DENVER – A woman was sentenced this week for her role in stealing mail from personal mailboxes in the Englewood area, U.S. Attorney Jason R. Dunn and Acting U.S. Postal Inspector in Charge Lesley Allison announced.  Krissie Renae Ward, age 20, of Denver, was sentenced by U.S. District Court Judge R. Brooke Jackson to serve 18 months in federal prison, followed by 3 years on supervised release.  Co-defendant Tiffany Krystal Mankin, age 34, of Denver, was scheduled to be sentenced today, but removed her ankle monitor and did not show up for sentencing.  Judge Jackson issued a bench warrant for her arrest. 

The two defendants were indicted by a federal grand jury in Denver on March 20, 2018.  Ward pled guilty before Judge Jackson on August 22, 2018 and was sentenced on November 27, 2018.  Mankin pled guilty before Judge Jackson on August 23, 2018 and was scheduled to be sentenced on November 28, 2018. 

According to the stipulated facts contained in both defendants’ plea agreements, on November 15, 2016, Englewood Police Department officers responded to a report of suspicious activity at a Safeway store located at 201 East Jefferson Avenue, in Englewood. The reporting party called police and stated that two females inside a black Volkswagen were opening excessive amounts of mail.  Englewood officers located the vehicle and contacted the occupants, who turned out to be Mankin and Ward.  Both were extremely nervous, fidgety, and avoided questions.  Both women were taken to the Englewood police station. 

During a search of the car, officers found 67 pieces of mail belonging to 31 different people.  None of the mail contained actual currency.  Law enforcement officers recovered seven checks totaling more than $9,000 from open, rifled mail.  Further investigation revealed that Ward and Mankin were looking for mail that contained credit cards and checks.  They took the mail out of curbside mailboxes by driving up and reaching out of the car window to grab the mail. 

“Stealing mail is not a victimless crime,” said U.S. Attorney Jason R. Dunn.  “Our country depends upon the integrity of our postal service, and when a crime such as this occurs, the recipient of the check or credit card as well as the financial institution issuing them suffers.” 

“The U.S. Postal Inspection Service would like to thank the diligent witness in this case who reported suspicious activity involving the U.S. Mail,” said Lesley Allison, Acting Inspector-in-Charge of the Denver Division.  “Along with the quick response from the Englewood Police Department, the actions of the witness allowed Postal Inspectors to quickly identify these defendants, who were responsible for stealing mail from numerous victims,” Allison said.  “As we enter into the busy holiday mailing season, today’s sentence marks a great example of what can happen when the public and law enforcement work together with Postal Inspectors to stop mail theft in our communities,” said Allison. 

This case was investigated by the U.S. Postal Inspection Service, with substantial assistance by the Englewood Police Department.

The defendants were prosecuted by Assistant U.S. Attorney Jason St. Julien.

DENVER -- Alan Alonzo Williams, age 56, of Aurora, Colorado was sentenced last week by U.S. District Court Judge Robert Blackburn to serve 84 months in federal prison followed by 5 years on supervised release for bank fraud, announced U.S. Attorney Jason Dunn, IRS Criminal Investigation Acting Special Agent in Charge Kevin Caramucci, and FBI Denver Special Agent in Charge Dean Phillips.

Williams, who was sentenced on June 19, 2019 had pled guilty on January 12, 2017, but his sentencing hearing was delayed several times at his request.  He was also ordered to pay restitution in the amount of $1,146,828.28 to the lenders he pled guilty to defrauding.

According to the indictment and plea agreement, Williams wanted to obtain funds for himself and for Williams Vending Company, Inc. (WVC), a company established by Williams and his parents that sold, leased, repaired and operated vending machines.  Williams was unable to qualify for bank loans due to his prior felony convictions and status as a parolee.  He engaged the involvement of a third party, Ms. X, who had no true ownership interest in WVC to represent that she was its president in order to obtain loans on behalf of WVC.  In actuality, Williams controlled the finances and operations of WVC.  Williams knew that Ms. X had a serious drug problem, and exploited her habit by causing her to sign various documents and then providing her with money, which she would use to buy drugs to get high.

In 2007, Williams had Ms. X sign a contract to purchase a home in Denver, and he later arranged for her to obtain a $800,000 loan to purchase the property.  Williams caused false information about Ms. X’s financial status, including fraudulent Forms W-2 and earning statements, to be submitted to the lender in order to make it appear that she qualified for the loan. 

Williams subsequently arranged for three bank accounts to be opened in WVC’s name and gave Ms. X sole signature authority over the accounts.  He nonetheless maintained control over the accounts. He later worked through loan brokers in order to obtain Small Business Administration loans for WVC.  Much of the information that Williams submitted in order to obtain the loans was false.  The false information included that Ms. X was the president and sole owner of WVC, that she had many years of management experience, that she currently earned a substantial salary at WVC, and that she had substantial assets and resided in a $1.1 million home.  None of that was true.

Williams also told the brokers that WVC focused on proving vending products to government offices and agencies, as Ms. X qualified as a minority business owner and the company qualified as a minority contractor.  Williams similarly obtained a loan by representing that WVC had a contract to provide vending services for three major apartment complexes, when there was no such contract.  William misrepresented to the lenders how the loan proceeds would be used.  He presented documents purporting to be agreements between various government agencies and WVC to the lenders when, in fact, WVC did not have agreements with those agencies.  Williams did not use all the loan proceeds to pay creditors as required by the terms of the loans.  Williams used a large portion of the proceeds for his own purposes, rather than for the purposes authorized for the SBA guaranteed loan.      

The loans Williams obtained for WVC through these fraudulent means including a loan for $800,000 and additional loans for $360,000.  Williams also attempted to obtain another loan for $550,000, which was declined by the lender.

“Fraud hurts our economy and hurts victims, as was the case here,” said U.S. Attorney Jason Dunn.  “The seven year federal prison sentence is an appropriate outcome for this defendant’s attempt at cheating the system.”

“Williams’ scheme was about driven greed and a blatant disregard for the damage inflicted on the banking system.  Today’s sentence sends a message that bank fraud will ultimately cost the fraudster," said IRS Criminal Investigation Acting Special Agent in Charge Kevin Caramucci.

"The FBI is committed to aggressively pursuing those who commit bank fraud. Falsifying information on a loan application and lying to a lender to facilitate approval for a loan is a felony,” said FBI Denver Special Agent in Charge Dean Phillips. “We hope the recent sentencing of Alan Alonzo Williams will deter others who engage in these types of fraud schemes.”

This case was investigated by Internal Revenue Service – Criminal Investigation and the FBI.  The defendant was prosecuted by Assistant U.S. Attorney Rebecca Weber.

As the chief federal law enforcement official in Colorado, I have watched with keen interest what is happening in Portland, Oregon, regarding the use of federal law enforcement personnel. I have also followed closely the announcement this week by President Donald Trump and Attorney General William Barr that they will be sending law enforcement personnel into cities where violent crime has been skyrocketing.

Unfortunately, there has been a conflation of what is happening in Portland — protecting federal property — with the traditional crime-fighting initiatives the Department of Justice has engaged in for decades. The result has been widespread confusion about both. As Coloradans, we would be well-served to take a collective deep breath, tone down the rhetoric, and try to better understand both what has actually happened in Portland and what is actually being proposed elsewhere.

But first, let’s be clear about Colorado. As Colorado’s U.S. attorney, my job is to protect Coloradans by enforcing federal criminal law. I have spoken with our federal agency partners here, and we are all committed to ensuring that federal law enforcement activity in Colorado is conducted in a lawful manner, as it always has been. And while I am hopeful that the need for greater federal resources never arises, Colorado has my pledge that if such a need does arise, it will be done only in cooperation with the relevant state and local law enforcement agencies. As I often say, we have the gold standard of federal-state-local partnership here in Colorado. I intend to keep it that way.

Now, let’s talk about Portland. Over the past few weeks, lawful protests there have devolved into violent attacks on federal employees and the destruction of federal property. I have spoken with my counterpart there and he reports the widespread use of rocks, lasers, slingshots loaded with ball-bearings, explosives, and other methods to assault federal employees. There are also nightly attempts by rioters to storm federal buildings and destroy them. Unfortunately, the size and scale of the violence has so overwhelmed the men and women ordinarily tasked with protecting those employees and buildings that they have asked for help from Washington. In keeping with standard practice, personnel from other agencies came to assist.

In the last few days, there have been various allegations about the conduct of these agents, including charges that anonymous law enforcement officers are wandering the city, whisking away innocent citizens in unmarked vehicles to secret government locations for interrogation. Others allege instances of excessive use of force by officers staged around federal buildings.

While it is apparently true that those federal agents, like virtually all state and local police agencies, have used unmarked vehicles, the other claims are contradicted by the actual evidence on the ground. According to the head of the Customs and Border Patrol, all of their agents wear multiple insignia designating them as police or identifying their agency, and these agents have strict protocols limiting arrests to those engaging in direct violence against federal employees or federal property in and around the federal courthouse.

In fact, dozens of such arrests have been made. There is also no credible indication that federal agents have been more broadly wandering the streets of Portland looking for agitators or taking people anywhere other than back to the courthouse where all federal detainees are taken. And in the very small number of cases where agents have been accused of acting outside their authority, those incidents are being reviewed by the Inspector General for the respective agencies. Time and due process will tell if any laws or procedures were broken. If so, those responsible will be held accountable.

Those are the facts about Portland.

Next, there has been much discussion about the president’s and the attorney general’s announcement this week of Project LeGend, under which federal law enforcement resources and dollars will be targeted and deployed to those cities where violent crime (murders, armed robberies, bank robberies, etc.) has exploded in recent months. In Chicago, where 373 people have been murdered so far this year, the administration has pledged hundreds of agents from the FBI, ATF, DEA, and other agencies, as well as $9.3 million for the hiring of 75 local sheriff’s deputies. While the Chicago mayor originally opposed federal intervention, she now welcomes it after gaining a better understanding of the proposal.

In short, Project LeGend will help address the recent spike in violent crime occurring in many communities across our nation. That is very different than what is being done in Portland to protect federal employees and property. If done properly, both serve a valid purpose.

Nonetheless, many state and local officials in Colorado and elsewhere have incorrectly described the recent proposal as an effort to send in “paramilitary forces” (or even the military) to quash lawful demonstrations. Perhaps unintentionally, the media itself has exacerbated this misunderstanding: The New York Times, Wall Street Journal, and The Denver Post all ran headlines this week about the president’s proposal under a photograph of camouflaged and masked law enforcement personnel engaging demonstrators in Portland. Viewed together, this perpetuates the misperception about what is being proposed and heightens public anxiety.

Ultimately, bringing in law enforcement to areas that need support is a good thing, whether it be to defend public property or to help address the jump in violent crime across our nation. And as the U.S. attorney, you have my assurance that federal law enforcement in Colorado will continue to operate in accordance with the law, and will strive to work cooperatively with state and local authorities to make Colorado a safer and better place.

Jason Dunn currently serves as the United States attorney for the District of Colorado. He oversees the prosecution of all federal crimes and the litigation of all civil matters involving the United States government in Colorado.

 

DENVER – United States Attorney Jason R. Dunn, along with federal, state, and local partners, today announced that 30 defendants were indicted in two federal grand jury indictments for trafficking drugs, including methamphetamine, cocaine, heroin, and fentanyl.  Of the 30 defendants indicted, 24 have been arrested and one is in state custody on a separate charge.  Four others are in Mexico and one is at large in the United States.  The FBI, Homeland Security Investigations, Immigrations and Customs Enforcement, Internal Revenue Service—Criminal Investigation, the Drug Enforcement Administration, the Douglas County Sheriff and the Aurora Police Department all joined in the announcement.

According to the indictments and other court documents, following an investigation that began in late 2018, agents seized approximately 400 pounds of methamphetamine, 5 pounds of heroin, 4 pounds of cocaine, and 15,000 fentanyl pills, which were disguised to look like prescription oxycodone.  

The arrests included more than two dozen suspected members of a Mexican drug trafficking organization based in Denver, including one, Candelaria Vallejo-Gallo, who is being charged with operating a Continuing Criminal Enterprise (CCE), otherwise known as being charged as a Drug Kingpin.  To be considered a Drug Kingpin, the individual has to violate the Controlled Substances Act as part of a series of related or ongoing violations.  Additionally, the defendant must be an organizer, supervisor, or manager of at least five other persons connected in the same activity, and obtain substantial income or resources from the series of violations.  If convicted of being a Drug Kingpin, Vallejo-Gallo faces not less than 20 years, and up to life in federal prison.  Vallejo-Gallo is a Mexican national.  

In addition to the drug trafficking charges, at least one defendant is charged with carrying a firearm in furtherance of the drug conspiracy. 

“This is a very significant operation that took a massive amount of drugs and a large number of drug traffickers off our streets,” said United States Attorney Jason R. Dunn.  “I want to commend the work of the FBI for their outstanding investigation, as well as for their tactical operation last week in apprehending this large number of defendants without incident.  I also want to thank the other law enforcement agencies that participated in this operation and the arrests.  Colorado’s law enforcement community is second to none in terms of our ability to work collaboratively to ensure that criminals are apprehended and that the best interests of the public are always our controlling objective.”

“The combined efforts of the FBI, Drug Enforcement Administration, Homeland Security Investigations, Immigration and Customs Enforcement, Internal Revenue Service, Douglas County Sheriff’s Office, Colorado State Patrol, Aurora PD, and a multitude of other law enforcement agencies resulted in the FBI OCDETF Strike Force Group taking a significant drug trafficking organization off the streets of Denver and Aurora,” said FBI Denver Special Agent in Charge Dean Phillips. “Thanks to these partnerships, our community and children are safer.”

"This indictment reflects the hard work of our special agents and law enforcement partners who worked diligently over the last year to investigate the Vallejo Drug Trafficking Organization and bring them to justice,” said Assistant Special Agent in Charge, Homeland Security Investigations, Denver, Stephanie Lord Eisert.  “Homeland Security Investigations remains committed to targeting the flow of money which fuels transnational organized crime, and we will continue to aggressively pursue those that enable the flow of deadly narcotics into our communities."

“IRS-CI has and will continue to investigate drug traffickers by pursuing sophisticated, high profile, income tax, currency-related, and money laundering charges against these criminals,” said Acting Special Agent in Charge, Amanda Prestegard. 

This investigation was handled by the FBI, the DEA, Homeland Security Investigations (HSI), Internal Revenue Service—Criminal Investigation, U.S. Immigration and Customs Enforcement, the Douglas County Sheriff, the Colorado State Patrol, and the Aurora Police Department.

The defendants are being prosecuted by Assistant U.S. Attorneys Cyrus Chung and Zachary Phillips.

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

 

CASE NUMBERS:  20-cr-0028 and 20-cr-0025

 

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DENVER – Kirsten Lippold, age 48, of Boulder, Colorado, was sentenced today to serve 10 years in federal prison for distributing heroin resulting in death, U.S. Attorney Bob Troyer and FBI Denver Division Special Agent in Charge Calvin Shivers announced.  The sentence was handed down by U.S. District Court Judge Raymond P. Moore.  Following the prison sentence, Judge Moore ordered the defendant to serve 5 years on supervised release.  The defendant, who appeared at the sentencing hearing in custody, was remanded at the hearing’s conclusion.

Lippold was indicted by a federal grand jury in Denver on July 13, 2017.  She pled guilty on May 9, 2018 to distribution of heroin resulting in death. 

According to court documents, Kirsten Lippold distributed heroin, a Schedule I controlled substance, the use of which resulted in an overdose death on or about August 17, 2015.   Within the factual basis of her plea agreement, Lippold admitted to selling less than a gram of heroin to the decedent.  Nonetheless, that heroin resulted in a fatal overdose, which occurred in Boulder, Colorado.  Sentencing proceedings further revealed that the defendant also had prior felony drug convictions.  No information about the victim is available for release. 

“If you are selling even small amounts of heroin in Colorado, know this:  any one of your sales could kill someone.  If you don’t care about that, maybe you’ll care about this:  you will face mandatory minimum sentences in federal prison, out of state, no parole,” said U.S. Attorney Bob Troyer. 

“Ms. Lippold’s sentence represents the FBI’s dedication to pursuing those intent on harming the citizens of our communities, through direct action and general criminal activity,” said FBI Denver Division Special Agent in Charge Calvin Shivers. “The FBI will continue to work through our strong law enforcement partnerships to protect our community from those engaged in crimes of this nature."

The investigation was conducted by the Boulder County Drug Task Force, the City of Boulder Police Department and the Fort Collins Resident Agency of the Federal Bureau of Investigation. The prosecution was handled by Bradley W. Giles, Assistant U.S. Attorney, District of Colorado, Denver.

      LITTLE ROCK— Seven defendants were sentenced to federal prison for their involvement in a scheme to defraud the U.S. Department of Agriculture out of more than $11.5 million that was intended to benefit farmers who had been discriminated against. Chief United States District Judge D.P. Marshall, Jr. sentenced the defendants earlier today.

      Four of the defendants, all of whom are sisters, were each sentenced to serve 24 months in federal prison. Lynda Charles, 73, of Hot Springs; Rosie Bryant, 75, of Colleyville, Texas; Delois Bryant, 76, of North Little Rock; and Brenda Sherpell, 73, of Allport; each pleaded guilty on July 6, 2022, to conspiracy to commit mail fraud and to defraud the Internal Revenue Service.

      Niki Charles, 50, of Puerto Rico, was sentenced to serve 16 months in federal prison for her involvement in the fraud scheme. Charles admitted during her guilty plea that she and others solicited people to file false claims, asserting they were discriminated against when they tried to get assistance from USDA for their farming operations. Charles said she verified statements from corroborating witnesses who submitted affidavits to support the claims, but none of those witnesses actually appeared before Charles. Those actions resulted in $4.5 million in loss.

      Everett Martindale, 76, of Little Rock, was sentenced to a year and a day in federal prison.  Martindale worked as an attorney and acted as the legal representative for most of the claimants that the five women recruited.  Jerry Green, 42, of Grand Prairie, Texas, a tax preparer hired by the sisters to falsify tax returns, was also sentenced to a serve a year and a day.

      As documented in plea agreements, the defendants submitted claims under two programs: the Black Farmers Discrimination Litigation (BFDL) settlement and the Hispanic and Women Farmers and Ranchers (HWFR) claim program. The BFDL settlement resulted from a class action lawsuit filed in 1997 in which a group of black farmers claimed they had been discriminated against when they applied for farm credit, credit servicing, or farm benefits from USDA. Similarly, the HWFR claim program was created after groups of Hispanic and women farmers filed separate lawsuits against USDA, also alleging discrimination in their farm benefit programs.

      Both BFDL and HWFR resulted in a claims process where farmers who could show they had applied for participation in a USDA benefit program and believed they had been discriminated against could make a claim for financial relief. A successful claim resulted in an award of $62,500. Of that, $50,000 would be made payable to the claimant, and $12,500 would be transferred directly to the Internal Revenue Service as a tax withholding. Altogether, the sisters were involved with 192 claims, almost all of which were successful, resulting in a loss of over $11.5 million. The claims were false because the claimants had not suffered discrimination and, in most cases, had not even attempted to farm.

      The indictment alleged that Martindale would deposit claim checks into his law firm trust account, issue a check from that trust account to the claimant, and withhold his attorney fee. For both BFDL and HWFR, attorney fees were restricted to $1,500 per claimant. The indictment alleged that the four sisters entered an agreement with Martindale in which they would split the attorney fee. The sisters also demanded and received additional money from the claimants themselves.

      The money received from a claim was income that should have been reported on the claimant’s tax return. The sisters and their accountant, Green, admitted that Green provided tax preparation services for the claimants they recruited and that Green falsified the tax returns in order to create a tax refund.

      Three of the sisters—Lynda Charles, Rosie Bryant, and Delois Bryant—filed false tax returns of their own and used money from the conspiracy to purchase homes and properties, a Chevrolet van, and a Mercedes G550. The United States is pursuing recovery of those assets, and any additional fraud proceeds used to purchase assets, in the criminal case, as well as in a separate civil forfeiture proceeding.

      “These sisters defrauded two programs meant to help those that were discriminated against and instead lined their pockets,” said Christopher J. Altemus Jr., Special Agent in Charge IRS Criminal Investigation, Dallas Field Office.  “We want every American to take advantage of the programs, deductions, and credits to which they are entitled to by law; however, no one is entitled to defraud the government. Protecting taxpayer money is a matter IRS-CI takes extremely seriously and today’s sentences reinforce our commitment to the public that we will investigate and prosecute those who steal from American taxpayers.”

      “Discrimination is real. The 192 settlement claims submitted by these defendants, requesting millions of dollars, were not,” said United States Attorney Jonathan D. Ross. “Today’s sentences send the message that the United States is committed to prosecuting those who steal from programs designed to provide justice for victims of discrimination, and the Court takes seriously crimes such as these. We will continue to seek prison time for fraudsters who re-victimize those the government sought to make whole.”

      Special Agent-in-Charge Dax Roberson from the United States Department of Agriculture, Office of Inspector General (USDA-OIG), said, “I want to thank the United States Attorney’s office, USDA-OIG Special Agents, and our investigative partners for their hard work on this investigation.  When fraud is committed to deprive proper recipients of USDA funds, OIG will pursue justice to the fullest extent of the law.”

      In addition to their sentences of imprisonment, each defendant was sentenced to two years of supervised release following imprisonment, and the defendants were ordered to pay more than $9,000,000 in restitution.   

      The investigation is being conducted by USDA-OIG and IRS-CI with assistance from the United States Marshals Service and the United States Postal Inspection Service. The case is being prosecuted by Assistant United States Attorneys Cameron McCree, Bart Dickinson, and Amanda Fields.

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DENVER – The U.S. Attorney’s Office for the District of Colorado announces that Ronald Allen Grace Jr., age 54, of Arvada, was sentenced to 3 years in federal prison for possessing an unregistered silencer.

According to the plea agreement, federal law enforcement intercepted two packages containing firearm sound suppressors, commonly known as silencers, which had been shipped from China and bound for the defendant’s address.  Federal agents investigated the defendant and learned that he had previously been convicted of two felony offenses and was therefore prohibited from possessing a firearm or silencer.

Federal agents obtained a search warrant for the defendant’s home, where they recovered 15 firearms and 14 firearm suppressors.  Under federal law, it is illegal to possess silencers which are not properly registered as required by the National Firearms Act.  None of the defendant’s firearm suppressors had been registered as required under the National Firearms Act.  Further investigation revealed that the silencers had been ordered from a Chinese website known to sell silencers and illegally ship them to addresses in the United States.

“Silencers are often used to facilitate crimes, which is why federal law requires that they be registered,” said Acting United States Attorney Matt Kirsch.  “We will continue to protect public safety by seeking stiff penalties for people breaking federal firearms laws.”

“HSI will continue to bring our investigative capabilities to those who illegally obtain weapons and weapons’ silencers,” said Steven Cagen, special agent in charge, HSI Denver. “This sentence holds Grace accountable for his crimes and serves as a warning that HSI along with our law enforcement partners will work diligently to keep weapons out of the hands of convicted felons.”

“Many things are available for home delivery, suppressors are not one of them,” said ATF Special Agent in Charge David Booth.  “ATF is proud to work with our Federal partners to keep communities safe and keep firearms out of the hands of prohibited persons.”

United States District Court Judge Phillip Brimmer sentenced Grace on September 3, 2021.

The investigation was conducted jointly by Homeland Security Investigations and the Bureau of Alcohol, Tobacco, Firearms and Explosives.  The case was prosecuted by the Violent Crimes and Immigration Enforcement Section of the U.S. Attorney’s Office for the District of Colorado.

This case is part of Project Safe Neighborhoods (PSN), a program bringing together all levels of law enforcement and the communities they serve to reduce violent crime and make our neighborhoods safer.  PSN is part of the Department’s renewed focus on targeting violent criminals, directing all U.S. Attorney’s Offices to work in partnership with federal, state, and local law enforcement to develop effective, locally-based strategies to reduce violent crime.  To learn more about Project Safe Neighborhoods, go to www.justice.gov/psn.

CASE NUMBER:  20-cr-00199-PAB

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DENVER – Karen Lynn McClaflin, age 58, of Colorado Springs, Colorado, and owner of “Homesource Partners Inc.” pled guilty today before U.S. District Court Judge Christine M. Arguello to one count of wire fraud and one count of engaging in a monetary transaction in property derived from wire fraud, Acting U.S. Attorney Bob Troyer, FBI Special Agent in Charge Calvin Shivers and IRS Criminal Investigation Special Agent in Charge Steven Osborne announced. McClaflin appeared at the change of hearing free on a personal recognizance bond.

 

The defendant is scheduled to be sentenced by Judge Arguello on January 17, 2018. She was first charged by Information, after waiving her right to be indicted by a federal grand jury, on May 17, 2017. On that date she made her initial appearance, where she was advised of the charges pending against her and read her rights.

 

According to the stipulated facts contained in the plea agreement, in December 2005, McClaflin and a partner opened a franchise of “We Buy Ugly Houses” named Trademark Properties and Trademark Reality (“Trademark”) in Colorado Springs. Trademark’s business was to use investor money to purchase and renovate distressed houses in order to resell those houses at a profit. By 2011, Trademark had accumulated so much debt that McClaflin’s partner declared bankruptcy and their partnership was terminated. Rather than declare bankruptcy herself, McClaflin transitioned to another company with the same “fix and flip” business model as Trademark.

 

In late 2010, McClaflin started Homesource Partners Inc. (“Homesource”), and McClaflin rolled her investors from Trademark into Homesource. From late 2010 through early March 2017, McClaflin owned and operated Homesource in Colorado Springs, Colorado. In seeking investors for Homesource between March 2011 and early 2017, McClaflin told all involved that Homesource was seeking loans from investors to finance Homesource’s “fix and flip” business because Homesource was not able to use traditional bank loans. McClaflin represented that traditional bank loans took too long and some of the distressed homes might not qualify as collateral for such loans.

 

Through marketing materials and verbal statements, McClaflin represented to those involved that Homesource had access to distressed houses that were deeply discounted, which Homesource could purchase for no more than 80% of the “as is” value of the house. McClaflin further represented that Homesource then had exit strategies to profit from the distressed houses, including selling them within 30 days for an immediate profit, “fixing and flipping” the houses for sale within 31-90 days, or fixing the houses and renting them if the houses failed to sell within 90 days.

 

McClaflin represented that Homesource had a team of contractors who would fix and upgrade the properties so Homesource could resell the properties for a profit. McClaflin further represented that each property would be financed by an individual investor whose investment would be secured by a Deed of Trust in first position on that property, which McClaflin would record for the investor. Occasionally, McClaflin told the investor their Deed of Trust would be in second position. McClaflin further represented that investors would receive an interest rate of 6% to 15%. Finally, she represented that the properties would normally be sold in 3 months.

 

However, starting in late March 2011, McClaflin knowingly and intentionally began having multiple investors “invest” in the same property and began placing multiple Deeds of Trust on the same properties, such that the amount of the investments purporting to be secured by the Deeds of Trust exceeded the value of the property. Additionally, starting in late March or April 2011, McClaflin intentionally did not record all of the investors’ Deeds of Trust as promised. Nonetheless, McClaflin continued to falsely represent that investors would receive a first Deed of Trust and that McClaflin would record that Deed of Trust for the investor. McClaflin also sometimes forged the signature of an investor, without the investor’s knowledge or consent, on a release so McClaflin could remove that investor’s Deed of Trust from a property. McClaflin sometimes did not inform investors when “their” property sold and did not return the investor’s principal upon that sale as promised.

 

Additionally, starting in at least the beginning of 2013, Homesource’s debt had grown too high and the interest payments owed to investors far exceeded the gross profits earned by Homesource. By at least January 2013, McClaflin was aware of this problem and intentionally continued seeking additional investments so that she could keep making the interest payments owed to earlier investors.

 

Unbeknownst to the individual investors, the amount of investment funds, which were supposed to be secured by real property, far exceeded the value of the encumbered property and Homesource’s business assets. An analysis of Homesource’s finances shows that the influx of investor funds kept Homesource operating, particularly in its latter years, and without investor funding, Homesource would have failed years ago.

 

This case is being investigated by the Federal Bureau of Investigation and IRS Criminal Investigation. The defendant is being prosecuted by Assistant U.S. Attorney Pegeen Rhyne.

WASHINGTON – Members of the Administrative Division and a Criminal Division Assistant U.S. Attorney (AUSA) for the District of Colorado were among the 162 members of the Department of Justice recognized by Deputy Attorney General Rod Rosenstein, and Executive Office for U.S. Attorneys (EOUSA) Director James Crowell, IV at the 34th Director’s Awards Ceremony today in Washington D.C.  The United States Attorney’s Office for District of Colorado was one of 35 districts represented at the ceremony which was held in the Great Hall at the Robert F. Kennedy Department of Justice Building this morning.

In addressing the award recipients and guests, Deputy Attorney General Rod Rosenstein said, “Today’s honorees earned the esteem of their colleagues.  But most importantly, they earned the gratitude of our fellow citizens — the people whose communities you made safer, whose lives you improved, and whose trust you rewarded. Today, we pause to honor and recognize a small portion of your work.”

The Colorado U.S. Attorney’s Office Administrative Division was recognized for their outstanding teamwork, efficiency, and effectiveness in redesigning and moving a large United States Attorney’s Office (USAO) within Denver, without any operational impact, while obtaining cost savings and large scale efficiencies. The team closed the USAO's former location of more than 16 years on a Thursday evening, and opened a fully functional redesigned office five blocks away on Monday morning. The operational capability of the USAO was at full strength throughout the process, with four trials handled just prior to the move. Approximately 170 Assistant United States Attorneys, staff members and contractors now experience enhanced operational effectiveness in a state-of-the-art USAO directly adjacent to four United States Courthouses.  Design elements now enhance effectiveness, while integrated communications link Denver to offices in Durango and Grand Junction, expanding the office’s critical public safety mission throughout Colorado.  Those recognized include: Steven Brooks, Thomas Dillard, Marilyn Ferguson, David Gaouette, Jeffrey Hernandez, Mark Pittington, Victoria Soltis, and Bonnie Vigil. 

Criminal Division AUSA Andrea Surratt, who is now with the U.S. Attorney’s Office in Colorado, was awarded for work she did in the Southern District of New York just prior to transferring to Colorado.  She was recognized for her work in the creation of an Overdose Death Initiative, which has transformed the way overdose deaths are investigated across New York City.

“We are honored to continue to get Department recognition for the excellence of our employees at all levels,” said U.S. Attorney Bob Troyer.  “Our office has a history of regularly receiving these national honors because all our employees are deeply committed to improving life in Colorado.  Our Admin Division is the engine room that keeps our ship running on that course. Without their exceptional performance, none of our defense of the United States or public safety work happens. There is simply no better Admin Division in the country.”

EOUSA provides oversight, general executive assistance, and direction to the 94 United States Attorneys’ offices around the country. For more information on EOUSA and its mission, visit http://www.justice.gov/usao.

DENVER – United States Attorney Jason R. Dunn announced that Noel Quintana-Carbajal, age 47, who is a Mexican national illegally in the United States, was sentenced to serve 12 months and 1 day in federal prison for illegal reentry of a previously deported alien following a felony conviction.  Quintana-Carbajal will be deported at the conclusion of his prison sentence.  He was found in Kit Carson County Jail by immigration officers.  U.S. Immigration and Customs  Enforcement (ICE) and Removal Operations (ERO) joined in the announcement.

According to the stipulated facts contained in Quintana-Carbajal’s plea agreement, he is a native and citizen of Mexico without a claim to lawful immigration to the United States.  He has been removed from the United States eight times, with his most recent removal taking place on May 12, 2015.  The defendant did not seek or obtain permission to return lawfully to the United States.  Nonetheless, he returned.  Immigration officials encountered Quintana-Carbajal on January 27, 2020, while he was in custody at the Kit Carson County Jail in Burlington, Colorado.  He was detained there on state charges.

Quintana-Carbajal was previously convicted in U.S. District Court in New Mexico for the offense of Illegal Reentry.  He was sentenced to a term of 120 days in a U.S. Bureau of Prisons facility. 

“There is a lawful process to enter the United States, said U.S. Attorney Jason Dunn.  ”Quintana-Carbajal failed to follow that process not once, not even twice, but a total of eight times.  His prison sentence and subsequent deportation should send a message that there are consequences for this illegal behavior.”

“As this case demonstrates, we will not allow criminal aliens who pose a threat to public safety to treat our border like a revolving door,” said John Fabbricatore, field office director, ERO Denver.  “ICE is committed to using its immigration enforcement authority to ensure that our communities are protected from felons like Quintana-Carbajal who show no regard for our laws or our borders.  ICE is pleased to be working closely with the U.S. Attorney to hold criminals like Quintana-Carbajal accountable.” 

The sentence was pronounced by U.S. District Court Judge William J. Martinez on July 22, 2020.  Quintana-Carbajal was charged by indictment on February 20, 2020, and pleaded guilty on May 13, 2020.  This case was investigated by U.S. Immigration and Customs (ICE) Enforcement and Removal Operations (ERO).  The defendant was prosecuted by Special Assistant U.S. Attorney Dorothy DiPascali.

A copy of this press release is located on the website of the U.S. Attorney’s Office for the District of Colorado.  Related court documents can be found on PACER by searching for Case Number 20-cr-0062.

The year 2020 marks the 150th anniversary of the Department of Justice.  Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.

DENVER – United States Attorney Jason R. Dunn today announces that the state received nearly $1 million from the Department of Justice’s Office of Justice Programs and its component, the Office for Victims of Crime, to provide safe, stable housing and appropriate services to victims of human trafficking.

“These resources are such an important extension of the work that our office and the Department of Justice are doing to fight human trafficking,” said U.S. Attorney Dunn. “We work tirelessly to find and prosecute human traffickers, but supporting survivors as they look to rebuild their lives with counseling, new housing, and new employment is equally as important.”

“Human trafficking is a barbaric criminal enterprise that subjects its victims to unspeakable cruelty and deprives them of the most basic of human needs, none more essential than a safe place to live,” said Attorney General William P. Barr. “Throughout this Administration, the Department of Justice has fought aggressively to bring human traffickers to justice and to deliver critical aid to trafficking survivors. These new resources, announced today, expand on our efforts to offer those who have suffered the shelter and support they need to begin a new and better life.”

The grant went to two organizations – Street’s Hope for $492,750 and Break Free Inc. for $499,993.  They will provide six to 24 months of transitional or short-term housing assistance for trafficking victims, including rental, utilities or related expenses, such as security deposits and relocation costs. The grant will also provide funding for support needed to help victims locate permanent housing, secure employment, as well as occupational training and counseling. Street’s Hope and Break Free Inc. are among 73 organizations receiving more than $35 million in OVC grants to support housing services for human trafficking survivors.

“Human traffickers dangle the threat of homelessness over those they have entrapped, playing a ruthless game of psychological manipulation that victims are never in a position to win,” said OJP Principal Deputy Assistant Attorney General Katharine T. Sullivan. “These grants will empower survivors on their path to independence and a life of self-sufficiency and hope.”

Human trafficking offenses are among the most difficult crimes to identify, and the scope of human trafficking victimization may be much greater than the limited data reflect. A new report issued by the National Institute of Justice, another component of the Office of Justice Programs, found that the number of human trafficking cases captured in police reports may represent only a fraction of all such cases. Expanding housing and other services to trafficking victims remains a top Justice Department priority.

The Office for Victims of Crime, for example, hosted listening sessions and roundtable discussions with stakeholders in the field in 2018 and launched the Human Trafficking Capacity Building Center. From July 2018 through June 2019, 118 OVC human trafficking grantees reported serving 8,375 total clients including confirmed trafficking victims and individuals showing strong indicators of trafficking victimization.

For a complete list of individual award amounts and jurisdictions that will receive funding, visit: https://www.ojp.gov/sites/g/files/xyckuh241/files/media/document/htvictimsfactheet.pdf

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The Office of Justice Programs, directed by Principal Deputy Assistant Attorney General Katharine T. Sullivan, provides federal leadership, grants, training, technical assistance and other resources to improve the nation’s capacity to prevent and reduce crime, assist victims and enhance the rule of law by strengthening the criminal and juvenile justice systems. More information about OJP and its components can be found at www.ojp.gov.

The year 2020 marks the 150th anniversary of the Department of Justice. Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.

DENVER – Karen Lynn McClaflin, age 59, of Colorado Springs, Colorado, and owner of “Homesource Partners Inc.” was sentenced today by U.S. District Court Judge Christine M. Arguello to serve 96 months in prison, followed by 3 years of supervised release, restitution in the amount of $14,528,206.39, and a $200 mandatory special assessment, U.S. Attorney Bob Troyer, FBI Special Agent in Charge Calvin Shivers and IRS Criminal Investigation Special Agent in Charge Steven Osborne announced.  On June 21, 2017, Ms. McClaflin pled guilty to one count of wire fraud and one count of engaging in a monetary transaction in property derived from wire fraud.

According to the stipulated facts contained in the plea agreement, in December 2005, McClaflin and a partner started Trademark Properties and Trademark Reality (“Trademark”) in Colorado Springs.  Trademark’s business was to use investor money to purchase and renovate distressed houses in order to resell those houses at a profit.  By 2011, Trademark had accumulated so much debt that McClaflin’s partner declared bankruptcy, and their partnership was terminated.  Rather than declare bankruptcy herself, McClaflin transitioned to another company with the same “fix and flip” business model as Trademark.

In late 2010, McClaflin started Homesource Partners Inc. (“Homesource”), and McClaflin rolled many of her investors from Trademark into Homesource.  From late 2010 through early March 2017, McClaflin owned and operated Homesource in Colorado Springs, Colorado.  In seeking investors for Homesource between March 2011 and early 2017, McClaflin told investors that Homesource was seeking loans from investors to finance Homesource’s “fix and flip” business because Homesource was not able to use traditional bank loans.  McClaflin represented that traditional bank loans took too long and some of the distressed homes might not qualify as collateral for such loans. 

Through marketing materials and verbal statements, McClaflin told investors that Homesource had access to distressed houses that were deeply discounted, which Homesource could purchase for no more than 80% of the “as is” value of the house.  McClaflin further represented that Homesource then had exit strategies to profit from the distressed houses, including selling them within 30 days for an immediate profit, “fixing and flipping” the houses for sale within 31-90 days, or fixing the houses and renting them if the houses failed to sell within 90 days. 

McClaflin represented that Homesource had a team of contractors who would fix and upgrade the properties so Homesource could resell the properties for a profit.  McClaflin further represented that each property would be financed by an individual investor whose investment would be secured by a Deed of Trust in first position on that property, which McClaflin would record for the investor.  Occasionally, McClaflin told the investor their Deed of Trust would be in second position.  McClaflin further represented that investors would receive an interest rate of 6% to 15%.  

However, starting in late March 2011, McClaflin knowingly and intentionally began having multiple investors “invest” in the same property and began placing multiple Deeds of Trust on the same properties, such that the amount of the investments purporting to be secured by the Deeds of Trust exceeded the value of the property.  Additionally, starting in late March or April 2011, McClaflin intentionally did not record all of the investors’ Deeds of Trust as promised.  Nonetheless, McClaflin continued to falsely represent that investors would receive a first Deed of Trust and that McClaflin would record that Deed of Trust for the investor.  McClaflin also sometimes forged the signature of an investor, without the investor’s knowledge or consent, on a release so McClaflin could remove that investor’s Deed of Trust from a property.  McClaflin sometimes did not inform investors when “their” property sold and did not return the investor’s principal upon that sale as promised. 

Additionally, starting in at least the beginning of 2013, Homesource’s debt had grown too high and the interest payments owed to investors far exceeded the gross profits earned by Homesource.  By at least January 2013, McClaflin was aware of this problem and intentionally continued seeking additional investments so that she could keep making the interest payments owed to earlier investors.   

Unbeknownst to the individual investors, the amount of investment funds, which were supposed to be secured by real property, far exceeded the value of the encumbered property and Homesource’s business assets.  An analysis of Homesource’s finances shows that the influx of investor funds kept Homesource operating, particularly in its latter years.  Without the additional investor funding, Homesource would have failed years earlier.    

“For a lot of years, the defendant lied a lot of people out of millions of dollars,” said U.S. Attorney Bob Troyer.  “I am proud of the dogged and sophisticated work our prosecution team – including the FBI and IRS CI -- did to put a stop to it.”

"Karen McClaflin took advantage of innocent investors by knowingly and wittingly creating a deceptive home investment scheme for personal gain," said FBI Denver Special Agent in Charge Calvin Shivers.  "Investigations of those who commit fraud schemes to mislead innocent investors is a felony and those who do will face the consequences of their actions."

“Financial fraud schemes are often described as a house of cards,” says IRS Criminal Investigation, Denver Field Office, Special Agent In Charge Steven Osborne.  “The underlying structure can fall apart at any time and expose the individuals responsible.  IRS Criminal Investigation is proud to bring our forensic accounting skills to this joint venture and help put a stop to this and other types of white collar crime."

This case was investigated by the Federal Bureau of Investigation and IRS Criminal Investigation.  The defendant is being prosecuted by Assistant U.S. Attorney Pegeen Rhyne with Assistant U.S. Attorney Laura Hurd handling the asset forfeiture.

CASE NUMBER:      17-CR-00168

DENVER – The U.S. Attorney’s Office for the District of Colorado announces that Jared Newman, age 44, of Montrose, Colorado, was sentenced to 55 months in federal prison for wire fraud.

According to the plea agreement, the defendant was the ringleader of a bogus billing fraud scheme while employed as a subcontractor working in the warehouse at the Western Area Power Administration (“WAPA”) in Montrose, Colorado. WAPA is a government agency within the U.S. Department of Energy that is responsible for supplying and marketing electricity generated from federal dams to public entities within the U.S. As part of Newman’s scheme, he enlisted the assistance of friends and family members to create various shell companies which were in turn used to submit fraudulent invoices to WAPA for goods which were never provided to the government. After receiving funds for the nonexistent goods, Newman and his associates split the stolen funds. Newman received his funds by way of “kickbacks” which totaled $652,292. Newman used most of the funds to support his lavish lifestyle, which included making personal expenditures on such things as a private airplane and a vacation home located on Lake Havasu in Arizona. As part of his sentence, Newman will be responsible for paying WAPA’s total loss of $879,392 back to the government as restitution.

“This was a complex fraud, carried out over a long period of time, and it resulted in a substantial loss to the government,” said U.S. Attorney Cole Finegan. “We will go after anyone who cheats the government for their own personal gain.”

“Those who steal from the government steal from all of us, and we will continue to make sure they are found out and held accountable,” said Department of Energy Inspector General Teri L. Donaldson. “I’d like to thank our partners at DOJ and GSA for their hard work on this case, and also WAPA who brought this matter to our attention.”

"Procurement fraud schemes such as this one harm the taxpayer and are a violation of the public's trust," said Special Agent in Charge Jamie Willemin of the GSA Office of Inspector General, Southwest and Rocky Mountain Division. "GSA OIG special agents are committed to working with their partners to find and hold accountable those who violate that trust."

United States District Court Judge Regina Rodriguez sentenced the defendant Jared Newman on June 8, 2022.

The U.S. Department of Energy, Office of Inspector General and the U.S. General Services Administration, Office of Inspector General jointly conducted the investigation. Assistant United States Attorney Tim Neff handled the prosecution of the case.

Case number: 21-cr-00300-RMR

DENVER – Christopher George White, age 38, of McCormick, South Carolina, was sentenced last week by U.S. District Court Judge R. Brooke Jackson to serve 30 years in federal prison, followed by a lifetime term of supervised release, for his conviction on six counts of coercion and enticement of a minor, Acting U.S. Attorney Bob Troyer and Acting U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI) Special Agent in Charge John Eisert announced. White, who was remanded to the custody of the Bureau of Prisons following the hearing, used social media, text, and telephone calls to meet, entice, and then threaten minors into taking off clothing or committing sex acts for his own personal pleasure.

 

According to the stipulated facts contained in the plea agreement, between June 30, 2014 and August 4, 2014 White, targeted child victims ranging from 13 to 14 years of age by using Facebook profiles “Kent Noelle” and “Glenn Black.” White claimed to be a teenage boy while he was truly a 35-year-old man and previously convicted sex offender. He used those profiles to correspond with minor girls, including the six minor girls from Colorado. After first befriending them online, and then texting and even talking with the minors by phone, the defendant then began to use harassment, threats of physical harm, and threats to post sexually-explicit photographs of the children or their friends on social media, all in an effort to coerce the teenagers to produce and send him child pornography of themselves.

 

After pleading guilty to the six counts in this case, but before his sentence was announced, White continued to contact other minor girls from prison to harass them or engage in graphic phone sex with them. When White’s phone privileges were curtailed, he used another inmate’s access to continue contacting teenage girls from prison.

 

“HSI’s and our prosecutors’ forensic skill at catching these predators is second to none,” said Acting U.S. Attorney Bob Troyer. “But the absolute best way to protect your kids from being preyed upon like this is to keep an eye on their behavior and phone and computer use.”

 

“This child exploitation case is an example of HSI’s commitment, in partnership with the Department of Justice, to track, investigate and prosecute child predators to the fullest extent of the law,” said John Eisert, acting special agent in charge of HSI Denver. “HSI has an active and ongoing Operation Predator program to identify criminals who prey on children. Operation Predator helps make our communities safer by bringing criminals to justice for their despicable exploitation of our children.”

 

This case was investigated by HSI and the Larimer County Sheriff’s Office, as well as the Oconee County Sheriff’s Office in South Carolina.

 

White is being prosecuted by Assistant U.S. Attorneys David Tonini and Gregory Holloway.

 

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 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. For more information about Project Safe Childhood, please visit www.justice.gov/psc.