Tuesday, January 31, 2017

Former Tennessee Sheriff Pleads Guilty to Federal Corruption Charges

Former Chief Administrative Deputy and Sheriff’s Uncle Also Plead Guilty

A former Rutherford County Sheriff, his former Chief Administrative Deputy, and his uncle have pleaded guilty for operating a private electronic cigarette company in the county jail for personal gain and the concealment and misrepresentation of their involvement with the business, announced Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division and Acting U.S. Attorney Jack Smith of the Middle District of Tennessee.
Robert F. Arnold, 40, former Sheriff of Rutherford County, Tennessee, and his former Chief Administrative Deputy Joe L. Russell II, 50, also of Rutherford County, pleaded guilty to wire fraud, honest services fraud and extortion under color of official right on Jan. 18 and 20, respectively.  Arnold’s uncle, John Vanderveer, 59, of Marietta, Georgia, pleaded guilty to attempted witness tampering on Jan. 30.  The pleas were entered before Chief U.S. District Judge Kevin H. Sharp of the Middle District of Tennessee.  Arnold is scheduled to be sentenced by Chief Judge Sharp on May 8, and Vanderveer and Russell are scheduled to be sentenced on May 12 and May 19, respectively.  All three were indicted in May 2016 for their roles in the formation and operation of the electronic cigarette company, JailCigs LLC. 
In connection with their pleas, Arnold and Russell admitted to forming JailCigs with Vanderveer in 2013; using Arnold’s official position as Sheriff of Rutherford County to benefit JailCigs by allowing the company’s electronic cigarettes to come into the Rutherford County jail as non-contraband and be distributed by county employees; taking steps to disguise their involvement in the company; and misrepresenting the benefits that Rutherford County was supposedly receiving from JailCigs. 
Additionally, Arnold admitted that he personally received over $66,000 from JailCigs; and admitted that he lied about his income from, and knowledge of, the company when he was confronted by local media in April 2015.  Russell admitted receiving over $52,000 in payments from JailCigs.  Vanderveer, a private citizen and Arnold’s uncle, admitted to telling the company’s Tennessee sales representative to destroy her commission sheets so the company could provide fraudulent versions that would show the payments going to her, rather than Arnold.  Under the terms of the plea agreement, each defendant agreed to pay restitution to Rutherford County in the amount of $52,500. 

The FBI and the Tennessee Bureau of Investigation investigated the case.  Trial Attorney Mark Cipolletti of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Cecil W. VanDevender of the Middle District of Tennessee are prosecuting the case.

California Man Pleads Guilty to Illegally Importing Chinese Cigarettes

Attempted to Evade More Than $467,000 in Excise Taxes

A Los Angeles, California man pleaded guilty yesterday to illegally engaging in the business of importing tobacco products, announced Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and U.S. Attorney Eileen M. Decker for the Central District of California.

Zhi Xiong Chen, 56, of Chinatown, admitted that for nearly five years, despite not holding a permit to import tobacco products, he used several addresses to receive 15,128 cartons of Chinese-brand cigarettes. During this time, U.S. Customs and Border Protection officers also stopped approximately 9,824 cartons of Chinese-brand cigarettes at international mail facilities in California and New York.

As part of the scheme, Chen admitted that he attempted to evade paying more than $467,000 in federal and state excise taxes on the cigarettes that he illegally imported.

“While Zhi Xiong Chen was illegally importing tens of thousands of cartons of cigarettes into the United States, he was also evading hundreds of thousands of dollars in taxes due on those cigarettes,” said Acting Deputy Assistant Attorney General Goldberg. “Importers who obtain the required permits and pay their fair share of taxes deserve to compete on a level playing field. Those who try to cut corners and skirt these legal obligations should know that they will be investigated and prosecuted.”

“From early 2011 until mid-2016, this defendant illegally imported thousands of cartons of Chinese-made cigarettes without the necessary permits and without paying excise taxes,” said U.S. Attorney Decker. “The defendant’s crime not only cheated taxpayers, but also caused unregulated, potentially dangerous products to be sold to an unsuspecting public.”

Sentencing is scheduled for April 17. Chen faces a statutory maximum penalty of five years in prison, a period of supervised release, restitution and monetary penalties.

Acting Deputy Assistant Attorney General Goldberg and U.S. Attorney Decker thanked special agents of IRS–Criminal Investigation, the Alcohol and Tobacco Tax and Trade Bureau, and the U.S. Food and Drug Administration’s Criminal Investigations, who conducted the investigation, and Assistant U.S. Attorney Valerie L. Makarewicz and Trial Attorney Christopher S. Strauss of the Tax Division, who are prosecuting the case.

U.S. Marshals Arrest New Mexico’s Most Wanted

Albuquerque, NM - The U.S. Marshal Service for the District of New Mexico, South West Investigative Fugitive Team (SWIFT) Task Force comprised of the Bernalillo County Sheriff’s Office, the New Mexico Department of Corrections, and the New Mexico State Police, apprehended Juan Rivas Jr in an area south of Albuquerque, NM.

Juan Rivas is wanted by ATF and USMS on federal charges stemming from allegedly selling and distributing illegal narcotics. Rivas was also charged with Aiding and Abetting a drug trafficking deal of Methamphetamine. Rivas (AKA P-NUT) is allegedly a South Side Playerz X13 gang member from South East Los Angeles, CA. He has a long history of Selling drugs, Aggravated Battery with a deadly weapon and False imprisonment. Rivas is presumed innocent until proven guilty.