives of the insurance industry and in the health care-provider community, many of whom are here with us today. We know that the vast majority of those who work in the health care industry are honest people who want to help patients and follow the law. But we also know that a few bad actors have created an industry-wide problem. You all have a critical role to play in helping us to encourage good behavior, bring waste and abuse to light, and hold criminals accountable.
So long as health care fraud pays and these crimes go unpunished, our health care system will remain under siege. These crimes harm all of us – government agencies and programs, industries and individuals. But, through HEAT and with your support, we are fighting back. We welcome and need your help in this shared enterprise.
Your presence here today gives me great hope about our prospects for progress. I’m optimistic about what we can accomplish together, and I look forward to working with you all.
Houston-Area Patient Recruiter Convicted of Health Care Fraud
January 28, 2010 - Sylvia Smith, 64, a retired nurse, was convicted today of conspiracy to commit health care fraud and health care fraud, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney Tim Johnson of the Southern District of Texas; and Special Agent-in-Charge Mike Fields of the Dallas Regional Office of the Department of Health and Human Services, Office of the Inspector General (HHS-OIG).
At trial, Noel Jhagroo, owner of Trucare Medical Equipment Services (Trucare), a Houston-area durable medical equipment company, testified that he entered into a kickback arrangement with Smith, whereby he agreed to pay her 10 percent of what Medicare paid Trucare for each patient Smith referred. Jhagroo and Smith submitted claims to Medicare for enteral nutrition supplies and for bundles of orthotics, referred to as “artho kits.” Jhagroo also testified that he paid Smith a kickback of $300 per patient in this scheme. In total, Jhagroo and Smith submitted $747,258 in phony claims to Medicare.
In order to bill Medicare for enteral nutrition supplies, Medicare regulations require that a beneficiary have a feeding tube. The forms supplied by Smith indicated that the beneficiaries she referred had such a feeding tube. The evidence at trial, however, showed that none of the patients referred by Smith had a feeding tube. The evidence also showed that Smith provided Jhagroo with high-dollar Medicare codes for specialized enteral food supplements. In fact, Smith and Jhagroo supplied patients with over-the-counter supplements, one of which stated on the bottle that it was “not for tube feeding.”
The evidence at trial showed that Smith also provided Jhagroo with a product list of inexpensive, soft, over-the-counter supplements to be included in the artho kit. The evidence showed that Smith provided Jhagroo with Medicare codes to be used for billing purposes that were actually for expensive, rigid, high-end orthotics, in contrast to the inexpensive products that were actually delivered. After refusing the inexpensive artho kits initially, two Medicare beneficiaries testified that Smith offered them $100 if they would agree to accept the kits.
In addition to referring patients, the evidence at trial showed that Smith supplied Jhagroo with phony certificates of medical necessity signed by a Houston-area physician, so that Trucare could submit claims to Medicare. A Medicare beneficiary testified at trial that she had never heard of the physician who signed the form supplied by Smith to Trucare.
Smith’s sentencing is scheduled for May 12, 1010. Smith faces a maximum prison sentence of 10 years for the conspiracy count, as well as 10 years in prison for each of the six counts of health care fraud for which she was convicted. Smith also faces a maximum fine of $250,000 per count. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime. Jhagroo pleaded guilty on Nov. 2, 2009, to conspiracy to commit health care fraud for his role in the scheme.
The case was prosecuted by Assistant Chief John S. (Jay) Darden and Trial Attorneys Katherine Houston and Jennifer L. Saulino of the Criminal Division’s Fraud Section, and was investigated by the FBI, HHS-OIG and the Railroad Retirement Board.
The case was brought as part of the Medicare Fraud Strike Force, supervised by the U.S. Attorney’s Office for the Southern District of Texas and the Criminal Division’s Fraud Section. Since their inception in March 2007, Strike Force operations in seven districts have obtained indictments of more than 500 individuals who collectively have falsely billed the Medicare program for more than $1 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
At trial, Noel Jhagroo, owner of Trucare Medical Equipment Services (Trucare), a Houston-area durable medical equipment company, testified that he entered into a kickback arrangement with Smith, whereby he agreed to pay her 10 percent of what Medicare paid Trucare for each patient Smith referred. Jhagroo and Smith submitted claims to Medicare for enteral nutrition supplies and for bundles of orthotics, referred to as “artho kits.” Jhagroo also testified that he paid Smith a kickback of $300 per patient in this scheme. In total, Jhagroo and Smith submitted $747,258 in phony claims to Medicare.
In order to bill Medicare for enteral nutrition supplies, Medicare regulations require that a beneficiary have a feeding tube. The forms supplied by Smith indicated that the beneficiaries she referred had such a feeding tube. The evidence at trial, however, showed that none of the patients referred by Smith had a feeding tube. The evidence also showed that Smith provided Jhagroo with high-dollar Medicare codes for specialized enteral food supplements. In fact, Smith and Jhagroo supplied patients with over-the-counter supplements, one of which stated on the bottle that it was “not for tube feeding.”
The evidence at trial showed that Smith also provided Jhagroo with a product list of inexpensive, soft, over-the-counter supplements to be included in the artho kit. The evidence showed that Smith provided Jhagroo with Medicare codes to be used for billing purposes that were actually for expensive, rigid, high-end orthotics, in contrast to the inexpensive products that were actually delivered. After refusing the inexpensive artho kits initially, two Medicare beneficiaries testified that Smith offered them $100 if they would agree to accept the kits.
In addition to referring patients, the evidence at trial showed that Smith supplied Jhagroo with phony certificates of medical necessity signed by a Houston-area physician, so that Trucare could submit claims to Medicare. A Medicare beneficiary testified at trial that she had never heard of the physician who signed the form supplied by Smith to Trucare.
Smith’s sentencing is scheduled for May 12, 1010. Smith faces a maximum prison sentence of 10 years for the conspiracy count, as well as 10 years in prison for each of the six counts of health care fraud for which she was convicted. Smith also faces a maximum fine of $250,000 per count. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime. Jhagroo pleaded guilty on Nov. 2, 2009, to conspiracy to commit health care fraud for his role in the scheme.
The case was prosecuted by Assistant Chief John S. (Jay) Darden and Trial Attorneys Katherine Houston and Jennifer L. Saulino of the Criminal Division’s Fraud Section, and was investigated by the FBI, HHS-OIG and the Railroad Retirement Board.
The case was brought as part of the Medicare Fraud Strike Force, supervised by the U.S. Attorney’s Office for the Southern District of Texas and the Criminal Division’s Fraud Section. Since their inception in March 2007, Strike Force operations in seven districts have obtained indictments of more than 500 individuals who collectively have falsely billed the Medicare program for more than $1 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
Allen and Terence Crawley Indicted for Bank Robbery
Maryland and Virginia Residents Charged in South Pittsburg Bank Robbery
On January 26, 2010, a federal grand jury in Chattanooga, Tennessee, returned a two-count indictment charging Jonathan Allen, 24, of Reston, Virginia, and Terence Crawley, 27, of Clinton, Maryland, with bank robbery and brandishing a firearm in furtherance of a crime of violence in connection with the robbery of the Citizen’s Tri-County Bank in South Pittsburg, Tennessee on January 4, 2010.
If convicted, each defendant will face a term of imprisonment of up to 25 years on the robbery charge and an additional prison term of seven years or more on the firearms charge.
This indictment is the result of an investigation by the Federal Bureau of Investigation (FBI), Tennessee Highway Patrol, Virginia State Police, Marion County Sheriff’s Office, and South Pittsburg Police Department. Assistant U.S. Attorney Mel Andrew Schwing will represent the United States.
Members of the public are reminded that an indictment constitutes only charges and that every person is presumed innocent until his/her guilt has been proven beyond a reasonable doubt.
On January 26, 2010, a federal grand jury in Chattanooga, Tennessee, returned a two-count indictment charging Jonathan Allen, 24, of Reston, Virginia, and Terence Crawley, 27, of Clinton, Maryland, with bank robbery and brandishing a firearm in furtherance of a crime of violence in connection with the robbery of the Citizen’s Tri-County Bank in South Pittsburg, Tennessee on January 4, 2010.
If convicted, each defendant will face a term of imprisonment of up to 25 years on the robbery charge and an additional prison term of seven years or more on the firearms charge.
This indictment is the result of an investigation by the Federal Bureau of Investigation (FBI), Tennessee Highway Patrol, Virginia State Police, Marion County Sheriff’s Office, and South Pittsburg Police Department. Assistant U.S. Attorney Mel Andrew Schwing will represent the United States.
Members of the public are reminded that an indictment constitutes only charges and that every person is presumed innocent until his/her guilt has been proven beyond a reasonable doubt.
Basking Ridge Stockbroker Admits Defrauding an Investor
January 28, 2010 - A former stockbroker from Basking Ridge pleaded guilty today to defrauding an investor by misusing the investor’s investment funds and sending the investor a fake account statement, U.S. Attorney Paul J. Fishman announced.
James Patten, 50, who the Financial Industry Regulatory Authority, Inc. (“FINRA”), barred from association with any FINRA member in July 2006, pleaded guilty before U.S. District Court Judge Renee M. Bumb to a one-count criminal Information charging him with mail fraud. Judge Bumb continued Patten’s release on a $100,000 bond pending sentencing, which is scheduled for May 10.
According to the Information, Patten worked as a stockbroker with offices in Mendham and Bedminster from 2000 to 2006. In 2004, a client gave Patten approximately $538,000 to invest on her behalf, specifically instructing Patten to invest that amount in conservative investments, such as Treasury bills. Rather than invest the entire amount, however, Patten admitted that he used about half of the $538,000 to cover a series of bad investments that he previously made in the investor’s accounts. Thereafter, Patten then sent the investor an account statement showing that he had invested several hundred thousand dollars of the investor’s money in a municipal fund as directed. Patten admitted, however, that the account statement was fake and that he created it to conceal from the investor how he had used her money.
The charge of mail fraud carries a maximum penalty of 20 years in prison and a fine of $250,000 or twice the aggregate loss to the victims or gain to Patten.
In determining an actual sentence, Judge Bumb will consult the advisory U.S. Sentencing Guidelines, which provide appropriate sentencing ranges that take into account the severity and characteristics of the offense, the defendant’s criminal history, if any, and other factors. The judge, however, is not bound by those guidelines in determining a sentence. Parole has been abolished in the federal system. Defendants who are given custodial terms must serve nearly all that time.
Fishman credited Special Agents of the Federal Bureau of Investigation, under the direction of Acting Special Agent in Charge Kevin B. Cruise, in Newark, with the investigation that resulted in today’s plea. Fishman also thanked the U.S. Securities and Exchange Commission's New York Regional Office, under the direction of George S. Cannellos, for their assistance in the investigation.
The case is being prosecuted by Assistant U.S. Attorneys Justin W. Arnold and Christopher J. Kelly of the U.S. Attorney’s Criminal Division in Newark.
James Patten, 50, who the Financial Industry Regulatory Authority, Inc. (“FINRA”), barred from association with any FINRA member in July 2006, pleaded guilty before U.S. District Court Judge Renee M. Bumb to a one-count criminal Information charging him with mail fraud. Judge Bumb continued Patten’s release on a $100,000 bond pending sentencing, which is scheduled for May 10.
According to the Information, Patten worked as a stockbroker with offices in Mendham and Bedminster from 2000 to 2006. In 2004, a client gave Patten approximately $538,000 to invest on her behalf, specifically instructing Patten to invest that amount in conservative investments, such as Treasury bills. Rather than invest the entire amount, however, Patten admitted that he used about half of the $538,000 to cover a series of bad investments that he previously made in the investor’s accounts. Thereafter, Patten then sent the investor an account statement showing that he had invested several hundred thousand dollars of the investor’s money in a municipal fund as directed. Patten admitted, however, that the account statement was fake and that he created it to conceal from the investor how he had used her money.
The charge of mail fraud carries a maximum penalty of 20 years in prison and a fine of $250,000 or twice the aggregate loss to the victims or gain to Patten.
In determining an actual sentence, Judge Bumb will consult the advisory U.S. Sentencing Guidelines, which provide appropriate sentencing ranges that take into account the severity and characteristics of the offense, the defendant’s criminal history, if any, and other factors. The judge, however, is not bound by those guidelines in determining a sentence. Parole has been abolished in the federal system. Defendants who are given custodial terms must serve nearly all that time.
Fishman credited Special Agents of the Federal Bureau of Investigation, under the direction of Acting Special Agent in Charge Kevin B. Cruise, in Newark, with the investigation that resulted in today’s plea. Fishman also thanked the U.S. Securities and Exchange Commission's New York Regional Office, under the direction of George S. Cannellos, for their assistance in the investigation.
The case is being prosecuted by Assistant U.S. Attorneys Justin W. Arnold and Christopher J. Kelly of the U.S. Attorney’s Criminal Division in Newark.
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