Philadelphia La Cosa Nostra Capo Pleads Guilty to Racketeering Conspiracy

WASHINGTON—Martin Angelina, 50, of Philadelphia, pleaded guilty today to participating in a racketeering conspiracy involving loan sharking and illegal gambling, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Zane David Memeger of the Eastern District of Pennsylvania and George C. Venizelos, Special Agent in Charge of the FBI’s Philadelphia Division.

At the plea hearing before U.S. District Judge Eduardo C. Robreno of the Eastern District of Pennsylvania, Angelina pleaded guilty to conspiring to conduct and participate in the affairs of the Philadelphia La Cosa Nostra (LCN) family through a pattern of racketeering activity. He admitted to the court that he attempted to collect payments related to usurious loans by using extortionate means and operated an illegal video poker machine business in furtherance of the racketeering conspiracy. His sentencing is scheduled for December 3, 2012.

Angelina was among 14 members and associates of the Philadelphia LCN family charged with crimes involving racketeering conspiracy, extortion, loan sharking, illegal gambling, witness tampering, and theft from an employee benefit plan in a third superseding indictment returned by a federal grand jury in Philadelphia on July 25, 2012. The other defendants charged in the 52-count third superseding indictment included Philadelphia LCN family boss Joseph Ligambi, Philadelphia LCN family underboss Joseph Massimino, George Borgesi, Gaeton Lucibello, Anthony Staino, Jr., Damion Canalichio, Louis Barretta, Gary Battaglini, Robert Verrecchia, Eric Esposito, Robert Ranieri, Joseph Licata, and Louis Fazzini.

Gaeton Lucibello pleaded guilty to racketeering conspiracy charges on August 2, 2012, and is scheduled to be sentenced on November 26, 2012.

The trial for Ligambi, Massimino, Borgesi, Staino, Canalichio, Barretta, Battaglini, Licata, and Fazzini is scheduled for October 9, 2012. The trial for Verrecchia, Esposito, and Ranieri has not yet been scheduled. Ligambi, Massimino, Borgesi, Canalichio, Licata, and Fazzini are detained while awaiting trial. Staino, Barretta, Battaglini, Verrecchia, Esposito, and Ranieri are free on bond while awaiting trial.

The case is being prosecuted by Trial Attorney John S. Han of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorneys Frank A. Labor, III and Suzanne B. Ercole of the Eastern District of Pennsylvania. Valuable prosecutorial assistance was provided by the Pennsylvania Office of the Attorney General.

The case is being investigated by the FBI; the Internal Revenue Service-Criminal Investigation Division; the Pennsylvania State Police; the New Jersey State Police; the Philadelphia Police Department; and the U.S. Department of Labor’s Office of Inspector General Office of Labor Racketeering and Fraud Investigations and Employee Benefits Security Administration. Additional assistance was provided by the New Jersey Department of Corrections.

Man Indicted for Forced Labor and Sex Trafficking of Women Forced to Work as Prostitutes in Orange County

A Long Beach man was arraigned Monday in federal court after being indicted by a federal grand jury with sex trafficking and forced labor in connection with coercing women to engage in prostitution, announced André Birotte, Jr., the United States Attorney in Los Angeles; Steven Martinez, the Assistant Director in Charge of the FBI’s Los Angeles Field Office; and Paul Walters, Chief of the Santa Ana Police Department.

Roshaun (aka “Kevin”) Nakia Porter, 36, of Long Beach, California, was indicted by a federal grand jury on April 25, 2012. The indictment, returned in U.S. District Court in Los Angeles, charges Porter with two counts of forced labor, a violation of Title 18, United States Code, Section 1589 (a); and two counts of sex trafficking by force, fraud or coercion, a violation of Title 18, United States Code, Section 1591.

According to a federal criminal complaint filed in federal court following Porter’s April 10 arrest, the FBI was contacted by detectives with the Santa Ana Police Department (SAPD) following an undercover sting operation conducted by detectives with the SAPD’s Special Investigations-Vice Unit in early April. During the sting, detectives encountered five females who claimed that Porter was forcing them to work as prostitutes.

The complaint alleges that victims advised detectives that Porter operates a prostitution ring in the Orange County area and that he meets potential victims by placing ads on www.craigslist.com and www.seekingarrangements.com. The victims claimed they responded to Porter’s ads and believed they were entering into a monogamous relationship with Porter. The women claimed that, after Porter maintained a romantic relationship with them, he forced them to work as prostitutes. Victims claimed they had no means to support themselves and that they lived and worked in hotels in Orange County while they worked for Porter, according to the complaint.

The complaint further alleges that Porter charged his customers between $100 for 15 minutes to $300 for 60 minutes for illicit sex, and that all of the proceeds were provided by the victims to Porter. Additionally, Porter threatened victims by telling them that if they tried to leave, he would find them and hurt their families. The complaint alleges that Porter used physical violence to control some of the victims and that victims claimed to be afraid of Porter and his threats. Some of the victims claimed they tried to run away from Porter and that he would respond by threatening them via text message and phone calls. In one case, a victim claimed Porter threatened to kill her family members if she tried to leave, according to the complaint.

Based on evidence obtained during the joint investigation, agents and detectives believe that Porter may have additional victims. Anyone with information about victims may contact the FBI at 310-477-6565 or the Santa Ana Police Department at 714-245-8501.

Porter was denied bail during a detention hearing on April 12. A trial date was scheduled for June 19, 2012.

If convicted of the charges in the indictment, Porter faces a statutory maximum penalty of life in federal prison.

This investigation is being conducted by the FBI and the Santa Ana Police Department’s Special Investigations-Vice Unit. Porter is being prosecuted by the United States Attorney’s Office.

An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty.

MEDIA CONTACT:

Assistant United States Attorney Sandy N. Leal: 714-338-3531

FBI Media Relations: 310-996-3343

Two Alleged Members of the Philadelphia La Cosa Nostra Family Charged in Second Superseding Indictment

A Total of 14 Leaders, Members, and Associates of the Philadelphia LCN Charged to Date

WASHINGTON—Two alleged members of the Philadelphia organized crime family of La Cosa Nostra (LCN) were arrested today on racketeering charges contained in a second superseding indictment, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Zane David Memeger for the Eastern District of Pennsylvania, and Special Agent in Charge George C. Venizelos of the FBI’s Philadelphia Field Office.

Joseph Licata, 70, of Florham Park, New Jersy; and Louis Fazzini, 45, of Caldwell, New Jersey, were arrested today in the Newark, New Jersey-area and will make initial court appearances in U.S. District Court in Philadelphia at 1:30 p.m. EDT. They are each charged with racketeering conspiracy. According to the second superseding indictment, Licata served as a “caporegime” of North Jersey crew of the Philadelphia LCN family and supervised Louis Fazzini, a fully initiated, or “made,” member of this crew, in the operation of an illegal sports gambling business and other activities.

The 52-count second superseding indictment also charges 12 defendants who were previously charged in a May 23, 2011, superseding indictment: Philadelphia LCN family acting boss Joseph Ligambi, Philadelphia LCN family underboss Joseph Massimino, George Borgesi, Martin Angelina, Anthony Staino, Jr., Gaeton Lucibello, Damion Canalichio, Louis Barretta, Gary Battaglini, Robert Verrecchia, Eric Esposito, and Robert Ranieri.

The second superseding indictment adds two new charges against Philadelphia LCN family acting boss Ligambi relating to theft from an employee benefit plan administered by the Teamsters Health and Welfare Fund of Philadelphia and Vicinity. According to the second superseding indictment, from 2003 to 2011, Ligambi unlawfully caused the Teamsters Health and Welfare Fund of Philadelphia and Vicinity to pay the cost of health benefits provided to him and several of his family members through a “no show” job at Top Job Disposal, a Philadelphia-based waste hauling and removal company. As a no show employee, he performed no work or productive services for Top Job Disposal while still receiving pay and health benefits.

The second superseding indictment alleges that for more than a decade, 11 of the defendants, including Ligambi as the acting boss and Massimino as the underboss, as well as other members and associates of the Philadelphia LCN family in Philadelphia and New Jersey, conspired to conduct and participate in the affairs of the Philadelphia LCN family through a pattern of racketeering activity and through the collection of unlawful debts. The alleged racketeering activity includes numerous acts involving extortion, extortionate extensions of credit through usurious loans, extortionate collections, illegal gambling, witness tampering, and theft from an employee benefit plan. The organization’s collection of unlawful debts allegedly relates to its loan sharking operations and debts that arose from their illegal gambling businesses.

According to the second superseding indictment, the defendants promoted and furthered their illegal money making activities through violence, actual and implied threats, and the cultivation and exploitation of the Philadelphia LCN family’s long-standing reputation for violence. The defendants also used this reputation for violence to intimidate and prevent victims and witnesses from cooperating with law enforcement. The second superseding indictment alleges various instances where defendants used phrases such as “chop him up” and “put a bullet in your head” when threatening victims. In one instance, Canalicho allegedly used a bat to beat a victim for not paying a loan debt.

The second superseding indictment alleges that some of the defendants continued their racketeering activities even after being sent to prison. For example, Borgesi and Massimino, while in prison, allegedly generated criminal proceeds for themselves and the Philadelphia LCN family by using intermediaries to operate criminal businesses and to make extortionate demands at their direction.

Each charge of racketeering conspiracy, collection of unlawful debt, collection of extensions of credit through extortionate means, making extortionate extensions of credit, financing extortionate extensions of credit, and witness tampering carries a maximum penalty of 20 years in prison and a $250,000 fine. The illegal gambling and theft from an employee benefit plan charges each carry a maximum penalty of five years in prison and a $250,000 fine.

The case is being prosecuted by Trial Attorney John S. Han of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorney Frank A. Labor, III for the Eastern District of Pennsylvania. Valuable prosecutorial assistance was provided by the Pennsylvania Office of the Attorney General.

The case is being investigated by the FBI, the Internal Revenue Service Criminal Investigation Division, the Pennsylvania State Police, the New Jersey State Police, the Philadelphia Police Department, and the U.S. Department of Labor’s Office of Inspector General Office of Labor Racketeering and Fraud Investigations and Employee Benefits Security Administration. Additional assistance was provided by the New Jersey Department of Corrections.

An indictment is merely an accusation, and each defendant is presumed innocent until and unless they are proven guilty.

Eleven Individuals, Including Members and Associates of the Genovese Organized Crime Family, Indicted

Charges Include Racketeering Conspiracy, Extortion, Illegal Gambling, Union Embezzlement, and Obstruction of Justice

An 18-count indictment was unsealed in federal court in Brooklyn this morning charging 11 individuals, including several made members and associates of the Genovese organized crime family of La Cosa Nostra (the “Genovese family”), variously with racketeering conspiracy, extortion, illegal gambling, union embezzlement, and obstruction of justice. The defendants will make their initial appearance later today before United States Magistrate Judge Marilyn D. Go at the U.S. Courthouse at 225 Cadman Plaza East in Brooklyn, New York.

The case was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; Janice K. Fedarcyk, Assistant Director in Charge, Federal Bureau of Investigation, New York Field Office; Robert Panella, Special Agent in Charge, U.S. Department of Labor, Office of Inspector General, Office of Labor Racketeering and Fraud Investigations, New York Region; Raymond W. Kelly, Commissioner, New York City Police Department; and Rose Gill Hearn, Commissioner, New York City Department of Investigation (DOI).

As alleged in the indictment and a detention memorandum filed by the government today, Conrad Ianniello is a captain in the Genovese family. James Bernardone, the Secretary Treasurer of Local 124 of the International Union of Journeymen and Allied Trades (IUJAT), and Salvester Zarzana, the former President of Local 926 of the United Brotherhood of Carpenters and Joiners, are both soldiers in the Genovese family. Ryan Ellis, Paul Gasparrini, William Panzera, and Robert Scalza, the Secretary Treasurer of IUJAT Local 713, are associates of the Genovese family. Also named as defendants are Robert Fiorello, Rodney Johnson, Felice Masullo, and John Squitieri.

Ianniello is charged with, among other crimes, racketeering conspiracy, including predicate acts of illegal gambling; conspiring to extort vendors at the annual Feast of San Gennaro held in Little Italy, New York in 2008; and, along with Scalza and Ellis, conspiring to extort a labor union between April 2008 and May 2008 in order to induce the union to cease its efforts to organize workers at a company on Long Island. Based on their threats, the defendants allegedly hoped to pave the way for Scalza’s union, IUJAT Local 713, to unionize the company instead.

The indictment charges Bernardone and Gasparrini with racketeering conspiracy, including predicate acts of conspiring to extort a subcontractor related to work performed at construction sites in Manhattan, Queens, and Brooklyn from approximately 2006 to 2009, including work performed at a Hampton Inn located on Ditmars Boulevard in Queens. Zarzana is also charged with extortion related to one of those construction sites. In addition, the indictment alleges that in 2008, Squitieri embezzled money from employee pension and annuity funds of Local 7-Tile, Marble, and Terrazzo of the Bricklayers and Allied Craftworkers union by providing non-union laborers to perform tile-related work during a renovation at the Paramount Hotel in Manhattan, thereby avoiding paying into Local 7’s employee pension benefit plans. Johnson, a project manager at the Paramount Hotel renovation, is charged with obstruction of justice in connection with his efforts to impede a federal grand jury investigation conducted in this district that ultimately resulted in the charges brought in the indictment unsealed today.

Finally, Panzera and Fiorello are charged with crimes related to their involvement in loansharking and the extortionate collection of money from a victim.

“This indictment is the most recent chapter in this office’s continued fight against organized crime’s efforts to infiltrate unions and businesses operating in New York City. Where others saw a city festival, urban renewal, and job growth, these defendants allegedly saw only a chance to line their pockets at the expense of hard working individuals. And when law enforcement began to probe their actions, one defendant allegedly went so far as to try to block that investigation,” stated United States Attorney Lynch. “Organized crime figures and union officials who seek to earn money by corrupting legitimate industry will be investigated and prosecuted to the full extent of the law.”

FBI Assistant Director in Charge Fedarcyk stated, “Today’s charges highlight not only the ongoing vigilance of the FBI in policing the corrupt conduct of La Cosa Nostra, but also the necessity of such vigilance. Even as mob families seek and discover new ways to make money by illegitimate means, they continue to rely on tried-and-true schemes like extortion and gambling. The mob’s purpose is making money, and how is less important than how much.”

Special Agent in Charge Panella, U.S. Department of Labor, Office of Inspector General, stated, “The RICO indictment and today’s arrests reflect our strong commitment to combat the infiltration of unions by organized crime members and associates for their personal enrichment. The defendants allegedly utilized their organized crime influence to corrupt businesses and advance various illegal schemes. The Office of Inspector General will continue to work with our law enforcement partners to vigorously investigate labor racketeering in the nation’s unions.”

NYPD Commissioner Kelly stated, “As alleged in the indictment, the defendants’ extortion knew no bounds—in fact, one of the defendants allegedly even used the feast of San Gennaro to extort money from vendors involved in the celebration of the saint’s life. I commend the U.S. Attorney’s Office and the federal agents and New York City detectives for this successful investigation.”

DOI Commissioner Gill Hearn stated, “The charges underscore the determination of federal and city investigators to curtail organized crime’s influence in New York City, including the Feast of San Gennaro in Little Italy. DOI was pleased to assist its federal partners on this significant indictment.”

The defendants face maximum sentences ranging from five to 20 years of imprisonment on each count of conviction.

The government’s case is being prosecuted by Assistant United States Attorneys Nicole Argentieri, Jacquelyn Kasulis, and Amanda Hector.

Former Mine Security Chief Sentenced to Three Years in Prison in Connection with Federal Mine Investigation at Upper Big Branch

BECKLEY, WV—Upper Big Branch (UBB) Mine chief of security Hughie Elbert Stover was sentenced today on two felonies in connection with a federal investigation at the former Massey Energy Company’s UBB Mine, announced R. Booth Goodwin, II, U.S. Attorney for the Southern District of West Virginia. Stover, 60, of Clear Fork, Raleigh County, West Virginia, was sentenced to three years in prison by United States District Judge Irene C. Berger. Stover was convicted by a Beckley jury in October of making false statements to federal agents and obstructing a federal investigation. The defendant was the chief of security at UBB and at least two other then-Massey operations when an April 5, 2010 explosion claimed the lives of 29 miners and injured two others.

“Today’s sentence sends a clear message that when a person obstructs an investigation—especially an investigation as critical as UBB—there will be consequences,” said U.S. Attorney Booth Goodwin.

A jury found that Stover made materially false statements to an FBI special agent and a special investigator for the Mine Safety and Health Administration (MSHA). These federal agents were investigating allegations that security guards at UBB routinely notified mine personnel when MHSA inspectors arrived at the mine. Stover falsely denied that such a practice existed and falsely told the agents that he would have fired any security guard who provided such advance notice. In addition, Stover himself instructed UBB security guards to notify mine personnel whenever MSHA inspectors arrived at the mine. The defendant also caused a person known to the grand jury to dispose of thousands of pages of security-related documents stored in a Massey building near the UBB mine, with the intent to impede the federal investigation.

Also at sentencing, the court ordered the defendant to serve two years’ supervised release and pay a $20,000 fine.

The investigation was conducted by the Federal Bureau of Investigation and the Department of Labor’s Office of Inspector General, with assistance from MSHA special investigators detailed to the criminal probe. Assistant United States Attorney Blaire Malkin handled the prosecution.

Lucchese Organized Crime Family Member and Associate Among 13 Arrested, Charged for Racketeering and Other Offenses, Including Illegal Takeover of Publicly Traded Company

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Attorneys and Accountant Also Charged as Members of Racketeering Enterprise

WASHINGTON—Thirteen individuals, including an alleged member and an associate of the Lucchese organized crime family, are charged with racketeering and related offenses in an indictment unsealed this morning in conjunction with arrests in the case, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney Paul J. Fishman of the District of New Jersey.

The charges stem from the alleged extortionate takeover of FirstPlus Financial Group Inc. (FPFG), a publicly held company in Texas, and the subsequent looting of FPFG by members of the racketeering enterprise through a series of fraudulent consulting agreements and acquisitions involving companies controlled by Nicodemo S. Scarfo and Salvatore Pelullo.

The 25-count indictment filed in Camden, N.J., federal court charges Scarfo, a member of the Lucchese organized crime family of La Cosa Nostra (LCN), and Pelullo, an associate of the Lucchese and Philadelphia LCN families, with racketeering conspiracy and conduct including securities fraud, wire fraud, mail fraud, bank fraud, extortion, interstate travel in aid of racketeering, money laundering and obstruction of justice. The indictment also names Nicodemo D. Scarfo (Scarfo Sr.), the imprisoned former boss of the Philadelphia family of LCN, and Vittorio Amuso, the imprisoned boss of the Lucchese family, as unindicted co-conspirators.

Nine other defendants—including attorneys William Maxwell, Cory Leshner, David Adler, Gary McCarthy and Donald Manno, and certified public accountant Howard Drossner—are also variously charged with racketeering conspiracy, including securities fraud conspiracy, wire fraud, and other offenses. The indictment also charges Scarfo’s wife, Lisa Murray-Scarfo, with conspiracy to commit bank fraud and making false statements on a loan application for her role in securing a fraudulent mortgage to purchase a $715,000 house with proceeds from the racketeering enterprise’s criminal activity. William Maxwell’s brother John Maxwell, William Handley and John Parisi are charged with various offenses related to the conspiracy. Todd Stark is charged with conspiracy to provide ammunition for a 9mm handgun to Scarfo.

A number of the defendants were arrested this morning in a coordinated law enforcement effort by special agents of the FBI; Department of Labor, Office of Inspector General; and the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF). Scarfo, Handley, Leshner, Parisi, Adler, Drossner and Manno were arrested at their residences; Pelullo was arrested in Miami; and William Maxwell was arrested at his Houston office. McCarthy surrendered to the FBI this morning in Philadelphia. Murray-Scarfo is expected to surrender to authorities in Camden. Stark and John Maxwell have yet to be apprehended. The defendants in custody in the New Jersey area will appear this afternoon before U.S. Magistrate Judge Anne Marie Donio in Camden federal court.

“The indictment alleges that Mr. Scarfo and Mr. Pelullo used economic extortion and threats of violence to seize and maintain control of a publicly traded company, successfully removing its entire existing board of directors and management,” said Assistant Attorney General Breuer. “Once in control, they allegedly used their criminal enterprise to extract millions of dollars from the company to fund their lavish lifestyles. This prosecution demonstrates the Justice Department’s resolve to root out the influence of La Cosa Nostra wherever it exists.”

“According to the indictment, the defendants gave new meaning to ‘corporate takeover’ by looting a publicly traded company to benefit their criminal enterprise,” said U.S. Attorney Fishman. “Through rampant self dealing, fraudulent SEC filings and more traditional mob methods, the defendants allegedly stole $12 million from shareholders. Particularly in these economic times, investors should be free to invest in public companies without fear that violent criminal organizations are their puppetmasters. And the public deserves to rely with confidence on corporate officials and professionals whose positions require them to act in the best interest of shareholders, not members of organized crime.”

“The demise of Organized Crime has been greatly exaggerated,” said Michael B. Ward, Special Agent in Charge of the FBI’s Newark Field Office. “Criminal activities have evolved from the back alleys to the board rooms, but the same use of physical threats and intimidation to gain leverage and loot lucrative businesses for personal gain continues to this day. In response, the charges being brought against Nicky Scarfo Jr., Sal Pelullo and others represent law enforcement’s commitment to aggressively target the illegal activity of Organized Crime in any commercial business or venue.”

According to court documents, Scarfo is a made member of the Lucchese family and became a member after an attempt on his life in 1989 following an internal struggle for control of the Philadelphia family. In the mid-1990s while Scarfo Sr. and Amuso were in federal prison in Atlanta, Amuso arranged for Scarfo to become a member of the Lucchese family as a favor to Scarfo Sr. As a member of the Lucchese family, Scarfo was required to earn money and participate in the affairs of the Lucchese family.

According to the indictment, following his release from prison in 2005 on an unrelated charge, Scarfo was placed on supervised release and required to report to a probation officer. According to court documents, by participating in the affairs of what is described in the indictment as the Scarfo-Pelullo Enterprise, Scarfo and other members of the enterprise allegedly engaged in a systematic scheme to deceive and obstruct the probation department and the district court responsible for overseeing Scarfo’s supervised release.

The indictment alleges that in April 2007, Scarfo, Pelullo, Texas attorney William Maxwell and others devised a scheme to take over FPFG, a financial services company in Texas. According to court documents, through threats of physical and economic harm, the Scarfo-Pelullo Enterprise assumed and maintained control of FPFG for the purpose of plundering its assets. The takeover was accomplished by replacing FPFG’s board of directors with new figurehead members who served at the direction of Scarfo, Pelullo and other members of the enterprise. Once the takeover was completed, the figurehead board named William Maxwell as “special counsel” to FPFG, a position that he allegedly used to funnel millions of dollars to himself, Scarfo and Pelullo through fraudulent legal services and consulting agreements. The agreements, as well as FPFG’s fraudulent acquisitions of companies controlled by Scarfo and Pelullo, were allegedly designed to mask the true identity and nature of the control exerted over FPFG and to conceal the source of the money fraudulently conveyed to Scarfo and Pelullo.

According to the indictment, the enterprise succeeded in its criminal objectives with the knowing assistance of Adler, Drossner and McCarthy—who used their positions as professionals to ensure that the enterprise’s criminal activity was not revealed to law enforcement and regulatory authorities, including the U.S. Securities and Exchange Commission (SEC). As a public company, FPFG was required to submit periodic and annual filings to the SEC. The indictment alleges that the enterprise, led by Scarfo and Pelullo, repeatedly submitted false information, or omitted material information, in required SEC filings. As a result, FPFG’s shareholders and the investing public had no idea that FPFG was being controlled by members and associates of organized crime. Manno, an attorney for Scarfo, allegedly abused his position as an attorney to further insulate Scarfo and the enterprise by deceiving Scarfo’s probation officer and the district court. The indictment alleges that Manno’s deception corruptly influenced Scarfo’s supervised release by withholding information from the probation office and the district court regarding Scarfo’s source of income and his contact with convicted felons.

The indictment details a telephone call intercepted by law enforcement on Dec. 5, 2007, that illustrates the corrupt nature of Scarfo and Pelullo’s control of FPFG. According to the indictment, Pelullo called Scarfo to tell him about the sudden death of a former FPFG executive described in the indictment as “Individual #4,” who had provided information to Pelullo and William Maxwell that they used to extort control of FPFG. At the time of his death, Individual #4 was employed by FPFG as a member of its “compliance team.” During the conversation, Scarfo and Pelullo expressed relief regarding Individual #4’s death. After laughing about how he was “crushed” that “the rat is dead,” Pelullo acknowledged that Individual #4 was “the only connection, the only tie to anything.” As the news sunk in to Scarfo, he stated, “Oh boy. Yeah, Sal, you wanna know something though? . . . That’s one that I know you can’t take credit for . . . [laughter] . . . and that’s the natural best thing. You know what I mean? . . . That is so like Enron-ish. You know what I mean?”

The indictment alleges that the enterprise’s criminal activity allowed Scarfo and Pelullo to live lavish lifestyles which included the purchase of an $850,000 yacht, a luxury home for Scarfo, a Bentley automobile for Pelullo, and thousands of dollars in jewelry for Scarfo’s wife, Murray-Scarfo. As a direct result of the enterprise’s organized crime activity, FPFG and its shareholders suffered a loss of at least $12 million.

The charges and allegations contained in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

The case is being prosecuted by Trial Attorney Lisa C. Page of the Organized Crime and Gang Section in the Justice Department’s Criminal Division and Assistant U.S. Attorney Steven D’Aguanno of the New Jersey U.S. Attorney’s Office Organized Crime/Gangs Unit in Camden. The case was investigated by the FBI’s Newark Field Office; the Department of Labor, Office of Inspector General, Office of Labor Racketeering and Fraud Investigations, New York Region; and the ATF, Newark. The FBI Philadelphia Field Office and the SEC provided assistance.

Palisade Man Indicted for Defrauding Health Care Programs for Nuclear Weapons Workers and Miners

DENVER—Anthony Paul Breaux, age 33, of Palisade, Colorado, made his initial appearance in U.S. District Court in Denver this afternoon where he was advised of the heath care fraud and money laundering charges pending against him. Today’s court appearance was the result of an indictment returned by a federal grand jury in Denver on September 1, 2011.

According to the indictment, in October 2009, Breaux created and was acting as a registered agent for Honor-Bound Healthcare Providers, a Colorado Corporation. Breaux owned 100 percent of Honor-Bound, and was in the business of providing home health care services to patients in Colorado, Oregon, Arizona, and elsewhere.

Part of Honor-Bound’s patients were nuclear weapons workers or miners, millers, and transporters. In order to be reimbursed for providing medical services to these individuals, Breaux billed Energy Employees Occupational Illness Compensation Program (EEOICP) or Radiation Exposure Compensation Act (RECA). EEOICP is a health care benefit program that provides lump-sum compensation and health benefits to eligible Department of Energy nuclear weapons workers. RECA provides coverage to eligible uranium miners, millers, and transporters. Coverage is extended under both acts to certain eligible survivors with lump-sum compensation that would have otherwise been payable to the workers.

From June 2010 until June 2011, Breaux, doing business through Honor-Bound, allegedly knowingly and willfully executed and attempted to execute a scheme to defraud these health care benefit programs, by submitting and causing to be submitted bills for payment, knowing those bills already had been paid. In other cases the defendant submitted invoices for services never provided. He obtained payments on the claims in part by submitting false supporting documentation. In total, the fraud the defendant allegedly perpetrated is over $3.5 million.

Breaux also allegedly knowingly engaged in monetary transactions, or money laundering, of criminally derived property of a value greater than $10,000, which had been derived from specified unlawful activity. The indictment includes a notice of forfeiture, which states that upon conviction of one or more of the offenses, the defendant shall forfeit to the United States all of his interest in property, real or personal, that constitutes or is derived, directly or indirectly, from the gross proceeds traceable to the commission of the said violations.

“Congress established compensation programs for the men and women who worked in our nuclear weapons complexes and those who worked in dangerous mines,” said U.S. Attorney John Walsh. “To steal money from these funds is criminal, and the person responsible will be prosecuted vigorously by this office.”

“The EEOICP program was designed to provide compensation to persons who have become ill as a result of work at nuclear weapons facilities. The indictment alleges that the defendant submitted numerous false claims for medical services that had not been provided. The Office of the Inspector General will continue to work with the U.S. Attorney’s Office to combat fraud against Department of Labor programs,” said David Wickersham, Special Agent in Charge for the Dallas Region of the U.S. Department of Labor’s Office of Inspector General, Office of Labor Racketeering and Fraud Investigations.

“IRS - Criminal Investigation provides financial investigative expertise in our work with our law enforcement partners,” said IRS - Criminal Investigation Special Agent in Charge Sean Sowards. “Pooling the skills of each agency makes a formidable team as we investigate allegations of wrong-doing. This indictment demonstrates our collective efforts to enforce the law and ensure public trust.”

“The FBI takes health care fraud very seriously and worked collaboratively with the U.S. Department of Labor - Office of Inspector General, the Internal Revenue Service - Criminal Investigation, and the United States Attorney’s Office on this investigation,” said FBI Denver Special Agent in Charge James Yacone. “This investigation revealed fraud being committed against a federal health care program in excess of three million dollars. The FBI will continue to aggressively investigate violations regarding the healthcare system.”

If convicted of health care fraud and aiding and abetting, Breaux faces not more than 10 years in federal prison and a fine of up to $250,000. If convicted of money laundering, the defendant faces not more than 10 years in federal prison and a fine of up to $250,000 or alternatively a fine not more than twice the amount of the criminal derived property, or both, for each of the 48 counts.

This case was investigated by the Department of Labor Office of the Inspector General (DOL OIG), the Internal Revenue Service - Criminal Investigation (IRS-CI), and the Federal Bureau of Investigation (FBI).

The defendant is being prosecuted by Assistant U.S. Attorneys Jaime Pena and Tonya Andrews.

The charges contained in the indictment are allegations, and the defendant is presumed innocent unless and until found guilty.