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Wednesday, September 30, 2015


Tuesday, September 29, 2015
Ten Puerto Rico Police Officers Indicted for Allegedly Running Criminal Organization Out of Police Department
Officers Charged with Racketeering, Robbery, Extortion, Firearm, Narcotics, Civil Rights and Theft Charges

Ten Puerto Rico police officers have been indicted for their alleged participation in a criminal organization, run out of the police department, that used their affiliation with law enforcement to make money through robbery, extortion, manipulating court records and selling illegal narcotics, announced U.S. Attorney Rosa Emilia Rodríguez-Vélez of the District of Puerto Rico.

“The criminal action today dismantles a network of officers who, we allege, used their badges and their guns not to uphold the law, but to break it,” said U.S. Attorney Rodríguez-Vélez.  “The indictment portrays a classic criminal shakedown; but the people wielding the guns and stealing the drugs here weren’t mob goodfellas or mafia soldiers – these were police officers violating their oaths to enforce the law, making a mockery of the police’s sacred responsibility to protect the public.”

“Corruption is at the root of all evil,” said Special Agent in Charge Carlos Cases of the FBI’s San Juan Division.  “These police officers violated the trust of the people of Puerto Rico and not only dishonored the police department, but also their fellow, honest, and hardworking officers.  The FBI, along with the United States Attorney's Office, will continue to attack corruption at all levels.”

The indictment, returned on Sept. 24, 2015, by a federal grand jury in the District of Puerto Rico, includes 11 charges against the following police officers: Shylene López-García aka “Plinia;” Ángel Hernández-Nieves, aka “Doble;” Xavier Jiménez-Martínez, aka “Negro;” Alvin Montes-Cintrón, aka “Vinillo;” Ramón Muñiz-Robledo, aka “Marmota;” Guillermo Santos-Castro, aka “Caco Biftec;” Luis Flores-Ortiz, aka “Piquito;” José Neris-Serrano; Manuel Grego-López; and David Centeno-Faría, aka “David Bisbal”.

The defendants are charged with conspiring to violate the Racketeer Influenced and Corrupt Organizations (RICO) Act.  Other charges against certain defendants include extortion under color of official right, narcotics trafficking, civil rights violations and false statements to federal agents.

According to the indictment, the officers charged with RICO conspiracy were members of a criminal organization who sought to enrich themselves through a pattern of illegal conduct.  The officers worked together to conduct traffic stops and enter homes or buildings used by persons suspected of being engaged in criminal activity to steal money, property and narcotics.  The officers planted evidence to make false arrests, extorted narcotics and firearms from individuals in exchange for their release.  The members of the enterprise gave false testimony, manipulated court records and failed to appear in court when required so that cases would be dismissed.  The officers also sold and distributed wholesale quantities of narcotics.

For example, in January 2012, defendants Hernández-Nieves, Muñiz-Robledo and Grego-López, in their capacity as police officers, released a federal fugitive from custody in exchange for firearms.

In another example, the indictment alleges that in February 2013, defendants López-García and Montes-Cintrón, in their capacity as police officers, stole at least 500 grams of cocaine during the course of a police intervention, which Jiménez-Martínez sold afterward in furtherance of the goal of the enterprise.

The indictment charges that the defendants frequently shared the proceeds they illegally obtained and that they used their power, authority and official positions as police officers to promote and protect their illegal activity.  Among other things, the indictment charges that they used the Police of Puerto of Rico’s (POPR) firearms, badges, patrol cars, tools, uniforms and other equipment to commit the crimes and concealed their illegal activity with fraudulently obtained court documents and falsified POPR paperwork to make it appear that they were engaged in legitimate police work.

The case is being investigated by the FBI’s San Juan Division.  The case is being prosecuted by Assistant U.S. Attorneys Mariana Bauzá-Almonte and Teresa Zapata-Valladares of the District of Puerto Rico.

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

Monday, September 28, 2015


Tuesday, September 22, 2015
Owner of Sentenced to Two Years in Prison for Training Customers to Lie

A former Oklahoma City law enforcement officer and the owner of has been sentenced to two years in prison for training customers to lie and conceal crimes and other misconduct during polygraph examinations.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Assistant Commissioner Matthew Klein of U.S. Customs and Border Protection’s Office of Internal Affairs and Special Agent in Charge Scott L. Cruse of the FBI’s Oklahoma City Division made the announcement.

Douglas G. Williams, 69, of Norman, Oklahoma, pleaded guilty on May 13, 2015, to two counts of mail fraud and three counts of witness tampering.  Chief U.S. District Judge Vicki Miles-LaGrange of the Western District of Oklahoma imposed the sentence.

According to admissions made in connection with his plea, Williams owned and operated, an Internet-based business through which he trained people how to conceal misconduct and other disqualifying information when submitting to polygraph examinations in connection with federal employment suitability assessments, background investigations, internal agency investigations and other proceedings.  In particular, Williams admitted that he trained an individual posing as a federal law enforcement officer to lie and conceal involvement in criminal activity from an internal agency investigation.  Williams also admitted to training a second individual, posing as an applicant seeking federal employment, to lie and conceal crimes in a pre-employment polygraph examination.  Williams also admitted to instructing the individuals to deny receiving his polygraph training.

The investigation was conducted by U.S. Customs and Border Protection’s Office of Internal Affairs and the FBI’s Oklahoma City Division.  The case was prosecuted by Trial Attorneys Heidi Boutros Gesch and Brian K. Kidd of the Criminal Division’s Public Integrity Section.

Saturday, September 26, 2015


Wednesday, September 23, 2015
Colombian National Sentenced to 63 Months for Conspiring to Launder Drug Trafficking Proceeds

A Colombian national was sentenced today to 63 months in prison for conspiring to launder drug trafficking proceeds, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and Acting Administrator Chuck Rosenberg of the Drug Enforcement Administration (DEA).

Tito Miller Parra-Isaza, 45, pleaded guilty on May 26, 2015.  U.S. District Judge Ed Kinkeade of the Northern District of Texas imposed the sentence.

According to a factual stipulation filed in connection with his guilty plea, Parra-Isaza coordinated the deposit of bulk cash, which he knew to be the proceeds of drug trafficking, into financial institutions in Mexico and elsewhere.  The bulk cash was later wire transferred into bank accounts in Dallas and then transported to Panama and elsewhere for distribution to individuals involved in drug trafficking.

Four other defendants previously pleaded guilty.  Of the remaining charged defendants, three are fugitives and one is deceased.

This case is being investigated by the DEA.  This case is being prosecuted by Senior Trial Attorney Mark Irish and Trial Attorney Nicole Grosnoff of the Criminal Division’s Asset Forfeiture and Money Laundering Section.  The Criminal Division’s Office of International Affairs also has provided substantial assistance.

Friday, September 25, 2015


Wednesday, September 23, 2015
Chicago Man Charged in Connection with the Murder of Sheila Von Wiese in Bali, Indonesia

A Chicago man has been charged for conspiring with his cousin and cousin’s girlfriend to kill a U.S. citizen at a resort in Bali, Indonesia, in August 2014, according to a criminal complaint unsealed in federal court in Chicago today.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Zachary T. Fardon for the Northern District of Illinois and Acting Special Agent in Charge John A. Brown of the FBI’s Chicago Division made the announcement.

According to the complaint, Robert Ryan Justin Bibbs, 24, of Chicago, advised his cousin, Tommy Schaefer, and Schaefer’s girlfriend, Heather Mack, on how to kill Mack’s mother, Sheila Von Wiese in August 2014.  The complaint alleges that, on or about Aug. 2, 2014, Von Wiese and Mack departed Chicago for a vacation in Bali, Indonesia.  On or about Aug. 12, 2014, Schaefer allegedly departed Chicago and arrived in Indonesia at the same resort where Mack and the victim were staying.  The complaint alleges that, within hours of Schaefer’s arrival, the victim was bludgeoned to death, and Schaefer and Mack stuffed the body in a suitcase and placed it in a taxi cab, which was later discovered by Indonesian police.

According to the complaint, Bibbs knew of the plot to kill Von Wiese before Schaefer and Mack carried it out, advised them on how to kill the victim, and counseled Schaefer on how to evade detection by law enforcement.  According to the complaint, Bibbs did so because he believed that Schaefer would gain access to Von Wiese’s estate through the victim’s daughter, Mack, and that Schaefer would share the inheritance with family members, including Bibbs.

On Aug. 13, 2014, Schaefer and Mack were arrested in Bali.  In April 2015, an Indonesian court convicted Schaefer and Mack of charges related to Von Wiese’s murder.  Schaefer was sentenced to 18 years in an Indonesian prison, while Mack was sentenced to 10 years.

Bibbs was arrested today by federal authorities.  He is scheduled to make an initial court appearance before U.S. Magistrate Judge Maria Valdez today at 3 p.m. CDT.

The charges and allegations contained in a criminal complaint are merely accusations.  The defendant is presumed innocent until and unless proven guilty.

The case is being investigated by the FBI’s Chicago Division and being prosecuted by Assistant U.S. Attorneys Bolling Haxall and Julie Porter of the Northern District of Illinois and Trial Attorneys Hope Olds and Christine Duey of the Criminal Division’s Human Rights and Special Prosecutions Section.

Thursday, September 24, 2015


Thursday, September 17, 2015
Man Sentenced in Connection with Rope Tied Around Neck of James Meredith Statue on Ole Miss Campus

U.S. District Court Judge Michael P. Mills of the Northern District of Mississippi today sentenced Graeme Phillip Harris to six months in prison and one year supervised release for helping place a rope around the neck of the James Meredith statue on the University of Mississippi campus.

The incident occurred in the early morning hours of Feb. 16, 2014.  Court documents show that Harris and others hung a rope and an outdated version of the Georgia state flag—which prominently depicts the Confederate battle flag—around the neck of the Meredith statue, with the intent to threaten and intimidate African-American students and employees at the university.  The iconic statue honors Meredith’s role as the university’s first African-American student.

Harris was indicted by a federal grand jury on March 27 on one count of conspiracy to violate civil rights and one count of using a threat of force to intimidate African-American students because of their race or color.  On June 18, he pleaded guilty to the threats charge, pursuant to a plea agreement.

“Those who would use threats and intimidation to spread fear and hatred through our schools and workplaces should know that the Department of Justice will vigorously prosecute these cases,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division.  “No one should have to endure threats or intimidation because of their race or the color of their skin.”

“The United States Attorney’s Office for the Northern District of Mississippi greatly appreciates the assistance of the Department of Justice Civil Rights Division, the FBI, and the University of Mississippi in the investigation and prosecution of this case,” said U.S. Attorney Felicia C. Adams of the Northern District of Mississippi.

“The FBI is committed to the protection of the civil rights of all citizens and will continue to investigate allegations of crime motivated by hate,” said Special Agent in Charge Donald Alway of the FBI’s Jackson Division.  “I’m hopeful that this sentencing will clarify the consequences for anyone contemplating senseless, hurtful actions such as this.”

The investigation is ongoing.

This case is being investigated by the Oxford Resident Agency of the FBI’s Jackson, Mississippi, Division’s and the University of Mississippi Police Department.  The case is being prosecuted by the Justice Department’s Civil Rights Division and the U.S. Attorney’s Office of the Northern District of Mississippi.

Wednesday, September 23, 2015


09/14/2015 04:26 PM EDT
2015 Presidential Determination for Major Drug Producing and Transit Countries
Media Note
Office of the Spokesperson
Washington, DC
September 14, 2015

Under the Foreign Relations Authorization Act (FRAA), the President is required each year to notify Congress of those countries he determines to be major illicit drug producing countries or major drug-transit countries that “significantly affect the United States.”  This year’s list consists of 22 countries: Afghanistan, the Bahamas, Belize, Bolivia, Burma, Colombia, Costa Rica, Dominican Republic, Ecuador, El Salvador, Guatemala, Haiti, Honduras, India, Jamaica, Laos, Mexico, Nicaragua, Pakistan, Panama, Peru, and Venezuela.

A country’s presence on the list does not necessarily reflect its counternarcotics efforts or its level of cooperation with the United States on illegal drug control.  The designation can reflect a combination of geographic, commercial, and economic factors that allow drugs to be produced and/or trafficked through a country.

When a country on the list does not fulfill its obligations under international counternarcotics agreements and conventions, the President determines that the country has “failed demonstrably” to meet its counterdrug obligations.  Such a designation can lead to sanctions.  The President may also execute a National Interest Waiver of the designation when he determines there is a vital national interest in continuing U.S. assistance.

Of the aforementioned 22 on the 2015 list, the President has determined that Bolivia, Burma, and Venezuela “failed demonstrably” during the last twelve months to make sufficient or meaningful efforts to adhere to their obligations under international counternarcotics agreements.  In accordance with provisions of the FRAA, the President has also determined that support for programs to aid the promotion of democracy in Burma and Venezuela remains vital to the national interest of the United States and therefore grants Burma and Venezuela National Interest Waivers.

Monday, September 21, 2015


Thursday, September 17, 2015
Former County Chief Deputy Auditor Convicted of Embezzling Government Funds, Tax Fraud and Wire Fraud

A former chief deputy auditor for LaPorte County, Indiana, was convicted today by a federal jury in the Northern District of Indiana of embezzling over $150,000 from the LaPorte County government, tax fraud and defrauding her elderly father-in-law out of at least $400,000.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney David A. Capp of the Northern District of Indiana made the announcement.

Mary Ray, 67, of La Porte, Indiana, was convicted of two counts each of theft of government monies and making false statements on a tax return, and with seven counts of wire fraud.  Ray will be sentenced by Judge Jon E. Deguilio of the Northern District of Indiana on Dec. 22, 2015.

According to evidence presented at trial, from September 2011 through December 2012, while she served as deputy chief auditor for LaPorte County, Ray embezzled over $150,000 from county coffers, and underreported her income on her U.S. Individual Tax Returns for those years by failing to report the embezzled funds.  Evidence at trial also showed that Ray defrauded her 86-year-old father-in-law, a disabled veteran, out of at least $400,000 that he entrusted her to oversee.  The trial evidence also demonstrated that Ray used the funds that she embezzled from LaPorte County and stole from her father-in-law to gamble at casinos.

This case was investigated by the FBI and IRS-Criminal Investigation, with assistance from the Indiana State Police, the LaPorte County Sheriff’s Department and the Indiana State Board of Accounts.  The case is being prosecuted by Trial Attorney Peter Halpern of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Donald J. Schmid of the Northern District of Indiana.

Sunday, September 20, 2015


Monday, September 21, 2015
Former Peanut Company President Receives Largest Criminal Sentence in Food Safety Case; Two Others also Sentenced for Their Roles in Salmonella-Tainted Peanut Product Outbreak

Two former officials of and one broker for the Peanut Corporation of America (PCA) were sentenced to prison today in Albany, Georgia, for their roles in a conspiracy to defraud their customers by shipping salmonella-positive peanut products before the results of microbiological testing were received and falsifying microbiological test results, the Department of Justice announced today.

Stewart Parnell, 61, of Lynchburg, Virginia, the former owner and president of PCA, was sentenced by Senior U.S. District Court Judge W. Louis Sands of the Middle District of Georgia to serve 336 months in prison to be followed by three years of supervised release.  Michael Parnell, 56, of Midlothian, Virginia, who worked at P.P. Sales and was a food broker who worked on behalf of PCA, and is Stewart Parnell’s brother, was sentenced to serve 240 months in prison to be followed by three years of supervised release.  Mary Wilkerson, 41, of Edison, Georgia, who held various positions at PCA’s Blakely, Georgia, plant including receptionist, office manager and quality assurance manager, was sentenced to serve 60 months in prison to be followed by two years of supervised release.  Judge Sands will issue a restitution order at a later date.

The Parnell brothers were convicted by a federal jury on Sept. 19, 2014, of multiple counts of conspiracy, mail and wire fraud and the sale of misbranded food.  Stewart Parnell was also convicted of the introduction of adulterated food into interstate commerce.  Stewart Parnell and Mary Wilkerson were also convicted of obstruction of justice.  Stewart Parnell was found guilty of all but one of the 68 felony counts with which he was charged on Feb. 15, 2013.

Expert evidence at trial showed that tainted food led to a salmonella outbreak in 2009 with more than 700 reported cases of salmonella poisoning in 46 states.  According to the Centers for Disease Control and Prevention (CDC), based on epidemiological projections, that number translates to more than 22,000 total cases including nine deaths.  The court found that the evidence presented at trial linked Stewart and Michael Parnell’s conduct, and specifically PCA’s contaminated peanut products, to the victims’ illnesses.  The court also found that steps taken by the CDC to link reported illnesses to the specific strain of salmonella found in PCA products established that Stewart and Michael Parnell’s conduct was the proximate cause of the victims’ illnesses.

“Americans should be able to trust that the food we buy for ourselves and our families is safe,” said Acting Associate Attorney General Stuart F. Delery.  “The sentences handed down today to officials associated with the Peanut Corporation of America demonstrate the consequences for those whose criminal actions threaten that trust by introducing contaminated food into the marketplace.  Our prosecution is just one more example of the forceful actions that the Department of Justice, with its agency partners, takes against any individual or company who compromises the safety of America’s food supply for financial gain.”

The government presented evidence at trial to establish that Stewart Parnell and Michael Parnell – with former PCA operations manager Samuel Lightsey, 50, and Daniel Kilgore, 46, both of Blakely – participated in several schemes by which they defrauded PCA customers and jeopardized the quality and purity of their peanut products.  Specifically, the government presented evidence that the defendants misled customers about the presence of salmonella in their products.  For example, the Parnells, Lightsey and Kilgore fabricated certificates of analysis (COAs) accompanying various shipments of peanut products.  COAs are documents that summarize laboratory results, including test results concerning the presence or absence of pathogens in food.  According to the evidence, on several occasions, the Parnells, Lightsey and Kilgore participated in a scheme to fabricate COAs that stated that the food at issue was free of pathogens when in fact there had been no testing of the food or tests had revealed the presence of pathogens.

The government also presented evidence that when the U.S. Food and Drug Administration (FDA) officials visited PCA’s Blakely plant to investigate the outbreak, Stewart Parnell, Lightsey and Wilkerson gave untrue or misleading answers to questions posed by those officials.

“Today’s sentencing sends a powerful message to officials in the food industry that they stand in a special position of trust with the American consumer, and those who put profit above the welfare of their customers and knowingly sell contaminated food will face serious consequences,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “The Department of Justice will continue to work aggressively with its partners to ensure that the American people are protected from food that is adulterated or misbranded within the meaning of the Food, Drug, and Cosmetic Act and pursue any person who fails to abide by the vital food safety protections in the law.  We are dedicated to using all the tools that we have at our disposal to ensure that the processors and handlers of our food have the public’s safety forefront in their minds.”

“The sentence that was handed down today means that executives will no longer be able to hide behind the corporate veil,” said U.S. Attorney Michael J. Moore of the Middle District of Georgia.  “The tragedy of this case is that at a peanut processing plant in Middle Georgia, protecting the public lost out to increasing of profits.  This case was never just about shipping tainted peanut product; it was about making sure individual wrong doers were held accountable and the losses suffered by the victims and their families are never forgotten.”

Judge Sands took into account the fraud loss of PCA’s corporate victims when imposing today’s sentence.  The court found that Stewart Parnell and Mary Wilkerson should be held accountable for more than $100 million but less than $200 million in losses, and Michael Parnell should be held accountable for more than $20 million but less than $50 million in losses.  The court also found the government established evidence that Stewart Parnell and Mary Wilkerson should be accountable for harming more than 250 victims, and Michael Parnell should be accountable under federal sentencing guidelines for harming more than 50 victims.  The court additionally found that the Parnells should have known that their actions presented a reckless risk of death or serious bodily injury.

“At the outset, the FBI saw this case as a serious breach of the public’s trust by a corporation and its officers who were expected to comply with the various regulations that would ensure their products safe for consumption,” said Special Agent in Charge J. Britt Johnson of FBI Atlanta Field Office.  “They did not and lives were lost.  The lengthy prison sentences handed down today in federal court clearly reflects the magnitude of the criminal conduct of these corporate officers and it is hoped that these sentences can provide some solace to those victims or their families who suffered so much from that criminal conduct and waited so long for justice.”

“Americans expect and deserve the highest standards of food safety and integrity,” said Dr. Stephen Ostroff, FDA Acting Commissioner.  “Those who choose profits over the health and safety of U.S. consumers are now on notice that the FDA, working with the Department of Justice, will strive to use the full force of our justice system against them.”

Lightsey and Kilgore are scheduled to be sentenced on Thursday, Oct. 1, in Albany.

The case was prosecuted by Trial Attorneys Patrick Hearn and Mary M. Englehart of the Civil Division’s Consumer Protection Branch and Assistant U.S. Attorney Alan Dasher of the Middle District of Georgia.  Acting Associate Attorney General Delery, Principal Deputy Assistant Attorney General Mizer and U.S. Attorney Moore thank the investigative efforts of the FBI and FDA’s Office of Criminal Investigations.


Friday, September 18, 2015
Justice Department and Chinese Ministry of Public Security Coordinate Efforts to Combat International Drug Trafficking

This week, law enforcement officials from the United States and the People’s Republic of China met in Beijing to coordinate their efforts to fight international drug trafficking.

Representatives of the two sides held two separate but related meetings to exchange law enforcement information, share their assessments of the drug problem, discuss responses in their respective countries, review progress and examine possible mechanisms for further cooperation.  In doing so, the two countries expanded their understanding of the differences in their legal systems, investigative practices and national situations.

The Bilateral Drug Intelligence Working Group, led by officials from the U.S. Drug Enforcement Administration and the Chinese Ministry of Public Security, met on Sept. 14-15, 2015.  Primarily an exchange mechanism for law enforcement information, the Bilateral Drug Intelligence Working Group conducted briefings on the major drug issues faced by each country.

The Counternarcotics Working Group, led by the Department of Justice and Chinese Ministry of Public Security, met on Sept. 16-17, 2015.  This group, which reports to the Joint Liaison Group on law enforcement cooperation, focuses on expanding mutual understanding and cooperation on drug issues.  In this meeting, among other issues, the sides discussed the legal and regulatory challenges posed by “designer drugs” – also known as new psychoactive substances – as well as potential avenues for cooperation in investigating and combating this emerging threat.

Going forward, law enforcement exchange and cooperation mechanisms such as these will facilitate more effective cooperation between the two countries in confronting their shared problem of drug trafficking and abuse.

Saturday, September 19, 2015


September 14, 2015
Murder Trial Walk Away Arrested
Suspect Facing Murder Charge Captured

 LSFTF LogoSan Antonio, TX - Jose Gutierrez, 33, 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 Bexar County Sheriff’s Office (BCSO), where it is alleged that Gutierrez violated the conditions of his pretrial release.

On August 27, 2015, LSFTF officers initiated an investigation in locating and apprehending Gutierrez. Through extensive investigative efforts, task force officers determined that Gutierrez was hiding out in a house on the west side of San Antonio. This morning, task force officers entered the house, identified themselves, made contact with Gutierrez, and took him into custody without incident.

On August 25, 2015, Gutierrez was present to begin trial at the Bexar County 175th District Court to face a murder charge that stemmed back to 2013. He had previously been released on bond with electronic ankle monitoring. Reports stated that Gutierrez requested and was allowed to briefly leave the courtroom before jury selection began. Gutierrez allegedly exited the courtroom and never returned. His electronic ankle monitor had been cut off and was later found at a McDonald’s Restaurant located on the east side of San Antonio. A warrant was immediately issued for Gutierrez’s arrest and he remained a fugitive at large until his arrest this morning.

Gutierrez is currently being held in custody at the Bexar County Sheriff’s Office.

Robert R. Almonte, United States Marshal for the Western District of Texas, stated, “Gutierrez thought he could just walk away and never be held accountable for the crimes he committed, but due to the diligent work of our task force officers, Gutierrez will finally see his day in court.”

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

Friday, September 18, 2015


Monday, September 14, 2015
Former FBI Special Agent Sentenced to Five Years in Bribery Scheme

A former FBI special agent was sentenced today to serve five years in prison, to be served consecutively with a 10 year federal sentence imposed on him previously in the District of Utah, for accepting and soliciting bribes in exchange for providing internal law enforcement documents and other confidential information about a prominent citizen of Bangladesh for use by a political rival.

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

Robert Lustyik, 53, of Westchester County, New York, pleaded guilty on Dec. 23, 2014, to all five counts in the indictment against him, including conspiracy to engage in a bribery scheme, soliciting bribes by a public official, conspiracy to defraud the citizens of the United States and the FBI, theft of government property and unauthorized disclosure of a Suspicious Activity Report.  Lustyik separately was sentenced on March 30, 2015, in the District of Utah to 10 years imprisonment for soliciting and accepting bribes in exchange for taking official actions in his capacity as an FBI special agent.

Lustyik was an FBI special agent who worked on the counterintelligence squad in the White Plains Resident Agency.  Johannes Thaler was Lustyik’s friend and Rizve Ahmed, aka Caesar, was an acquaintance of Thaler.  According to court records, from September 2011 through March 2012, Lustyik, Thaler and Ahmed engaged in a scheme in which Lustyik and Thaler solicited bribe payments from Ahmed in exchange for Lustyik’s agreement to provide confidential documents and information pertaining to a prominent citizen of Bangladesh whom Ahmed perceived to be a political rival, and whom Ahmed sought to locate and harm.  Lustyik had access to the confidential documents and information through his position as an FBI special agent.      

As part of the scheme, Lustyik and Thaler exchanged text messages, including messages about how to pressure Ahmed to pay them additional money in exchange for confidential information.  For example, in late December 2011 and early January 2012, Lustyik texted Thaler, “we need to push [Ahmed] for this meeting and get that 40 gs quick . . . . I will talk us into getting the cash . . . . I will work my magic . . . . We r sooooooo close.”  Thaler responded, “I know.  It’s all right there in front of us.  Pretty soon we’ll be having lunch in our oceanfront restaurant . . . .”

Thaler and Ahmed previously pleaded guilty to bribery and conspiracy to commit fraud and were sentenced on March 5, 2015, to serve 30 months and 42 months in prison, respectively.

The case was investigated by the Department of Justice’s Office of the Inspector General, and prosecuted by Trial Attorney Emily Rae Woods of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Benjamin Allee of the Southern District of New York.

Thursday, September 17, 2015


Tuesday, September 15, 2015
Russian National Admits Role in Largest Known Data Breach Conspiracy Ever Prosecuted
Hackers Targeted Major Payment Processors, Retailers and Financial Institutions Around the World

A Russian national today admitted his role in a worldwide hacking and data breach scheme that targeted major corporate networks, compromised more than 160 million credit card numbers and resulted in hundreds of millions of dollars in losses –  the largest such scheme ever prosecuted in the United States.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Paul J. Fishman of the District of New Jersey and Director Joseph P. Clancy of the U.S. Secret Service made the announcement.

Vladimir Drinkman, 34, of Syktyvkar, Russia, and Moscow, pleaded guilty before Chief U.S. District Judge Jerome B. Simandle of the District of New Jersey to one count of conspiracy to commit unauthorized access of protected computers and one count of conspiracy to commit wire fraud.  Drinkman was arrested in the Netherlands on June 28, 2012, and was extradited to the District of New Jersey on Feb. 17, 2015.  Sentencing is scheduled for Jan. 15, 2016.

“This hacking ring’s widespread attacks on American companies caused serious harm and more than $300 million in losses to people and businesses in the United States,” said Assistant Attorney General Caldwell.  “As demonstrated by today’s conviction, our close cooperation with our international partners makes it more likely every day that we will find and bring to justice cyber criminals who attack America – wherever in the world they may be.  As law enforcement around the world responds to the cyber threat that affects us all, I am confident that this type of international cooperation that led to this result will be the new normal.”

“Defendants like Vladimir Drinkman, who have the skills to break into our computer networks and the inclination to do so, pose a cutting edge threat to our economic well-being, our privacy and our national security,” said U.S. Attorney Fishman.  “The crimes to which he admitted his guilt have a real, practical cost to our privacy and our pocketbooks.  Today’s guilty plea is a tribute to the skill and perseverance of the agents and prosecutors who brought him to justice.”

“This cyber case highlights the effectiveness of global law enforcement partnerships in the detection and dismantling of criminal enterprises targeting U.S. citizens,” said Director Clancy.  “The support of U.S. Attorney’s offices and the resulting plea enhances the Secret Service’s commitment to vigorously pursue transnational threats to the U.S. financial infrastructure.”

According to documents filed in this case and statements made in court, Drinkman and four co-defendants allegedly hacked into the networks of corporate victims engaged in financial transactions, retailers that received and transmitted financial data and other institutions with information that the conspirators could exploit for profit, including the computer networks of NASDAQ, 7-Eleven, Carrefour, JCP, Hannaford, Heartland, Wet Seal, Commidea, Dexia, JetBlue, Dow Jones, Euronet, Visa Jordan, Global Payment, Diners Singapore and Ingenicard.

According to the indictment in this case and statements made in court, the five defendants each played specific roles in the scheme.  Drinkman and Alexandr Kalinin, 28, of St. Petersburg, Russia, allegedly specialized in penetrating network security and gaining access to the corporate victims’ systems.  Drinkman and Roman Kotov, 34, of Moscow, allegedly specialized in mining the networks to steal valuable data.  The hackers hid their activities using anonymous web-hosting services allegedly provided by Mikhail Rytikov, 28, of Odessa, Ukraine.  Dmitriy Smilianets, 32, of Moscow, allegedly sold the information stolen by the other conspirators and distributed the proceeds of the scheme to the participants.

Drinkman and Kalinin were previously charged in New Jersey as “Hacker 1” and “Hacker 2” in a 2009 indictment charging Albert Gonzalez, 34, of Miami, in connection with five corporate data breaches, including the breach of Heartland Payment Systems Inc., which at the time was the largest ever reported.  Gonzalez is currently serving 20 years in federal prison for those offenses.  Kalinin is also charged in two federal indictments in the Southern District of New York: the first charges Kalinin in connection with hacking certain computer servers used by NASDAQ and the second charges him and another Russian hacker, Nikolay Nasenkov, with an international scheme to steal bank account information from U.S.-based financial institutions.  Rytikov was previously charged in the Eastern District of Virginia in an unrelated scheme.

Drinkman and Smilianets were arrested at the request of the United States while traveling in the Netherlands on June 28, 2012.  Smilianets was extradited on Sept. 7, 2012, and remains in federal custody.  Kalinin, Kotov and Rytikov remain at large.

The Attacks

According to documents filed in this case and statements made in court, the five defendants penetrated the computer networks of several of the corporate victims and stole user names and passwords, means of identification, credit and debit card numbers and other corresponding personal identification information of cardholders.  The conspirators allegedly acquired more than 160 million card numbers through hacking.

The initial entry was often gained using a “SQL injection attack.”  SQL, or Structured Query Language, is a type of programming language designed to manage data held in particular types of databases; the hackers allegedly identified vulnerabilities in SQL databases and used those vulnerabilities to infiltrate a computer network.  Once the network was infiltrated, the defendants allegedly placed malicious code (malware) in the system.  This malware created a “back door,” leaving the system vulnerable and helping the defendants maintain access to the network.  In some cases, the defendants lost access to the system due to companies’ security efforts, but were allegedly able to regain access through persistent attacks.

Instant message chats obtained by law enforcement revealed that the defendants allegedly targeted the victim companies for many months, waiting patiently as their efforts to bypass security were underway, sometimes leaving malware implanted in multiple companies’ servers for more than a year.

The defendants allegedly used their access to the networks to install “sniffers,” which were programs designed to identify, collect and steal data from the victims’ computer networks.  The defendants then allegedly used an array of computers located around the world to store the stolen data and ultimately sell it to others.

Selling the Data

According to documents filed in this case and statements made in court, after acquiring the card numbers and associated data – which they referred to as “dumps” – the conspirators sold it to resellers around the world.  The buyers then sold the dumps through online forums or directly to individuals and organizations.  Smilianets was allegedly in charge of sales, selling the data only to trusted identity theft wholesalers.  He allegedly charged approximately $10 for each stolen American credit card number and associated data, approximately $50 for each European credit card number and associated data and approximately $15 for each Canadian credit card number and associated data – offering discounted pricing to bulk and repeat customers.  Ultimately, the end users encoded each dump onto the magnetic strip of a blank plastic card and cashed out the value of the dump by withdrawing money from ATMs or making purchases with the cards.

Covering Their Tracks

According to documents filed in this case and statements made in court, the defendants allegedly used a number of methods to conceal the scheme.  Unlike traditional Internet service providers, Rytikov allegedly allowed his clients to hack with the knowledge he would never keep records of their online activities or share information with law enforcement.

Over the course of the conspiracy, the defendants allegedly communicated through private and encrypted communications channels to avoid detection.  Fearing law enforcement would intercept even those communications, some of the conspirators allegedly attempted to meet in person.

To protect against detection by the victim companies, the defendants allegedly altered the settings on victim company networks to disable security mechanisms from logging their actions.  The defendants also allegedly worked to evade existing protections by security software.

As a result of the scheme, financial institutions, credit card companies and consumers suffered hundreds of millions of dollars in losses – including more than $300 million in losses reported by just three of the corporate victims – and immeasurable losses to the identity theft victims in costs associated with stolen identities and false charges.

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

The case is being investigated by the U.S. Secret Service’s Criminal Investigations Division and Newark, New Jersey, Division.  The case is being prosecuted by Trial Attorney Richard Green of the Criminal Division’s Computer Crime and Intellectual Property Section, Chief Gurbir S. Grewal of the District of New Jersey’s Economic Crimes Unit and Assistant U.S. Attorney Andrew S. Pak of the District of New Jersey.  The Criminal Division’s Office of International Affairs, public prosecutors with the Dutch Ministry of Security and Justice and the National High Tech Crime Unit of the Dutch National Police also provided valuable assistance.

Wednesday, September 16, 2015


Friday, September 11, 2015
Former Business Manager Charged with Theft from Labor Union

A former business manager of the Local 657 of the Laborers International Union of North America (LIUNA) was charged with stealing from the organization.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Assistant Director in Charge Paul M. Abbate of the FBI’s Washington, D.C., Field Office, Special Agent in Charge Steven D. Anderson of the Department of Labor Office of Inspector General’s Office of Labor Racketeering and Fraud Investigations Washington, D.C., Regional Office and District Director Mark Wheeler of the Department of Labor’s Office of Labor Management Standards Washington, D.C., District Office made the announcement.

Anthony Wendel Frederick Sr., 49, of Upper Marlboro, Maryland, the former Business Manager of Local 657 of LIUNA based in Washington, D.C., was charged by criminal complaint with one count of theft from a labor organization.  The defendant was arrested today and is scheduled to have his initial appearance at 1:45 p.m. EDT before U.S. Magistrate Judge G. Michael Harvey of the District of Columbia.

LIUNA is a labor organization that represents laborers in the construction industry.  LIUNA’s Local 657 represents construction laborers in Washington, D.C. and five adjacent counties.  For approximately 10 years, until June 2014, Frederick served as the business manager for Local 657.

The criminal complaint alleges that, from May 2013 to June 2014, Frederick directed more than $1.7 million in Local 657 funds to STS Contracting of Greenbelt, Maryland, without the knowledge or authorization of the Local 657 Executive Board or officials in LIUNA International.  Specifically, according to the criminal complaint, a routine audit of the local union by LIUNA in June 2014 revealed that Frederick had paid nearly $1.1 million to STS Contracting for minimal renovations at the Local 657 administrative building.  In addition, the complaint alleges that, without authorization, Frederick directed over $580,000 in Local 657 funds to STS Contracting for expediting permits for the construction of a new training center for Local 657, which project was being handled by another construction firm.  According to the criminal complaint, the LIUNA auditor also discovered that Frederick grossly overpaid STS Contracting for expediting various permits, including $20,000 to expedite a $143 excavation permit, and over $20,000 to renew existing permits, which could have been accomplished online for approximately $250 apiece.

The criminal complaint further alleges that STS Contracting paid a down payment of $225,000 on a home purchased by Frederick, and directed more than $600,000 to a corporation owned in part by Frederick’s wife.  In addition, STS Contracting principals allegedly depleted a company bank account, which contained only stolen Local 657 funds, by withdrawing more than $500,000 in cash and using the remainder for personal items, entertainment, shopping trips, hotel stays and overseas travel.

The charges and allegations contained in a criminal complaint are merely accusations.  The defendant is presumed innocent until and unless proven guilty.

The case is being investigated by the FBI and the Department of Labor.  The case is being prosecuted by Trial Attorney Vincent Falvo of the Criminal Division’s Organized Crime and Gang Section.

Tuesday, September 15, 2015


Friday, September 11, 2015
Jury Convicts Houston Psychiatrist in $158 Million Medicare Fraud Scheme

A Houston psychiatrist was convicted late yesterday by a federal jury of participating in a $158 million Medicare fraud scheme involving false claims for mental health treatment.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Kenneth Magidson of the Southern District of Texas, Special Agent in Charge Perrye K. Turner of the FBI’s Houston Field Office, Special Agent in Charge C.J. Porter U.S. Department of Health and Human Services-Office of Inspector General (HHS-OIG) Dallas Region, the Texas Attorney General’s Medicaid Fraud Control Unit (MFCU) and Special Agent in Charge D. Richard Goss of the Internal Revenue Service-Criminal Investigation Division (IRS-CI) Houston Field Office made the announcement.

Sharon Iglehart, 58, of Harris County, Texas, was convicted of one count of conspiracy to commit health care fraud, one count of health care fraud and three counts of making false statements relating to health care matters, following a seven-day jury trial before U.S. District Judge Ewing Werlein Jr. of the Southern District of Texas.  Iglehart is scheduled to be sentenced on Dec. 5, 2015.

According to evidence presented at trial, from 2006 until June 2012, Iglehart and others engaged in a scheme to defraud Medicare by submitting, through Riverside General Hospital (Riverside), approximately $158 million in false and fraudulent claims for partial hospitalization program (PHP) services to Medicare.  A PHP is a form of intensive outpatient treatment for severe mental illness.

The evidence presented at trial showed that the Medicare beneficiaries for whom Riverside billed Medicare did not receive PHP services.  In fact, according to evidence presented at trial, most of the Medicare beneficiaries for whom Riverside billed Medicare rarely saw a psychiatrist and did not receive intensive psychiatric treatment.

In addition, evidence presented at trial showed that Iglehart personally billed Medicare for individual psychotherapy and other treatment to patients at Riverside locations – treatment that she never provided.  The evidence at trial also demonstrated that Iglehart falsified the medical records of patients at Riverside’s inpatient facility to make it appear as if she provided psychiatric treatment when, in fact, she did not.

To date, 12 others previously have been convicted of offenses based on their roles in the fraudulent scheme.  Earnest Gibson III, the former president of Riverside; Earnest Gibson IV, the operator of one of Riverside’s PHP satellite locations; Regina Askew, a group home owner and patient file auditor; and Robert Crane, a patient recruiter, were all convicted after a jury trial in October 2014.  Earnest Gibson III was sentenced to 45 years in prison.  Earnest Gibson IV was sentenced to 20 years in prison.  Regina Askew was sentenced to 12 years in prison.  Robert Crane has not yet been sentenced.  Mohammad Khan, an assistant administrator at the hospital, who managed many of the hospital’s PHPs, pleaded guilty and was sentenced to 40 years in prison.  William Bullock, an operator of a Riverside satellite location, as well as Leslie Clark, Robert Ferguson, Waddie McDuffie and Sharonda Holmes, who were all involved in paying or receiving kickbacks, also pleaded guilty.  Bullock, Clark and Ferguson await sentencing.

The case was investigated by the FBI, HHS-OIG, Texas MFCU, and IRS-CI with assistance from the Railroad Retirement Board-Office of Inspector General (RRB-OIG) Chicago Field Office and the Office of Personnel Management-Office of Inspector General, and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Texas.  The case is being prosecuted by Assistant Chief Laura M.K. Cordova and Trial Attorney Ashlee C. McFarlane of the Criminal Division’s Fraud Section.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 2,300 defendants who have collectively billed the Medicare program for more than $7 billion.  In addition, HHS’s Centers for Medicare & Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.

Monday, September 14, 2015


Thursday, September 10, 2015
Auto Parts Distributor Pleads Guilty to Manufacturing and Selling Pirated Mercedes-Benz Software
Pirated Software Valued at Over $17 Million

An aftermarket auto parts distributor in Harahan, Louisiana, pleaded guilty today to manufacturing and selling over 800 copyright-infringing copies of Mercedes-Benz diagnostic software valued at over $17 million.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Kenneth A. Polite of the Eastern District of Louisiana and Special Agent in Charge Michael J. Anderson of the FBI’s New Orleans Division made the announcement.

The Brinson Company (TBC), and its owner, Rainer Wittich, 66, of River Ridge, Louisiana, pleaded guilty before U.S. District Court Judge Nannette Jolivette Brown of the Eastern District of Louisiana to an information charging them, respectively, with conspiracy to commit criminal copyright infringement and to violate the Digital Millennium Copyright Act, and criminal copyright infringement.  Sentencing is scheduled for Jan. 16, 2016.  As part of its plea agreement, TBC agreed to assist Mercedes-Benz in compiling a list of all customers to whom it sold, distributed, donated or otherwise provided the pirated software.

Wittich owned TBC, which sold replacement parts and diagnostic equipment for Mercedes-Benz vehicles.  According to TBC’s plea agreement, beginning in about 2001, in conjunction with two other companies, TBC began developing, manufacturing and selling non-authentic versions of the Mercedes-Benz Star Diagnostic System (SDS), a portable tablet-type computer that contains proprietary software created by Mercedes-Benz to diagnose and repair its automobiles and that requires a code or “license key” to access.  TBC admitted that, without authorization, it obtained Mercedes-Benz SDS software and updates, modified and duplicated the software, and installed the software on laptop computers (which served as the SDS units).

TBC further admitted that, not later than June 2010, it began purchasing software for the non-authentic SDS units as well as updates and “patches” for the software from an individual in the United Kingdom.  TBC admitted that, after Mercedes-Benz notified the United Kingdom-based individual that his conduct was in violation of the law, representatives of TBC and the co-conspirator companies discussed plans to have him “go underground and off the radar” and continue to provide assistance and support in the production of non-authentic SDS units.

A genuine SDS unit sold for up to $22,000, and purchasers of the SDS paid Mercedes-Benz several thousands of dollars per year to receive regular software updates.  According to TBC’s plea agreement, a non-authentic SDS unit sold for up to $11,000.  TBC admitted that, in total, it sold approximately 725 non-authentic SDS devices, and that one of its co-conspirators sold at least 95 devices.

The case was investigated by the Cyber Task Force of the FBI’s New Orleans Division.  The case is being prosecuted by Senior Counsel Evan Williams of the Criminal Division’s Computer Crimes and Intellectual Property Section and Assistant U.S. Attorneys Jordan Ginsberg and Myles Ranier of the Eastern District of Louisiana.

The enforcement action announced today is related to the many efforts being undertaken by the Department of Justice Task Force on Intellectual Property (IP Task Force).  The IP Task Force supports prosecution priorities, promotes innovation through heightened civil enforcement, enhances coordination among federal, state, and local law enforcement partners, and focuses on international enforcement efforts, including reinforcing relationships with key foreign partners and U.S. industry leaders.

Sunday, September 13, 2015


Wednesday, September 9, 2015
Guilty Plea in Case of Disabled Adults Held in Subhuman Conditions

Linda Weston, 55, of Philadelphia, Pennsylvania, pleaded guilty today to all charges in a racketeering and hate crimes case that involved holding disabled adults captive in locked closets, basements and attics in Philadelphia’s Tacony section and in other states.  Weston pleaded guilty to racketeering conspiracy, kidnapping resulting in the death of the victim, forced human labor, involuntary servitude, multiple counts of murder in aid of racketeering, hate crime, violent crime in aid of racketeering, sex trafficking, kidnapping, theft of government funds, wire fraud, mail fraud, use of a firearm in furtherance of a violent crime and false statements.  U.S. District Court Judge Cynthia M. Rufe scheduled a sentencing hearing for Nov. 5, 2015.  Weston has agreed to receive a sentence of life plus 80 years in prison, restitution, fines, supervised release and special assessments.

From approximately 2001 through October 2011, Weston and her co-conspirators lured mentally handicapped individuals into locations rented by Weston, Jean McIntosh, Eddie Wright and others in Philadelphia; Killeen, Texas; Norfolk, Virginia; and West Palm Beach, Florida.  The group targeted mentally challenged individuals who were estranged from their families.  Once Weston convinced them to move in, she became their representative payee with Social Security and began to receive their disability benefits and in some instances, their state benefits.   On one occasion, Weston and one of her co-defendants took the social security and identification documents from a victim by force and then used the funds for her own and Weston Family purposes.

Weston, McIntosh, Wright and others confined their victims to locked rooms, basements, closets, attics and apartments.  While confined, the captives were often isolated, in the dark and sedated with drugs placed in their food and drink by Weston and other defendants.  When the individuals tried to escape, stole food, or otherwise protested their treatment, Weston and others punished them by slapping, punching, kicking, stabbing, burning and hitting them with closed hands, belts, sticks, bats and hammers or other objects, including the butt of a pistol.  Some victims endured the abuse for years, until Oct. 15, 2011, when Philadelphia Police officers rescued them from the sub-basement of an apartment building in the city’s Tacony section.  The enterprise victimized six disabled adults and four children.

In April 2005, Weston and a co-defendant targeted victim Donna Spadea.  They brought Spadea to a home at 2211 Glenview Ave., in Philadelphia.  Spadea was kept in the basement with the other victims, fed a substandard diet and not allowed to use the bathroom.  On June 26, 2005, Spadea was found dead in the basement.  Weston ordered other members of the household to move Spadea’s body to a different location before calling law enforcement.

In 2008, victim Maxine Lee was living with the family.  Lee was beaten when she tried to escape or when she begged for food and never received medical attention for any of her injuries.  After Weston moved the enterprise to Virginia in 2008, Weston confined Lee inside a kitchen cabinet and an attic for several months.  Lee subsequently died of bacterial meningitis and starvation in November of 2008.  Weston ordered other members of the household to move Lee’s body to a bedroom and stage the scene before calling law enforcement.  The next day the family left for Philadelphia.

Weston’s daughter, McIntosh, and co-defendant Wright have already pleaded guilty.  Co-defendants Gregory Thomas, Sr., and Nicklaus Woodard are awaiting trial.

The case was investigated by the FBI, the Social Security Administration Office of Inspector General, IRS Criminal Investigations, the Philadelphia Police Department and the Philadelphia District Attorney’s Office with assistance from the Bureau of Alcohol, Tobacco, Firearms and Explosives’ West Palm Beach Field Office.  It is being prosecuted by Assistant U.S. Attorneys Richard P. Barrett and Faith Moore Taylor.

Saturday, September 12, 2015


Wednesday, September 9, 2015
Owner of Dietary Supplement Company Sentenced to Prison for Multimillion-Dollar Scheme to Adulterate Dietary Supplements
Company’s Executive Vice President Pleads Guilty to Obstruction of an Agency Investigation

The owner and president of a dietary supplement manufacturing company in Flanders, New Jersey, was sentenced to prison today for the sale of diluted and adulterated dietary ingredients and supplements, the Department of Justice announced.

Barry Steinlight, 70, of Hackettstown, New Jersey, was sentenced by U.S. District Court Judge Esther Salas of the District of New Jersey to serve 40 months in prison and one year of supervised release.  Steinlight was also ordered to forfeit $1 million in profits from his fraudulent scheme.  Steinlight previously pleaded guilty to a one-count information charging him with conspiring to commit wire fraud.

“The Justice Department has increased its attention on supplement sellers like Barry Steinlight who sell products that are not what they claim to be,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “We will investigate and prosecute companies and individuals that sell supplements that threaten the health of the American public and drain their bank accounts with misrepresented products.”

Steinlight was the president and owner of Raw Deal Inc., a dietary supplement manufacturer.  In pleading guilty, Steinlight admitted that from at least 2009 through November 2013, he instructed Raw Deal employees to add “fillers,” including maltodextrin, viobin cocoa replacer and rice flours, to the dietary ingredients and supplements sold to customers.  These “fillers” were added without customer consent or knowledge.  Steinlight also directed Raw Deal employees not to list the “fillers” as ingredients on certificates of analysis issued to its customers as proof of the identity of the ingredients contained in the products.  During his plea hearing, Steinlight admitted that Raw Deal Inc.’s gross profits during the scheme were between $7 million and $20 million.

Yesterday, Raw Deal’s executive vice president, Catherine Palmer, 38, of Budd Lake, New Jersey, pleaded guilty to a one-count information charging her with obstructing an agency investigation.  The obstruction charge carries a statutory maximum sentence of five years in prison and a $250,000 fine, or twice the gain or loss caused by the offense.  Her sentencing is scheduled for Dec. 21.

According to court documents, Palmer lied to U.S. Food and Drug Administration (FDA) investigators and ordered a subordinate to falsify a dietary supplement product’s ingredient list before submitting it to the FDA.  In addition, she admitted instructing a Raw Deal employee not to run blenders during the 2012 inspection so that the FDA would not see “fillers” being added to customer orders.  This practice hid from the FDA the fact that Steinlight and Raw Deal diluted the products before sale to unsuspecting customers.

Court documents also revealed that Steinlight directed Raw Deal employees to create certificates of authenticity that falsely claimed that certain Raw Deal products were kosher or organic.

“Consumers expect labels that accurately describe the products they ingest,” said U.S. Attorney Paul J. Fishman of the District of New Jersey.  “Steinlight deceived his customers as part of a four-year scheme in which he delivered bogus, mislabeled products.  Today he was appropriately punished for his crime.”

“Today’s announcement demonstrates that those who sell adulterated dietary supplements and purposely subvert the regulatory functions of the FDA by providing false and misleading information will be held accountable for their actions,” said Acting Special Agent in Charge Jeffrey J. Ebersole of the FDA Office of Criminal Investigations’ New York Field Office.  “We commend the efforts of the Department of Justice for vigorously pursuing the prosecution of this matter.”

Principal Deputy Assistant Attorney General Mizer and U.S. Attorney Fishman commended the investigative efforts of the FDA’s Office of Criminal Investigations.  The government is represented by Assistant U.S. Attorney Joseph Mack of the District of New Jersey, Deputy Chief of the office’s Health Care and Government Fraud Unit; Special Assistant U.S. Attorney Shannon M. Singleton of the FDA’s Office of Chief Counsel; and Trial Attorneys Patrick Runkle and David Sullivan of the Civil Division’s Consumer Protection Branch.  Paralegal Jeffrey Skonieczny of the District of New Jersey also assisted in the criminal investigation.

Friday, September 11, 2015


Wednesday, September 9, 2015
Minneapolis Man Pleads Guilty to Conspiracy to Provide Material Support to ISIL
Defendant is the Second of Nine Co-Conspirators to Plead Guilty

Hanad Mustofe Musse, 19, of Minneapolis, pleaded guilty today to conspiring with at least eight other individuals to travel to Syria in an effort to provide material support to the Islamic State of Iraq and the Levant (ISIL), a designated foreign terrorist organization.  Musse was initially charged by criminal complaint on April 20, 2015, and was subsequently indicted on May 19, 2015.  Musse pleaded guilty today before Senior U.S. District Judge Michael J. Davis of the District of Minnesota.

Assistant Attorney General for National Security John P. Carlin and U.S. Attorney Andrew M. Luger of the District of Minnesota made the announcement.

“Hanad Mustofe Musse conspired to provide material support to ISIL and attempted to travel to Syria to join their ranks overseas,” said Assistant Attorney General Carlin.  “The National Security Division’s highest priority is counterterrorism and we will continue to pursue justice against those who seek to provide material support to designated foreign terrorist organizations.”

“The facts set forth in Mr. Musse’s guilty plea underscore the length and breadth of this criminal conspiracy,” said U.S. Attorney Luger.  “This defendant made multiple attempts to leave Minnesota to join ISIL – criminal prosecution was the best remaining option to stop him and potentially save his life.  Twin Cities’ youth continue to be the targets of an intense recruiting campaign by ISIL.  Fighting back is the shared responsibility of a wide cross-section of Minnesotans – parents, religious leaders, teachers, community leaders and law enforcement. We must continue to work together to end the cycle of recruiting.”

As the defendant admitted in his guilty plea, between March and June 2014, Musse became aware of individuals in the United States and abroad who had traveled or desired to travel overseas to join ISIL.  Musse joined this group of aspiring travelers with the understanding that ISIL was a designated foreign terrorist organization that engaged in terrorism and terrorist activity.  The defendant participated in several meetings throughout 2014 in which he and his co-conspirators discussed traveling to Syria to join ISIL, including how they would pay for such travel, what routes they could take from Minnesota to Syria to best elude law enforcement and the feasibility of using fraudulent travel documents to travel to Syria.

Musse also admitted in his plea that by June 2014, he knew that co-conspirator Abdi Nur had successfully traveled to Syria and that co-conspirator Abdullahi Yusuf had attempted to travel to Syria but had been stopped by law enforcement at the Minneapolis/St. Paul, Minnesota, International Airport.  Nevertheless, Musse continued to make preparations to travel to Syria to join ISIL.  Between Oct. 20, 2014, and Nov. 6, 2014, Musse made five cash withdrawals from his federal financial aid account totaling $2,400.  He deposited those funds in a personal checking account that he opened on Nov. 3, 2014.  Musse later used those funds to purchase a bus ticket from Minneapolis to New York City.

As admitted by the defendant in his guilty plea, on Nov. 6, 2014, Musse and co-conspirators Mohamed Farah, Hamza Ahmed and Zacharia Abdurahman purchased bus tickets from Minneapolis to New York City, where they met at John F. Kennedy International Airport (JFK).  While at JFK, Musse purchased a round-trip ticket to Athens, Greece, which he planned to use as a transit point from which to travel to Syria.  Musse knew that Abdurahman purchased a ticket on the same flight for the same purpose.  After being prevented by federal agents from boarding his flight, Musse lied to the agents about the true nature of his travel.

The defendant admitted in his guilty plea that after their failed November 2014 attempt to fly overseas, Musse and co-conspirators Mohamed Farah, Abdurahman and Ahmed met to discuss and coordinate false responses to anticipated law enforcement questions in an effort to conceal their intention to travel to Syria to join ISIL.

Musse admitted in his guilty plea that he continued to meet with his co-conspirators throughout the winter and spring of 2015 to discuss and plan another attempt to travel to Syria to join ISIL.  As a result of some of those meetings, Musse willingly agreed to participate in a scheme to obtain false passports, travel from Minnesota to Mexico and fly overseas to join ISIL using those false passports.  On April 6, 2015, Musse provided a passport photo of himself to a co-conspirator for the purpose of creating a fake passport.  Unbeknownst to the defendant, the individual was a cooperating human source (CHS).  When Musse’s family learned of his plan to travel, Musse requested the return of the photograph from the CHS.  However, Musse admits that he did not withdraw from the conspiracy to provide material support to ISIL when he sought return of the passport photo.  Rather, Musse was attempting to preserve the viability of his and his co-conspirators’ future travel to Syria.

This case is being investigated by the FBI-led Joint Terrorism Task Force.  This case is being prosecuted by Assistant U.S. Attorneys Andrew R. Winter and John F. Docherty of the District of Minnesota, with assistance provided by the National Security Division’s Counterterrorism Section.

Thursday, September 10, 2015


Tuesday, September 8, 2015
Houston Woman Convicted of Producing and Distributing Animal Crush Videos

Ashley Nicole Richards 24, of Houston, Texas, has been convicted of creating and distributing videos depicting the torture and killing of puppies, chickens and kittens, announced U.S. Attorney Kenneth Magidson for the Southern District of Texas.  Richards entered a guilty plea today, admitting she produced and distributed what is referred to as “animal crush videos.”

People for the Ethical Treatment of Animals (PETA) defines the “crush” fetish as a cruel and illegal genre of pornography in which women are videotaped or photographed mutilating small animals for the sexual gratification of viewers.  In crush fetish materials, women are depicted, usually barefoot or in high heels, stepping on (or crushing), torturing and killing different species of animals, ranging from crawfish, crabs and insects to rodents, rabbits, kittens, puppies, cats, dogs and other mammals.

Under federal law it is illegal to depict - via photograph, motion-picture film, video, digital recording or electronic image - actual conduct in which one or more living non-human mammals, birds, reptiles or amphibians is intentionally crushed, burned, drowned, suffocated, impaled or otherwise subjected to serious bodily injury, and is obscene.

This is the first known case to be indicted in federal court since the statute was amended in 2010.

Richards has admitted to creating and distributing videos that involve puppies, chickens and kittens being tortured and killed.  The videos are titled “puppy1,” “puppy 2,” “whitechick1,” “whitechick2,” “whitechick3,” “blackluvsample,” “adammeetseve” and “adammeetseve2” and were created at varying times between February 2010 and August 2012.  In the “puppy2” video, which is more than 13 minutes in length, Richards is seen torturing and killing a blue Pit Bull-mix puppy in a kitchen.  The defenseless dog’s mouth is closed with duct tape and he struggles as Richards strikes the dog numerous times with a meat cleaver.  In the video, Richards chops off one of the puppy’s paws, then hacks at his head and neck.  Richards is later seen severing the dog’s head and urinating on its body.  In another video, described in court today, Richards steps on a cat’s eye with heel of her shoe.

Previous court records also indicated that during the videos, Richards is often scantily clad and wearing a Mardi Gras-type mask.  As she tortured the animals, she engaged in sexually charged dialogue meant to arouse the viewer.

Authorities were alerted to the videos following an inquiry from PETA.

Richards was originally arrested on state charges on Aug. 15, 2012.  A federal grand jury returned an indictment Nov. 28, 2012, and she was transferred to federal custody.  However, the crush video charges were later dismissed on what the court cited as constitutionality issues.  The government appealed that decision to the 5th Circuit Court of Appeals in New Orleans which subsequently overturned the decision of the District Court.  The defense then filed a petition for a writ of certiorari to the U.S. Supreme Court challenging the 5th Circuit’s ruling.  The Supreme Court denied that petition and remanded the case back to the District Court for prosecution.

Today, Richards pleaded guilty to all five counts as charged, four counts of producing and one count of distribution of the animal crush videos which were obscene in nature.  U.S. District Judge Sim Lake accepted the guilty pleas and has set sentencing for December 10.  At that time, Richards faces up to seven years in federal prison on each count of conviction as well as possible $250,000 fine.

Richards also pleaded guilty to three charges in state court stemming from the same conduct and was sentenced to ten years in prison.        

The Houston Police Department originally investigated the matter and worked in conjunction with the Houston Office of the FBI.  Assistant U.S. Attorney Sherri L. Zack is prosecuting the case, while trial attorney John Pellettieri of the Department of Justice’s Criminal Division handled the appeal.

Wednesday, September 9, 2015


Tuesday, September 8, 2015
Detroit Gang Leader Sentenced to 35 Years for Violent Racketeering-Related Crimes

The National President of the Phantom Outlaw Motorcycle Club and “Three-Star General” of the Vice Lords street gang in Michigan was sentenced today to serve 35 years in prison for violent racketeering-related crimes.  To date, 12 other defendants have been convicted of federal offenses related to their roles in this violent conspiracy.

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, Special Agent in Charge Robin Shoemaker of the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) and Special Agent in Charge Paul M. Abbate of the FBI’s Detroit Division made the announcement.

The arrests and convictions in this case are, in part, the result of the Detroit One Initiative, a collaborative effort between law enforcement and the community to reduce homicide and other violent crime in Detroit.  Through the lead efforts of the Comprehensive Violence Reduction Partnership Task Force, which consists of representatives of the ATF, Detroit Police Department, Michigan State Police, Michigan Department of Corrections and the FBI, law enforcement authorities linked various acts of violence in Detroit to the Phantom Outlaw Motorcycle Club and the Vice Lords street gang, and identified the leaders and key members of these gangs, who now have been held accountable.

Antonio Johnson, aka Mister Tony, MT or Big Bro, 39, of Detroit, was convicted on March 16, 2015, after a multi-week trial, of engaging in a racketeering conspiracy, conspiracy to commit murder in aid of racketeering, assault with a dangerous weapon in aid of racketeering, conspiracy to assault with a dangerous weapon in aid of racketeering, use and carry of a firearm during and in relation to a crime of violence, and being a felon in possession of firearms.  U.S. District Judge Paul D. Borman of the Eastern District of Michigan presided over the trial and imposed today’s sentence.

“Through his leadership positions in two gangs, Johnson spread violence in Detroit and beyond,” said Assistant Attorney General Caldwell.  “Here, through the Detroit One initiative, the collective efforts of federal agents, state and local police, and private citizens helped thwart a mass murder plot and ensure the convictions and lengthy prison sentences of Johnson and his fellow gang members.  This case is emblematic of law and order at its best: a true partnership between law enforcement authorities and the community they serve.”

“Gang wars fuel violence in our community, and the resulting drive-by shootings create unacceptable risk to innocent lives,” said U.S. Attorney McQuade.  “The Detroit One partners are systematically dismantling violent street and motorcycle gangs that are destroying the peace in our neighborhoods.”

“This significant sentence is the result of our on-going state and federal effort to combat gun violence in our communities,” said Special Agent in Charge Shoemaker.  “This investigation and resulting convictions is proof again that the Detroit One initiative and the CVRP are making a significant difference in our communities, there is a lot of work to do, but ATF is committed in the fight against violent crime.”

At trial, evidence showed that the Phantom Outlaw Motorcycle Club, which is headquartered in northwest Detroit, and its members were involved in a range of criminal activity including conspiracy to commit murder, shootings, robbery, extortion and the possession and sale of stolen vehicles and motorcycles.  The evidence also demonstrated that the leadership of the Phantoms was heavily involved in the Vice Lords, a well-known street gang originating from Chicago, and that Johnson was both the National President of the Phantoms and a leader of the Vice Lords in Michigan.  The evidence showed that Johnson used the Vice Lords to assist the Phantoms in various criminal endeavors, including to search for and violently attack rivals of the Phantoms.

Specifically, according to the evidence presented at trial, on Sept. 8 2013, Johnson ordered numerous Phantoms to forcibly steal the “rags,” or motorcycle vests, of members of the rival Satan Sidekick Motorcycle Club.  The evidence showed that, during Phantoms’ attempt to do so, a Satan Sidekick member was shot in the face and a Phantom member was stabbed.

According to the evidence presented at trial, a few weeks later, Johnson and his fellow Phantoms plotted the murder of three members of the rival Hell Lovers Motorcycle Club whom the Phantoms believed were responsible for a shooting death of a member of their club.  According to the evidence presented at trial, the plot involved killing the three men and then, during the anticipated subsequent wake at the Hell Lovers’ clubhouse, shooting all Hell Lovers in attendance.  ATF and FBI agents intervened before the Phantoms carried out the plot.

The case was investigated by the ATF and the FBI.  The case was prosecuted by Trial Attorney Joseph Wheatley of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorneys Christopher Graveline and Louis Gabel of the Eastern District of Michigan.

Through the Detroit One initiative, local, state, and federal law enforcement authorities are maximizing their abilities to identify and arrest those responsible for violence in Detroit.  Since 2013, this collective effort has had led to significant indictments, convictions, and sentences against a number of street gang members responsible for much of the violent crime in Detroit.  These collaboration also has contributed to a decrease in the homicide rate from 386 in 2012 to 300 in 2014, and in the overall violent crime rate.

Tuesday, September 8, 2015

Terrorist Designation of Samir Kuntar

Terrorist Designation of Samir Kuntar

Sunday, September 6, 2015


Friday, September 4, 2015
Georgia Hospital System and Physician to Pay More than $25 Million to Settle Alleged False Claims Act and Stark Law VIolations

Columbus Regional Healthcare System (Columbus Regional) and Dr. Andrew Pippas have agreed to pay more than $25 million to resolve allegations that they violated the False Claims Act by submitting claims in violation of the Stark Law.  Today’s settlement also resolves allegations that Columbus Regional and Pippas submitted claims for payment to federal health care programs that misrepresented the level of services they provided.  Under the settlement agreement, Columbus Regional has agreed to pay $25 million, plus additional contingent payments not to exceed $10 million, for a maximum settlement amount of $35 million, and Pippas has agreed to pay $425,000.

“Today’s settlement demonstrates our continuing vigilance to ensure that health care referrals are based solely on the medical needs of the patient and that health care providers bill the government only for the care they provide,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “Healthcare providers who seek to profit at the expense of taxpayers will face serious consequences.”

“The maximum amount of this settlement, some $35 million, is appropriate given the number of alleged violations involving the False Claims Act and the Stark Act,” said U.S. Attorney Michael Moore of the Middle District of Georgia.  “Access to health care is on everyone’s mind, especially with respect to rural communities.  The type of conduct alleged in this case puts that access at risk.  This settlement reflects on the one hand, the Department of Justice’s commitment to make sure that hospitals and physicians who commit violations of federal law are held to account, and on the other hand, especially with the requirement of the monitoring agreement, makes sure that we continue to have appropriately functioning health care providers accessible to the wide array of communities they serve.”

The Stark Law prohibits physician referrals of certain health services for Medicare and Medicaid patients if the physician has a financial relationship with the entity to which he or she refers the patient.  The United States alleged that between 2003 and 2013, Columbus Regional provided excessive salary and directorship payments to Pippas that violated the Stark Law.

The United States also alleged that from May 2006 through May 2013, Columbus Regional submitted claims to federal health care programs for services at higher levels than supported by the documentation, and between 2010 and 2012, they submitted claims to federal health care programs for radiation therapy at higher levels than the therapy that was provided.

Of the $25.425 million that Columbus Regional and Pippas have agreed to pay to resolve their respective civil claims, they will pay $24,666,040 to the federal government for federal healthcare program losses and $758,960 to the state of Georgia for the state share of its Medicaid losses.

Also as part of the settlement, Columbus Regional will enter into a Corporate Integrity Agreement (CIA) with the Department of Health and Human Services-Office of the Inspector General (HHS-OIG) that requires Columbus Regional to implement measures designed to avoid or promptly detect future conduct similar to that which gave rise to this settlement.

“Increasing referrals by self-dealing and violating the Stark statute – as the government contended in this case – undermines impartial medical judgment at the expense of patients and taxpayers,” said Special Agent in Charge Derrick L. Jackson of HHS-OIG.  “Charging federal health care programs for pricier services than those actually provided will not be tolerated.”

The settlements resolve allegations filed in two lawsuits by Richard Barker, a former Columbus Regional executive, in federal court in Columbus, Georgia.  The lawsuits were filed under the qui tam, or whistleblower, provisions of the federal False Claims Act and the Georgia False Medicaid Claims Act, which permit private individuals to sue on behalf of the federal and state governments, respectively, for false claims and to share in any recovery.  Mr. Barker’s share of the settlement has not yet been determined.

This illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services.  The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.  One of the most powerful tools in this effort is the False Claims Act.  Since January 2009, the Justice Department has recovered a total of more than $24.9 billion through False Claims Act cases, with more than $15.9 billion of that amount recovered in cases involving fraud against federal health care programs.

The civil settlement was handled by the U.S. Attorney’s Office of the Middle District of Georgia and the Civil Division’s Commercial Litigation Branch.  These matters were investigated by HHS-OIG’s Office of Investigations, with assistance from the HHS Office of Counsel to the Inspector General and Office of General Counsel and Center for Medicare and Medicaid Services, and the state of Georgia’s Medicaid Fraud Control Unit.  

The civil lawsuits are captioned United States ex rel. Barker v. Columbus Regional Healthcare System, et al., Case No. 4:12-cv-108 (M.D. Ga.) and United States ex rel. Barker v. Columbus Regional Healthcare System, et al., Case No. 4:14-cv-304 (M.D. Ga.).  The claims resolved by the settlement are allegations only, and there has been no determination of liability.

Friday, September 4, 2015


Wednesday, September 2, 2015
Eight Indicted in Fraud Case That Alleges $50 Million in Bogus Claims for Student Substance Abuse Counseling

Six Linked to Long Beach Treatment Program Taken into Custody Today

Eight people have been indicted for allegedly participating in a scheme that submitted more than $50 million in fraudulent bills to a California state program for alcohol and drug treatment services for high school and middle school students that, in many instances, were not provided or were provided to students who did not have substance abuse problems.

Six of the defendants who worked at the Long Beach-based Atlantic Health Services, formerly known as Atlantic Recovery Services (ARS), were arrested this morning by federal authorities.

The indictment, which charges the defendants with health care fraud and aggravated identity theft, alleges that ARS received more than $46 million from California’s Drug Medi-Cal program after ARS submitted false and fraudulent claims for group and individual substance abuse counseling services.

“The defendants named in the indictment are accused of exploiting a program that was set up to help a particularly vulnerable population – young people who are confronting drug and alcohol abuse,” said U.S. Attorney Eileen M. Decker for the Central District of California.  “According to the indictment, ARS and its employees engaged in a long-running fraud scheme to steal tens of millions of dollars from a program with limited resources that was designed to help underprivileged youth in recovery.  In the process, the defendants and ARS branded many innocent young people as substance abusers and addicts in order to boost enrollment numbers and billings.”

Today’s arrests are the result of a 40-count indictment that was returned by a federal grand jury on August 26 and unsealed this morning.

The eight defendants are all former employees of ARS, which received contracts to provide substance abuse treatment services through the Drug Medi-Cal program to students in schools in Los Angeles County.  The schools included various sites operated by Soledad Enrichment Action and public schools in Montebello, California, Bell Gardens,
Californina, Lakewood, and the Antelope Valley.

ARS allegedly submitted bogus claims for payment to the Drug Medi-Cal program for a decade, according to the indictment.  ARS shut down in April 2013, when California suspended payments to the company.

According to the indictment, the claims submitted to the Drug Medi-Cal program were false and fraudulent for a number of reasons, including:

ARS billed for services provided to students who did not have substance abuse disorders or addictions and therefore did not qualify to receive Drug Medi-Cal services;

ARS billed for counseling sessions that were not conducted at all;

ARS billed for counseling services that were not conducted in accordance with Drug Medi-Cal regulations regarding length, number of students, content and setting;

ARS personnel falsified documents, including treatment plans, group counseling sign-in sheets, progress notes and update logs (which listed the dates and times of counseling sessions); and

ARS personnel forged student signatures on documents.
“For counselors and supervisors to risk stigmatizing students as substance abusers, as alleged in this case, just to enrich themselves at taxpayer expense is outrageous,” said Special Agent in Charge Christian Schrank for the Office of the Inspector General of the Department of Health and Human Services. “This decade-long conspiracy to defraud Medi-Cal while disregarding the true health care needs of children will not be tolerated.”

Previously, 11 other defendants pleaded guilty to health care fraud charges stemming from the ARS scheme.  Those defendants are former ARS managers Cathy Fernandez, 53, of Downey, California; Erin Hoover, 37, of Long Beach, California; Elizabeth Black, 51, of Long Beach; Helsa Casillas, 44, of El Sereno, California; and Sandra Lopez, 41, of Huntington Park, California; and former ARS counselors Tamara Diaz, 45 of East Los Angeles, California; Margarita Lopez, 40, of Paramount, California; Irma Talavera, 27, of Paramount; Laura Vasquez, 52, of Pico Rivera; Cindy Leticia Ortiz, 29, of Norwalk, California; and Arthur Dominguez, 63, of Glendale, California.

Another defendant, Dr. Leland Whitson, 75, of Redondo Beach, California, the former Medical/Clinical Director of ARS, previously pleaded guilty to making a false statement affecting a health care program.

The dozen defendants who have already pleaded guilty are pending sentencing by U.S. District Judge Philip S. Gutierrez.

Each of the eight defendants named in the indictment unsealed today potentially faces decades in federal prison if convicted.  For example, if convicted, Miller faces a statutory maximum sentence of 324 years in federal prison.

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

The cases against the 20 defendants are the result of an investigation by the Office of Inspector General of the Department of Health and Human Services; the California Department of Justice, Bureau of Medi-Cal Fraud and Elder Abuse; and IRS - Criminal Investigation.

Wednesday, September 2, 2015


Monday, August 31, 2015
Former Silk Road Task Force Agent Pleads Guilty to Money Laundering and Obstruction
Ex-Secret Service Agent Used Status to Pocket $820,000 Worth of Bitcoin

A former U.S. Secret Service special agent pleaded guilty today to money laundering and obstruction of justice in connection with his theft of digital currency during the federal investigation of Silk Road, an online marketplace used to facilitate the purchase and sale of illegal drugs and other contraband.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Melinda Haag of the Northern District of California, Chief Richard Weber of the IRS-Criminal Investigation (IRS-CI), Special Agent in Charge David J. Johnson of the FBI’s San Francisco Division, Special Agent in Charge Michael P. Tompkins of the Justice Department’s Office of the Inspector General’s Washington, D.C. Field Office, and Special Agent in Charge Lori Hazenstab of the Department of Homeland Security’s Office of the Inspector General in Washington D.C. made the announcement.

Shaun W. Bridges, 32, of Laurel, Maryland, had been a special agent with the U.S. Secret Service for approximately six years in the Baltimore Field Office and was assigned to the Electronic Crimes Task Force.  He pleaded guilty before the U.S. District Judge Richard Seeborg of the Northern District of California and a sentencing hearing is scheduled for Dec. 7, 2015.

“There is a bright line between enforcing the law and breaking it,” said Assistant Attorney General Caldwell.  “Law enforcement officers who cross that line not only harm their immediate victims but also betray the public trust.  This case shows we will act quickly to hold wrongdoers accountable, no matter who they are.”

“Mr. Bridges has now admitted that he brazenly stole $820,000 worth of digital currency while working as a U.S. Secret Service special agent, a move that completely violated the public’s trust,” said U.S. Attorney Haag.  “We depend on those in federal law enforcement having the highest integrity and unshakeable honor, and Mr. Bridges has demonstrated that he utterly lacks those qualities.  We appreciate the hard work of our federal partners that went into bringing Mr. Bridges to justice.”

“Through a series of complex transactions, the defendant stole bitcoins worth hundreds of thousands of dollars,” said Chief Weber.  “This case is an excellent example of the financial expertise of our special agents. Through the analysis of both the block chain and data from the Silk Road servers, we were able to trace the flow of funds, which eventually led to the defendant.”

Between 2012 and 2014, Bridges was assigned to the Baltimore Silk Road Task Force, a multi-agency group investigating illegal activity on Silk Road.  Bridges’ responsibilities included, among other things, conducting forensic computer investigations in an effort to locate, identify and prosecute targets, including Ross Ulbricht, aka Dread Pirate Roberts, who ran Silk Road.

According to his plea agreement, Bridges admitted that in January 2013 he used an administrator account on the Silk Road website that belonged to another individual to fraudulently obtain access to that website, reset passwords of various accounts and to move bitcoin from those accounts into a bitcoin “wallet” that Bridges controlled.  Bridges admitted that he moved and stole approximately 20,000 bitcoin, which at that time was worth approximately $350,000.

Bridges admitted that he moved the stolen bitcoin into an account at Mt. Gox, an online digital currency exchange based in Japan.  According to his admissions, he liquidated the bitcoin into $820,000 of U.S. currency between March and May 2013, and had the funds transferred to personal investment accounts in the United States.

Bridges’ plea agreement also established that he obstructed the Baltimore federal grand jury’s investigations of Silk Road and Ulbricht in a number of ways, including by impeding the ability of the investigation to fully utilize a cooperator’s access to Silk Road.  In addition, Bridges admitted that he made multiple false and misleading statements to investigators in connection with the San Francisco federal grand jury’s investigation into his own illegal acts, and that he encouraged another government employee to lie to investigators.

Bridges is one of two federal agents to plead guilty in connection with illegal activity during the investigation of Silk Road.  Carl M. Force, 46, of Baltimore, was a special agent with the Drug Enforcement Administration and was also assigned to the Baltimore Silk Road Task Force.  On July 1, 2015, Force pleaded guilty to a three-count information charging him with money laundering related to his theft of over $700,000 in digital currency while acting as an undercover agent on the Task Force.  Force is scheduled to be sentenced by Judge Seeborg on Oct. 19, 2015.

The case was investigated by the FBI’s San Francisco Division, the IRS-CI’s San Francisco Division, the Justice Department’s Office of the Inspector General and the Department of Homeland Security’s Office of the Inspector General in Washington, D.C.  The case is being prosecuted by Assistant U.S. Attorneys Kathryn Haun and William Frentzen of the Northern District of California and Trial Attorney Richard B. Evans of the Criminal Division’s Public Integrity Section, with assistance from Assistant U.S. Attorney Arvon Perteet.
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