FROM: U.S. DEPARTMENT OF JUSTICE
Sunday, December 30, 2012
Attorney General Eric Holder Welcomes Bill Baer as Assistant Attorney General for the Antitrust Division
Attorney General Eric Holder today welcomed the confirmation of Bill Baer as the Department of Justice’s Assistant Attorney General for the Antitrust Division.
"Bill is a highly-skilled and well-respected antitrust lawyer who understands the importance of promoting competition in order for consumers to reap the benefits of lower prices and better quality products and services," said Attorney General Holder. "I have no doubt that he will lead the Antitrust Division effectively in its vigorous enforcement of the antitrust laws."
Since January 2000, Baer was a partner and head of Arnold & Porter LLP’s Antitrust Practice Group in Washington, D.C. Baer’s practice included providing counsel on a broad range of antitrust and consumer protection issues, including international cartel investigations and merger and acquisition reviews in the United States and the European Commission. He has extensive antitrust experience in various industries, including high tech, intellectual property, communications and health care. Baer also served as a partner at the firm from 1983 to 1995 and as an associate from 1980 to 1983. During that time, Baer specialized in complex civil and criminal antitrust litigation.
From April 1995 to October 1999, Baer was the Federal Trade Commission’s (FTC) Director of the Bureau of Competition. During that time, the FTC achieved significant enforcement successes, including blocking anticompetitive mergers involving two major office supply stores and of the four leading drug wholesalers. Under his leadership, the commission also successfully challenged exclusionary practices in a variety of industries, including toys, high tech and the leading brand name and generic drug manufacturers. From 1975 to 1980, Baer also served in other positions at the FTC, including Assistant General Counsel for Legislation & Congressional Relations, Assistant to Chairman Michael Pertschuk, and as a trial attorney and Assistant to the Director of the Bureau of Consumer Protection.
Baer is a member of the American Bar Association’s Antitrust Section. He has lectured in the United States and around the world on various antitrust and consumer protection issues.
Baer received his J.D. from Stanford Law School in 1975, and served as editor of Stanford’s Law Review. He received his B.A. from Lawrence University in 1972 where he graduated Cum Laude and Phi Beta Kappa.
Monday, December 31, 2012
Sunday, December 30, 2012
COURT BARS INSTANT TAX SERVICE FRANCHISE FROM PREPARING TAX RETURNS
FROM: U.S. DEPARTMENT OF JUSTICE
Friday, December 28, 2012
Federal Court Bars Alleged Co-Owner of Las Vegas Instant Tax Service Franchise from Preparing Tax Returns
Company and Other Alleged Co-owner Also Subject to Restrictions
A Nevada federal court has permanently barred Benyam Tewolde from preparing tax returns for others, the Justice Department announced today. Tewolde and his wife, Yordanos Kidanits, are the alleged co-owners of an Instant Tax Service franchise that operates at multiple locations in the Las Vegas area. Instant Tax Service is a nationally franchised tax preparation company based in Dayton, Ohio.
Kidantis and the franchisee, Koraggio LLC, were also permanently enjoined from engaging in certain abusive practices. The civil injunction orders, to which the defendants consented without admitting the allegations against them, were signed on Dec. 27 by Judge Miranda M. Du of the U.S. District Court for the District of Nevada.
According to the government complaint, the defendants helped employees at their Instant Tax Service franchise offices to engage in a variety of misconduct, including:
Preparing phony tax-return forms with fabricated businesses and income,
Falsely claiming education credits,
Claiming false filing status,
Claiming false dependents,
Selling deceptive loan products,
Filing tax returns without customer consent or authorization, and
Preparing bogus W-2 forms, based on information from employee paystubs
The complaint further alleged that Tewolde personally prepared fraudulent returns.
The injunction permanently bars Tewolde from preparing or filing federal tax returns for others, training tax preparers and owning or managing a tax preparation business.
Kidane and Koraggio are enjoined from violating the federal tax laws and consumer protection laws. The court order requires them to hire a monitor at their expense who will periodically report to the Justice Department to ensure compliance with the injunction. The order also bars Kidane and Koraggio from marketing abusive loan products, including holiday, or instant cash loan or advance products offered to customers based on information obtained from the customer’s paystub.
The case is one of five similar lawsuits that the Justice Department brought against Instant Tax Service franchises earlier this year. One of those suits is pending against the nationwide franchisor of Instant Tax Service and its owner, Fesum Ogbazion, in Dayton. The court in that case has entered a preliminary injunction, and trial on the government’s request to shut down the Instant Tax Service franchisor permanently is scheduled for next May.
Friday, December 28, 2012
Federal Court Bars Alleged Co-Owner of Las Vegas Instant Tax Service Franchise from Preparing Tax Returns
Company and Other Alleged Co-owner Also Subject to Restrictions
A Nevada federal court has permanently barred Benyam Tewolde from preparing tax returns for others, the Justice Department announced today. Tewolde and his wife, Yordanos Kidanits, are the alleged co-owners of an Instant Tax Service franchise that operates at multiple locations in the Las Vegas area. Instant Tax Service is a nationally franchised tax preparation company based in Dayton, Ohio.
Kidantis and the franchisee, Koraggio LLC, were also permanently enjoined from engaging in certain abusive practices. The civil injunction orders, to which the defendants consented without admitting the allegations against them, were signed on Dec. 27 by Judge Miranda M. Du of the U.S. District Court for the District of Nevada.
According to the government complaint, the defendants helped employees at their Instant Tax Service franchise offices to engage in a variety of misconduct, including:
Falsely claiming education credits,
Claiming false filing status,
Claiming false dependents,
Selling deceptive loan products,
Filing tax returns without customer consent or authorization, and
Preparing bogus W-2 forms, based on information from employee paystubs
The complaint further alleged that Tewolde personally prepared fraudulent returns.
The injunction permanently bars Tewolde from preparing or filing federal tax returns for others, training tax preparers and owning or managing a tax preparation business.
Kidane and Koraggio are enjoined from violating the federal tax laws and consumer protection laws. The court order requires them to hire a monitor at their expense who will periodically report to the Justice Department to ensure compliance with the injunction. The order also bars Kidane and Koraggio from marketing abusive loan products, including holiday, or instant cash loan or advance products offered to customers based on information obtained from the customer’s paystub.
The case is one of five similar lawsuits that the Justice Department brought against Instant Tax Service franchises earlier this year. One of those suits is pending against the nationwide franchisor of Instant Tax Service and its owner, Fesum Ogbazion, in Dayton. The court in that case has entered a preliminary injunction, and trial on the government’s request to shut down the Instant Tax Service franchisor permanently is scheduled for next May.
Friday, December 28, 2012
ALLEGED KICKBACKS FOR DRUG PROMOTIONS
FROM: U.S. DEPARTMENT OF JUSTICE
Thursday, December 27, 2012
Victory Pharma Inc. of San Diego Pays $11.4 Million to Resolve Kickback Allegations in Connection with Promotion of Its Drugs
Victory Pharma Inc., a specialty pharmaceutical company headquartered in San Diego, has agreed to pay $11,420,743 to resolve federal civil and criminal liability arising from its marketing of the pharmaceutical products Naprelan, Xodol, Fexmid and Dolgic, the Justice Department announced today. Under the agreement announced today, Victory entered into a deferred prosecution agreement and paid a criminal forfeiture of $1.4 million to resolve federal Ant-Kickback Statute allegations, and paid $9,938,310 to resolve False Claims Act allegations.
The settlement resolves allegations that Victory engaged in a scheme to promote its drugs by paying kickbacks to doctors to induce them to write prescriptions for Victory’s products, including prescriptions for patients covered by Medicare and other federal health insurance programs. The kickbacks included tickets to professional and collegiate sporting events; tickets to concerts and plays; spa outings; golf and ski outings; dinners at expensive restaurants; and numerous other out-of-office events. Victory also encouraged its sales representatives to schedule paid "preceptorships," which involved sales representatives "shadowing" doctors in their offices. The settlement also resolves allegations that Victory improperly used these preceptorships to induce doctors to prescribe Victory’s products.
"Kickback schemes undermine the integrity of medical decisions, subvert the health marketplace and waste taxpayer dollars," said Stuart F. Delery, Principal Deputy Assistant Attorney General for the Civil Division. "We will continue to hold accountable those who refuse to play by the rules and provide illegal incentives to influence the decision making of health care providers."
"This resolution underscores the need for physicians to make treatment decisions based on their own independent medical judgment, without being influenced by kickbacks or other improper benefits," said Laura E. Duffy, U.S. Attorney for the Southern District of California. "Protecting taxpayers from health care fraud is a priority of this office. We will continue to work closely with our investigative partners in taking both criminal and civil measures to combat health care fraud."
The settlement resolves a False Claims Act lawsuit filed in the Southern District of California by Chad Miller, a former sales representative for Victory. The whistleblower, or qui tam, provisions of the False Claims Act permit the whistleblower (or relator) to obtain a portion of the proceeds obtained by the federal government. As part of today’s resolution, Mr. Miller will receive $1.7 million.
"Patients expect health care providers to be concerned only with patients’ best medical interests," said Glenn R. Ferry, Special Agent in Charge for the U.S. Department of Health and Human Services Office of Inspector General Los Angeles region. "Financial kickbacks betray that patient trust, and taxpayers’ expectation that federal and state health dollars be put only to the wisest use."
FBI Special Agent in Charge Daphne Hearn commented, "Many laws of this nation are put in place to protect our citizens from corrupt practices that may endanger our health and safety. When individuals or businesses operate outside of the fence in order to turn a bigger profit the FBI will pursue them in the justice system."
Chris Hendrickson, Special Agent in Charge, Western Field Office, Defense Criminal Investigative Service, stated: "The Department of Defense is committed to its partnership with the Department of Justice and other federal and state enforcement agencies to aggressively pursue those who take advantage of taxpayer-funded health care systems for illicit gain. Doctors providing services to our military members and their families should be free from undue influence in prescribing medicines and other care decisions, and DCIS will act swiftly against those who engage in these illegal and unethical acts."
This settlement is the result of a coordinated effort by the Department of Justice, Civil Division, Commercial Litigation Branch; the U.S. Attorney’s Office for the Southern District of California; the FBI; and the Offices of Inspectors General for Health and Human Services, the Department of Defense, the Department of Labor, the U.S. Postal Service, the Veteran’s Administration, and the Office of Personnel Management.
This resolution is part of the government’s emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services in May 2009. 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 that effort is the False Claims Act, which the Justice Department has used to recover $10.1 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department's total recoveries in False Claims Act cases since January 2009 are over $13.9 billion.
Thursday, December 27, 2012
Victory Pharma Inc. of San Diego Pays $11.4 Million to Resolve Kickback Allegations in Connection with Promotion of Its Drugs
Victory Pharma Inc., a specialty pharmaceutical company headquartered in San Diego, has agreed to pay $11,420,743 to resolve federal civil and criminal liability arising from its marketing of the pharmaceutical products Naprelan, Xodol, Fexmid and Dolgic, the Justice Department announced today. Under the agreement announced today, Victory entered into a deferred prosecution agreement and paid a criminal forfeiture of $1.4 million to resolve federal Ant-Kickback Statute allegations, and paid $9,938,310 to resolve False Claims Act allegations.
The settlement resolves allegations that Victory engaged in a scheme to promote its drugs by paying kickbacks to doctors to induce them to write prescriptions for Victory’s products, including prescriptions for patients covered by Medicare and other federal health insurance programs. The kickbacks included tickets to professional and collegiate sporting events; tickets to concerts and plays; spa outings; golf and ski outings; dinners at expensive restaurants; and numerous other out-of-office events. Victory also encouraged its sales representatives to schedule paid "preceptorships," which involved sales representatives "shadowing" doctors in their offices. The settlement also resolves allegations that Victory improperly used these preceptorships to induce doctors to prescribe Victory’s products.
"Kickback schemes undermine the integrity of medical decisions, subvert the health marketplace and waste taxpayer dollars," said Stuart F. Delery, Principal Deputy Assistant Attorney General for the Civil Division. "We will continue to hold accountable those who refuse to play by the rules and provide illegal incentives to influence the decision making of health care providers."
"This resolution underscores the need for physicians to make treatment decisions based on their own independent medical judgment, without being influenced by kickbacks or other improper benefits," said Laura E. Duffy, U.S. Attorney for the Southern District of California. "Protecting taxpayers from health care fraud is a priority of this office. We will continue to work closely with our investigative partners in taking both criminal and civil measures to combat health care fraud."
The settlement resolves a False Claims Act lawsuit filed in the Southern District of California by Chad Miller, a former sales representative for Victory. The whistleblower, or qui tam, provisions of the False Claims Act permit the whistleblower (or relator) to obtain a portion of the proceeds obtained by the federal government. As part of today’s resolution, Mr. Miller will receive $1.7 million.
"Patients expect health care providers to be concerned only with patients’ best medical interests," said Glenn R. Ferry, Special Agent in Charge for the U.S. Department of Health and Human Services Office of Inspector General Los Angeles region. "Financial kickbacks betray that patient trust, and taxpayers’ expectation that federal and state health dollars be put only to the wisest use."
FBI Special Agent in Charge Daphne Hearn commented, "Many laws of this nation are put in place to protect our citizens from corrupt practices that may endanger our health and safety. When individuals or businesses operate outside of the fence in order to turn a bigger profit the FBI will pursue them in the justice system."
Chris Hendrickson, Special Agent in Charge, Western Field Office, Defense Criminal Investigative Service, stated: "The Department of Defense is committed to its partnership with the Department of Justice and other federal and state enforcement agencies to aggressively pursue those who take advantage of taxpayer-funded health care systems for illicit gain. Doctors providing services to our military members and their families should be free from undue influence in prescribing medicines and other care decisions, and DCIS will act swiftly against those who engage in these illegal and unethical acts."
This settlement is the result of a coordinated effort by the Department of Justice, Civil Division, Commercial Litigation Branch; the U.S. Attorney’s Office for the Southern District of California; the FBI; and the Offices of Inspectors General for Health and Human Services, the Department of Defense, the Department of Labor, the U.S. Postal Service, the Veteran’s Administration, and the Office of Personnel Management.
This resolution is part of the government’s emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services in May 2009. 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 that effort is the False Claims Act, which the Justice Department has used to recover $10.1 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department's total recoveries in False Claims Act cases since January 2009 are over $13.9 billion.
Thursday, December 27, 2012
A CASE OF MISAPPROPRIATION OF MONEY
FROM: SECURITIES AND EXCHANGE COMMISSION
Defendant in SEC Enforcement Action Sentenced and Ordered to Pay Restitution
The Securities and Exchange Commission announced today that, on December 5, 2012, the United States District Court for the District of Connecticut sentenced Stephen B. Blankenship, a resident of New Fairfield, Connecticut to forty-one months imprisonment plus three years of supervised release and ordered him to pay a fine of $7,500.00, and restitution in the amount of $607,516.81 based upon his guilty plea to one count of Mail Fraud and one count of Securities Fraud. On September 12, 2012, Blankenship pleaded guilty to all charges brought by the United States Attorney’s Office in Connecticut in connection with a scheme he operated through Deer Hill Financial Group, LLC in Danbury, Connecticut. From 2002 to 2012, Blankenship falsely represented to numerous investors that he had investment opportunities that were safe and would pay a consistent return to investors. Instead, there were no actual investments and Blankenship used some of the victim’s funds to pay personal and business expenses and other investors in furtherance of his fraud.
On September 13, 2012, the Commission filed a civil complaint in the United States District Court for the District of Connecticut alleging that Blankenship misappropriated at least $600,000 from at least 12 investors by falsely representing that he would invest their funds. The Commission’s complaint seeks the entry of a permanent injunction against future violations, disgorgement of ill-gotten gains plus pre-judgment interest and civil monetary penalties. The Commission litigation is still pending.
On October 11, 2012, the Commission barred Blankenship from the securities industry based his guilty plea. The Connecticut Department of Banking’s Securities Division has also obtained, by consent, a revocation of Blankenship’s state license and barred Blankenship and Deer Hill from operating in Connecticut.
Defendant in SEC Enforcement Action Sentenced and Ordered to Pay Restitution
The Securities and Exchange Commission announced today that, on December 5, 2012, the United States District Court for the District of Connecticut sentenced Stephen B. Blankenship, a resident of New Fairfield, Connecticut to forty-one months imprisonment plus three years of supervised release and ordered him to pay a fine of $7,500.00, and restitution in the amount of $607,516.81 based upon his guilty plea to one count of Mail Fraud and one count of Securities Fraud. On September 12, 2012, Blankenship pleaded guilty to all charges brought by the United States Attorney’s Office in Connecticut in connection with a scheme he operated through Deer Hill Financial Group, LLC in Danbury, Connecticut. From 2002 to 2012, Blankenship falsely represented to numerous investors that he had investment opportunities that were safe and would pay a consistent return to investors. Instead, there were no actual investments and Blankenship used some of the victim’s funds to pay personal and business expenses and other investors in furtherance of his fraud.
On September 13, 2012, the Commission filed a civil complaint in the United States District Court for the District of Connecticut alleging that Blankenship misappropriated at least $600,000 from at least 12 investors by falsely representing that he would invest their funds. The Commission’s complaint seeks the entry of a permanent injunction against future violations, disgorgement of ill-gotten gains plus pre-judgment interest and civil monetary penalties. The Commission litigation is still pending.
On October 11, 2012, the Commission barred Blankenship from the securities industry based his guilty plea. The Connecticut Department of Banking’s Securities Division has also obtained, by consent, a revocation of Blankenship’s state license and barred Blankenship and Deer Hill from operating in Connecticut.
Wednesday, December 26, 2012
JUSTICE CHARGES TAX PREPARERS WITH MAKING BOGUS CLAIMS FOR CREDITS AND DEDUCTIONS
FROM: U.S. JUSTICE DEPARTMENT
Friday, December 21
Justice Department Seeks to Shut Down Georgia Tax
Preparers
Falsify Tax Returns, Costing U.S. Treasury More Than $100 Million Dollars
The United States has asked a federal court in Atlanta to bar Larry J. Heath, who operates Heath’s Income Tax II in Cartersville, Ga., and his brother Andrew R. Heath, who operates Excellent Tax Service of Acworth, Ga., from preparing tax returns for others, the Justice Department announced today. According to the government complaint, the Heaths and their businesses have repeatedly prepared federal tax returns that unlawfully understate customers’ federal tax liabilities. The suit alleges that the defendants concoct bogus losses, expenses, education credits, business expenses and charitable contributions, which they falsely report on their customers’ federal income tax returns.
According to the complaint, the Internal Revenue Service (IRS) previously suspended Larry Heath’s IRS-issued electronic filing identification number (EFIN) because of the large number of erroneous returns he prepared. In response, the complaint alleges, Larry Heath purported to "sell" his business to two different individuals and used their EFINs to continue to file tax returns.
The suit alleges that the IRS has examined thousands of income tax returns prepared by the Heaths and their businesses and found that 94.5 percent of tax returns required IRS adjustments. According to the complaint, the total harm to the U.S. Treasury caused by Larry and Andy Heath’s misconduct could exceed $100 million.
Friday, December 21
Justice Department Seeks to Shut Down Georgia Tax
Preparers
Falsify Tax Returns, Costing U.S. Treasury More Than $100 Million Dollars
The United States has asked a federal court in Atlanta to bar Larry J. Heath, who operates Heath’s Income Tax II in Cartersville, Ga., and his brother Andrew R. Heath, who operates Excellent Tax Service of Acworth, Ga., from preparing tax returns for others, the Justice Department announced today. According to the government complaint, the Heaths and their businesses have repeatedly prepared federal tax returns that unlawfully understate customers’ federal tax liabilities. The suit alleges that the defendants concoct bogus losses, expenses, education credits, business expenses and charitable contributions, which they falsely report on their customers’ federal income tax returns.
According to the complaint, the Internal Revenue Service (IRS) previously suspended Larry Heath’s IRS-issued electronic filing identification number (EFIN) because of the large number of erroneous returns he prepared. In response, the complaint alleges, Larry Heath purported to "sell" his business to two different individuals and used their EFINs to continue to file tax returns.
The suit alleges that the IRS has examined thousands of income tax returns prepared by the Heaths and their businesses and found that 94.5 percent of tax returns required IRS adjustments. According to the complaint, the total harm to the U.S. Treasury caused by Larry and Andy Heath’s misconduct could exceed $100 million.
Monday, December 24, 2012
THE REFOR OF THE PUERTO RICO POLICE DEPARTMENT
FROM: U.S. DEPARTMENT OF JUSTICE
Friday, December 21, 2012
Justice Department Enters into Agreement to Reform the Puerto Rico Police Department
The Justice Department (DOJ) today entered into a sweeping agreement with the Commonwealth of Puerto Rico and Governor Luis Fortuño to resolve its civil investigation of the Puerto Rico Police Department (PRPD). The complaint and the agreement were filed today in the U.S. District Court of Puerto Rico, along with a joint motion requesting a temporary stay of the proceedings until April 15, 2013 to provide the incoming administration of Governor-elect Alejandro García Padilla sufficient time to review the agreement.
The comprehensive agreement addresses wide-ranging and ongoing constitutional violations by PRPD that were documented in a lengthy DOJ report issued in September 2011. The department found reasonable cause to believe that PRPD engages in a pattern or practice of use of excessive force, use of unreasonable force designed to suppress protected speech, and unconstitutional searches and seizures. The agreement also addresses allegations that PRPD fails to investigate sex crimes and domestic violence, and engages in discriminatory policing.
"We appreciate the hard work of Governor Fortuño, Superintendent Hector Pesquera, and their staff. Together, and with great input from the public, we have designed a comprehensive blueprint for reform that provides a solid foundation that will professionalize and support the hardworking men and women of PRPD as they protect the people of Puerto Rico," said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. "We have also met with Governor-elect Garcia-Padilla, who recognizes that constitutional policing and effective policing go hand in hand. We look forward to working with Governor-elect García Padilla and his incoming administration to finalize the agreement and begin the critical work of rebuilding PRPD. Ensuring effective, constitutional policing is not a partisan issue, and we appreciate the commitment of Governor Fortuño and Governor-elect García Padilla to the reforms embodied in the agreement. The successful implementation of the reforms contained in this agreement will help to reduce crime, ensure respect for the Constitution and restore public confidence in PRPD."
Today’s agreement was reached after extensive negotiations with commonwealth officials and their police consultants. The agreement provides a comprehensive blueprint for meaningful, sustainable reform and reflects the input of many community stakeholders from throughout the Commonwealth, including police affinity groups, members of the Puerto Rico business community, students, representatives of the Dominican community, and members of the lesbian, gay, bisexual, transsexual and transgender communities.
The agreement addresses the policies, procedures, training, internal and external oversight, disciplinary systems and information and data integrity mechanisms that caused or contributed to the pattern or practice of misconduct. It also details necessary changes intended to ensure that police services are delivered to the people of Puerto Rico in a manner that is effective, complies with the Constitution, and promotes the community’s trust in PRPD. For instance, the agreement contains provisions that are designed to increase transparency and promote PRPD’s responsiveness to the community, including measures that require regular meetings with community representatives to facilitate cooperation and communication; collection and dissemination of accurate and up-to-date crime statistics; community outreach programs in each PRPD region; and independent and periodic compliance assessments that are available to the public.
The purpose of the joint motion requesting a temporary stay of the proceedings is to provide the incoming administration with a meaningful opportunity to review the agreement. The department and representatives of Governor Fortuño have met independently with Governor-elect García Padilla and his transition team to brief them on the investigation’s findings and the agreement. The stay, requested until April 15, 2013, will provide Governor-elect García Padilla and his incoming administration with a meaningful opportunity to review the agreement, and either accept it or negotiate necessary changes, before the department and Commonwealth request approval and entry of the agreement as an order. During this period, the department will continue its ongoing outreach into communities across Puerto Rico to seek input and feedback. Once approved and entered by the district court, the agreement will resolve the department’s civil action, and the implementation phase will immediately begin.
Friday, December 21, 2012
Justice Department Enters into Agreement to Reform the Puerto Rico Police Department
The Justice Department (DOJ) today entered into a sweeping agreement with the Commonwealth of Puerto Rico and Governor Luis Fortuño to resolve its civil investigation of the Puerto Rico Police Department (PRPD). The complaint and the agreement were filed today in the U.S. District Court of Puerto Rico, along with a joint motion requesting a temporary stay of the proceedings until April 15, 2013 to provide the incoming administration of Governor-elect Alejandro García Padilla sufficient time to review the agreement.
The comprehensive agreement addresses wide-ranging and ongoing constitutional violations by PRPD that were documented in a lengthy DOJ report issued in September 2011. The department found reasonable cause to believe that PRPD engages in a pattern or practice of use of excessive force, use of unreasonable force designed to suppress protected speech, and unconstitutional searches and seizures. The agreement also addresses allegations that PRPD fails to investigate sex crimes and domestic violence, and engages in discriminatory policing.
"We appreciate the hard work of Governor Fortuño, Superintendent Hector Pesquera, and their staff. Together, and with great input from the public, we have designed a comprehensive blueprint for reform that provides a solid foundation that will professionalize and support the hardworking men and women of PRPD as they protect the people of Puerto Rico," said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. "We have also met with Governor-elect Garcia-Padilla, who recognizes that constitutional policing and effective policing go hand in hand. We look forward to working with Governor-elect García Padilla and his incoming administration to finalize the agreement and begin the critical work of rebuilding PRPD. Ensuring effective, constitutional policing is not a partisan issue, and we appreciate the commitment of Governor Fortuño and Governor-elect García Padilla to the reforms embodied in the agreement. The successful implementation of the reforms contained in this agreement will help to reduce crime, ensure respect for the Constitution and restore public confidence in PRPD."
Today’s agreement was reached after extensive negotiations with commonwealth officials and their police consultants. The agreement provides a comprehensive blueprint for meaningful, sustainable reform and reflects the input of many community stakeholders from throughout the Commonwealth, including police affinity groups, members of the Puerto Rico business community, students, representatives of the Dominican community, and members of the lesbian, gay, bisexual, transsexual and transgender communities.
The agreement addresses the policies, procedures, training, internal and external oversight, disciplinary systems and information and data integrity mechanisms that caused or contributed to the pattern or practice of misconduct. It also details necessary changes intended to ensure that police services are delivered to the people of Puerto Rico in a manner that is effective, complies with the Constitution, and promotes the community’s trust in PRPD. For instance, the agreement contains provisions that are designed to increase transparency and promote PRPD’s responsiveness to the community, including measures that require regular meetings with community representatives to facilitate cooperation and communication; collection and dissemination of accurate and up-to-date crime statistics; community outreach programs in each PRPD region; and independent and periodic compliance assessments that are available to the public.
The purpose of the joint motion requesting a temporary stay of the proceedings is to provide the incoming administration with a meaningful opportunity to review the agreement. The department and representatives of Governor Fortuño have met independently with Governor-elect García Padilla and his transition team to brief them on the investigation’s findings and the agreement. The stay, requested until April 15, 2013, will provide Governor-elect García Padilla and his incoming administration with a meaningful opportunity to review the agreement, and either accept it or negotiate necessary changes, before the department and Commonwealth request approval and entry of the agreement as an order. During this period, the department will continue its ongoing outreach into communities across Puerto Rico to seek input and feedback. Once approved and entered by the district court, the agreement will resolve the department’s civil action, and the implementation phase will immediately begin.
Saturday, December 22, 2012
REAL ESTATE AGENT GETS 70 MONTH PRISON TERM FOR ROLE IN MORTGAGE FRAUD SCHEME
FROM: U.S. DEPARTMENT OF JUSTICE
Wednesday, December 19, 2012
Las Vegas Real Estate Agent Sentenced to 70 Months in Prison for Her Role in Mortgage Fraud Scheme
WASHINGTON – A Las Vegas real estate agent was sentenced today to serve 70 months in prison for her participation in a mortgage fraud scheme that netted more than $10 million in fraudulent mortgage loans, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Daniel G. Bogden of the District of Nevada, and Special Agent in Charge Kevin Favreau of the FBI’s Las Vegas Field Office.
Linda Marie Kot, 58, was sentenced by U.S. District Judge Kent J. Dawson in the District of Nevada. In addition to her prison term, Kot was sentenced to serve five years of supervised release and ordered to pay $3,891,811 in forfeiture.
In May 2012, after a five-day trial, a federal jury in Las Vegas found Kot guilty of three counts of bank fraud and one count of conspiracy to commit mail, wire and bank fraud.
According to court documents and evidence presented at trial, Kot participated in a scheme with members of an investment group to submit fraudulent loan documents to lenders that involved "straw buyers," individuals with good credit scores whose names were put on the properties but who were not intended to be responsible for the payment of the mortgages or other expenses of the properties. The scheme took place in 2006 and involved 13 new home purchases, three existing home sales and several loan applications that were not approved.
According to the evidence at trial and court documents, Kot and her co-conspirators caused material misstatements to be placed on loan applications, including information about the true owners and controllers of the properties; whether the properties would be primary residences; and the level of assets and income of the straw buyers. In some cases, Kot put straw buyers on her bank account to make it appear that the straw buyers had assets that they did not have, in order to help them qualify for mortgage loans for which they otherwise would not have been eligible. Kot made over $276,000 in commissions on the fraudulent sales, the evidence at trial showed.
One of the counts of conviction involved a similar scheme that Kot engaged in with members of her family from 2005 to 2006. The evidence at trial showed that Kot and members of her family used straw buyers and fraudulent loan applications to buy properties. Kot and members of her family paid the straw buyers fees, and any profits on sale of the houses were split among family members.
While Kot and her family members were able to sell most of the properties they bought with straw buyers before the market downturn, the investment group that Kot conspired with was not able to do so, according to evidence presented at trial. As a result, most of the mortgages for the houses that the investment group bought in 2006, where Kot acted as the realtor, ended up in default and foreclosure, with many of the straw buyers ending up in bankruptcy.
Three co-conspirators, Hugo Coutelin, Jeff Thomas and Michael Perry, previously pleaded guilty for their roles in the fraud scheme. In September 2012, Coutelin and Perry were each sentenced to 15 months in prison and Thomas was sentenced to time served.
This case was investigated by the FBI. Trial Attorneys Nicholas S. Acker and Fred Medick of the Fraud Section in the Justice Department’s Criminal Division prosecuted the case, with assistance from the U.S. Attorney’s Office for the District of Nevada. Fraud Section Trial Attorney Brian Young and former Fraud Section Trial Attorneys Matt Klecka and Joseph Capone also assisted with the investigation.
Today’s sentencing was a result of efforts by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.StopFraud.gov
Wednesday, December 19, 2012
Las Vegas Real Estate Agent Sentenced to 70 Months in Prison for Her Role in Mortgage Fraud Scheme
WASHINGTON – A Las Vegas real estate agent was sentenced today to serve 70 months in prison for her participation in a mortgage fraud scheme that netted more than $10 million in fraudulent mortgage loans, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Daniel G. Bogden of the District of Nevada, and Special Agent in Charge Kevin Favreau of the FBI’s Las Vegas Field Office.
Linda Marie Kot, 58, was sentenced by U.S. District Judge Kent J. Dawson in the District of Nevada. In addition to her prison term, Kot was sentenced to serve five years of supervised release and ordered to pay $3,891,811 in forfeiture.
In May 2012, after a five-day trial, a federal jury in Las Vegas found Kot guilty of three counts of bank fraud and one count of conspiracy to commit mail, wire and bank fraud.
According to court documents and evidence presented at trial, Kot participated in a scheme with members of an investment group to submit fraudulent loan documents to lenders that involved "straw buyers," individuals with good credit scores whose names were put on the properties but who were not intended to be responsible for the payment of the mortgages or other expenses of the properties. The scheme took place in 2006 and involved 13 new home purchases, three existing home sales and several loan applications that were not approved.
According to the evidence at trial and court documents, Kot and her co-conspirators caused material misstatements to be placed on loan applications, including information about the true owners and controllers of the properties; whether the properties would be primary residences; and the level of assets and income of the straw buyers. In some cases, Kot put straw buyers on her bank account to make it appear that the straw buyers had assets that they did not have, in order to help them qualify for mortgage loans for which they otherwise would not have been eligible. Kot made over $276,000 in commissions on the fraudulent sales, the evidence at trial showed.
One of the counts of conviction involved a similar scheme that Kot engaged in with members of her family from 2005 to 2006. The evidence at trial showed that Kot and members of her family used straw buyers and fraudulent loan applications to buy properties. Kot and members of her family paid the straw buyers fees, and any profits on sale of the houses were split among family members.
While Kot and her family members were able to sell most of the properties they bought with straw buyers before the market downturn, the investment group that Kot conspired with was not able to do so, according to evidence presented at trial. As a result, most of the mortgages for the houses that the investment group bought in 2006, where Kot acted as the realtor, ended up in default and foreclosure, with many of the straw buyers ending up in bankruptcy.
Three co-conspirators, Hugo Coutelin, Jeff Thomas and Michael Perry, previously pleaded guilty for their roles in the fraud scheme. In September 2012, Coutelin and Perry were each sentenced to 15 months in prison and Thomas was sentenced to time served.
This case was investigated by the FBI. Trial Attorneys Nicholas S. Acker and Fred Medick of the Fraud Section in the Justice Department’s Criminal Division prosecuted the case, with assistance from the U.S. Attorney’s Office for the District of Nevada. Fraud Section Trial Attorney Brian Young and former Fraud Section Trial Attorneys Matt Klecka and Joseph Capone also assisted with the investigation.
Today’s sentencing was a result of efforts by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.StopFraud.gov
Friday, December 21, 2012
DUAL U.S-COSTA RICAN CITIZEN CHARGED IN BUSINESS OPPORTUNITY FRAUD CASE.
FROM: U.S. DEPARTMENT OF JUSTICE
Tuesday, December 18, 2012
Individual Arrested in Connection with Costa Rica-based Business Opportunity Fraud Ventures
Operation Had Connections to Florida, New Mexico, Colorado, Nevada, Wisconsin and Pennsylvania
A dual United States and Costa Rican citizen charged in connection with the operation of a series of fraudulent business opportunities was arrested today in Chicago following his indictment by a federal grand jury in Miami on Nov. 29, 2011, the Justice Department and the U.S. Postal Inspection Service announced today. Sean Rosales was arrested based on charges that he and his co-conspirators purported to sell beverage and greeting card business opportunities, including assistance in establishing, maintaining and operating such businesses. The charges in the indictment form part of the government’s continued nationwide crackdown on business opportunity fraud.
Prior to Rosales’ arrest, 11 other individuals were charged in connection with business opportunity fraud ventures based in Costa Rica. Seven of those other individuals have been convicted in the United States.
"Business opportunity fraud imposes significant financial hardship on innocent, hardworking victims who are simply trying to make better lives for themselves and their families ," said Stuart F. Delery, Principal Deputy Assistant Attorney General for the Justice Department’s Civil Division. "The Department of Justice will continue its push to prosecute those who defraud Americans to make a quick buck."
Beginning in May 2005, Rosales and his coconspirators are alleged to have fraudulently induced purchasers in the United States to buy business opportunities in USA Beverages Inc., Twin Peaks Gourmet Coffee Inc., Cards-R-Us Inc., Premier Cards Inc., The Coffee Man Inc. and Powerbrands Distributing Company. According to the indictment, the business opportunities the defendant sold cost thousands of dollars each, and most purchasers paid at least $10,000. Each company operated for several months, and after one company closed, the next opened. The various companies used bank accounts, office space and other services in the Southern District of Florida and elsewhere, according to the indictment.
The indictment alleges that the defendant, using aliases, participated in a conspiracy that used various means to make it appear to potential purchasers that the businesses were located entirely in the United States. In reality, Rosales operated out of Costa Rica to fraudulently induce potential purchasers in the United States to buy the purported business opportunities, the indictment alleges.
According to the indictment, the companies made numerous false statements to potential purchasers of the business opportunities. Among the misrepresentations alleged in the indictment are that purchasers would likely earn substantial profits; that prior purchasers of the business opportunities were earning substantial profits; that purchasers would sell a guaranteed minimum amount of merchandise, such as greeting cards and beverages; and that the business opportunity worked with locators familiar with the potential purchaser’s area who would secure or had already secured high-traffic locations for the potential purchaser’s merchandise stands. The indictment alleges that potential purchasers also were falsely told that the profits of some of the companies were based in part on the profits of the business opportunity purchasers, thus creating the false impression that the companies had a stake in the purchasers’ success and in finding good locations.
The indictment also alleges that the companies employed various types of sales representatives, including fronters, closers, and references. A fronter spoke to potential purchasers when the prospective purchasers initially contacted the company in response to an advertisement. A closer subsequently spoke to potential purchasers to close deals. References spoke to potential purchasers about the financial success they purportedly had experienced since purchasing one of the business opportunities. According to the indictment, the companies also employed locators, who were typically characterized by the sales representatives as third parties who worked with the companies to find high-traffic locations for the prospective purchasers’ merchandise display racks.
The indictment alleges Rosales, using assumed names, was a fronter and reference for USA Beverages, a fronter and reference for Twin Peaks, a fronter, locator and reference for Cards-R-Us, a fronter, locator and reference for Premier Cards, a fronter, locator and reference for Coffee Man, and a locator for Powerbrands.
According to the allegations in the indictment, each of the companies was registered as a corporation and rented office space to make it appear to potential purchasers that its operations were fully in the United States. USA Beverages was registered as a Florida and New Mexico corporation and rented office space in Las Cruces, N.M. Twin Peaks was registered as a Florida and Colorado corporation and rented office space in Fort Collins, Colo., and Cards-R-Us was registered as a Nevada corporation and rented office space in Reno, Nev. Premier Cards was registered as a Colorado and Pennsylvania corporation and rented office space in Philadelphia, and The Coffee Man was registered as a Colorado corporation and rented office space in Denver. Powerbrands was registered as a Wisconsin corporation and rented office space in Glendale, Wis., and Palm Beach Gardens, Fla.
The defendant was charged with conspiracy to commit mail and wire fraud, and with committing this offense via telemarketing. In addition, the defendant was charged with seven counts of mail fraud and 13 counts of wire fraud. If convicted of conspiracy, Rosales faces a maximum statutory term of 25 years in prison, a possible fine and mandatory restitution on the conspiracy count. He also faces a maximum statutory term of imprisonment of 25 years on each of the mail and wire fraud counts, a possible fine and mandatory restitution.
"Fraudulent business opportunity sellers must realize that all financial fraud will be prosecuted vigorously, even if the schemers conduct their fraudulent operations from abroad," said Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida . "Increased international law enforcement cooperation eliminates safe havens for those who cheat American citizens from overseas."
"This international and domestic investigation illuminates the Postal Inspection Service’s resolve to protect the American public from business opportunity scams, and to ensure that the U.S. Mail is not used as a conduit for fraudsters to prey on the American public." said Tony Gomez, Acting U. S. Postal Inspector in Charge in Miami.
Principal Deputy Assistant Attorney General Delery commended the investigative efforts of the Postal Inspection Service. The case is being prosecuted by trial attorneys Jeffrey Steger and Alan Phelps with the U.S. Department of Justice Consumer Protection Branch.
An indictment is merely an allegation, and every defendant is presumed innocent until proven guilty beyond a reasonable doubt.
Tuesday, December 18, 2012
Individual Arrested in Connection with Costa Rica-based Business Opportunity Fraud Ventures
Operation Had Connections to Florida, New Mexico, Colorado, Nevada, Wisconsin and Pennsylvania
A dual United States and Costa Rican citizen charged in connection with the operation of a series of fraudulent business opportunities was arrested today in Chicago following his indictment by a federal grand jury in Miami on Nov. 29, 2011, the Justice Department and the U.S. Postal Inspection Service announced today. Sean Rosales was arrested based on charges that he and his co-conspirators purported to sell beverage and greeting card business opportunities, including assistance in establishing, maintaining and operating such businesses. The charges in the indictment form part of the government’s continued nationwide crackdown on business opportunity fraud.
Prior to Rosales’ arrest, 11 other individuals were charged in connection with business opportunity fraud ventures based in Costa Rica. Seven of those other individuals have been convicted in the United States.
"Business opportunity fraud imposes significant financial hardship on innocent, hardworking victims who are simply trying to make better lives for themselves and their families ," said Stuart F. Delery, Principal Deputy Assistant Attorney General for the Justice Department’s Civil Division. "The Department of Justice will continue its push to prosecute those who defraud Americans to make a quick buck."
Beginning in May 2005, Rosales and his coconspirators are alleged to have fraudulently induced purchasers in the United States to buy business opportunities in USA Beverages Inc., Twin Peaks Gourmet Coffee Inc., Cards-R-Us Inc., Premier Cards Inc., The Coffee Man Inc. and Powerbrands Distributing Company. According to the indictment, the business opportunities the defendant sold cost thousands of dollars each, and most purchasers paid at least $10,000. Each company operated for several months, and after one company closed, the next opened. The various companies used bank accounts, office space and other services in the Southern District of Florida and elsewhere, according to the indictment.
The indictment alleges that the defendant, using aliases, participated in a conspiracy that used various means to make it appear to potential purchasers that the businesses were located entirely in the United States. In reality, Rosales operated out of Costa Rica to fraudulently induce potential purchasers in the United States to buy the purported business opportunities, the indictment alleges.
According to the indictment, the companies made numerous false statements to potential purchasers of the business opportunities. Among the misrepresentations alleged in the indictment are that purchasers would likely earn substantial profits; that prior purchasers of the business opportunities were earning substantial profits; that purchasers would sell a guaranteed minimum amount of merchandise, such as greeting cards and beverages; and that the business opportunity worked with locators familiar with the potential purchaser’s area who would secure or had already secured high-traffic locations for the potential purchaser’s merchandise stands. The indictment alleges that potential purchasers also were falsely told that the profits of some of the companies were based in part on the profits of the business opportunity purchasers, thus creating the false impression that the companies had a stake in the purchasers’ success and in finding good locations.
The indictment also alleges that the companies employed various types of sales representatives, including fronters, closers, and references. A fronter spoke to potential purchasers when the prospective purchasers initially contacted the company in response to an advertisement. A closer subsequently spoke to potential purchasers to close deals. References spoke to potential purchasers about the financial success they purportedly had experienced since purchasing one of the business opportunities. According to the indictment, the companies also employed locators, who were typically characterized by the sales representatives as third parties who worked with the companies to find high-traffic locations for the prospective purchasers’ merchandise display racks.
The indictment alleges Rosales, using assumed names, was a fronter and reference for USA Beverages, a fronter and reference for Twin Peaks, a fronter, locator and reference for Cards-R-Us, a fronter, locator and reference for Premier Cards, a fronter, locator and reference for Coffee Man, and a locator for Powerbrands.
According to the allegations in the indictment, each of the companies was registered as a corporation and rented office space to make it appear to potential purchasers that its operations were fully in the United States. USA Beverages was registered as a Florida and New Mexico corporation and rented office space in Las Cruces, N.M. Twin Peaks was registered as a Florida and Colorado corporation and rented office space in Fort Collins, Colo., and Cards-R-Us was registered as a Nevada corporation and rented office space in Reno, Nev. Premier Cards was registered as a Colorado and Pennsylvania corporation and rented office space in Philadelphia, and The Coffee Man was registered as a Colorado corporation and rented office space in Denver. Powerbrands was registered as a Wisconsin corporation and rented office space in Glendale, Wis., and Palm Beach Gardens, Fla.
The defendant was charged with conspiracy to commit mail and wire fraud, and with committing this offense via telemarketing. In addition, the defendant was charged with seven counts of mail fraud and 13 counts of wire fraud. If convicted of conspiracy, Rosales faces a maximum statutory term of 25 years in prison, a possible fine and mandatory restitution on the conspiracy count. He also faces a maximum statutory term of imprisonment of 25 years on each of the mail and wire fraud counts, a possible fine and mandatory restitution.
"Fraudulent business opportunity sellers must realize that all financial fraud will be prosecuted vigorously, even if the schemers conduct their fraudulent operations from abroad," said Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida . "Increased international law enforcement cooperation eliminates safe havens for those who cheat American citizens from overseas."
"This international and domestic investigation illuminates the Postal Inspection Service’s resolve to protect the American public from business opportunity scams, and to ensure that the U.S. Mail is not used as a conduit for fraudsters to prey on the American public." said Tony Gomez, Acting U. S. Postal Inspector in Charge in Miami.
Principal Deputy Assistant Attorney General Delery commended the investigative efforts of the Postal Inspection Service. The case is being prosecuted by trial attorneys Jeffrey Steger and Alan Phelps with the U.S. Department of Justice Consumer Protection Branch.
An indictment is merely an allegation, and every defendant is presumed innocent until proven guilty beyond a reasonable doubt.
Thursday, December 20, 2012
HUSBAND AND WIFE FRAUDSTERS SENTENCED TO PRISON AND TO PAY RESTITUTION
FROM: U.S. DEPARTMENT OF JUSTICE
Tuesday, December 11, 2012
Husband and Wife Sentenced in Virginia for Investment Fraud Scheme
WASHINGTON – Former FBI agent John Robert "Bob" Graves and his wife Sara Turberville Graves were sentenced today in federal court to serve 135 months in prison and 36 months in prison, respectively, for their participation in an investment fraud scheme, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney for the Eastern District of Virginia Neil H. MacBride; Jeffrey C. Mazanec, Special Agent in Charge of the FBI’s Richmond Field Office; and Keith A. Fixel, Inspector in Charge of the Charlotte Division of the U.S. Postal Inspection Service (USPIS).
John Graves, 53, and Sara Graves, 45, both of Fredericksburg, Va., were sentenced by U.S. District Judge James R. Spencer in the Eastern District of Virginia. In addition to their prison sentences, John and Sara Graves were both sentenced to serve three years of supervised release and were also ordered to pay $1,235,773 in restitution to the victims of their fraud.
On April 27, 2012, John and Sara Graves were both convicted of one count of conspiracy to commit mail and wire fraud, one count of mail fraud and four counts of wire fraud. John Graves was also convicted of three counts of Investment Advisers Act fraud and one count of making false statements to the FBI. The defendants were previously ordered to forfeit over $1.3 million, including the contents of several bank and brokerage accounts.
John and Sara Graves were indicted on Oct. 4, 2011. According to the evidence presented at trial, John Graves, who is a former Special Agent with the FBI, founded and served as president of Brooke Point Management (BPM), a corporation through which he sold insurance, performed estate and tax planning services and recruited and advised investment clients. He was also a registered investment advisory representative with, and CEO of, Compass Financial Advisers, an Indiana-based registered investment advisory firm. Sara Graves served as secretary of BPM and managing member of Dupont Auburn Real Estate, an Indiana real estate investment company. Between approximately June 2008 and July 2011, John and Sara Graves devised and executed a scheme to defraud approximately 11 investors located in central Virginia of approximately $1.3 million.
According to the evidence presented at trial, John and Sara Graves raised investor funds by selling investments in BPM and Dupont Auburn Real Estate through misrepresentations about the safety and security of the investments, as well as misrepresentations and omissions regarding their intended use of investor money. According to evidence presented at trial, John and Sara Graves used investor funds to, among other things, pay back previous investors who requested access to their money, purchase real estate, pay personal expenses, including credit card bills and time share dues, and to pay for John Graves’ personal acquisition of Compass Financial Advisers. As alleged at trial, John Graves continued to make misrepresentations even after the scheme was uncovered, through false and misleading filings in U.S. Bankruptcy Court and false and misleading statements to investors and to investigators from the U.S. Securities and Exchange Commission (SEC), FBI and USPIS.
The case is being prosecuted by Trial Attorney Kevin B. Muhlendorf of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Jamie L. Mickelson and Michael R. Gill of the Eastern District of Virginia. This case was investigated by the FBI and USPIS. The department acknowledges the significant assistance provided by the SEC, which referred the case for criminal prosecution.
This investigation has been coordinated by the Virginia Financial and Securities Fraud Task Force, an unprecedented partnership between criminal investigators and civil regulators to investigate and prosecute complex financial fraud cases in the nation and in Virginia. The task force is an investigative arm of the President’s Financial Fraud Enforcement Task Force, an interagency national task force.
Tuesday, December 11, 2012
Husband and Wife Sentenced in Virginia for Investment Fraud Scheme
WASHINGTON – Former FBI agent John Robert "Bob" Graves and his wife Sara Turberville Graves were sentenced today in federal court to serve 135 months in prison and 36 months in prison, respectively, for their participation in an investment fraud scheme, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney for the Eastern District of Virginia Neil H. MacBride; Jeffrey C. Mazanec, Special Agent in Charge of the FBI’s Richmond Field Office; and Keith A. Fixel, Inspector in Charge of the Charlotte Division of the U.S. Postal Inspection Service (USPIS).
John Graves, 53, and Sara Graves, 45, both of Fredericksburg, Va., were sentenced by U.S. District Judge James R. Spencer in the Eastern District of Virginia. In addition to their prison sentences, John and Sara Graves were both sentenced to serve three years of supervised release and were also ordered to pay $1,235,773 in restitution to the victims of their fraud.
On April 27, 2012, John and Sara Graves were both convicted of one count of conspiracy to commit mail and wire fraud, one count of mail fraud and four counts of wire fraud. John Graves was also convicted of three counts of Investment Advisers Act fraud and one count of making false statements to the FBI. The defendants were previously ordered to forfeit over $1.3 million, including the contents of several bank and brokerage accounts.
John and Sara Graves were indicted on Oct. 4, 2011. According to the evidence presented at trial, John Graves, who is a former Special Agent with the FBI, founded and served as president of Brooke Point Management (BPM), a corporation through which he sold insurance, performed estate and tax planning services and recruited and advised investment clients. He was also a registered investment advisory representative with, and CEO of, Compass Financial Advisers, an Indiana-based registered investment advisory firm. Sara Graves served as secretary of BPM and managing member of Dupont Auburn Real Estate, an Indiana real estate investment company. Between approximately June 2008 and July 2011, John and Sara Graves devised and executed a scheme to defraud approximately 11 investors located in central Virginia of approximately $1.3 million.
According to the evidence presented at trial, John and Sara Graves raised investor funds by selling investments in BPM and Dupont Auburn Real Estate through misrepresentations about the safety and security of the investments, as well as misrepresentations and omissions regarding their intended use of investor money. According to evidence presented at trial, John and Sara Graves used investor funds to, among other things, pay back previous investors who requested access to their money, purchase real estate, pay personal expenses, including credit card bills and time share dues, and to pay for John Graves’ personal acquisition of Compass Financial Advisers. As alleged at trial, John Graves continued to make misrepresentations even after the scheme was uncovered, through false and misleading filings in U.S. Bankruptcy Court and false and misleading statements to investors and to investigators from the U.S. Securities and Exchange Commission (SEC), FBI and USPIS.
The case is being prosecuted by Trial Attorney Kevin B. Muhlendorf of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Jamie L. Mickelson and Michael R. Gill of the Eastern District of Virginia. This case was investigated by the FBI and USPIS. The department acknowledges the significant assistance provided by the SEC, which referred the case for criminal prosecution.
This investigation has been coordinated by the Virginia Financial and Securities Fraud Task Force, an unprecedented partnership between criminal investigators and civil regulators to investigate and prosecute complex financial fraud cases in the nation and in Virginia. The task force is an investigative arm of the President’s Financial Fraud Enforcement Task Force, an interagency national task force.
Wednesday, December 19, 2012
PAYMENT PROCESSOR GOES TO PRISON FOR PART IN INTERNATIONAL SCAREWARE CYBERCRIME RING
FROM: U.S. DEPARTMENT OF JUSTICE, SCAREWARE
Friday, December 14, 2012
Payment Processor for Scareware Cybercrime Ring Sentenced to 48 Months in Prison
WASHINGTON – A Swedish credit card payment processor was sentenced today to 48 months in prison for his role in an international cybercrime ring that netted $71 million by infecting victims’ computers with "scareware" and selling rogue antivirus software that was supposed to secure victims’ computers but was, in fact, useless, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney for the Western District of Washington Jenny A. Durkan and Special Agent in Charge Laura M. Laughlin of the FBI Seattle Division.
Mikael Patrick Sallnert, 37, a citizen of Sweden, was sentenced by Chief U.S. District Judge Marsha J. Pechman in the Western District of Washington. In addition to his prison term, Sallnert was ordered to pay $650,000 in forfeiture.
"Mikael Patrick Sallnert played an instrumental role in carrying out a massive cybercrime ring that victimized approximately 960,000 innocent victims," said Assistant Attorney General Breuer. "By facilitating payment processing, Sallnert allowed the cybercrime ring to collect millions of dollars from victims who were duped into believing their computers were compromised and could be fixed by the bogus software created by Sallnert’s co-conspirators. Cybercrime poses a real threat to American consumers and businesses, and the Justice Department is committed to pursuing cybercriminals across the globe."
"Payment processors like this defendant are the backbone of the cybercrime underworld," said U.S. Attorney Durkan. "As an established businessman, this defendant put a stamp of legitimacy on cyber criminals. He was involved in defrauding thousands of victims, and his actions contributed to insecurities in e-commerce that stifle the development of legitimate enterprises and increase the costs of e-commerce for everyone."
"Partnerships are central to the FBI in accomplishing its mission," said Special Agent in Charge Laughlin. "This cyber crime ring spanned multiple countries—increasing the threat it posed and complicating the necessary law enforcement response. Thanks to the commitment of many foreign partners and FBI entities across the nation, we were able to dismantle that threat and ensure Mr. Sallnert faced justice. The FBI and its partners will continue to work tirelessly until we bring in the remaining perpetrators of this malicious scheme."
Sallnert was arrested in Denmark on Jan. 19, 2012, and extradited to the United States in March 2012. He pleaded guilty on Aug. 17, 2012, to one count of conspiracy to commit wire fraud and one count of accessing a protected computer in furtherance of fraud.
The prosecution of Sallnert is part of Operation Trident Tribunal, an ongoing, coordinated enforcement action targeting international cybercrime. The operation targeted international cybercrime rings that caused more than $71 million in total losses to more than one million computer users through the sale of fraudulent computer security software known as "scareware." Scareware is malicious software that poses as legitimate computer security software and purports to detect a variety of threats on the affected computer that do not actually exist. Users are then informed they must purchase what they are told is anti-virus software in order to repair their computers. The users are then barraged with aggressive and disruptive notifications until they supply their credit card number and pay for the "anti-virus" product, which is, in fact, fake.
The scareware scheme used a variety of ruses to trick consumers into unknowingly infecting their computers with the malicious scareware products, including web pages featuring fake computer scans. Once the scareware was downloaded, victims were notified that their computers were infected with a range of malicious software, such as viruses and Trojans and badgered into purchasing the fake antivirus software to resolve the non-existent problem at a cost of up to $129. An estimated 960,000 users were victimized by this scareware scheme, leading to $71 million in actual losses.
According to Sallnert’s plea agreement, he agreed to establish and operate credit card payment processing services for the scareware ring, knowing that his co-conspirators were intentionally causing fake and fraudulent messages to display on victims’ computers that would fraudulently induce the victims into purchasing the rogue security software. According to court documents, between approximately August 2008 and October 2009, the payment processing mechanisms established by Sallnert processed approximately $5 million in credit card payments on behalf of the scheme.
This case is being investigated by the FBI Seattle Division Cyber Task Force and other FBI entities. The case is being prosecuted by Trial Attorneys Carol Sipperly and Ethan Arenson of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorneys Norman Barbosa and Kathryn Warma of the Western District of Washington. Substantial assistance was provided by the Criminal Division’s Office of International Affairs.
Critical assistance in the prosecution was provided by the Security Service of Ukraine, German Federal Criminal Police, Netherlands National High-Tech Crime Unit, London Metropolitan Police, Latvian State Police, Lithuanian Criminal Police Bureau, Swedish National Police Cyber Unit, French Police Judiciare, Royal Canadian Mounted Police, Romania’s Directorate for Combating Organized Crime, Cyprus National Police in cooperation with the Unit for Combating Money Laundering and the Danish National Police.
To avoid falling victim to a scareware scheme, computer users should avoid purchasing computer security products that use unsolicited "free computer scans" to sell their products. It is also important for users to protect their computers by maintaining an updated operating system and using legitimate, up-to-date antivirus software, which can detect and remove fraudulent scareware products.
Additional tips on how to spot a scareware scam include:
• Scareware advertising is difficult to dismiss. Scareware purveyors employ aggressive techniques and badger users with pop-up messages into purchasing their products. These fake alerts are often difficult to close and quickly reappear.
• Fake anti-virus products are designed to appear legitimate and can use names such as Virus Shield, Antivirus or VirusRemover. Only install software from trusted sources that you seek out. Internet service providers often make name-brand anti-virus products available to their customers for free.
• Become familiar with the brand, look and functionality of the legitimate anti-virus software that is installed on your computer. This will assist you in identifying scareware.
Computer users who think they have been victimized by scareware should file a complaint with the FBI’s Internet Crime Complaint Center, www.ic3.gov.
Friday, December 14, 2012
Payment Processor for Scareware Cybercrime Ring Sentenced to 48 Months in Prison
WASHINGTON – A Swedish credit card payment processor was sentenced today to 48 months in prison for his role in an international cybercrime ring that netted $71 million by infecting victims’ computers with "scareware" and selling rogue antivirus software that was supposed to secure victims’ computers but was, in fact, useless, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney for the Western District of Washington Jenny A. Durkan and Special Agent in Charge Laura M. Laughlin of the FBI Seattle Division.
Mikael Patrick Sallnert, 37, a citizen of Sweden, was sentenced by Chief U.S. District Judge Marsha J. Pechman in the Western District of Washington. In addition to his prison term, Sallnert was ordered to pay $650,000 in forfeiture.
"Mikael Patrick Sallnert played an instrumental role in carrying out a massive cybercrime ring that victimized approximately 960,000 innocent victims," said Assistant Attorney General Breuer. "By facilitating payment processing, Sallnert allowed the cybercrime ring to collect millions of dollars from victims who were duped into believing their computers were compromised and could be fixed by the bogus software created by Sallnert’s co-conspirators. Cybercrime poses a real threat to American consumers and businesses, and the Justice Department is committed to pursuing cybercriminals across the globe."
"Payment processors like this defendant are the backbone of the cybercrime underworld," said U.S. Attorney Durkan. "As an established businessman, this defendant put a stamp of legitimacy on cyber criminals. He was involved in defrauding thousands of victims, and his actions contributed to insecurities in e-commerce that stifle the development of legitimate enterprises and increase the costs of e-commerce for everyone."
"Partnerships are central to the FBI in accomplishing its mission," said Special Agent in Charge Laughlin. "This cyber crime ring spanned multiple countries—increasing the threat it posed and complicating the necessary law enforcement response. Thanks to the commitment of many foreign partners and FBI entities across the nation, we were able to dismantle that threat and ensure Mr. Sallnert faced justice. The FBI and its partners will continue to work tirelessly until we bring in the remaining perpetrators of this malicious scheme."
Sallnert was arrested in Denmark on Jan. 19, 2012, and extradited to the United States in March 2012. He pleaded guilty on Aug. 17, 2012, to one count of conspiracy to commit wire fraud and one count of accessing a protected computer in furtherance of fraud.
The prosecution of Sallnert is part of Operation Trident Tribunal, an ongoing, coordinated enforcement action targeting international cybercrime. The operation targeted international cybercrime rings that caused more than $71 million in total losses to more than one million computer users through the sale of fraudulent computer security software known as "scareware." Scareware is malicious software that poses as legitimate computer security software and purports to detect a variety of threats on the affected computer that do not actually exist. Users are then informed they must purchase what they are told is anti-virus software in order to repair their computers. The users are then barraged with aggressive and disruptive notifications until they supply their credit card number and pay for the "anti-virus" product, which is, in fact, fake.
The scareware scheme used a variety of ruses to trick consumers into unknowingly infecting their computers with the malicious scareware products, including web pages featuring fake computer scans. Once the scareware was downloaded, victims were notified that their computers were infected with a range of malicious software, such as viruses and Trojans and badgered into purchasing the fake antivirus software to resolve the non-existent problem at a cost of up to $129. An estimated 960,000 users were victimized by this scareware scheme, leading to $71 million in actual losses.
According to Sallnert’s plea agreement, he agreed to establish and operate credit card payment processing services for the scareware ring, knowing that his co-conspirators were intentionally causing fake and fraudulent messages to display on victims’ computers that would fraudulently induce the victims into purchasing the rogue security software. According to court documents, between approximately August 2008 and October 2009, the payment processing mechanisms established by Sallnert processed approximately $5 million in credit card payments on behalf of the scheme.
This case is being investigated by the FBI Seattle Division Cyber Task Force and other FBI entities. The case is being prosecuted by Trial Attorneys Carol Sipperly and Ethan Arenson of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorneys Norman Barbosa and Kathryn Warma of the Western District of Washington. Substantial assistance was provided by the Criminal Division’s Office of International Affairs.
Critical assistance in the prosecution was provided by the Security Service of Ukraine, German Federal Criminal Police, Netherlands National High-Tech Crime Unit, London Metropolitan Police, Latvian State Police, Lithuanian Criminal Police Bureau, Swedish National Police Cyber Unit, French Police Judiciare, Royal Canadian Mounted Police, Romania’s Directorate for Combating Organized Crime, Cyprus National Police in cooperation with the Unit for Combating Money Laundering and the Danish National Police.
To avoid falling victim to a scareware scheme, computer users should avoid purchasing computer security products that use unsolicited "free computer scans" to sell their products. It is also important for users to protect their computers by maintaining an updated operating system and using legitimate, up-to-date antivirus software, which can detect and remove fraudulent scareware products.
Additional tips on how to spot a scareware scam include:
• Scareware advertising is difficult to dismiss. Scareware purveyors employ aggressive techniques and badger users with pop-up messages into purchasing their products. These fake alerts are often difficult to close and quickly reappear.
• Fake anti-virus products are designed to appear legitimate and can use names such as Virus Shield, Antivirus or VirusRemover. Only install software from trusted sources that you seek out. Internet service providers often make name-brand anti-virus products available to their customers for free.
• Become familiar with the brand, look and functionality of the legitimate anti-virus software that is installed on your computer. This will assist you in identifying scareware.
Computer users who think they have been victimized by scareware should file a complaint with the FBI’s Internet Crime Complaint Center, www.ic3.gov.
Tuesday, December 18, 2012
FORMER CA POLICE OFFICER INDICTED FOR ALLEGEDLY SEXUALLY ASSAULTING WOMAN WHILE TRANSPORTING HER TO JAIL
FROM: U.S. DEPARTMENT OF JUSTICE
Monday, December 10, 2012
Former California Police Officer Indicted and Arrested on Civil Rights Charges for Sexually Assaulting Woman While Transporting Her to Jail
Bryan Benson, a former Anderson, Calif., police officer, was arrested today on charges of deprivation of civil rights for sexually assaulting a woman while transporting her to jail and of trying to conceal his criminal conduct, announced the Justice Department.
Benson, 28, was charged in a three-count indictment returned by a federal grand jury in the Eastern District of California and unsealed today. He is charged with one count of deprivation of rights under color of law, one count of obstruction of justice and one count of causing a false entry to be made in a document or record with the intent to impede investigation into his conduct.
The indictment alleges that on May 29, 2010, Benson sexually assaulted the arrested woman, resulting in bodily injury and involving aggravated sexual assault and kidnapping. The indictment further alleges that Benson obstructed justice by warning the woman not to report the crime, and that he caused a police dispatcher to falsely record his location in the dispatch logs in an effort to conceal his offense.
If convicted, Benson could face a maximum sentence of life in prison and a fine of $250,000 on the deprivation of civil rights charge, and 20 years in prison and a fine of $250,000 on both the obstruction and false-entry charges.
This case is being investigated by the FBI. The case is being prosecuted by Assistant U.S. Attorneys R. Steven Lapham and Michelle Prince for the Eastern District of California and Trial Attorney Chiraag Bains from the Justice Department’s Civil Rights Division.
An indictment is merely an accusation and the defendant is presumed innocent unless proven guilty.
Monday, December 10, 2012
Former California Police Officer Indicted and Arrested on Civil Rights Charges for Sexually Assaulting Woman While Transporting Her to Jail
Bryan Benson, a former Anderson, Calif., police officer, was arrested today on charges of deprivation of civil rights for sexually assaulting a woman while transporting her to jail and of trying to conceal his criminal conduct, announced the Justice Department.
Benson, 28, was charged in a three-count indictment returned by a federal grand jury in the Eastern District of California and unsealed today. He is charged with one count of deprivation of rights under color of law, one count of obstruction of justice and one count of causing a false entry to be made in a document or record with the intent to impede investigation into his conduct.
The indictment alleges that on May 29, 2010, Benson sexually assaulted the arrested woman, resulting in bodily injury and involving aggravated sexual assault and kidnapping. The indictment further alleges that Benson obstructed justice by warning the woman not to report the crime, and that he caused a police dispatcher to falsely record his location in the dispatch logs in an effort to conceal his offense.
If convicted, Benson could face a maximum sentence of life in prison and a fine of $250,000 on the deprivation of civil rights charge, and 20 years in prison and a fine of $250,000 on both the obstruction and false-entry charges.
This case is being investigated by the FBI. The case is being prosecuted by Assistant U.S. Attorneys R. Steven Lapham and Michelle Prince for the Eastern District of California and Trial Attorney Chiraag Bains from the Justice Department’s Civil Rights Division.
An indictment is merely an accusation and the defendant is presumed innocent unless proven guilty.
Monday, December 17, 2012
THREE SENTENCED TO PRISON FOR ROLES IN SHARING CHILD PORNOGRAPHY ON FACEBOOK
FROM: U.S. JUSTICE DEPARTMENT
WASHINGTON – Two Wisconsin men and a Missouri man were sentenced to prison for their role in a conspiracy to advertise, distribute and possess child pornography, Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney for the Western District of North Carolina Anne M. Tompkins announced today.
Daniel Slott, 44, of Merrill, Wis., was sentenced today by U.S. District Judge Richard L. Voorhees in the Western District of North Carolina to serve 228 months in prison and lifetime supervised release.
Brian Slott, 42, of Merrill, was sentenced today Judge Voorhees to serve 180 months in prison and lifetime supervised release.
Henry Wright, 50, of Jefferson County, Mo., was sentenced yesterday by Judge Voorhees to serve 70 months in prison and 10 years of supervised release.
Following their release, all three co-conspirators must register as sex offenders.
In November 2010, a grand jury charged six individuals, including Brian Slott, Daniel Slott and Wright, with conspiracy to advertise, distribute and possess child pornography. All three pleaded guilty to the charges in July 2011.
According to filed court documents and court proceedings, Brian Slott, Daniel Slott and Wright engaged in a conspiracy with others to share child pornography on Facebook. Court records indicate that all three were members of several Facebook groups dedicated to sharing child pornography and child erotica, including groups called "girls girls girls :)" and "little girls love to play to :)." These groups contained over 10,000 images of child pornography and child erotica. According to filed documents and statements made in court, Wright engaged in chats with the group leader and commented on images of prepubescent children posted to the Facebook groups. Daniel Slott, a registered sex offender, traveled to his brother’s house to participate in the groups and download images of children engaged in sexually explicit conduct. Brian Slott also downloaded images from the groups’ sites. In August 2010, agents with the FBI executed a search warrant at Daniel Slott, Brian Slott and Henry Wright’s residences and seized multiple computers and storage media devices. Hundreds of images of child pornography were located on these items.
Three co-conspirators were sentenced earlier this fall: James Byrd was sentenced in August 2012 to serve 87 months in prison; David Large was sentenced in October 2012 to 70 months in prison; and Michael Engelking was sentenced in October 2012 to serve 210 months in prison.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse, launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims.
The investigation was conducted by the FBI’s Violent Crimes Against Children Unit headquartered in Maryland. The case was prosecuted by Assistant U.S. Attorney Cortney S. Escaravage of the Western District of North Carolina and Trial Attorney LisaMarie Freitas of CEOS.
WASHINGTON – Two Wisconsin men and a Missouri man were sentenced to prison for their role in a conspiracy to advertise, distribute and possess child pornography, Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney for the Western District of North Carolina Anne M. Tompkins announced today.
Daniel Slott, 44, of Merrill, Wis., was sentenced today by U.S. District Judge Richard L. Voorhees in the Western District of North Carolina to serve 228 months in prison and lifetime supervised release.
Brian Slott, 42, of Merrill, was sentenced today Judge Voorhees to serve 180 months in prison and lifetime supervised release.
Henry Wright, 50, of Jefferson County, Mo., was sentenced yesterday by Judge Voorhees to serve 70 months in prison and 10 years of supervised release.
Following their release, all three co-conspirators must register as sex offenders.
In November 2010, a grand jury charged six individuals, including Brian Slott, Daniel Slott and Wright, with conspiracy to advertise, distribute and possess child pornography. All three pleaded guilty to the charges in July 2011.
According to filed court documents and court proceedings, Brian Slott, Daniel Slott and Wright engaged in a conspiracy with others to share child pornography on Facebook. Court records indicate that all three were members of several Facebook groups dedicated to sharing child pornography and child erotica, including groups called "girls girls girls :)" and "little girls love to play to :)." These groups contained over 10,000 images of child pornography and child erotica. According to filed documents and statements made in court, Wright engaged in chats with the group leader and commented on images of prepubescent children posted to the Facebook groups. Daniel Slott, a registered sex offender, traveled to his brother’s house to participate in the groups and download images of children engaged in sexually explicit conduct. Brian Slott also downloaded images from the groups’ sites. In August 2010, agents with the FBI executed a search warrant at Daniel Slott, Brian Slott and Henry Wright’s residences and seized multiple computers and storage media devices. Hundreds of images of child pornography were located on these items.
Three co-conspirators were sentenced earlier this fall: James Byrd was sentenced in August 2012 to serve 87 months in prison; David Large was sentenced in October 2012 to 70 months in prison; and Michael Engelking was sentenced in October 2012 to serve 210 months in prison.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse, launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims.
The investigation was conducted by the FBI’s Violent Crimes Against Children Unit headquartered in Maryland. The case was prosecuted by Assistant U.S. Attorney Cortney S. Escaravage of the Western District of North Carolina and Trial Attorney LisaMarie Freitas of CEOS.
Sunday, December 16, 2012
TWO MISSISSIPPI MEN PLEAD GUILTY TO HATE CRIMES AGAINST AFRICAN-AMERICAN
FROM: U.S. DEPARTMENT OF JUSTICE
Tuesday, December 4, 2012
Two Mississippi Men Plead Guilty for Committing Hate Crimes Against African-American
William Kirk Montgomery, 23, from Puckett, Miss., and Jonathan K. Gaskamp, 20, from Brandon, Miss., pleaded guilty today in U.S. District Court in Jackson, Miss., to conspiracy and federal hate crime charges in connection with their roles in the assault of African-Americans in Jackson, the Justice Department announced today. Defendants Deryl Paul Dedmon, 20; John Aaron Rice, 19; and Dylan Wade Butler, 21, all from Brandon, Miss., have previously entered guilty pleas in connection with their roles in these offenses. The conspiracy culminated in the death of James Craig Anderson, who was assaulted and killed on June 26, 2011.
Montgomery and Gaskamp were both charged with one count of conspiracy and one count of violating the Matthew Sheppard James Byrd, Jr. Hate Crimes Prevention Act.
Beginning in the spring of 2011, Montgomery, Gaskamp and others conspired with one another to harass and assault African-Americans in and around Jackson. On numerous occasions, the co-conspirators used dangerous weapons, including beer bottles, sling shots and motor vehicles, to cause, and attempt to cause, bodily injury to African-Americans, specifically targeting those they believed to be homeless or under the influence of alcohol because they believed that such individuals would be less likely to report an assault. Additionally, the co-conspirators would often boast about these racially motivated assaults.
"We hope that today’s guilty pleas provide further closure to James Craig Anderson’s family and to the community that has mourned his senseless death and been further disheartened by the scope of the conspiracy to commit racially motivated assaults in Jackson by these and other co-conspirators," said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. "The Justice Department’s focus in this matter is ongoing and broad; we will vigorously pursue those who commit racially motivated assaults and will use every tool at our disposal to ensure that those who commit such acts are brought to justice."
According to plea documents presented in court today, the defendants engaged in a series of racially-motivated assaults in and around Jackson. On one occasion, Montgomery, Gaskamp, Deryl Paul Dedmon, John Aaron Rice and two other co-conspirators chased down and stopped an African-American man’s vehicle and then beat the man to the point that he begged for his life. Gaskamp kicked the victim in the head and body at least two times.
On another occasion, Montgomery, Gaskamp and others attended a birthday party/bonfire in Puckett, Miss., during which they discussed going to Jackson to harass and assault African-Americans. Montgomery, Dedmon, Rice, Butler and three other co-conspirators agreed to carry out the plan. At around 4:15 a.m. on June 26, 2011, Montgomery, Rice, Butler and another co-conspirator drove to Jackson in Montgomery’s white Jeep with the understanding that Dedmon and two other co-conspirators would join them a short time later. Gaskamp did not go to Jackson on this occasion. Upon arriving in Jackson, Montgomery and the other three occupants of the Jeep drove around and threw beer bottles at African-American pedestrians.
At approximately 5:00 a.m., Montgomery and the other three occupants of the Jeep spotted Anderson in a motel parking lot off Ellis Avenue. Rice and another co-conspirator decided to get out of the Jeep to distract Anderson while they waited for Dedmon and the other co-conspirators to arrive. After Dedmon and the other two co-conspirators arrived, Dedmon and Rice physically assaulted Anderson. After the assault, one of the co-conspirators yelled, "White Power!", with Dedmon responding by also yelling "White Power!" Dedmon then deliberately used his vehicle to run over Anderson, causing injuries that resulted in his death.
Thereafter, a number of the co-conspirators, including Montgomery, agreed to, and did, give false statements to law enforcement officials about the nature of their interactions with Anderson.
"The defendants today took responsibility for committing federal hate crimes by assaulting vulnerable Americans solely because of their race," said U.S. Attorney Gregory K. Davis. "Working with the Civil Rights Division of the Department of Justice, our office will continue to make the prosecution of hate crimes and other civil rights violations a top priority in the Southern District of Mississippi."
"As the agency responsible for investigating criminal violations of federal civil rights statutes, the FBI takes very seriously its responsibility to uphold the civil rights of all citizens," said Daniel McMullen, the Special Agent in Charge of the FBI’s Jackson Division. "The FBI will continue its efforts to identify and bring to justice all those individuals who participated in depriving Anderson and other citizens of their civil rights because of the color of their skin."
These guilty pleas were the result of a cooperative effort between the U.S. Attorney’s Office for the Southern District of Mississippi, the Civil Rights Division of the Department of Justice, and the Hinds County District Attorney’s Office. This case was investigated by the Jackson Division of the FBI and the Jackson Police Department. It is being prosecuted by Trial Attorney Sheldon L. Beer and Deputy Chief Paige M. Fitzgerald of the Civil Rights Division and Assistant U.S. Attorney Glenda R. Haynes of the U.S. Attorney’s Office for the Southern District of Mississippi.
Tuesday, December 4, 2012
Two Mississippi Men Plead Guilty for Committing Hate Crimes Against African-American
William Kirk Montgomery, 23, from Puckett, Miss., and Jonathan K. Gaskamp, 20, from Brandon, Miss., pleaded guilty today in U.S. District Court in Jackson, Miss., to conspiracy and federal hate crime charges in connection with their roles in the assault of African-Americans in Jackson, the Justice Department announced today. Defendants Deryl Paul Dedmon, 20; John Aaron Rice, 19; and Dylan Wade Butler, 21, all from Brandon, Miss., have previously entered guilty pleas in connection with their roles in these offenses. The conspiracy culminated in the death of James Craig Anderson, who was assaulted and killed on June 26, 2011.
Montgomery and Gaskamp were both charged with one count of conspiracy and one count of violating the Matthew Sheppard James Byrd, Jr. Hate Crimes Prevention Act.
Beginning in the spring of 2011, Montgomery, Gaskamp and others conspired with one another to harass and assault African-Americans in and around Jackson. On numerous occasions, the co-conspirators used dangerous weapons, including beer bottles, sling shots and motor vehicles, to cause, and attempt to cause, bodily injury to African-Americans, specifically targeting those they believed to be homeless or under the influence of alcohol because they believed that such individuals would be less likely to report an assault. Additionally, the co-conspirators would often boast about these racially motivated assaults.
"We hope that today’s guilty pleas provide further closure to James Craig Anderson’s family and to the community that has mourned his senseless death and been further disheartened by the scope of the conspiracy to commit racially motivated assaults in Jackson by these and other co-conspirators," said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. "The Justice Department’s focus in this matter is ongoing and broad; we will vigorously pursue those who commit racially motivated assaults and will use every tool at our disposal to ensure that those who commit such acts are brought to justice."
According to plea documents presented in court today, the defendants engaged in a series of racially-motivated assaults in and around Jackson. On one occasion, Montgomery, Gaskamp, Deryl Paul Dedmon, John Aaron Rice and two other co-conspirators chased down and stopped an African-American man’s vehicle and then beat the man to the point that he begged for his life. Gaskamp kicked the victim in the head and body at least two times.
On another occasion, Montgomery, Gaskamp and others attended a birthday party/bonfire in Puckett, Miss., during which they discussed going to Jackson to harass and assault African-Americans. Montgomery, Dedmon, Rice, Butler and three other co-conspirators agreed to carry out the plan. At around 4:15 a.m. on June 26, 2011, Montgomery, Rice, Butler and another co-conspirator drove to Jackson in Montgomery’s white Jeep with the understanding that Dedmon and two other co-conspirators would join them a short time later. Gaskamp did not go to Jackson on this occasion. Upon arriving in Jackson, Montgomery and the other three occupants of the Jeep drove around and threw beer bottles at African-American pedestrians.
At approximately 5:00 a.m., Montgomery and the other three occupants of the Jeep spotted Anderson in a motel parking lot off Ellis Avenue. Rice and another co-conspirator decided to get out of the Jeep to distract Anderson while they waited for Dedmon and the other co-conspirators to arrive. After Dedmon and the other two co-conspirators arrived, Dedmon and Rice physically assaulted Anderson. After the assault, one of the co-conspirators yelled, "White Power!", with Dedmon responding by also yelling "White Power!" Dedmon then deliberately used his vehicle to run over Anderson, causing injuries that resulted in his death.
Thereafter, a number of the co-conspirators, including Montgomery, agreed to, and did, give false statements to law enforcement officials about the nature of their interactions with Anderson.
"The defendants today took responsibility for committing federal hate crimes by assaulting vulnerable Americans solely because of their race," said U.S. Attorney Gregory K. Davis. "Working with the Civil Rights Division of the Department of Justice, our office will continue to make the prosecution of hate crimes and other civil rights violations a top priority in the Southern District of Mississippi."
"As the agency responsible for investigating criminal violations of federal civil rights statutes, the FBI takes very seriously its responsibility to uphold the civil rights of all citizens," said Daniel McMullen, the Special Agent in Charge of the FBI’s Jackson Division. "The FBI will continue its efforts to identify and bring to justice all those individuals who participated in depriving Anderson and other citizens of their civil rights because of the color of their skin."
These guilty pleas were the result of a cooperative effort between the U.S. Attorney’s Office for the Southern District of Mississippi, the Civil Rights Division of the Department of Justice, and the Hinds County District Attorney’s Office. This case was investigated by the Jackson Division of the FBI and the Jackson Police Department. It is being prosecuted by Trial Attorney Sheldon L. Beer and Deputy Chief Paige M. Fitzgerald of the Civil Rights Division and Assistant U.S. Attorney Glenda R. Haynes of the U.S. Attorney’s Office for the Southern District of Mississippi.
Saturday, December 15, 2012
THE ALABAMA FORECLOSURE SALE FRAUD
FROM: U.S. DEPARTMENT OF JUSTICE
WASHINGTON — Two Alabama real estate investors and their company pleaded guilty today for their roles in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in southern Alabama, the Department of Justice announced.
Robert M. Brannon, of Laurel, Miss.; his son, Jason R. Brannon, of Mobile, Ala.; and their Mobile-based company, J & R Properties LLC, pleaded guilty today to an indictment originally returned on June 28, 2012 in the U.S. District Court for the Southern District of Alabama charging each of them with one count of bid rigging and one count of conspiracy to commit mail fraud. According to court documents, the Brannons and their company conspired with others not to bid against one another at public real estate foreclosure auctions in southern Alabama. After a designated bidder bought a property at a public auction, which typically takes place at the county courthouse, the conspirators would generally hold a secret, second auction, at which each participant would bid the amount above the public auction price he or she was willing to pay. The highest bidder at the secret, second auction won the property.
The Brannons and their company were also charged with conspiring to use the U.S. mail to carry out a fraudulent scheme to acquire title to rigged foreclosure properties sold at public auctions at artificially suppressed prices, to make and receive payoffs to co-conspirators, and to cause financial institutions, homeowners and others with a legal interest in rigged foreclosure properties to receive less than the competitive price for the properties. The Brannons and their company are charged with participating in the bid-rigging and mail fraud conspiracies from as early as October 2004 until at least August 2007.
"The conspirators subverted the competitive bidding process by engaging in a collusive scheme to artificially depress prices at real estate foreclosure auctions and to defraud financial institutions and homeowners out of money and property," said Renata B. Hesse, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. "Today’s guilty pleas send a strong message that the division is committed to prosecuting those who fraudulently subvert competition for their own financial gain."
"The success of this investigation represents the FBI’s staunch commitment to target and investigate those who are willing to abuse and exploit illegal advantages during this legal process for personal gain at the expense of suffering citizens and businesses," said Acting Special Agent in Charge of the FBI’s Mobile Division Stephen E. Richardson.
Including today’s pleas, to date, eight individuals—Harold H. Buchman, Allen K. French, Bobby Threlkeld Jr., Steven J. Cox, Lawrence B. Stacy, David R. Bradley and the Brannons—and two companies—M & B Builders LLC and J & R Properties— have pleaded guilty in the U.S. District Court for the Southern District of Alabama in connection with this ongoing investigation.
Each violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals, and a $100 million fine for companies. The maximum fine for a Sherman Act charge may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime if either amount is greater than the statutory maximum fine. Each count of conspiracy to commit mail fraud carries a maximum penalty of 20 years in prison and a fine of $250,000 for individuals, and a fine of $500,000 for companies. The fine may be increased to twice the gross gain the conspirators derived from the crime or twice the gross loss caused to the victims of the crime by the conspirators.
WASHINGTON — Two Alabama real estate investors and their company pleaded guilty today for their roles in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in southern Alabama, the Department of Justice announced.
Robert M. Brannon, of Laurel, Miss.; his son, Jason R. Brannon, of Mobile, Ala.; and their Mobile-based company, J & R Properties LLC, pleaded guilty today to an indictment originally returned on June 28, 2012 in the U.S. District Court for the Southern District of Alabama charging each of them with one count of bid rigging and one count of conspiracy to commit mail fraud. According to court documents, the Brannons and their company conspired with others not to bid against one another at public real estate foreclosure auctions in southern Alabama. After a designated bidder bought a property at a public auction, which typically takes place at the county courthouse, the conspirators would generally hold a secret, second auction, at which each participant would bid the amount above the public auction price he or she was willing to pay. The highest bidder at the secret, second auction won the property.
The Brannons and their company were also charged with conspiring to use the U.S. mail to carry out a fraudulent scheme to acquire title to rigged foreclosure properties sold at public auctions at artificially suppressed prices, to make and receive payoffs to co-conspirators, and to cause financial institutions, homeowners and others with a legal interest in rigged foreclosure properties to receive less than the competitive price for the properties. The Brannons and their company are charged with participating in the bid-rigging and mail fraud conspiracies from as early as October 2004 until at least August 2007.
"The conspirators subverted the competitive bidding process by engaging in a collusive scheme to artificially depress prices at real estate foreclosure auctions and to defraud financial institutions and homeowners out of money and property," said Renata B. Hesse, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. "Today’s guilty pleas send a strong message that the division is committed to prosecuting those who fraudulently subvert competition for their own financial gain."
"The success of this investigation represents the FBI’s staunch commitment to target and investigate those who are willing to abuse and exploit illegal advantages during this legal process for personal gain at the expense of suffering citizens and businesses," said Acting Special Agent in Charge of the FBI’s Mobile Division Stephen E. Richardson.
Including today’s pleas, to date, eight individuals—Harold H. Buchman, Allen K. French, Bobby Threlkeld Jr., Steven J. Cox, Lawrence B. Stacy, David R. Bradley and the Brannons—and two companies—M & B Builders LLC and J & R Properties— have pleaded guilty in the U.S. District Court for the Southern District of Alabama in connection with this ongoing investigation.
Each violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals, and a $100 million fine for companies. The maximum fine for a Sherman Act charge may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime if either amount is greater than the statutory maximum fine. Each count of conspiracy to commit mail fraud carries a maximum penalty of 20 years in prison and a fine of $250,000 for individuals, and a fine of $500,000 for companies. The fine may be increased to twice the gross gain the conspirators derived from the crime or twice the gross loss caused to the victims of the crime by the conspirators.
Friday, December 14, 2012
INTERNATIONAL CYBER-CRIMINALS GET PLUG PULLED
FROM: U.S. DEPARTMENT OF JUSTICE
Wednesday, December 5, 2012
International Cyber-Fraud Ring Responsible for Millions of Dollars in Fraud Dismantled
WASHINGTON – In a coordinated international takedown, law enforcement officials in Romania, the Czech Republic, the United Kingdom and Canada, acting on provisional arrest requests made by the United States, arrested six Romanian nationals today for their alleged involvement in a sophisticated multimillion dollar cyber fraud scheme that targeted consumers on U.S.-based Internet marketplace websites, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Loretta E. Lynch of the Eastern District of New York and FBI Assistant Director in Charge George Venizelos of the New York Field Office.
"As a result of extensive cooperation between U.S. and European law enforcement officials, the defendants have been charged with a scheme to defraud unsuspecting Americans of millions of dollars," said Assistant Attorney General Breuer. "The Department of Justice is committed to finding and prosecuting Internet fraud aggressively, wherever it happens and however hard the perpetrators work to conceal their crimes."
"Thanks to our international law enforcement partnerships, even the most sophisticated criminal organizations are not beyond our reach, and we will continue our efforts to protect American consumers from these fraud schemes on Internet marketplace websites," said U.S. Attorney Lynch.
"The FBI is committed to protecting the American public from predatory conduct whether it originates here or abroad," said FBI Assistant Director in Charge Venizelos. "The international nature of many organized crime groups makes it essential for us to work with our partners here and overseas – as we did in this investigation – to rein in the alleged criminals."
A criminal complaint unsealed today in U.S. District Court in the Eastern District of New York charges Romanian nationals Emil Butoi, 34, Aurel Cojorcaru, 43, Nicolae Ghebosila, 43, Cristea Mircea, 30, Ion Pieptea, 36, and Nicolae Simion, 37, and Albanian national Fabian Meme, 42, each with one count of wire fraud conspiracy and one count of money laundering conspiracy. Butoi, Cojocaru, Meme, Mircea, Pieptea and Simion are also each charged with one count of passport fraud conspiracy.
Butoi, Cojorcaru, Ghebosila, Mircea, Pieptea and Simion were arrested today. Meme is already incarcerated in the Czech Republic.
The government will seek the defendants’ extradition to the United States pursuant to the relevant international treaties.
As alleged in the complaint, the defendants were responsible for saturating Internet marketplace websites including eBay, Cars.com, AutoTrader.com and CycleTrader.com with detailed advertisements for cars, motorcycles, boats and other high-value items generally priced in the $10,000 to $45,000 range. Unbeknownst to the buyers, however, the merchandise did not exist. The defendants allegedly employed co-conspirators who corresponded with victim buyers by email, sending fraudulent certificates of title and other information designed to lure the victims into parting with their money. Sometimes, the defendants allegedly pretended to sell cars from nonexistent auto dealerships in the United States and even created phony websites for these fictitious dealerships. In at least one transaction involving Ghebosila, the "seller" allegedly pretended to be the widow of an Iraq war veteran who was selling her family’s mobile home so that she could care for her children. In other transactions, the defendants allegedly duped victims into sending tens of thousands of dollars for non-existent vehicles, including Lexus, Audi, Ford, Chevrolet, Dodge, Toyota, Mercedes, Porsche and BMW cars; Big Dog Mastiff and Ninja motorcycles; a Fleetwood Storm motor home; and boats.
As part of the scheme, Cojocaru, Meme, Butoi and others produced high-quality fake passports so that foreign national co-conspirators in the United States, known as "arrows," could use the passports as identification to open American bank accounts. The complaint alleges that Cojocaru was recorded on video during the investigation displaying new holograms that he was using to create more authentic-looking passports.
According to the complaint, after the "sellers" reached an agreement with the victim buyers, they would often email them invoices purporting to be from Amazon Payments, PayPal or other online payment services, with wire transfer instructions. However, the defendants and their co-conspirators allegedly used counterfeit service marks in designing the invoices so that they would appear identical to communications from legitimate payment services. The fraudulent invoices directed the buyers to send money to the American bank accounts that had been opened by the "arrows." Finally, the arrows would allegedly collect the illicit proceeds and send them to the defendants in Europe by wire transfer and other methods. For example, the arrows allegedly forwarded Pieptea $18,000 cash in fraud proceeds hidden inside hollowed-out audio speakers. Other arrows allegedly used the proceeds to purchase expensive Audemars Piguet watches, and then sent the watches to the defendants abroad.
According to the complaint, it is estimated that the defendants earned over $3 million from the fraudulent scheme.
If convicted, the defendants each face a maximum sentence of 20 years in prison on the wire fraud conspiracy and money laundering conspiracy counts, and 10 years in prison on the passport fraud conspiracy count.
The charges in the complaint are merely allegations, and the defendants are presumed innocent unless and until proven guilty.
The government’s case is being prosecuted by Assistant U.S. Attorneys Cristina Posa, Vamshi Reddy and Claire Kedeshian of the U.S. Attorney’s Office for the Eastern District of New York, and Trial Attorney Carol Sipperly of the Criminal Division’s Computer Crime and Intellectual Property Section.
The offices of the FBI Legal Attachés in Romania, the Czech Republic, the United Kingdom, Canada and Hungary were instrumental in coordinating efforts with the United States’ international partners, and the Justice Department Criminal Division’s Office of International Affairs worked with its counterparts in these countries to effect the provisional arrests and requests for mutual legal assistance, including the forfeiture of illegal proceeds of these crimes. The Department of Justice’s Asset Forfeiture and Money Laundering Section also provided assistance in the forfeitures.
The U.S. government thanks the Romanian government, in particular the Ministry of Justice, the Directorate for Combating Organized Crime and the Romanian Intelligence Service, for their collaborative efforts throughout this long-term investigation, as well as the Czech National Police, Hungarian National Bureau of Investigation, Metropolitan Police Service in England, Montreal Police Service, Royal Canadian Mounted Police, International Organized Crime Intelligence and Operations Center, Internet Crime Complaint Center, Costa Mesa, Calif., Police Department, Orange County, Calif., District Attorney’s Office and the New York City Police Department for their assistance.
Wednesday, December 5, 2012
International Cyber-Fraud Ring Responsible for Millions of Dollars in Fraud Dismantled
WASHINGTON – In a coordinated international takedown, law enforcement officials in Romania, the Czech Republic, the United Kingdom and Canada, acting on provisional arrest requests made by the United States, arrested six Romanian nationals today for their alleged involvement in a sophisticated multimillion dollar cyber fraud scheme that targeted consumers on U.S.-based Internet marketplace websites, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Loretta E. Lynch of the Eastern District of New York and FBI Assistant Director in Charge George Venizelos of the New York Field Office.
"As a result of extensive cooperation between U.S. and European law enforcement officials, the defendants have been charged with a scheme to defraud unsuspecting Americans of millions of dollars," said Assistant Attorney General Breuer. "The Department of Justice is committed to finding and prosecuting Internet fraud aggressively, wherever it happens and however hard the perpetrators work to conceal their crimes."
"Thanks to our international law enforcement partnerships, even the most sophisticated criminal organizations are not beyond our reach, and we will continue our efforts to protect American consumers from these fraud schemes on Internet marketplace websites," said U.S. Attorney Lynch.
"The FBI is committed to protecting the American public from predatory conduct whether it originates here or abroad," said FBI Assistant Director in Charge Venizelos. "The international nature of many organized crime groups makes it essential for us to work with our partners here and overseas – as we did in this investigation – to rein in the alleged criminals."
A criminal complaint unsealed today in U.S. District Court in the Eastern District of New York charges Romanian nationals Emil Butoi, 34, Aurel Cojorcaru, 43, Nicolae Ghebosila, 43, Cristea Mircea, 30, Ion Pieptea, 36, and Nicolae Simion, 37, and Albanian national Fabian Meme, 42, each with one count of wire fraud conspiracy and one count of money laundering conspiracy. Butoi, Cojocaru, Meme, Mircea, Pieptea and Simion are also each charged with one count of passport fraud conspiracy.
Butoi, Cojorcaru, Ghebosila, Mircea, Pieptea and Simion were arrested today. Meme is already incarcerated in the Czech Republic.
The government will seek the defendants’ extradition to the United States pursuant to the relevant international treaties.
As alleged in the complaint, the defendants were responsible for saturating Internet marketplace websites including eBay, Cars.com, AutoTrader.com and CycleTrader.com with detailed advertisements for cars, motorcycles, boats and other high-value items generally priced in the $10,000 to $45,000 range. Unbeknownst to the buyers, however, the merchandise did not exist. The defendants allegedly employed co-conspirators who corresponded with victim buyers by email, sending fraudulent certificates of title and other information designed to lure the victims into parting with their money. Sometimes, the defendants allegedly pretended to sell cars from nonexistent auto dealerships in the United States and even created phony websites for these fictitious dealerships. In at least one transaction involving Ghebosila, the "seller" allegedly pretended to be the widow of an Iraq war veteran who was selling her family’s mobile home so that she could care for her children. In other transactions, the defendants allegedly duped victims into sending tens of thousands of dollars for non-existent vehicles, including Lexus, Audi, Ford, Chevrolet, Dodge, Toyota, Mercedes, Porsche and BMW cars; Big Dog Mastiff and Ninja motorcycles; a Fleetwood Storm motor home; and boats.
As part of the scheme, Cojocaru, Meme, Butoi and others produced high-quality fake passports so that foreign national co-conspirators in the United States, known as "arrows," could use the passports as identification to open American bank accounts. The complaint alleges that Cojocaru was recorded on video during the investigation displaying new holograms that he was using to create more authentic-looking passports.
According to the complaint, after the "sellers" reached an agreement with the victim buyers, they would often email them invoices purporting to be from Amazon Payments, PayPal or other online payment services, with wire transfer instructions. However, the defendants and their co-conspirators allegedly used counterfeit service marks in designing the invoices so that they would appear identical to communications from legitimate payment services. The fraudulent invoices directed the buyers to send money to the American bank accounts that had been opened by the "arrows." Finally, the arrows would allegedly collect the illicit proceeds and send them to the defendants in Europe by wire transfer and other methods. For example, the arrows allegedly forwarded Pieptea $18,000 cash in fraud proceeds hidden inside hollowed-out audio speakers. Other arrows allegedly used the proceeds to purchase expensive Audemars Piguet watches, and then sent the watches to the defendants abroad.
According to the complaint, it is estimated that the defendants earned over $3 million from the fraudulent scheme.
If convicted, the defendants each face a maximum sentence of 20 years in prison on the wire fraud conspiracy and money laundering conspiracy counts, and 10 years in prison on the passport fraud conspiracy count.
The charges in the complaint are merely allegations, and the defendants are presumed innocent unless and until proven guilty.
The government’s case is being prosecuted by Assistant U.S. Attorneys Cristina Posa, Vamshi Reddy and Claire Kedeshian of the U.S. Attorney’s Office for the Eastern District of New York, and Trial Attorney Carol Sipperly of the Criminal Division’s Computer Crime and Intellectual Property Section.
The offices of the FBI Legal Attachés in Romania, the Czech Republic, the United Kingdom, Canada and Hungary were instrumental in coordinating efforts with the United States’ international partners, and the Justice Department Criminal Division’s Office of International Affairs worked with its counterparts in these countries to effect the provisional arrests and requests for mutual legal assistance, including the forfeiture of illegal proceeds of these crimes. The Department of Justice’s Asset Forfeiture and Money Laundering Section also provided assistance in the forfeitures.
The U.S. government thanks the Romanian government, in particular the Ministry of Justice, the Directorate for Combating Organized Crime and the Romanian Intelligence Service, for their collaborative efforts throughout this long-term investigation, as well as the Czech National Police, Hungarian National Bureau of Investigation, Metropolitan Police Service in England, Montreal Police Service, Royal Canadian Mounted Police, International Organized Crime Intelligence and Operations Center, Internet Crime Complaint Center, Costa Mesa, Calif., Police Department, Orange County, Calif., District Attorney’s Office and the New York City Police Department for their assistance.
Thursday, December 13, 2012
SEC SECURES TRIAL VICTORY AND OBTAINS OVER $2.1 MILLION IN DISGORGEMENT AND PENALTIES
FROM: U.S. SECURITIES AND EXCHANGE COMMISSION
The Securities and Exchange Commission announced today that on October 18, 2012, the Honorable Sandra J. Feuerstein of the U.S. District Court for the Eastern District of New York entered a final judgment against two brothers, Mayer Amsel and David Amsel, following a bench trial in a market manipulation case involving the securities of a company known as East Delta Resources Corp.
The final judgment orders the Amsels to pay, on a joint and several basis, $936,780.46 in disgorgement and $326,631.17 in prejudgment interest. In addition, Mayer Amsel was ordered to pay a civil money penalty of $455,000, and David Amsel was ordered to pay a civil money penalty of $715,000.
Besides monetary remedies, the judgment also provides injunctive relief. The Amsels were permanently enjoined from violating Section 10(b) of the Securities Exchange Act of 1934; Exchange Act Rule 10b-5; and Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933. The judgment likewise permanently enjoins both men from participating in any offering of penny stock and any activities to induce the purchase or sale of any penny stock. David Amsel was permanently enjoined from aiding and abetting violations of Section 13(a) of the Exchange Act and Exchange Act Rules 12b-20, 13a-1, and 13a-13. David Amsel was also enjoined from serving as an officer or director of a publicly held company for eight years from September 7, 2012.
The SEC charged the Amsels in January 2010, alleging that together they garnered more than $1 million in illegal profits when they conducted unlawful wash sales and matched sales of unregistered East Delta shares. All of the SEC’s claims against the Amsels were resolved in the SEC’s favor via summary judgment, at trial, or through two post-trial rulings. All of the findings in the court’s summary judgment ruling and post-trial rulings were incorporated into the final judgment.
The court found on summary judgment that the Amsels violated Section 10(b) of the Exchange Act and Section 17(a) of the Securities Act when they executed fraudulent wash sales and matched sales, and that David Amsel aided and abetted East Delta’s violation of Section 13(a) of the Exchange Act when he prepared certain SEC filings for East Delta. Based upon the evidence presented at trial, the court found that both Amsels also violated Sections 5(a) and 5(c) of the Securities Act by selling unregistered East Delta shares, notwithstanding the existence of a Form S-8 registration statement and consulting agreement associated with Mayer Amsel’s stock. Significantly, the court found the Form S-8 ineffective for registration purposes because the "primary character" of Mayer Amsel’s consulting role at East Delta was capital-raising and promotional and thus contrary to the eligibility requirements for effective Form S-8 registration.
The SEC’s case was litigated by Frederick Block, Assistant Chief Litigation Counsel and Danette Edwards, Senior Counsel. The investigation prior to the litigation was led by Stephen Herm, David Neuman, Senior Investigations Counsel, and Gregory Faragasso, Assistant Director.
The SEC appreciates the assistance of the Quebec Autorité des marchés financiers (AMF) and the British Columbia Securities Commission (BCSC) in connection with the investigation leading to the litigation.
The Securities and Exchange Commission announced today that on October 18, 2012, the Honorable Sandra J. Feuerstein of the U.S. District Court for the Eastern District of New York entered a final judgment against two brothers, Mayer Amsel and David Amsel, following a bench trial in a market manipulation case involving the securities of a company known as East Delta Resources Corp.
The final judgment orders the Amsels to pay, on a joint and several basis, $936,780.46 in disgorgement and $326,631.17 in prejudgment interest. In addition, Mayer Amsel was ordered to pay a civil money penalty of $455,000, and David Amsel was ordered to pay a civil money penalty of $715,000.
Besides monetary remedies, the judgment also provides injunctive relief. The Amsels were permanently enjoined from violating Section 10(b) of the Securities Exchange Act of 1934; Exchange Act Rule 10b-5; and Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933. The judgment likewise permanently enjoins both men from participating in any offering of penny stock and any activities to induce the purchase or sale of any penny stock. David Amsel was permanently enjoined from aiding and abetting violations of Section 13(a) of the Exchange Act and Exchange Act Rules 12b-20, 13a-1, and 13a-13. David Amsel was also enjoined from serving as an officer or director of a publicly held company for eight years from September 7, 2012.
The SEC charged the Amsels in January 2010, alleging that together they garnered more than $1 million in illegal profits when they conducted unlawful wash sales and matched sales of unregistered East Delta shares. All of the SEC’s claims against the Amsels were resolved in the SEC’s favor via summary judgment, at trial, or through two post-trial rulings. All of the findings in the court’s summary judgment ruling and post-trial rulings were incorporated into the final judgment.
The court found on summary judgment that the Amsels violated Section 10(b) of the Exchange Act and Section 17(a) of the Securities Act when they executed fraudulent wash sales and matched sales, and that David Amsel aided and abetted East Delta’s violation of Section 13(a) of the Exchange Act when he prepared certain SEC filings for East Delta. Based upon the evidence presented at trial, the court found that both Amsels also violated Sections 5(a) and 5(c) of the Securities Act by selling unregistered East Delta shares, notwithstanding the existence of a Form S-8 registration statement and consulting agreement associated with Mayer Amsel’s stock. Significantly, the court found the Form S-8 ineffective for registration purposes because the "primary character" of Mayer Amsel’s consulting role at East Delta was capital-raising and promotional and thus contrary to the eligibility requirements for effective Form S-8 registration.
The SEC’s case was litigated by Frederick Block, Assistant Chief Litigation Counsel and Danette Edwards, Senior Counsel. The investigation prior to the litigation was led by Stephen Herm, David Neuman, Senior Investigations Counsel, and Gregory Faragasso, Assistant Director.
The SEC appreciates the assistance of the Quebec Autorité des marchés financiers (AMF) and the British Columbia Securities Commission (BCSC) in connection with the investigation leading to the litigation.
Wednesday, December 12, 2012
DOCTOR PLEADS GUILTY TO PART IN MEDICARE FRAUD CASE
FROM: U.S. DEPARTMENT OF JUSTICE
Monday, December 10, 2012
Brooklyn, N.Y., Physician and Clinic President Pleads Guilty to Medicare Fraud Scheme
WASHINGTON – A medical doctor and the president of two Brooklyn, N.Y., medical clinics pleaded guilty today for his role in a scheme resulting in more than $11.7 million in fraudulent Medicare claims, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.
According to court documents, Ho Yon Kim, 86, of Flushing, N.Y., was the president of URI Medical Service PC and Sarang Medical PC, both doing business in Flushing, and purportedly providing physical therapy and electric stimulation treatment. He was also a rendering physician at both clinics. Kim pleaded guilty in Brooklyn federal court before U.S. Magistrate Judge Marilyn D. Go to a superseding information charging him with conspiracy to commit health care fraud.
During today’s plea hearing, Kim admitted that, from approximately March 2007 to October 2011, he conspired with others to induce Medicare beneficiaries to allow their Medicare numbers to be billed for medical services that were never provided or were not medically necessary. In exchange, the conspirators provided the beneficiaries with a variety of spa services such as massages, facials, lunches and dancing classes.
At sentencing, Kim faces a maximum penalty of 10 years in prison. A sentencing date has not yet been set.
Also charged by indictment in the scheme were medical doctors Hoi Yat Kam and Peter Lu, who await trial. The charges and allegations against them are merely accusations and they are considered innocent unless and until proven guilty.
The case is being prosecuted by Trial Attorneys Nicholas S. Acker and Bryan D. Fields of the Criminal Division’s Fraud section. The case was investigated by the FBI and the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), and brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of New York.
.
Monday, December 10, 2012
Brooklyn, N.Y., Physician and Clinic President Pleads Guilty to Medicare Fraud Scheme
WASHINGTON – A medical doctor and the president of two Brooklyn, N.Y., medical clinics pleaded guilty today for his role in a scheme resulting in more than $11.7 million in fraudulent Medicare claims, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.
According to court documents, Ho Yon Kim, 86, of Flushing, N.Y., was the president of URI Medical Service PC and Sarang Medical PC, both doing business in Flushing, and purportedly providing physical therapy and electric stimulation treatment. He was also a rendering physician at both clinics. Kim pleaded guilty in Brooklyn federal court before U.S. Magistrate Judge Marilyn D. Go to a superseding information charging him with conspiracy to commit health care fraud.
During today’s plea hearing, Kim admitted that, from approximately March 2007 to October 2011, he conspired with others to induce Medicare beneficiaries to allow their Medicare numbers to be billed for medical services that were never provided or were not medically necessary. In exchange, the conspirators provided the beneficiaries with a variety of spa services such as massages, facials, lunches and dancing classes.
At sentencing, Kim faces a maximum penalty of 10 years in prison. A sentencing date has not yet been set.
Also charged by indictment in the scheme were medical doctors Hoi Yat Kam and Peter Lu, who await trial. The charges and allegations against them are merely accusations and they are considered innocent unless and until proven guilty.
The case is being prosecuted by Trial Attorneys Nicholas S. Acker and Bryan D. Fields of the Criminal Division’s Fraud section. The case was investigated by the FBI and the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), and brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of New York.
.
Monday, December 10, 2012
CALIFORNIA WOMAN GOES TO PRISON FOR SEX TRAFFICKING
FROM: U.S. DEPARTMENT OF HOMELAND SECURITY
Former Sacramento woman sentenced to 9 years for sex trafficking
OAKLAND, Calif. — A former Sacramento woman was sentenced Wednesday to nine years in federal prison on charges stemming from a probe by U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI) and the FBI that linked her to a scheme to sex traffic teenage girls.
Helen Jean Singh (née Kearney), 22, pleaded guilty earlier this year to participating in a sex trafficking conspiracy involving the prostitution of teenage females. During Wednesday's sentencing, Singh accepted responsibility for her actions.
A federal grand jury indicted Singh and her husband, Mahendar "Mike" Singh, on the sex trafficking conspiracy charge in December 2011. According to the indictment, the pair recruited teenage girls by promising money, drugs and a "family-like environment." The couple maintained control over their victims by providing drugs, using physical force and threats of physical force, and fostering a climate of fear. The Singh's used the Internet to advertise their prostitution enterprise, which spanned from Sacramento County to multiple Bay Area counties.
"Few crimes strike at our community the way sex trafficking does," U.S. Attorney Melinda Haag said. "By sexually exploiting children and young adults for financial gain, sex traffickers have shown that greed has no bounds. My office will continue to lead efforts by law enforcement to fight the menace that is sex trafficking."
The Singhs were arrested in August 2011 after the South San Francisco Police Department responded to a motel near the San Francisco Airport and found Mahendar Singh with three teenage girls. The affidavit alleges the defendants used an Internet website to advertise their victims and employed cell phones and text-messaging to make arrangements with customers.
"While no prison sentence can ever compensate for the physical and emotional toll experienced by trafficking victims, this lengthy prison term should serve as a sobering warning about the consequences facing those who engage in this reprehensible practice," said Clark Settles, special agent in charge ICE Homeland Security Investigations (HSI) San Francisco. "Human traffickers prey on the powerless and the vulnerable. ICE Homeland Security Investigations and its federal law enforcement partners are committed to protecting those who cannot protect themselves."
"The FBI will continue to work with our local, state and federal law enforcement partners to relentlessly pursue and bring to justice sex traffickers who exploit and victimize juveniles," said Acting Special Agent in Charge Michael Gavin of FBI San Francisco. "We will also work with our community partners to help those who are victimized get the assistance they need."
In addition to HSI and the FBI, the other agencies involved in the case included the South San Francisco Police Department; the San Mateo County District Attorney's Office; the Human Trafficking Prosecution Unit of the Criminal Section, Civil Rights Division; U.S. Department of Justice; and the Child Exploitation and Obscenity Section of the Criminal Division, U.S. Department of Justice.
The sentence was handed down by U.S. District Court Judge Phyllis J. Hamilton. Judge Hamilton also sentenced Helen Singh, who was and will remain in custody, to a five-year period of supervised release following her prison term and ordered her to forfeit property and make restitution of $45,000 to one of the victims. Mahendar Singh, who also pleaded guilty previously, received the same sentence April 18.
Assistant U.S. Attorney Andrew S. Huang prosecuted the case with the assistance of legal assistant Vanessa Vargas.
Human trafficking is one of the most heinous crimes that HSI investigates. In its worst manifestation, human trafficking is akin to modern-day slavery. HSI relies on tips from the public to dismantle these organizations. Trafficking victims are often hidden in plain sight, voiceless and scared. The public is urged to report suspicious human trafficking activity to the ICE HSI Tip Line at
1-866-347-2423 or report tips online at www.ice.gov/tips.
Former Sacramento woman sentenced to 9 years for sex trafficking
OAKLAND, Calif. — A former Sacramento woman was sentenced Wednesday to nine years in federal prison on charges stemming from a probe by U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI) and the FBI that linked her to a scheme to sex traffic teenage girls.
Helen Jean Singh (née Kearney), 22, pleaded guilty earlier this year to participating in a sex trafficking conspiracy involving the prostitution of teenage females. During Wednesday's sentencing, Singh accepted responsibility for her actions.
A federal grand jury indicted Singh and her husband, Mahendar "Mike" Singh, on the sex trafficking conspiracy charge in December 2011. According to the indictment, the pair recruited teenage girls by promising money, drugs and a "family-like environment." The couple maintained control over their victims by providing drugs, using physical force and threats of physical force, and fostering a climate of fear. The Singh's used the Internet to advertise their prostitution enterprise, which spanned from Sacramento County to multiple Bay Area counties.
"Few crimes strike at our community the way sex trafficking does," U.S. Attorney Melinda Haag said. "By sexually exploiting children and young adults for financial gain, sex traffickers have shown that greed has no bounds. My office will continue to lead efforts by law enforcement to fight the menace that is sex trafficking."
The Singhs were arrested in August 2011 after the South San Francisco Police Department responded to a motel near the San Francisco Airport and found Mahendar Singh with three teenage girls. The affidavit alleges the defendants used an Internet website to advertise their victims and employed cell phones and text-messaging to make arrangements with customers.
"While no prison sentence can ever compensate for the physical and emotional toll experienced by trafficking victims, this lengthy prison term should serve as a sobering warning about the consequences facing those who engage in this reprehensible practice," said Clark Settles, special agent in charge ICE Homeland Security Investigations (HSI) San Francisco. "Human traffickers prey on the powerless and the vulnerable. ICE Homeland Security Investigations and its federal law enforcement partners are committed to protecting those who cannot protect themselves."
"The FBI will continue to work with our local, state and federal law enforcement partners to relentlessly pursue and bring to justice sex traffickers who exploit and victimize juveniles," said Acting Special Agent in Charge Michael Gavin of FBI San Francisco. "We will also work with our community partners to help those who are victimized get the assistance they need."
In addition to HSI and the FBI, the other agencies involved in the case included the South San Francisco Police Department; the San Mateo County District Attorney's Office; the Human Trafficking Prosecution Unit of the Criminal Section, Civil Rights Division; U.S. Department of Justice; and the Child Exploitation and Obscenity Section of the Criminal Division, U.S. Department of Justice.
The sentence was handed down by U.S. District Court Judge Phyllis J. Hamilton. Judge Hamilton also sentenced Helen Singh, who was and will remain in custody, to a five-year period of supervised release following her prison term and ordered her to forfeit property and make restitution of $45,000 to one of the victims. Mahendar Singh, who also pleaded guilty previously, received the same sentence April 18.
Assistant U.S. Attorney Andrew S. Huang prosecuted the case with the assistance of legal assistant Vanessa Vargas.
Human trafficking is one of the most heinous crimes that HSI investigates. In its worst manifestation, human trafficking is akin to modern-day slavery. HSI relies on tips from the public to dismantle these organizations. Trafficking victims are often hidden in plain sight, voiceless and scared. The public is urged to report suspicious human trafficking activity to the ICE HSI Tip Line at
1-866-347-2423 or report tips online at www.ice.gov/tips.
Sunday, December 9, 2012
NASPSO PRESIDENT FOUND GUILTY OF STEALING UNION FUNDS AND PENSION MONEY
FROM: U.S. DEPARTMENT OF JUSTICE
WASHINGTON – The founder and president of the National Association of Special Police and Security Officers (NASPSO) – which represents private security guards assigned to protect federal buildings in the metropolitan Washington area – was convicted yesterday in Washington federal court, following a jury trial, of 18 counts related to his theft of union treasury and pension funds, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.
Caleb Gray-Burriss, 62, of Washington, was convicted on six counts of mail fraud, seven counts of theft from a labor organization, one count each of obstruction of justice and criminal contempt, and three counts of union recordkeeping offenses. Joining in the announcement of the verdict were Marc I. Machiz, Director of the Philadelphia Regional Office of the Employee Benefits Security Administration of the Department of Labor; Michael S. Barcus, Special Agent in Charge of the Washington Regional Office of the Department of Labor, Office of the Inspector General, Office of Labor Racketeering and Fraud Investigations; and District Director Mark Wheeler, of the Department of Labor’s Washington District Office of the Office of Labor-Management Standards.
In June 2010, Mr. Gray-Burriss was charged with four counts of mail fraud in connection with his operation of a pension plan for members of NASPSO. A grand jury returned two superseding indictments in April 2011 and August 2012, which also charged offenses committed by Gray-Burriss while he was released on bail.
According to the evidence at trial, from approximately June 2004 through February 2011, Gray-Burriss wrote numerous checks to himself or to other third parties from the NASPSO pension plan checking account. The evidence also showed that Gray-Burriss spent more than $100,000 of the pension plan funds in this way, while falsely maintaining it was an operational fund that he was properly administering and that was providing benefits to the beneficiaries. The evidence further showed that Gray-Burriss committed criminal contempt of a court order addressing his prior misappropriation of pension and health plan funds after Gray-Burriss resumed his scheme in 2009 to defraud employers and NASPSO members of pension funds.
In addition, the evidence presented at trial showed that Gray-Burriss, while an officer and employee of NASPSO, stole over $150,000 in NASPSO funds consisting of cash withdrawals to himself, unauthorized salary increases and bonuses to himself and another person, fraudulently drawn checks to himself – purportedly for employment taxes on behalf of NASPSO – and unlawfully used NASPSO funds to pay his personal fines in a civil lawsuit.
The jury also found that Gray-Burriss committed obstruction of justice by destroying or concealing NASPSO financial records during a grand jury investigation; failing to file required annual reports on behalf of NASPSO, falsifying those reports, and failing to maintain properly the records of NASPSO.
At sentencing, which is currently scheduled for Feb. 28, 2013, Gray-Burris faces a maximum potential penalty of 20 years in prison and a $250,000 fine on each of the mail fraud counts, five years in prison and a $10,000 fine on each of the theft from a labor organization and conspiracy counts; five years in prison and a $250,000 fine on the criminal contempt count; 20 years in prison and a $250,000 fine on the obstruction count, and a year in prison and a $10,000 fine for the recordkeeping offenses.
The investigation was conducted by agents and investigators of the U.S. Department of Labor. Trial Attorney Vincent J. Falvo of the Criminal Division’s Organized Crime and Gang Section and Trial Attorney Tracee Plowell, of the Criminal Division’s Public Integrity Section prosecuted the case.
WASHINGTON – The founder and president of the National Association of Special Police and Security Officers (NASPSO) – which represents private security guards assigned to protect federal buildings in the metropolitan Washington area – was convicted yesterday in Washington federal court, following a jury trial, of 18 counts related to his theft of union treasury and pension funds, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.
Caleb Gray-Burriss, 62, of Washington, was convicted on six counts of mail fraud, seven counts of theft from a labor organization, one count each of obstruction of justice and criminal contempt, and three counts of union recordkeeping offenses. Joining in the announcement of the verdict were Marc I. Machiz, Director of the Philadelphia Regional Office of the Employee Benefits Security Administration of the Department of Labor; Michael S. Barcus, Special Agent in Charge of the Washington Regional Office of the Department of Labor, Office of the Inspector General, Office of Labor Racketeering and Fraud Investigations; and District Director Mark Wheeler, of the Department of Labor’s Washington District Office of the Office of Labor-Management Standards.
In June 2010, Mr. Gray-Burriss was charged with four counts of mail fraud in connection with his operation of a pension plan for members of NASPSO. A grand jury returned two superseding indictments in April 2011 and August 2012, which also charged offenses committed by Gray-Burriss while he was released on bail.
According to the evidence at trial, from approximately June 2004 through February 2011, Gray-Burriss wrote numerous checks to himself or to other third parties from the NASPSO pension plan checking account. The evidence also showed that Gray-Burriss spent more than $100,000 of the pension plan funds in this way, while falsely maintaining it was an operational fund that he was properly administering and that was providing benefits to the beneficiaries. The evidence further showed that Gray-Burriss committed criminal contempt of a court order addressing his prior misappropriation of pension and health plan funds after Gray-Burriss resumed his scheme in 2009 to defraud employers and NASPSO members of pension funds.
In addition, the evidence presented at trial showed that Gray-Burriss, while an officer and employee of NASPSO, stole over $150,000 in NASPSO funds consisting of cash withdrawals to himself, unauthorized salary increases and bonuses to himself and another person, fraudulently drawn checks to himself – purportedly for employment taxes on behalf of NASPSO – and unlawfully used NASPSO funds to pay his personal fines in a civil lawsuit.
The jury also found that Gray-Burriss committed obstruction of justice by destroying or concealing NASPSO financial records during a grand jury investigation; failing to file required annual reports on behalf of NASPSO, falsifying those reports, and failing to maintain properly the records of NASPSO.
At sentencing, which is currently scheduled for Feb. 28, 2013, Gray-Burris faces a maximum potential penalty of 20 years in prison and a $250,000 fine on each of the mail fraud counts, five years in prison and a $10,000 fine on each of the theft from a labor organization and conspiracy counts; five years in prison and a $250,000 fine on the criminal contempt count; 20 years in prison and a $250,000 fine on the obstruction count, and a year in prison and a $10,000 fine for the recordkeeping offenses.
The investigation was conducted by agents and investigators of the U.S. Department of Labor. Trial Attorney Vincent J. Falvo of the Criminal Division’s Organized Crime and Gang Section and Trial Attorney Tracee Plowell, of the Criminal Division’s Public Integrity Section prosecuted the case.
Saturday, December 8, 2012
TWO POOL COMMODITY SCAM
FROM: U.S. COMMODITY FUTURES TRADING SERVICE
December 6, 2012
CFTC Charges Ray Thomas Brown with Fraud, Misappropriation, and Registration Violations in Operating Two Commodity Pool Scams
Court enters order freezing Brown’s assets and protecting books and records
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced that on November 26, 2012, it filed a civil enforcement complaint under seal in the U.S. District Court for the District of Arizona, charging defendant Ray Thomas Brown of Phoenix, Ariz., with fraud in operating two commodity scams since at least 2010.
According to the complaint, unsealed on December 3, 2012, Brown fraudulently solicited members of the public to participate in a commodity pool while acting as an unregistered commodity pool operator, and Brown fraudulently duped persons to authorize him to trade their commodity futures accounts. Brown’s fraud allegedly included misrepresentations and omissions about his past trading success, trading profits, trading expertise, and personal history, the dissemination of false account statements, and the misappropriation of customer funds. As a result of at least two fraudulent schemes, Brown succeeded in duping customers into sending at least $1.2 million to bank and trading accounts under his control, according to the complaint.
On November 27, 2012, the court entered an order freezing Brown’s assets and requiring him to give the CFTC access to his books and records.
In the first scheme, according to the CFTC complaint, Brown lured his victims into a Ponzi scheme by fraudulently guaranteeing profitable returns of up to 100 percent per month and falsely representing that trading in the pool account was generating as much as multi-million dollar profits. Brown allegedly directed persons to send funds to bank accounts under his control to participate in the commodity pool, and at least $950,000 was deposited in these accounts. Unknown to the victims, Brown allegedly misappropriated a considerable portion of investors’ funds and allegedly used the funds he collected from pool participants to pay for his personal expenses. Brown actually traded only a small portion of the funds he received, and he lost virtually all of those funds in trading, according to the complaint. Furthermore, Brown allegedly concealed his trading losses by issuing false account statements showing fictitious trading profits and grossly inflated cash assets of the pool.
In the second scheme, Brown fraudulently misrepresented his trading expertise and past performance to convince clients to open individual commodity futures trading accounts and to authorize him to trade those accounts, according to the complaint. These victims deposited at least $270,000 into those accounts, and Brown lost virtually all of those funds within 90 days, according to the complaint.
In its continuing litigation in this matter, the CFTC seeks restitution to defrauded customers, a return of ill-gotten gains, civil monetary penalties, trading and registration bans, and a permanent injunction against further violations of federal commodities laws, as charged.
The CFTC thanks the Black Mountain Precinct of the Phoenix Police Department for its invaluable assistance in this matter. The CFTC also appreciates the assistance of the Arizona Corporation Commission.
CFTC Division of Enforcement staff members responsible for this case are Jonathan Robell, Dmitriy Vilenskiy, Tracy Walraven, Richard Foelber, and Joan Manley.
December 6, 2012
CFTC Charges Ray Thomas Brown with Fraud, Misappropriation, and Registration Violations in Operating Two Commodity Pool Scams
Court enters order freezing Brown’s assets and protecting books and records
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced that on November 26, 2012, it filed a civil enforcement complaint under seal in the U.S. District Court for the District of Arizona, charging defendant Ray Thomas Brown of Phoenix, Ariz., with fraud in operating two commodity scams since at least 2010.
According to the complaint, unsealed on December 3, 2012, Brown fraudulently solicited members of the public to participate in a commodity pool while acting as an unregistered commodity pool operator, and Brown fraudulently duped persons to authorize him to trade their commodity futures accounts. Brown’s fraud allegedly included misrepresentations and omissions about his past trading success, trading profits, trading expertise, and personal history, the dissemination of false account statements, and the misappropriation of customer funds. As a result of at least two fraudulent schemes, Brown succeeded in duping customers into sending at least $1.2 million to bank and trading accounts under his control, according to the complaint.
On November 27, 2012, the court entered an order freezing Brown’s assets and requiring him to give the CFTC access to his books and records.
In the first scheme, according to the CFTC complaint, Brown lured his victims into a Ponzi scheme by fraudulently guaranteeing profitable returns of up to 100 percent per month and falsely representing that trading in the pool account was generating as much as multi-million dollar profits. Brown allegedly directed persons to send funds to bank accounts under his control to participate in the commodity pool, and at least $950,000 was deposited in these accounts. Unknown to the victims, Brown allegedly misappropriated a considerable portion of investors’ funds and allegedly used the funds he collected from pool participants to pay for his personal expenses. Brown actually traded only a small portion of the funds he received, and he lost virtually all of those funds in trading, according to the complaint. Furthermore, Brown allegedly concealed his trading losses by issuing false account statements showing fictitious trading profits and grossly inflated cash assets of the pool.
In the second scheme, Brown fraudulently misrepresented his trading expertise and past performance to convince clients to open individual commodity futures trading accounts and to authorize him to trade those accounts, according to the complaint. These victims deposited at least $270,000 into those accounts, and Brown lost virtually all of those funds within 90 days, according to the complaint.
In its continuing litigation in this matter, the CFTC seeks restitution to defrauded customers, a return of ill-gotten gains, civil monetary penalties, trading and registration bans, and a permanent injunction against further violations of federal commodities laws, as charged.
The CFTC thanks the Black Mountain Precinct of the Phoenix Police Department for its invaluable assistance in this matter. The CFTC also appreciates the assistance of the Arizona Corporation Commission.
CFTC Division of Enforcement staff members responsible for this case are Jonathan Robell, Dmitriy Vilenskiy, Tracy Walraven, Richard Foelber, and Joan Manley.
Thursday, December 6, 2012
TWO POLICE OFFICERS CHARGED WITH SOLICITING A BRIBE FROM A DEFENDANT
FROM: U.S. DEPARTMENT OF JUSTICE
WASHINGTON – Two former police officers with the Police of Puerto Rico were charged with allegedly attempting to extort a commonwealth defendant and soliciting bribe payments of $50,000, Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division announced today.
Abimael Arroyo-Cruz, 30, of Rio Grande, Puerto Rico, and Josue Becerril-Ramos, 36, of Carolina, Puerto Rico, were both charged in an indictment returned yesterday in the District of Puerto Rico with one count of conspiracy, one count of federal programs bribery, one count of conspiracy to commit extortion and one count of attempted extortion.
According to the indictment, Arroyo and Becerril arrested eight individuals for possession of unregistered firearms and marijuana on Aug. 2, 2012. The officers then allegedly solicited from one defendant a bribe payment of $50,000 to have his case dismissed. Beginning on Sept. 11, 2012, both officers allegedly spoke with the commonwealth defendant multiple times over the telephone, discussing payment details and strategies for dismissing the commonwealth defendant’s case.
The indictment alleges that Arroyo and Becerril collected approximately $35,000, of the $50,000 demanded, from the commonwealth defendant in two different payment installments. Unbeknownst to the officers, however, the individuals who dropped off the payments were cooperating with federal law enforcement.
In exchange for the bribes, the indictment alleges, Arroyo and Becerril devised a plan whereby the officers would misidentify a co-defendant in court, leading to dismissal of the commonwealth defendant’s case. According to the indictment, when asked under oath at the preliminary hearing to identify the commonwealth defendant, Arroyo instead identified a co-defendant. The indictment alleges that Arroyo confirmed to the commonwealth defendant following the hearing that he deliberately misidentified the co-defendant as part of the plan to have the commonwealth defendant’s case dismissed.
The case is being prosecuted by Assistant U.S. Attorney Timothy Henwood of the District of Puerto Rico and Trial Attorneys Menaka Kalaskar and Marquest J. Meeks of the Criminal Division’s Public Integrity Section. The case was investigated by the FBI’s San Juan Field Office.
WASHINGTON – Two former police officers with the Police of Puerto Rico were charged with allegedly attempting to extort a commonwealth defendant and soliciting bribe payments of $50,000, Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division announced today.
Abimael Arroyo-Cruz, 30, of Rio Grande, Puerto Rico, and Josue Becerril-Ramos, 36, of Carolina, Puerto Rico, were both charged in an indictment returned yesterday in the District of Puerto Rico with one count of conspiracy, one count of federal programs bribery, one count of conspiracy to commit extortion and one count of attempted extortion.
According to the indictment, Arroyo and Becerril arrested eight individuals for possession of unregistered firearms and marijuana on Aug. 2, 2012. The officers then allegedly solicited from one defendant a bribe payment of $50,000 to have his case dismissed. Beginning on Sept. 11, 2012, both officers allegedly spoke with the commonwealth defendant multiple times over the telephone, discussing payment details and strategies for dismissing the commonwealth defendant’s case.
The indictment alleges that Arroyo and Becerril collected approximately $35,000, of the $50,000 demanded, from the commonwealth defendant in two different payment installments. Unbeknownst to the officers, however, the individuals who dropped off the payments were cooperating with federal law enforcement.
In exchange for the bribes, the indictment alleges, Arroyo and Becerril devised a plan whereby the officers would misidentify a co-defendant in court, leading to dismissal of the commonwealth defendant’s case. According to the indictment, when asked under oath at the preliminary hearing to identify the commonwealth defendant, Arroyo instead identified a co-defendant. The indictment alleges that Arroyo confirmed to the commonwealth defendant following the hearing that he deliberately misidentified the co-defendant as part of the plan to have the commonwealth defendant’s case dismissed.
The case is being prosecuted by Assistant U.S. Attorney Timothy Henwood of the District of Puerto Rico and Trial Attorneys Menaka Kalaskar and Marquest J. Meeks of the Criminal Division’s Public Integrity Section. The case was investigated by the FBI’s San Juan Field Office.
Wednesday, December 5, 2012
MAN CHARGED WITH INSIDER TRADING
FROM: U.S. SECURITIES AND EXCHANGE COMMISSION
The Securities and Exchange Commission today charged a Connecticut-based business executive with insider trading ahead of the sale of Patriot Capital Funding Group based on nonpublic information he learned at the helm of a firm involved in the bidding process.
The SEC alleges that I. Joseph Massoud, who founded investment advisory firm Compass Group Management, gained access to nonpublic information contained in an online "dataroom" where bidding companies could learn more about Patriot Capital's financial condition. For access to the data, Compass Group had to enter into a confidentiality agreement that prohibited its employees from buying Patriot Capital stock. Nonetheless, Massoud purchased shares soon after Compass Group gained access to the confidential information, and he bought even more stock after he learned that Compass Group's bid was what he described as "waaaaay off" compared to bids from other companies. Patriot Capital's share price more than doubled after a merger was publicly announced, and Massoud realized more than $676,000 in illegal profits.
Massoud, who lives in Westport, Conn., agreed to settle the SEC's charges by paying more than $1.4 million. He also will be barred from working in the securities industry or serving as an officer or director of a public company. The settlement is subject to court approval.
According to the SEC's complaint filed in federal court in Connecticut, Patriot Capital initiated a nonpublic bidding process in 2009 to entertain proposals for strategic investments and the possible sale of the company. In May 2009, Massoud directed Compass Group to execute a confidentiality agreement with Patriot Capital so it could participate in that process. After Compass Group was provided access to the online dataroom as part of the bidding process, a Compass Group analyst accessed the dataroom and provided various reports containing material, nonpublic information to Massoud.
The SEC alleges that Massoud also learned nonpublic information about the value of bids received by Patriot Capital from other parties involved in the bidding process. On July 7, 2009, Massoud e-mailed others working on the Patriot Capital transaction at Compass Group and indicated that he had just talked with Patriot Capital's CEO. He wrote that Compass Group was "waaaaay off" on its bid to acquire Patriot Capital, which according to the CEO had received several acquisition bids that were much higher than Compass Group's offer. Massoud also learned from the CEO that Compass Group would have to increase its bid to match those higher proposals if it wanted to be considered.
According to the SEC's complaint, Massoud bought 322,216 shares of Patriot Capital stock in transactions spread across 15 different trading days from May to July. Massoud purchased more than half of those shares after July 7 when Patriot Capital's CEO confidentially told him about other higher bids to acquire Patriot Capital. On August 3, 2009, Patriot Capital publicly announced a merger with Prospect Capital Corporation. On August 25, after Patriot Capital had been acquired and its stock price had increased significantly, Massoud sold all of his Patriot Capital stock.
The SEC alleges that Massoud violated Section 10(b) of the Securities and Exchange Act of 1934 and Rule 10b-5 thereunder and that his profits constitute ill-gotten gains. Massoud agreed to pay disgorgement of $676,013, prejudgment interest of $80,785, and a penalty of $676,013. He agreed to be enjoined from violating Section 10(b) and Rule 10b-5 in the future, and he will be barred from serving as a public company officer or director and from being associated with any broker, dealer, investment adviser, municipal securities dealer, municipal adviser, transfer agent, or national recognized statistical rating organization. He also will be barred from participating in any penny stock offering.
The Securities and Exchange Commission today charged a Connecticut-based business executive with insider trading ahead of the sale of Patriot Capital Funding Group based on nonpublic information he learned at the helm of a firm involved in the bidding process.
The SEC alleges that I. Joseph Massoud, who founded investment advisory firm Compass Group Management, gained access to nonpublic information contained in an online "dataroom" where bidding companies could learn more about Patriot Capital's financial condition. For access to the data, Compass Group had to enter into a confidentiality agreement that prohibited its employees from buying Patriot Capital stock. Nonetheless, Massoud purchased shares soon after Compass Group gained access to the confidential information, and he bought even more stock after he learned that Compass Group's bid was what he described as "waaaaay off" compared to bids from other companies. Patriot Capital's share price more than doubled after a merger was publicly announced, and Massoud realized more than $676,000 in illegal profits.
Massoud, who lives in Westport, Conn., agreed to settle the SEC's charges by paying more than $1.4 million. He also will be barred from working in the securities industry or serving as an officer or director of a public company. The settlement is subject to court approval.
According to the SEC's complaint filed in federal court in Connecticut, Patriot Capital initiated a nonpublic bidding process in 2009 to entertain proposals for strategic investments and the possible sale of the company. In May 2009, Massoud directed Compass Group to execute a confidentiality agreement with Patriot Capital so it could participate in that process. After Compass Group was provided access to the online dataroom as part of the bidding process, a Compass Group analyst accessed the dataroom and provided various reports containing material, nonpublic information to Massoud.
The SEC alleges that Massoud also learned nonpublic information about the value of bids received by Patriot Capital from other parties involved in the bidding process. On July 7, 2009, Massoud e-mailed others working on the Patriot Capital transaction at Compass Group and indicated that he had just talked with Patriot Capital's CEO. He wrote that Compass Group was "waaaaay off" on its bid to acquire Patriot Capital, which according to the CEO had received several acquisition bids that were much higher than Compass Group's offer. Massoud also learned from the CEO that Compass Group would have to increase its bid to match those higher proposals if it wanted to be considered.
According to the SEC's complaint, Massoud bought 322,216 shares of Patriot Capital stock in transactions spread across 15 different trading days from May to July. Massoud purchased more than half of those shares after July 7 when Patriot Capital's CEO confidentially told him about other higher bids to acquire Patriot Capital. On August 3, 2009, Patriot Capital publicly announced a merger with Prospect Capital Corporation. On August 25, after Patriot Capital had been acquired and its stock price had increased significantly, Massoud sold all of his Patriot Capital stock.
The SEC alleges that Massoud violated Section 10(b) of the Securities and Exchange Act of 1934 and Rule 10b-5 thereunder and that his profits constitute ill-gotten gains. Massoud agreed to pay disgorgement of $676,013, prejudgment interest of $80,785, and a penalty of $676,013. He agreed to be enjoined from violating Section 10(b) and Rule 10b-5 in the future, and he will be barred from serving as a public company officer or director and from being associated with any broker, dealer, investment adviser, municipal securities dealer, municipal adviser, transfer agent, or national recognized statistical rating organization. He also will be barred from participating in any penny stock offering.
Tuesday, December 4, 2012
CONNECTICUT RESIDENT CHARGED WITH OPERATING A COMMODITY POOL PONZI SCHEME
FROM: COMMODITY FUTURES TRADE COMMISSION
CFTC Charges Connecticut Resident Feisal Sharif with Operating a $5.4 Million Commodity Pool Ponzi Scheme and Misappropriating at least $900,000 of Pool Participants’ Funds
In a related criminal action filed in September, the U.S. Attorney for the State of Connecticut charged Sharif with wire fraud
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced the filing of a civil enforcement action charging defendant Feisal Sharif of Branford, Conn., with operating a commodity pool Ponzi scheme that solicited approximately $5.4 million from at least 50 people to invest in a commodity pool named First Financial, LLC. Sharif allegedly misappropriated at least $900,000 of pool participants’ funds, using the funds to pay personal expenses and purchase gifts. The CFTC complaint also charges Sharif with failing to register as a Commodity Pool Operator (CPO) of First Financial.
According to the complaint filed on November 26, 2012, in the U.S. District Court for the District of Connecticut, from at least January 2007 and continuing until September 13, 2012, Sharif, in order to entice prospective participants, guaranteed monthly and yearly returns of 1 percent to 15 percent on investments in the pool. Of the $5.4 million solicited from pool participants, at least $900,000 was misappropriated, approximately $1.32 million was lost trading futures in accounts in the name of First Financial, and $3.17 million was paid out to certain pool participants as fictitious "profits" or returns of principal, according to the complaint. Sharif allegedly admitted to one pool participant that he was operating a Ponzi scheme.
To falsely assure pool participants that their funds were safe in the pool’s trading accounts, Sharif allegedly fabricated trading account statements from First Financial and from futures commission merchants.
In its continuing litigation, the CFTC seeks civil monetary penalties, trading and registration bans, restitution, disgorgement, and a permanent injunction against further violations of the federal commodities laws.
The CFTC appreciates the cooperation of the Securities and Business Investments Division of the State of Connecticut Department of Banking, the Federal Bureau of Investigation, and the U.S. Attorneys’ Office for the State of Connecticut in this matter.
On September 14, 2012, in a related criminal action, the U.S. Attorney for the State of Connecticut charged Sharif with wire fraud.
The CFTC Division of Enforcement staff members responsible for this case are James Deacon, Amanda Harding, Jessica Harris, Kenneth McCracken, Rick Glaser, and Richard Wagner.
CFTC Charges Connecticut Resident Feisal Sharif with Operating a $5.4 Million Commodity Pool Ponzi Scheme and Misappropriating at least $900,000 of Pool Participants’ Funds
In a related criminal action filed in September, the U.S. Attorney for the State of Connecticut charged Sharif with wire fraud
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced the filing of a civil enforcement action charging defendant Feisal Sharif of Branford, Conn., with operating a commodity pool Ponzi scheme that solicited approximately $5.4 million from at least 50 people to invest in a commodity pool named First Financial, LLC. Sharif allegedly misappropriated at least $900,000 of pool participants’ funds, using the funds to pay personal expenses and purchase gifts. The CFTC complaint also charges Sharif with failing to register as a Commodity Pool Operator (CPO) of First Financial.
According to the complaint filed on November 26, 2012, in the U.S. District Court for the District of Connecticut, from at least January 2007 and continuing until September 13, 2012, Sharif, in order to entice prospective participants, guaranteed monthly and yearly returns of 1 percent to 15 percent on investments in the pool. Of the $5.4 million solicited from pool participants, at least $900,000 was misappropriated, approximately $1.32 million was lost trading futures in accounts in the name of First Financial, and $3.17 million was paid out to certain pool participants as fictitious "profits" or returns of principal, according to the complaint. Sharif allegedly admitted to one pool participant that he was operating a Ponzi scheme.
To falsely assure pool participants that their funds were safe in the pool’s trading accounts, Sharif allegedly fabricated trading account statements from First Financial and from futures commission merchants.
In its continuing litigation, the CFTC seeks civil monetary penalties, trading and registration bans, restitution, disgorgement, and a permanent injunction against further violations of the federal commodities laws.
The CFTC appreciates the cooperation of the Securities and Business Investments Division of the State of Connecticut Department of Banking, the Federal Bureau of Investigation, and the U.S. Attorneys’ Office for the State of Connecticut in this matter.
On September 14, 2012, in a related criminal action, the U.S. Attorney for the State of Connecticut charged Sharif with wire fraud.
The CFTC Division of Enforcement staff members responsible for this case are James Deacon, Amanda Harding, Jessica Harris, Kenneth McCracken, Rick Glaser, and Richard Wagner.
Subscribe to:
Posts (Atom)