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Saturday, February 28, 2015


Litigation Release No. 23205 / February 23, 2015
Securities and Exchange Commission v. Heart Tronics, Inc., et al., Civil Action No. SACV 11- 1962-JVS (ANX)
SEC Wins Summary Judgment Against Mitchell J. Stein for Heart Tronics, Inc. Fraud Scheme.

The Securities and Exchange Commission today announced that on February 18, 2015, the U.S. District Court for the Central District of California awarded partial summary judgment in the Commission's favor against Mitchell J. Stein for his role in a wide-ranging fraud scheme while he was attorney for Heart Tronics, Inc. (formerly known as Signalife, Inc.). In December 2014, Stein was sentenced to a 17-year term of imprisonment based on his conviction in a parallel criminal prosecution for 14 counts of conspiracy to commit mail fraud and wire fraud, mail fraud, wire fraud, securities fraud, money laundering and conspiracy to obstruct justice.

Based on Stein's criminal conviction, the Court awarded summary judgment in the Commission's favor on the Commission's claims that Stein violated Section 17(a) of the Securities Act of 1933, violated and aided and abetted the violation of Sections 10(b) of the Securities Exchange Act of 1934 and Exchange Act Rule 10b-5, violated Sections 13(b)(5) and Rule 13b2-1 of the Exchange Act, and aided and abetted the violation of Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Exchange Act Rules 13a-1, 13a-11, 13a-13 and 12b-20. The Court imposed permanent injunctions, officer and director bars, a penny stock bar, a civil penalty of $5,378,581.61, and disgorgement and prejudgment interest of $6,076,415.52 against Stein.

The Commission's litigation against former Heart Tronics co-CEO for Operations, President and Chief Operating Officer, Willie Gault, continues, with trial to begin on March 3, 2015.

Friday, February 27, 2015


Friday, February 20, 2015
Georgia Couple Found Guilty of Tax Fraud

A Milledgeville, Georgia, couple were found guilty of tax fraud following a three-day jury trial for skimming more than $1.5 million in cash from their business without disclosing the income, the Department of Justice announced.

Kenneth Horner, 58, and Kimberly Horner, 53, were charged with filing false corporate and personal tax returns for the years 2007 and 2008.  They were convicted of all four counts charged.  Their sentencing is scheduled for May 6 at 10:00 a.m. before U.S. District Judge Timothy C. Batten Sr.

“This jury recognized the defendants’ handling of cash for what it really was: a ploy to avoid disclosing income and paying taxes,” said Acting U.S. Attorney John Horn of the Northern District of Georgia.

“In willfully failing to report their total business income to the IRS, the Horners cheated the system and dodged the same basic responsibility that millions of other business owners comply with every year:  fairly and honestly reporting their earnings,” said Principal Deputy Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.  “Today’s verdict establishes that those who engage in such criminal conduct will be held accountable. The Tax Division is committed to working with its law enforcement partners to identify, investigate and vigorously prosecute these offenders.”  

“At this time of year, when hard-working citizens are sitting down to prepare their tax returns, it is especially disappointing to see the overt steps some individuals will take to hide their taxable funds from the government,” said Special Agent in Charge Veronica F. Hyman-Pillot of the Internal Revenue Service (IRS)-Criminal Investigation.  “Taxpayers deserve our vigilance in the investigation and prosecution of individuals who willfully underreport their income and evade the payment of their fair share of taxes.”

According to Acting U.S. Attorney Horn, the charges and other information presented in court: Kenneth and Kimberly Horner owned Topcat Towing and Recovery Inc. (Topcat Towing), a towing business in Lithonia, Georgia.  Between 2005 and 2008, Topcat Towing had an exclusive contract with DeKalb County, Georgia, for all county car tows needed from the south precinct of the county.  Between 2005 and 2008, the defendants skimmed more than $1.5 million in cash receipts from their towing business and deposited those cash receipts into their personal bank account without disclosing the income to their tax return preparer or on corporate and personal tax returns filed with the IRS.  The defendants tried to conceal their cash deposits from the government by “structuring” their deposits, which is the act of splitting up cash deposits that exceed $10,000 for the purpose of evading a Currency Transaction Report (CTR) from being filed.

Most financial institutions, including banks, are generally required to file CTRs for cash transactions that exceed $10,000.  CTRs are submitted to the U.S. Department of Treasury.  In 2007 and 2008, the defendants used their unreported cash, in part, to build a custom home in Conyers, Georgia, that was appraised at more than $900,000.  The defendants owe approximately $400,000 in taxes to the IRS for their unreported income.

This case is being investigated by the IRS-Criminal Investigation. Trial Attorney Christopher J. Maietta of the Tax Division and Assistant U.S. Attorney Steven D. Grimberg of the Northern District of Georgia are prosecuting the case.

Wednesday, February 25, 2015


Friday, February 20, 2015
Former Military Contractor Pleads Guilty for Paying Bribe to Army Officer During Iraq War

A former military contractor who ran two Kuwaiti companies during the Iraq War pleaded guilty today for paying a $15,000 bribe to an Army National Guard officer in exchange for the award of a contract to provide buses to the United States Army, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Zane David Memeger of the Eastern District of Pennsylvania.

George H. Lee, 71, of Philadelphia, pleaded guilty today before U.S. District Judge Joel H. Slomsky in the Eastern District of Pennsylvania to one count of bribery of a public official.  Sentencing has been scheduled for July 7, 2015.

During his guilty plea, Lee admitted that as the president and chief executive officer of American Logistics Services (ALS), a Kuwaiti company providing supplies to the U.S. military in Iraq, he paid a $15,000 bribe to Lieutenant Markus E. McClain in exchange for McClain’s agreement to award an extension of a lucrative bus contract to ALS.  Specifically, Lee admitted that in August 2004 several of his employees met with McClain at Camp Arifjan, Kuwait and offered McClain $15,000 and a Rolex watch in exchange for McClain’s agreement to award the contract extension to ALS.  Lieutenant McClain initially declined, but one month later Lee renewed the offer, and McClain accepted $15,000 to use his official position to award the contract extension to ALS.

McClain previously pleaded guilty to one count of accepting a gratuity and is awaiting sentencing.  

The case is being investigated by the U.S. Army Criminal Investigation Command, the Defense Criminal Investigative Service and the U.S. Department of Homeland Security – Immigration and Customs Enforcement, and was previously investigated by the Office of the Special Inspector General for Iraq Reconstruction.  The case is being prosecuted by Trial Attorneys John Keller and Richard Evans of the Criminal Division’s Public Integrity Section.

Sunday, February 22, 2015


Friday, February 20, 2015
The National President, Vice President, Warlord and Three Other Members of the Devils Diciples Motorcycle Gang Convicted of Racketeering and Drug-Trafficking Charges

After a four-month trial, a federal jury in the Eastern District of Michigan convicted six members of the Devils Diciples Motorcycle Gang today, including the national president, national vice president and national warlord, for their participation in various criminal acts, including violent crimes in aid of racketeering, methamphetamine production and trafficking, illegal firearms offenses, obstruction of justice, illegal gambling and other federal offenses.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan and Special Agent in Charge Paul M. Abbate of the FBI’s Detroit Field Office made the announcement.

“For too many years the Devils Diciples spread fear and violence throughout Michigan and the country,” said Assistant Attorney General Caldwell.  “This outlaw motorcycle gang thrived on intimidation and its ability to avoid prosecution – but no longer.  Through these convictions, we have decimated the gang and its leadership and helped secure justice for the communities they harmed.”

"These defendants were responsible for violence and trafficking in methamphetamine in Macomb County and across the country,” said U.S. Attorney McQuade.  “We are grateful for the work of the investigating agencies and the jury to bring them to justice."

“The defendants in this case perpetrated a broad range of violent criminal activities in support of their illegal enterprise,” said Special Agent in Charge Abbate.  “Today’s convictions, which targeted the leadership of this criminal organization, reflect the hard work and dedication of federal, state and local law enforcement, the Department of Justice Criminal Division’s Organized Crime and Gang Section and the U.S. Attorney’s Office for the Eastern District of Michigan.”

Devils Diciples national President Jeff Garvin Smith, aka “Fat Dog,” 60, of Mt. Clemens, Michigan; National Vice President Paul Anthony Darrah, aka “Pauli,” 50, of Macomb Township, Michigan; and National Warlord Cary Dale Vandiver, aka “Gun Control,” 56, of Sand Mountain, Alabama, were all found guilty by a jury of engaging in a RICO conspiracy, methamphetamine trafficking conspiracy, conspiracy to obstruct justice, violent crimes in aid of racketeering and various substantive charges.  Another prominent leader, Vincent John Witort, aka “Holiday,” 64, of Fontana, California, and a methamphetamine cook, Patrick Michael McKeoun, aka “Magoo,” 60, of Birmingham, Alabama, were found guilty of engaging in a RICO conspiracy and methamphetamine trafficking conspiracy.  David Randy Drozdowski, aka “D,” 38 of Fair Haven, Michigan, was found guilty by a jury of committing violent crimes in aid of racketeering and being a felon in possession of a firearm.  Scott William Sutherland, aka “Scotty Z,” 49, of Redford, Michigan, was acquitted by the jury of various charges, but previously pleaded guilty to being a felon in possession of a firearm.  Sentencing hearings will be scheduled at a later date before U.S. District Judge Robert H. Cleland of the Eastern District of Michigan.

According to evidence presented at trial, the Devils Diciples (which is intentionally misspelled) is a motorcycle gang with its national headquarters in Clinton Township, Michigan.  The Devils Diciples operated regional chapters in cities throughout Michigan, Alabama, Arizona, California, Illinois, Indiana, Ohio and elsewhere, and engaged in criminal activities for financial gain.

Evidence presented at trial demonstrated that membership in the Devils Diciples is based in part on successful completion of a probationary period, followed by formal approval by one or more members or leaders.  Members, commonly referred to as “full patched members,” are required to own Harley Davidson motorcycles and are required to follow orders from the gang’s leadership, including orders to assault, threaten and intimidate others, to transport and distribute drugs, to lie to law enforcement and to hide or destroy evidence.  Members are also required to follow the Devils Diciples by-laws and attend regular meetings referred to as “church.”

According to evidence presented at trial, Smith was the National President and Darrah was the National Vice President of the gang.  In those roles, they were responsible for overall management of the activities of the other Devils Diciples members and chapters, including giving final approval to any activity generally affecting the gang as a whole.  Vandiver was the National Warlord – or enforcer – of the gang.  With other gang members, the leaders also participated directly in criminal activities both for financial gain on behalf of the Devils Diciples, and to protect the gang and its members.

Specifically, the evidence showed that in late 2007, Smith and Darrah were involved in the shooting of a Devils Diciples member who failed to abide by the gang’s rules.  And, in August 2008, Smith violently assaulted the girlfriend of another Devils Diciples member because he believed she disrespected him and the gang.

Additionally, the evidence showed that Smith possessed state and federal law enforcement manuals regarding outlaw motorcycle gangs marked “For Official Use Only” and “Law Enforcement Sensitive,” and numerous documents related to criminal matters involving members of the Devils Diciples, including police reports, search warrants, affidavits, indictments and witness interview transcripts.  The evidence showed that the documents were used for the purposes of counter-surveillance and to identify suspected informants.

The other defendants were also full patched members of the gang, who committed several other acts of violence.

For example, in August 2003, Witort and other gang members robbed, kidnapped and attempted to murder members of the gang’s Arizona Chapter for violating the gang’s rules.  Inside the Arizona clubhouse, the victims were bound with duct tape and zip ties, and severely beaten with firearms, tasers, knives, and other weapons.  The victims were then loaded into the bed of a pick-up truck, driven out into the desert, dumped into ravines, and left to die.  The evidence showed that Witort and Smith helped to plan the beatings and that Smith later congratulated one of the participants, telling him in a letter that the Devils Diciples were “all proud of you.”

Additionally, the evidence demonstrated that in 2012, at a bar in Chesterfield Township, Michigan, Drozdowski and another Devils Diciples member assaulted a perceived rival motorcycle gang member for being present in Devils Diciples territory.  The victim was knocked unconscious and suffered multiple fractures to his face and jaw.  Drozdowski and the other Devils Diciples member then ripped the leather vest off of the unconscious victim.

In addition to the defendants convicted today, 21 members and associates of the Devil’s Diciples have been pleaded guilty to various crimes as result of this investigation.  The investigation further resulted in the seizure of more than 60 firearms and more than 6,000 rounds of ammunition and the dismantling of eight methamphetamine manufacturing laboratories across the country.

The case was investigated by the FBI, the Michigan State Police, the Macomb County Sheriff’s Office and the County of Macomb Enforcement Team (COMET), with assistance from the Bureau of Alcohol, Tobacco, Firearms and Explosives, and the St. Clair County Sheriff’s Office.  The case is being prosecuted by the Criminal Division’s Organized Crime and Gang Section and the U.S. Attorney’s Office for the Eastern District of Michigan.

Sunday, February 15, 2015



WASHINGTON — Minebea Co. Ltd., a small sized bearings manufacturer based in Nagano, Japan, has agreed to plead guilty and to pay a $13.5 million criminal fine for its role in a conspiracy to fix prices for small sized ball bearings sold to customers in the United States and elsewhere, the Department of Justice announced today.

According to a one-count felony charge filed today in U.S. District Court for the Southern District of Ohio in Cincinnati, Minebea conspired to fix the prices of small sized ball bearings in the United States and elsewhere.  In addition to the criminal fine, Minebea has agreed to cooperate in the department’s ongoing investigation.  The plea agreement is subject to court approval.

According to the charge, Minebea and its co-conspirator discussed and agreed upon prices to be submitted to small sized ball bearings customers.  Minebea’s participation in the conspiracy lasted from at least as early as early-to-mid 2008 and continued until at least October 2011.

“Because of the unlawful price-fixing by the defendant and its co-conspirators, American businesses paid more for small-sized bearings than they otherwise would,” said Bill Baer, Assistant Attorney General of the Department of Justice’s Antitrust Division.  “Working with the Federal Bureau of Investigation and our other law enforcement partners, the Antitrust Division will continue our efforts to ensure American businesses and consumers benefit from competitive markets.”

“Any agreement that restricts price competition violates the law,” said U.S. Attorney Carter Stewart of Southern District of Ohio.  “We will continue to work to protect consumers’ right to free and open competition.”

Bearings are used in industry in numerous products to reduce friction and help parts roll smoothly past one another; they “bear” the load.  Small sized ball bearings are those ball bearings whose outside diameter is 26 millimeters or less.

Minebea is charged with price fixing in violation of the Sherman Act, which carries a maximum penalty of a $100 million criminal fine for corporations.  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, if either of those amounts is greater than the statutory maximum fine.

The charge today is the result of an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the bearings industry, which is being conducted by the Antitrust Division’s Chicago Office and the FBI’s Cincinnati Field Office.

Friday, February 13, 2015

$1.2 Million in Grants to Help Prevent Child Abuse in Michigan

$1.2 Million in Grants to Help Prevent Child Abuse in Michigan


February 04, 2015
Chris Atwater, Chief Deputy U.S. Marshal 
Middle District of North Carolina 
Michael Potter, Supervisory Deputy U.S. Marshal 
Middle District of North Carolina 
Greensboro U.S. Marshals End Suspect's Two and a Half Year Run From Justice

Greensboro, NC –  This morning at 06:00 AM, Javier Antonio Benitez-Fuentes, a 37 year old, Hispanic Male, was arrested by members of the U.S. Marshals Joint Fugitive Task Force (JFTF), Immigration and Customs Enforcement (ICE), and the Greensboro Police Department. Benitez-Fuentes was wanted by the Greensboro Police Department for First Degree Sex Offense with a Child (two counts). Benitez-Fuentes had been on the run for approximately two and a half years.

The case began to progress after new information was received through a crime stoppers tip. Investigators were told that Benitez-Fuentes was living at 111 Concord Street under the alias of “Jose Benitez”. Investigators corroborated this information and set up surveillance. JFTF surrounded the residence and knocked on the door, the suspect refused to open the door. JFTF forced entry into the residence and located Benitez-Fuentes and detained him until further investigation. Benitez-Fuentes gave the officers’ an identification card in the name of “Jose Benitez”. The ICE agent on the scene finger-printed Benitez-Fuentes to confirm his identity and the print came back positive for Javier Antonio Benitez-Fuentes. Benitez-Fuentes was arrested without further incident and was transported to the Guilford County Detention Center where he was given a $100,000 bond.

The U.S. Marshals Joint Fugitive Task Force for the Middle District of North Carolina is comprised of investigators from the U.S. Marshals Service, Chapel Hill Police Department, Durham Police Department, Greensboro Police Department, High Point Police Department, Winston-Salem Police Department, Alamance County Sheriff’s Office, the North Carolina State Highway Patrol and the North Carolina Department of Public Safety, Department of Community Corrections – Probation & Parole.

Thursday, February 12, 2015


February 05, 2015
Nicholas Bonifazi, Deputy U.S. Marshal
Northern District of Iowa 
USMS Office of Public Affairs 
U.S. Marshals Arrest Cedar Rapids Most Wanted in Chicago

Cedar Rapids, IA - U.S. Marshals arrested a Cedar Rapids man in Chicago today wanted on charges related to burglary and trafficking stolen firearms.

Brandon Robertson,19, failed to appear for sentencing in October 2014. Following the incident, the U.S. Marshals Service Northern Iowa Fugitive Task Force (NIFTF) was requested to assist in the hunt for Robertson.

In January, the NIFTF partnered with Lamar Outdoor Advertising, to make the public aware of Robertson's fugitive status. Shortly after Lamar Outdoor Advertising published Robertson's "Most Wanted" status on digital billboards throughout eastern Iowa, the public quickly responded with phone calls coming in to the local US Marshals Fugitive Tipline.

NIFTF members narrowed the search for Robertson to a residence in the vicinity of the 4100 block of South Prairie Avenue in Chicago. NIFTF members coordinated with the U.S. Marshals Service Great Lakes Regional Fugitive Task Force along with members of the Chicago Police Department to apprehend Robertson. Robertson quickly surrendered to the Marshals, and was taken into custody without incident.
The U.S. Marshals Service is the federal government’s primary agency for fugitive investigations.

Nationwide, 60 local task forces are dedicated to violent crime reduction by locating and apprehending wanted criminals. These task forces also serve as the central point for agencies to share information on fugitive matters. The Northern Iowa Fugitive Task Force is comprised of officers from the US Marshals Service, the Linn County Sheriff’s office, Cedar Rapids Police Department, and the Iowa Department of Criminal Investigation.

Wednesday, February 11, 2015


Wednesday, February 4, 2015
Massachusetts Tax Return Preparer and Business Owner Pleads Guilty to Tax Fraud

A tax return preparer in Worcester and Hyde Park, Massachusetts, pleaded guilty today in the U.S. District Court for the District of Massachusetts to two counts of filing false claims with the Internal Revenue Service (IRS), the Department of Justice announced today.

Yaw Aboagye-Marfo, 42, of Worcester and Hyde Park, Massachusetts, was charged in a superseding indictment in August 2014 with filing false tax returns that claimed refunds to which clients were not entitled.  According to the indictment, Aboagye-Marfo also filed false tax returns on his own behalf that claimed refunds from the IRS to which he was not entitled.

According to the indictment, Aboagye-Marfo owned and operated People’s Choice Tax Service and National Taxpert, located in Worcester and Hyde Park, respectively.  Aboagye-Marfo used other individuals to recruit taxpayers for their personal identifying and related information so that he could use the information to file false tax returns on their behalf.  In some cases, Aboagye-Marfo obtained only the personal identifying information of individual taxpayers and filed tax returns that claimed false Schedule C businesses, regardless of the individual’s income or employment status, qualifying that individual for large tax refunds.  In some instances, Aboagye-Marfo also reported false dependents on the tax returns.  Aboagye-Marfo charged a fee for his services and he also claimed a portion of the false tax refund proceeds for himself.

Sentencing is scheduled for May 15 before U.S. District Court Judge George A. O’Toole.  Aboabye-Marfo faces a statutory maximum sentence of five years in prison and a $250,000 fine for each count.

This case was investigated by the special agents of IRS - Criminal Investigation.  Trial Attorney Jeffrey B. Bender and Assistant Chief Karen Kelly of the Justice Department’s Tax Division are prosecuting the case.

Monday, February 9, 2015


Friday, January 30, 2015

Former Liberty Reserve IT Manager Sentenced to 36 Months in Prison
The former information technology manager for Liberty Reserve, a company that operated one of the world’s most widely used digital currency services, was sentenced today to 36 months in prison for conspiring to operate an unlicensed money transmitting business.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Preet Bharara of the Southern District of New York made the announcement.

Maxim Chukharev, 28, of San José, Costa Rica, pleaded guilty in September 2014 before U.S. District Judge Denise L. Cote, who also imposed today’s sentence.

According to allegations contained in the indictment and statements made in related court proceedings, Chukharev was an associate of Liberty Reserve founder Arthur Budovsky and served as Liberty Reserve’s information technology manager in Costa Rica.  In that role, Chukharev was principally responsible, along with co-defendant Mark Marmilev, formerly Liberty Reserve’s chief technology officer, for maintaining Liberty Reserve’s technological infrastructure.

According to allegations in the indictment and statements made in related court proceedings, Liberty Reserve was incorporated in Costa Rica in 2006 and billed itself as the Internet’s “largest payment processor and money transfer system.”  Liberty Reserve was created, structured and operated to help users conduct illegal transactions anonymously and launder the proceeds of their crimes, and it emerged as one of the principal money transfer agents used by cybercriminals around the world to distribute, store and launder the proceeds of illegal activity.  Liberty Reserve was used extensively for illegal purposes, functioning as the bank of choice for the criminal underworld because it provided an infrastructure that enabled cybercriminals around the world to conduct anonymous and untraceable financial transactions.

According to court records, before being shut down by the government in May 2013, Liberty Reserve had more than one million users worldwide, including more than 200,000 users in the United States, who conducted approximately 55 million transactions through its system totaling more than $6 billion in funds.  These funds encompassed suspected proceeds of credit card fraud, identity theft, investment fraud, computer hacking, child pornography, narcotics trafficking and other crimes.

Chukharev, Marmilev and Budovsky were among seven individuals charged in the indictment, which was unsealed on May 28, 2013.  Three co-defendants—Marmilev, Vladimir Kats and Azzeddine El Amine—previously pleaded guilty.  Marmilev was sentenced to five years in prison in December 2014; Kats and El Amine await sentencing.  The indictment also charged Liberty Reserve with conspiracy to commit money laundering and operation of an unlicensed money transmitting business, and the charges remain pending.

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

This case is being investigated by the U.S. Secret Service, the Internal Revenue Service-Criminal Investigation and the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, with assistance from the Secret Service’s New York Electronic Crimes Task Force.  The Judicial Investigation Organization in Costa Rica, the National High Tech Crime Unit in the Netherlands, the Financial and Economic Crime Unit of the Spanish National Police, the Cyber Crime Unit at the Swedish National Bureau of Investigation and the Swiss Federal Prosecutor’s Office also provided assistance.

This case is being prosecuted jointly by the Criminal Division’s Asset Forfeiture and Money Laundering Section (AFMLS) and the U.S. Attorney’s Office’s Complex Frauds Unit and Asset Forfeiture Unit in the Southern District of New York, with assistance from the Criminal Division’s Office of International Affairs and Computer Crime and Intellectual Property Section.

Trial Attorney Kevin Mosley of AFMLS and Assistant U.S. Attorneys Serrin Turner, Andrew Goldstein and Christine Magdo of the Southern District of New York are in charge of the prosecution, and Assistant U.S. Attorney Christine Magdo is in charge of the forfeiture aspects of the case.

Sunday, February 8, 2015


Tuesday, January 27, 2015

New York Attorney Found Guilty of Subscribing to False Federal Tax Returns
An attorney licensed to practice in New York was found guilty yesterday of three counts of subscribing to false tax returns for the 2007, 2008 and 2009 tax years following a bench trial before U.S. District Judge Vincent L. Briccetti, Principal Deputy Assistant Attorney General Caroline D. Ciraolo for the U.S. Department of Justice’s Tax Division and U.S. Attorney Preet Bharara for the Southern District of New York, announced today.

Matthew Libous was found not guilty by Judge Briccetti of false subscription counts for his 2010, 2011 and 2011 amended returns and not guilty of one count of obstructing the Internal Revenue Service (IRS).

“Yesterday’s verdict was a just conclusion for Matthew Libous’s repeated, willful failure to report all his income to the IRS over a period of years,” said U.S. Attorney Bharara.  “As a practicing attorney, Libous knew better.  My office will continue to make every effort to ensure that everyone pays his or her fair share of taxes.”

“Yesterday’s conviction should serve as clear notice that the Tax Division, working with IRS Criminal Investigation and the Offices of the U.S. Attorneys, will vigorously enforce our nation’s criminal tax laws and prosecute those individuals, including legal professionals, who willfully file false federal tax returns,” said Principal Deputy Assistant Attorney General Ciraolo.

According to the superseding indictment and the evidence presented at trial, Libous engaged in the practice of law from 2006 through 2008.  Libous deposited the fees he received into his personal bank account but never reported them on his tax return.  In 2008, Libous became a minority partner and manager of Wireless Construction Solutions LLC (WCS), a company that maintained cellular telephone towers.  Libous caused WCS to pay thousands of dollars in his personal expenses on his behalf from 2008 to 2011.  In returning yesterday’s verdict following a three-day bench trial, Judge Briccetti said that he found that Libous willfully failed to report the income from his law practice in 2007 and 2008, and the income he received as a result of his causing WCS to pay his personal expenses in 2008 and 2009.

Libous faces a statutory maximum sentence of three years in prison for each of the false subscription convictions.  The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.  Sentencing is scheduled for April 29.

This prosecution is being handled by the U.S. Attorney’s Office for the Southern District of New York, White Plains Division.  Assistant U.S. Attorney James McMahon for the Southern District of New York and Special Assistant U.S. Attorney Andrew Kameros of the Tax Division are in charge of the prosecutions.

Wednesday, February 4, 2015


Department of Justice
Office of Public Affairs
Wednesday, January 21, 2015
Puerto Rico Superior Court Judge Convicted of Conspiracy and Bribery Charges in Connection with Vehicular Homicide Trial

A current Puerto Rico Superior Court Judge was convicted yesterday by a federal jury in Puerto Rico of accepting bribes to acquit a businessman of vehicular homicide charges.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Rosa Emilia Rodríguez-Vélez of the District of Puerto Rico and Special Agent in Charge Carlos Cases of the FBI’s San Juan Division made the announcement.

“Judicial corruption strikes at the very heart of our legal system,” said Assistant Attorney General Caldwell.  “Justice must be determined by the evidence and the law, not by bribe payments from those with the deepest pockets.  We are committed to maintaining the public’s trust by rooting out corruption wherever we find it – whether it be a politician in a backroom or a judge on the bench.”

“This conviction should serve to restore the public’s trust in the fairness of the judicial system,” said U.S. Attorney Rodríguez-Vélez.  “We hope that the jury’s verdict brings some closure to the family of Félix Babilonia.  I congratulate the prosecutors and the agents whose hard work and dedication brought about Acevedo-Hernández's conviction.”

“Justice is for all the people, not for a select few who use money and power to buy favorable verdicts,” said Special Agent in Charge Cases.  “The San Juan Division of the FBI is committed to continue investigating corruption at all levels in Puerto Rico and the United States Virgin Islands.”

Puerto Rico Superior Court Judge Manuel Acevedo-Hernandez, 62, was convicted late yesterday following a one-week trial of conspiracy to commit federal programs bribery and receipt of a bribe by an agent of an organization receiving federal funds.  Sentencing is scheduled for April 20, 2015, before Chief U.S. District Judge Aida Delgado-Colon of the District of Puerto Rico.

According to evidence at trial, Acevedo-Hernandez presided over a case involving Lutgardo Acevedo-Lopez, 39, a certified public accountant in Aguadilla, Puerto Rico.  On June 30, 2012, a car driven by Acevedo-Lopez collided with another car, resulting in the death of the other car’s driver.  Acevedo-Lopez was charged with criminal vehicular homicide in connection with the incident.  Acevedo-Hernandez, a supervisory superior court judge in the Aguadilla judicial region of Puerto Rico, acquitted Acevedo-Lopez of all charges.

The evidence demonstrated that Acevedo-Lopez used an intermediary to bribe Acevedo-Hernandez by paying taxes owed by Acevedo-Hernandez, paying for the construction of a garage for Acevedo-Hernandez, and providing Acevedo-Hernandez with a motorcycle, clothing and accessories, including cufflinks and a watch.  In exchange, Acevedo-Hernandez acquitted Acevedo-Lopez of all charges.

Acevedo-Lopez pleaded guilty to conspiracy to commit federal programs bribery and paying a bribe to an agent of an organization receiving federal funds on Aug. 14, 2014.

The case was investigated by the FBI’s San Juan Division and is being prosecuted by Trial Attorney Peter Mason of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorneys Timothy Henwood and Jose Capo of the District of Puerto Rico.

Tuesday, February 3, 2015


For Immediate Release
January 29, 2015 Chris Bozeman, Lone Star Fugitive Task Force
Deputy U.S. Marshal/Public Information Officer (PIO)
Western District of Texas – San Antonio 
West Coast Homicide Suspect Arrested in West Texas
San Bernardino County Fugitive Captured

 LSFTF LogoSan Antonio, TX – Logan Anderson Swank, 20, was arrested this morning by members of the United States Marshals Service Lone Star Fugitive Task Force (LSFTF) in San Antonio, TX. An arrest warrant was issued pursuant to an investigation by the San Bernardino County Sheriff’s Department (SBCSD) Homicide Detail, where it is alleged that Swank committed homicide.

This morning, members of the LSFTF were contacted by detectives from the SBCSD to assist in searching for Swank here in San Antonio. Members of the LSFTF immediately initiated an investigation in locating and apprehending Swank. Through investigative efforts, task force officers determined that Swank was hiding out in an apartment located in the 8000 block of Midcrown Drive, on the northeast side of San Antonio. While conducting surveillance, task force officers observed Swank exit an apartment and walk toward the parking lot. Task force officers approached Swank, identified themselves, and took him into custody without incident.

On September 29, 2014, Logan Swank and another accomplice, Wesley Swank, 28, were allegedly involved in shooting a man with a shotgun in the 2200 block of Muni Road, in Apple Valley, CA. Reports stated that the victim was found sitting in a car, located in the parking lot of the apartment complex. The victim suffered from 1 gunshot wound and was pronounced dead at the scene. After an extensive investigation by SBCSD detectives, arrest warrants were issued yesterday for the 2 suspects involved in the shooting. Welsey Swank was arrested last night by SBCSD Homicide Detail officers and Logan Swank remained a fugitive at large until he was arrested this morning by LSFTF officers.

Logan Swank is currently being held in custody at the Bexar County Sheriff’s Office awaiting extradition to San Bernardino County.

Robert R. Almonte, United States Marshal for the Western District of Texas, states, “Excellent collaborative efforts by the San Bernardino Sheriff’s Department, Lone Star Fugitive Task Force, and the Pacific Southwest Regional Fugitive Task Force for apprehending these violent fugitives safely and without delay. I pray the victim’s family will find peace and closure knowing that these 2 men will be held accountable for their actions.”

Members of the Lone Star Fugitive Task Force:

New Braunfels Police Department
San Antonio Police Department
San Antonio Independent School District Police Department
Bexar County Sheriff’s Office
Comal County Sheriff’s Office
Bexar County Fire Marshal’s Office
Bexar County District Attorney’s Office
Texas Office of The Attorney General
Texas Department of Public Safety
Texas Department of Criminal Justice – Office of the Inspector General
Immigration & Customs Enforcement – Office of Detention & Removal
U.S. Marshals Service

Monday, February 2, 2015


Tuesday, January 27, 2015
Chicago Twins’ Cooperation Against Sinaloa Cartel Yields 14-Year Prison Terms; New Charges Target Cartel’s Top Echelon
Twin brothers Pedro and Margarito Flores, regarded as Chicago’s most significant drug traffickers who rose from street level dealers to the highest echelons of the Mexico-based Sinaloa Cartel and a rival cartel before they began providing unparalleled cooperation to the Drug Enforcement Administration (DEA), were each sentenced today to 14 years in federal prison.  The sentencing marked the Flores brothers’ first public court appearance since they entered protective federal custody in 2008.  Their August 2012 guilty pleas to a narcotics distribution conspiracy were unsealed in November 2014.
Also today, federal law enforcement officials announced the unsealing of an expanded eighth superseding indictment in the case in which the Flores brothers and leaders of the Sinaloa Cartel were initially indicted here in 2009.  The eighth superseding indictment and three separate new indictments announced today, add significant new defendants, including two alleged cartel money laundering associates who were arrested in the United States and extend the government’s efforts in Chicago and elsewhere to dismantle the Sinaloa Cartel under Joaquin Guzman Loera, 60, also known as “Chapo,” and Ismael Zambada Garcia, 67, aka “Mayo.”
“The persistent determination of DEA special agents and leadership in Chicago, coupled with the efforts of those in DEA offices worldwide, is having a significant impact on the global operations of the Sinaloa Cartel,” said U.S. Attorney Zachary T. Fardon of the Northern District of Illinois.  “This case put an end to the Flores brothers’ Chicago hub for transshipment of cartel narcotics nationwide.  Our investigation and prosecution of cartel members is continuing,”
“The extraordinary work in this investigation continues,” said Special Agent in Charge Dennis A. Wichern of the Chicago Field Division of the DEA.  “Agents, investigators, prosecutors and our worldwide law enforcement partners continue to expand this investigation against members of the Sinaloa Cartel ― working to bring them to justice and in doing so ― helping to make the great city of Chicago a safer place.” 
“IRS Criminal Investigation is committed to working together with the DEA and the United States Attorney’s Office to fight the war on drugs,” said Special Agent in Charge James C. Lee of the Internal Revenue Service Criminal Investigation Division (IRS CI) in Chicago.  “IRS CI brings, and will continue to bring, its financial expertise to disrupt and dismantle the Sinaloa Cartel’s drug trafficking organization.”
Flores Brothers Sentencing
In sentencing of the 33-year-old Flores brothers, U.S. District Chief Judge Ruben Castillo said that but for the Flores brothers’ cooperation, he would have imposed a life sentence and noted that because of the peril their ongoing cooperation poses to them and their families, they effectively “are going to leave here with a life sentence.”  If the city of Chicago had walls, Judge Castillo said the brothers’ operation “devastated the walls of this city,” adding that their operation “became just a highway of drugs into this city.” 
But, Judge Castillo added, “it is never too late to cooperate,” which is what earned the Flores brothers a significant discount in their sentences. 
Judge Castillo ordered the Flores brothers to forfeit more than $3.66 million that was seized from them and a sport utility vehicle.  In addition, more than $400,000 worth of assorted jewelry, several luxury automobiles and smaller amounts of cash and electronics equipment were seized and forfeited in administrative proceedings by the DEA.  The brothers left behind millions of dollars in additional assets in Mexico after they began cooperating.
The judge also placed each of the brothers on court supervision for five years when they are released from prison after serving at least 85 percent of their sentences.
Between 2005 and 2008, the Flores brothers and their crew operated a Chicago-based wholesale distribution cell for the Sinaloa Cartel and a rival drug trafficking organization controlled by Arturo Beltran Leyva, receiving on average 1,500 to 2,000 kilograms of cocaine per month.  Approximately half of this cocaine was distributed to the Flores’ customers in the Chicago area, while the other half was distributed to customers in Columbus, Cincinnati, Detroit, Milwaukee, New York, Philadelphia, Washington, D.C. and Vancouver, among other cities.  In total, the brothers admitted to facilitating the transfer of approximately $1.8 billion of drug proceeds from the United States to Mexico, primarily through bulk cash smuggling. 
At great personal risk to themselves and their families, the Flores brothers began cooperating with the government in October 2008 and recorded conversations, including two directly with Chapo Guzman.  Their cooperation resulted in indictments against leaders of the Sinaloa Cartel and the Beltran Leyva organization, as well as the complete dismantling of the brothers’ own Chicago-based criminal enterprise.  In late 2008 alone, their cooperation facilitated approximately a dozen seizures in the Chicago area totaling hundreds of kilograms of cocaine and heroin and more than $15 million in cash, as well as the seizure of more than 1,600 kilograms of cocaine in the Los Angeles area that was bound for Chicago.
Further cooperation by the Flores brothers and members of their dismantled crew resulted in the convictions of more than a dozen of their high-level customers who received on average 50 to 100 kilos of cocaine per month. 
“While not as high-profile as the cartel figures, the successful prosecution of these defendants made a very real difference in combating the scourge of drug trafficking that fuels so much violence and the destruction of communities in Chicago,” said the prosecutors in recommending a sentence at or near the low end of the agreed 10- to 16-year sentencing range.
“The Flores brothers (and their families) will live the rest of their lives in danger of being killed in retribution,” prosecutors stated in a sentencing memo.  “The barbarism of the cartels is legend, with a special place reserved for those who cooperate.” 
In 2009, the brothers’ father was kidnapped and presumed killed when he reentered Mexico despite the U.S. government warning him not to do so.
The Primary ― Eighth Superseding ― Indictment
The eighth superseding indictment unsealed today charges a total of nine defendants, including Chapo Guzman, Mayo Zambada and Guzman’s son, Jesus Alfredo Guzman Salazar, 31, aka “Alfredillo” and “Jags,” each of whom was among the initial group of co-defendants in the original indictment in 2009.  Zambada and Salazar are fugitives, while Guzman remains in Mexican custody following his arrest last February.
Co-defendant, Jesus Raul Beltran Leon, 31, aka “Trevol” and “Chuy Raul,” was arrested in Mexico this past November and remains in Mexican custody.  The remaining co-defendants, all fugitives, Heriberto Zazueta Godoy, 54, aka “Capi Beto,” Victor Manuel Felix Beltran, 27, aka “Lic Vicc,” Hector Miguel Valencia Ortega, 33, aka “Mv,” Jorge Mario Valenzuela Verdugo, 32, aka “Choclos” and Guadalupe Fernandez Valencia, 54, aka “Don Julio” and “Julia.”
This indictment alleges that all nine defendants conspired between May 2005 and December 2014, when the indictment was returned under seal, to import and distribute narcotics and to commit money laundering.  They allegedly conspired to smuggle large quantities of cocaine from Central and South America, as well as heroin, methamphetamine and marijuana from Mexico to the United States and through Chicago for distribution nationwide.  The indictment seeks forfeiture of $2 billion.      
The U.S. Treasury Department’s Office of Foreign Asset Control today announced the designation of Felix Beltran, who is Salazar’s brother-in-law, pursuant to the Foreign Narcotics Kingpin Designation Act, freezing all of his assets in the U.S. or in the control of U.S. persons and generally prohibiting any U.S. persons from engaging in transactions with him.  A second designation was announced today against Alfonso Limon Sanchez, an alleged Sinaloa Cartel associate under federal indictment with Zambada and others in San Diego.  Other alleged cartel leaders, including Chicago defendants Guzman, Zambada, Salazar and Godoy, were previously designated drug kingpins.
Charges brought in earlier versions of this primary indictment remain pending against three additional co-defendants: Felipe Cabrera Sarabia, 44, who is in custody in Mexico; German Olivares, age unknown and a fugitive; and Edgar Manuel Valencia Ortega, 27, aka “Fox,” and Hector Miguel Valencia Ortega’s brother, who was arrested last year in the United States and is in federal custody in Chicago.  His next court date is Feb. 19, 2015 for a status hearing. 
In addition to the Flores brothers, Alfredo Vasquez Hernandez, 59, pleaded guilty and was sentenced last November to 22 years in prison.  Two other co-defendants, Mayo Zambada’s son, Vicente Zambada Niebla, 39, and Tomas Arevalo Renteria, 45, have pleaded guilty and are awaiting sentencing in Chicago.  Altogether, 18 defendants have been charged in the primary case in Chicago.
Three New Indictments
Those 18 are among a total of 62 defendants, most of whom have been convicted and sentenced, who were indicted in nearly two dozen related cases in Chicago since 2009.  Two new defendants, Alvaro Anguiano Hernandez, 38, aka “Panda,” and Jorge Martin Torres, 38, were arrested separately in the U.S. in November and are facing separate indictments here alleging they were high-level money laundering associates of the Sinaloa Cartel and participated in money laundering conspiracies.  Anguiano Hernandez’s indictment seeks forfeiture of $950,000. 
Torres allegedly conspired to launder in excess of $300,000 of drug proceeds from Mexico to the United States to purchase, refurbish, and transfer from Ohio to Mexico, a 1982 Cessna Turbo 210 to promote the cartel’s alleged narcotics conspiracy.  His indictment seeks forfeiture of $1 million.
A third separate indictment announced today charges Venancio Covarrubias, 26, aka “Benny,” of Elgin, who was arrested last October, with being a high-level cartel customer in the Chicago area.  In September 2013, law enforcement, including U.S. Customs and Border Protection officers in Laredo, Texas, seized 159 kilograms of cocaine that was allegedly destined for a warehouse in Elgin leased by Covarrubias.  The cocaine, wrapped in 118 brick-shaped packages, was hidden in a tractor-trailer containing a shipment of fresh tomatoes from a fictitious Mexican business called Tadeo Produce.  The charges allege that during the prior year, Covarrubias wire transferred drug proceeds to Tadeo Produce while receiving narcotics disguised as tomato shipments.  His indictment seeks forfeiture of $2.89 million.
The money laundering conspiracy charges against Anguiano Hernandez, Torres and Covarrubias carry a maximum sentence of 20 years in prison, a $500,000 fine, or an alternate fine totaling twice the amount of the funds involved in illegal activity.  The narcotics importation and distribution conspiracy charges against Covarrubias and each defendant in the primary indictment carry a mandatory minimum sentence of 10 years to a maximum of life in prison and a $10 million fine.  If convicted, the court must impose a reasonable sentence under federal statutes and the advisory United States sentencing guidelines.  The defendants against whom charges are pending are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
Total Seizures Since 2008
Overall, the Chicago-based investigation of the Sinaloa Cartel has resulted in seizures of approximately $30.8 million, approximately 11 tons of cocaine, 265 kilograms of methamphetamine and 78 kilograms of heroin.  Law Enforcement in Chicago has worked closely with federal agents and prosecutors in San Diego to target the senior leadership of the Sinaloa Cartel.  This partnership yielded the prosecutions here as well as 14 indictments announced this month in San Diego against 60 alleged Sinaloa leaders, lieutenants and associates, including Zambada, two of his four sons and another of Guzman’s sons.   
The investigation in Chicago has been led by the DEA, joined by the IRS Criminal Investigation Division and the Chicago Police Department.  Also assisting were DEA offices worldwide, including in Los Angeles, San Diego, Mexico City and its El Paso Intelligence Center, the Organized Crime Drug Enforcement Task Force the Chicago High-Intensity Drug Trafficking Area task force, the U.S. Attorney’s Offices in San Diego, Springfield, Illinois and Milwaukee and the Milwaukee Police Department, the Chicago and Peoria offices of the Federal Bureau of Investigation, the Chicago office of the Bureau of Alcohol, Tobacco, Firearms and Explosives, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, the U.S. Marshals Service, the U.S. State Department’s Diplomatic Security Service, the Cook County Sheriff’s Department, suburban police departments in Calumet City, Evergreen Park, Oak Park, Palos Heights and the Beverly Hills Police Department.  The investigation was assisted by agents and analysts of the Justice Department Criminal Division’s Special Operations Division, the attorneys from the Criminal Division’s Narcotic and Dangerous Drug Section and Office of International Affairs.
The government is being represented by Assistant U.S. Attorneys Michael J. Ferrara, Erika Csicsila, Naana Frimpong, Georgia Alexakis, Kathryn Malizia and Thomas D. Shakeshaft.  

Sunday, February 1, 2015


January 22, 2015
Yvette Soto, Deputy U.S. Marshal
District of New Mexico 
Murder Suspect Finally in U.S. Custody After Nearly a Decade on the Run
Allegedly bludgeoned victim and left body in NM desert

Dona Ana, NM – After nearly a decade on the run, murder suspect Eduardo Estrada-Garcia is finally back on U.S. soil to face his charges. The U.S. Marshals Service South West Investigative Fugitive Team (SWIFT) task force took custody of Estrada-Garcia on Thursday, January 22, after he was extradited from Mexico.

The Dona Ana County Sheriff’s Department in New Mexico wanted Estrada-Garcia for allegedly murdering Emely Ianni- Howard. On June 6, 2006, Estrada-Garcia allegedly bludgeoned Howard to death and left her body in the Chaparral Desert.

During the fugitive investigation for Estrada-Garcia, the U.S. Marshals worked closely with the Border Violence Division of the New Mexico Attorney General’s Office to develop information regarding his possible whereabouts, which ultimately led to his apprehension in Mexico in June 2014.

“While Estrada-Garcia evaded capture for nearly a decade, this case is a testament to the vehement dedication of the U.S. Marshals in the District of New Mexico and our many law enforcement partners who were resolute in their commitment to bring this fugitive to justice,” said Conrad Candelaria, U.S. Marshal for the District of New Mexico.

“I would also like to acknowledge the hard work and legal diligence of the Border Violence Division of the New Mexico Attorney General’s Office and the Office of International Affairs of the U.S. Department of Justice, Criminal Division, which navigated and facilitated the complex extradition process so that this fugitive could be returned to New Mexico and be held accountable for the horrific crimes allegedly committed.”

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