Leonard C Boyle, Acting United States Attorney for the District of Connecticut, and David Sundberg, Special Agent in Charge of the New Haven Division of the Federal Bureau of Investigation, today announced that a federal grand jury in New Haven returned an indictment yesterday charging Connecticut State Senator DENNIS A. BRADLEY, JR., and his former campaign Treasurer, JESSICA MARTINEZ, with multiple offenses related to defrauding Connecticut’s program for publicly funding political campaigns during Bradley’s 2018 run for State Senate.

Bradley and Martinez appeared today before U.S. Magistrate Judge Robert M. Spector in New Haven, entered pleas of not guilty to the charges, and were released on bonds in the amount of $300,000 and $250,000, respectively.

As alleged in the indictment, Bradley, 38, of Bridgeport, has been a member of the Connecticut State Senate since 2018, representing the 23rd State Senate District.  Martinez, 39, of Bridgeport, was the Treasurer for Bradley’s 2018 State Senate campaign.  In Bradley’s 2018 campaign for State Senate, Bradley, Martinez, and others conspired to defraud the Connecticut State Election Enforcement Commission (“SEEC”), the Citizens’ Election Fund, and the State of Connecticut by making misrepresentations concerning Bradley’s compliance with state election law and the requirements and restrictions of the Citizens’ Election Program (“CEP”), a voluntary public election-financing program under which candidates can apply to SEEC for grants to fund their primary and general election campaigns.

“Candidates for public office must be held to a high standard of conduct, especially when they apply for public funds for their campaigns,” said Acting U.S. Attorney Boyle.  “It is alleged that these defendants not only broke the rules at the outset of Mr. Bradley’s first campaign for the State Senate, but then engaged in an extensive cover up to conceal their illegal behavior and to receive additional public funds.  The U.S. Attorney’s Office and our FBI partners are committed to holding public officials to account.”

“The Federal Bureau of Investigation is committed to protecting the citizens of Connecticut against all forms of illegal fraud and deception,” said FBI Special Agent in Charge Sundberg.  “Maintaining the integrity of our state and federal election processes is crucial to ensuring the will of the voting public is carried out based on truth and fairness.”

The indictment alleges that Bradley, Martinez, and their co-conspirators violated CEP rules by holding a March 15, 2018, campaign event at Dolphin’s Cove restaurant in Bridgeport, then engaged in a scheme to trick SEEC into awarding his campaign undeserved CEP grants by making misrepresentations and omissions to disguise the nature of that event.

It is alleged that, although CEP rules imposed a $2,000 limit on Bradley’s expenditure of personal funds, Bradley used personal funds to pay Dolphin’s Cove $5,597.31 for the campaign event, and used personal funds for other campaign expenditures related to the event, including printed invitations and a band.

It is further alleged that, in an attempt to hide the March 15 campaign event from SEEC, Bradley, Martinez and their co-conspirators claimed it was a “Thank You Party” for friends and clients of Bradley’s law firm, Bradley, Denkovich & Karayiannis, P.C., also known as BDK Law Group.

It is alleged that, although at least eight donors gave to Bradley’s campaign at the Dolphin’s Cove event, Bradley’s and Martinez’s co-conspirators altered and falsified the contribution cards so that none were dated March 15, 2018.

It is further alleged that, although CEP rules required complete and truthful disclosures of Bradley’s campaign contributions and expenditures, in April, May and June 2018, Bradley’s campaign filed Itemized Campaign Finance Disclosure Statements with SEEC that omitted that Bradley had held a campaign event on March 15, 2018 at Dolphin’s Cove restaurant, omitted that Bradley had incurred approximately $6,307 in expenses for the event, omitted that Bradley had accepted multiple campaign contributions at the event, and misrepresented the dates of those March 15, 2018 contributions.

It is further alleged that on May 24, 2018, Bradley and Martinez applied for a CEP grant to fund Bradley’s Democratic primary campaign.  On July 10, 2018, relying on the false and misleading information contained in Bradley’s filings, SEEC issued the campaign $84,140 in public funds.  On August 14, 2018, Bradley won the Democratic primary with approximately 55 percent of the vote.

It is further alleged that, after issuing a CEP primary grant to Bradley, SEEC began investigating a citizen complaint regarding Bradley’s campaign, including the campaign event at Dolphin’s Cove.  On August 21, 2018, Bradley emailed a letter to SEEC in which he denied all the allegations in the citizen complaint as “frivolous and manipulative.”  In that letter, Bradley falsely stated, “On March 15, 2018, BDK hosted a Client Appreciation event at Dolphin’s Cove restaurant[.] … This was in no shape or form a political event. … In fact, we did not collect any donations at this event and have no donations dated 03/15/2018.”

It is further alleged that on October 12, 2018, after Bradley and Martinez attempted to obtain an additional $95,710 CEP grant to fund Bradley’s general election campaign, Martinez made similar false statements under oath to SEEC.  SEEC eventually denied Bradley a general election grant.  On November 6, 2018, Bradley won the general election with approximately 87 percent of the vote. 

It is further alleged that Martinez made similar false statements to investigating FBI special agents in March 2020, and under oath before the grand jury in September 2020.

Bradley is charged with one count of conspiracy to commit wire fraud and five counts of wire fraud, and Martinez is charged with one count of conspiracy to commit wire fraud, five counts of wire fraud, one count of making a false statement to the FBI, and one count of making a false declaration before the grand jury.  The conspiracy and fraud offenses carry a maximum term of imprisonment of 20 years on each count, and the false statement and declaration offenses carry a maximum term of imprisonment of five years on each count.

Acting U.S. Attorney Boyle stressed that an indictment is not evidence of guilt.  Charges are only allegations, and each defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt.

This case is being investigated by the Federal Bureau of Investigation and prosecuted by Assistant U.S. Attorneys Jonathan N. Francis and David E. Novick.

Leonard C Boyle, Acting United States Attorney for the District of Connecticut, today announced that ISAIAH HALLIDAY, 21, of Hartford, was sentenced yesterday by U.S. District Judge Jeffrey A. Meyer in New Haven to 108 months of imprisonment, followed by three years of supervised release, for committing violent robberies that victimized several individuals who sought to purchase items over mobile classifieds web apps.

According to court documents and statements made in court, between September and November 2017, Halliday and others committed several robberies in Hartford during they lured would-be customers with real or nonexistent items posted to mobile classifieds web apps, such as Offer Up, Letgo and Craigslist, through the use of a fake account.  Upon arrival, the customers were robbed of money and cell phones.  On each occasion, Halliday threatened the victims with a handgun or what appeared to be a handgun.

On November 11, 2017, Hartford Police officers responded to a location on Blue Hills Avenue in response to a report of a male suffering from a gunshot wound.  Upon arrival, the victim stated that he had traveled to Mansfield Street in Hartford to meet with an individual he contacted on Offer Up to purchase an iPhone.  When he arrived, Halliday approached the front passenger door of his vehicle and pointed a black handgun at him.  After the victim attempted to drive away, Halliday fired one round at him, striking him in the right forearm.

Also, in September 2017, three victims were shot at as they fled the scene of a robbery.  During a robbery in October 2017, Halliday put a gun, or what appeared to be a gun, to a victim’s chest and demanded the victim’s money and cell phone.

Halliday has been detained since his arrest on November 17, 2017.  On February 16, 2021, he pleaded guilty to one count of conspiracy to interfere with commerce by robbery.

This matter was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives, and the Hartford Police Department.  The case was prosecuted by Assistant U.S. Attorney Geoffrey M. Stone.

John H. Durham, United States Attorney for the District of Connecticut, today announced that NICHOLAS SEPESKO, 70, of Hamden, was arrested yesterday on a federal criminal complaint charging him with mailing threatening letters, some of which contained white powder, to an individual.

Following his arrest, Sepesko appeared before U.S. Magistrate Judge Sarah A. L. Merriam in New Haven and was released on a $20,000 bond.

As alleged in court documents and statements made in court, between October 2018 and November 2020, Sepesko mailed multiple letters to an individual threatening to harm the victim and the victim’s spouse.  None of the letters contained a return address.  The last three letters Sepesko mailed to the victim contained not only threats, but also a white powdery substance.  In the most recent letter, Sepesko wrote that the white powder could be rat poison or Ricin.

The three letters containing the unknown powdery substance lead to physical responses by federal, state and local law enforcement and environmental protection agencies.  It is alleged that laboratory analysis of the substance contained in a letter mailed by Sepesko in early October contained calcium carbonate.  Test results of the substance contained in the other two letters are pending.

The complaint charges Sepesko with mailing threatening communications, and conveying false information and hoax.  Each offense carries a maximum term of imprisonment of five years, a $250,000 fine, restitution and, with respect to a hoax, repayment of reimbursement for any municipal response.

U.S. Attorney Durham noted that this alleged crime and other like it will be vigorously prosecuted, as hoax letters containing white powder cause emotional distress for recipients and consume valuable time and resources of our first responders.

U.S. Attorney Durham stressed that a complaint is only a charge and is not evidence of guilt.  Charges are only allegations and a defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt.

This investigation is being conducted by the Federal Bureau of Investigation, U.S. Postal Inspection Service and Wallingford Police Department, with the assistance of the Connecticut State Police, Hamden Police Department and Connecticut Department of Energy and Environmental Protection.  The case is being prosecuted by Assistant U.S. Attorney Peter S. Jongbloed.

Leonard C Boyle, Acting United States Attorney for the District of Connecticut, and David Sundberg, Special Agent in Charge of the New Haven Division of the Federal Bureau of Investigation, today announced that a grand jury in New Haven has returned an indictment charging DOUGLAS SENERTH, 32, of South Windsor, with offenses related to his alleged theft of approximately $679,000 from his grandparents.

The indictment was returned on June 7, 2021.  Senerth appeared today before U.S. Magistrate Judge Robert A. Richardson in Hartford and entered a plea of not guilty.  He has been detained in state custody since February 10, 2021, when he was arrested on unrelated charges.

As alleged in the indictment, Senerth defrauded his grandmother and his late grandfather by falsely claiming to be a college student and inducing them to give him approximately $419,000 to pay for nonexistent college tuition and other related expenses, and an additional approximately $260,000 by falsely claiming that he would invest their money into an investment fund run by one of his nonexistent professors.  As part of the scheme, Senerth created fraudulent college transcripts, letters and email accounts that he used to corroborate his lies.

The indictment charges Senerth with three counts of wire fraud, an offense that carries a maximum term of imprisonment of 20 years on each count.

This investigation is being conducted by the Federal Bureau of Investigation and prosecuted by Assistant U.S. Attorney Heather Cherry.

The Justice Department has established a National Elder Fraud Hotline to provide services to seniors who may be victims of financial fraud.  The Hotline is staffed by experienced case managers who can provide personalized support to callers.  Case managers assist callers with reporting the suspected fraud to relevant agencies and by providing resources and referrals to other appropriate services as needed.  When applicable, case managers will complete a complaint form with the Federal Bureau of Investigation Internet Crime Complaint Center (IC3) for Internet-facilitated crimes and submit a consumer complaint to the Federal Trade Commission on behalf of the caller.  The Hotline’s toll-free number is 833-FRAUD-11 (833-372-8311).

John H. Durham, United States Attorney for the District of Connecticut, announced that MEMET BEQIRI, also known as Matt Beqiri, 33, of Tolland, was sentenced today by U.S. District Judge Alvin W. Thompson in Hartford to two years of probation for fabricating E. coli test results at his meat processing business.  Judge Thompson also ordered Beqiri to pay a $15,000 fine.

According to court documents and statements made in court, Beqiri is the owner and general manager of New England Meat Packing, LLC, located in Stafford Springs, a federally inspected business engaged in the slaughtering, processing, selling and transporting of meat and meat food products for human consumption.  Pursuant to the Hazard Analysis and Critical Control Point (HACCP) plan developed and implemented by New England Meat Packing to comply with regulatory requirements, the company is required to perform one generic E. coli carcass swab for every 300 animals slaughtered and to periodically collect ground beef samples for E. coli testing.

Between November 3, 2016 and September 9, 2017, Beqiri authorized the preparation and submission in the company’s Lab Sample Report binder, which the USDA’s Food Safety and Inspection Service (FSIS) reviews, a total of 36 documents relating to 52 separate carcass swabs and ground beef samples on behalf of New England Meat Packing.  The 36 documents were each on the letterhead of a certified laboratory that tests food product samples to ensure safety and wholesomeness and signed by the laboratory director.  The documents stated that the required E. coli testing of samples submitted by New England Meat Packing had been conducted and completed, and that all 52 samples tested negative for E. coli.  In fact, none of the 52 carcass swabs and samples had been submitted or tested by the identified laboratory, or any other laboratory, and the 36 documents were fraudulently prepared using laboratory letterhead obtained from previous testing that New England Meat Packing had conducted with that laboratory.

During the investigation of this matter, Beqiri admitted to an investigator with USDA’s FSIS that the documents were fraudulent, and that his business did not collect and submit the samples to the certified laboratory because he did not correlate the potential impact on food safety with his sampling program and wanted to create the appearance he was compliant with all USDA HACCP testing requirements.

There have been no known instances of illnesses reported by anyone who consumed the meat in any of the states where the meat was distributed.

On August 20, 2019, Beqiri pleaded guilty to one count of making and using a false document and aiding and abetting.

The investigation was conducted by the U.S. Department of Agriculture, Food Safety and Inspection Service, Office of Investigations, Enforcement and Audit.  The case was prosecuted by Assistant U.S. Attorney Deborah R. Slater.

NORFOLK, Va. – Two Venezuelan citizens pleaded guilty today and yesterday to conspiracy to distribute cocaine on board a vessel in international waters.

According to court documents, on May 16, 2023, Juan Milano, 50, and Carlos Marcano, 31, were found with two others by a U.S. Navy ship and its Naval and Coast Guard personnel on board a go-fast boat in international waters while in possession of over 1400 kilograms of cocaine. The go-fast vessel was without nationality, and none of its crew declared their nationality, the flag nationality of the vessel, or claimed to be its master.

Milano is schedule to be sentenced on December 14 and Marcano, who pleaded yesterday, is scheduled to be sentenced on December 13. They each face a mandatory minimum of 10 years in prison and a maximum of life imprisonment. Actual sentences for federal crimes are typically less than the maximum penalties. A federal district court judge will determine any sentence after taking into account the U.S. Sentencing Guidelines and other statutory factors.

Milano and Marcano were prosecuted as part of a joint interagency partnership between the U.S Coast Guard, U.S. Navy, the Department of Justice including the Drug Enforcement Administration, the Department of Homeland Security, and select U.S. Attorney offices in the United States and its territories. 

Jessica D. Aber, U.S. Attorney for the Eastern District of Virginia; Jarod Forget, Special Agent in Charge for the Drug Enforcement Administration’s (DEA) Washington Division; Derek W. Gordon, Special Agent in Charge of U.S. Homeland Security Investigations (HSI) Washington, D.C.; William P. Hicks II, Special Agent in Charge, Coast Guard Investigative Service, Chesapeake Region, made the announcement after U.S. District Senior Judge Raymond A. Jackson.

The Narcotics and Dangerous Drug Section of the Department of Justice assisted in this investigation. The Joint Interagency Task Force South (JIATF-S), a United States multiservice, multiagency task force, also assisted in this investigation.

Assistant U.S. Attorney Kevin M. Comstock is prosecuting the case.

Congress has declared drug trafficking on vessels in international waters a serious international problem universally condemned and one that presents a specific threat to the security and societal well-being of the United States.

A copy of this press release is located on the website of the U.S. Attorney’s Office for the Eastern District of Virginia. Related court documents and information are located on the website of the District Court for the Eastern District of Virginia or on PACER by searching for Case No. 2:23-cr-85.

Leonard C Boyle, Acting United States Attorney for the District of Connecticut, announced DONNA MONTICONE, 49, of Oxford, waived her right to be indicted and pleaded guilty today before U.S. District Judge Janet C. Hall to one count of tampering with a consumer product.

Pursuant to the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), the court proceeding occurred via videoconference.

According to court documents and statements made in court, Monticone was a nurse employed by the Yale Reproductive Endocrinology and Infertility clinic (“Yale REI clinic”) in Orange.  As part of her responsibilities at the Yale REI, Monticone ordered and inventoried a variety of narcotics used by the clinic, including fentanyl, which is a component of a cohort of drugs used by Yale physicians during outpatient surgical procedures to anesthetize patients and protect them from feeling pain.

In June 2020, Monticone began stealing fentanyl for her own use.  She accessed secure storage areas and took vials of fentanyl, used a syringe to withdraw the narcotics from the vials, and reinjected saline into vials so that it would appear as if none of the narcotics were missing.  The investigation revealed that approximately 75 percent of the fentanyl given to patients at the Yale REI clinic from June to October 2020 was adulterated with saline.  Some of the vials contained diluted fentanyl, while others contained no drug at all and contained just saline. 

In pleading guilty, Monticone admitted that knew that the adulterated vials of fentanyl she replaced at the Yale REI clinic would be used in surgical procedures, and that the absence of an anesthetic during an outpatient procedure may cause serious bodily injury to the patient.  Monticone further admitted that she initially injected herself with the fentanyl while working at the Yale REI clinic and eventually began taking the vials home.  She would refill the vials with sterile saline at home, bring them back to the clinic, and reintroduce them into the stock of fentanyl available for use during surgical procedures.  On approximately November 1, 2020, Monticone brought approximately 175 vials of fentanyl that she had taken from the Yale REI clinic and discarded them in waste containers at the clinic.

Judge Hall scheduled sentencing for May 25, 2021, at which time Monticone faces a maximum term of imprisonment of 10 years.

Monticone is released on a $50,000 bond pending sentencing.  She has surrendered her nursing license.

This matter is being investigated by the Food and Drug Administration, Office of Criminal Investigations; the DEA’s New Haven Tactical Diversion Squad; and the Connecticut Department of Consumer Protection, Drug Control Division.  The case is being prosecuted by Assistant U.S. Attorney Ray Miller.

Leonard C Boyle, Acting United States Attorney for the District of Connecticut, announced DONNA MONTICONE, 49, of Oxford, was sentenced today by U.S. District Judge Janet C. Hall in New Haven for tampering with fentanyl vials intended for patients at the fertility clinic where she was employed.  Monticone was ordered to serve three years of supervised release, four weekends of incarceration, and three months of home confinement.

According to court documents and statements made in court, Monticone was a nurse employed by the Yale Reproductive Endocrinology and Infertility clinic (“Yale REI clinic”) in Orange.  As part of her responsibilities at the Yale REI, Monticone ordered and inventoried a variety of narcotics used by the clinic, including fentanyl, which is a component of a cohort of drugs used by Yale physicians during outpatient surgical procedures to anesthetize patients and protect them from feeling pain.

In June 2020, Monticone began stealing fentanyl for her own use.  She accessed secure storage areas and took vials of fentanyl, used a syringe to withdraw the narcotics from the vials, and reinjected saline into vials so that it would appear as if none of the narcotics were missing.  The investigation revealed that approximately 75 percent of the fentanyl given to patients at the Yale REI clinic from June to October 2020 was adulterated with saline.  Some of the vials contained diluted fentanyl, while others contained no drug at all and contained just saline. 

Monticone knew that the adulterated vials of fentanyl she replaced at the Yale REI clinic would be used in surgical procedures, and that the absence of an anesthetic during an outpatient procedure may cause serious bodily injury to the patient.  Monticone initially injected herself with the fentanyl while working at the Yale REI clinic and eventually began taking the vials home.  She would refill the vials with sterile saline at home, bring them back to the clinic, and reintroduce them into the stock of fentanyl available for use during surgical procedures.  On approximately November 1, 2020, Monticone brought approximately 175 vials of fentanyl that she had taken from the Yale REI clinic and discarded them in waste containers at the clinic.

Numerous victims submitted letters to Judge Hall describing physical pain they experienced during their procedures at the Yale REI clinic during this time period.

On March 2, 2021, Monticone pleaded guilty to one count of tampering with a consumer product.

Monticone has surrendered her nursing license.

This matter was investigated by the Food and Drug Administration, Office of Criminal Investigations; the DEA’s New Haven Tactical Diversion Squad; and the Connecticut Department of Consumer Protection, Drug Control Division.  The case was prosecuted by Assistant U.S. Attorney Ray Miller.

New Haven – John H. Durham, United States Attorney for the District of Connecticut, announced that LESTER BURROUGHS, 61, of Torrington, was sentenced today by U.S. District Judge Victor A. Bolden to 33 months of imprisonment, followed by three years of supervised release, for misappropriating approximately $575,000 from investment clients, most of whom were elderly.

Pursuant to the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), the sentencing occurred via videoconference.

According to court documents and statements made in court, Burroughs owned Burroughs Investment Group, a full-service financial consulting firm based in Torrington, and was a registered securities broker with the Financial Industry Regulatory Authority.  Beginning in at least 2012 and continuing through 2019, Burroughs misrepresented to certain clients that their money would be invested in legitimate guaranteed investment contracts.  Instead, he used his clients’ money to pay business expenses and other clients’ “guaranteed” investment returns.

Burroughs began the scheme after an investment he recommended to a client failed to materialize an expected return and Burroughs feared the possible financial repercussions to his business should that client file a complaint with regulatory agencies.  Burroughs then stole approximately $370,000 from an elderly client in order to pay the nonexistent returns of the failed investment to the first client.  In 2018, after the elderly client’s daughter demanded a full accounting of her mother’s investments, Burroughs tried to cover up his conduct by providing his client’s daughter with fraudulent accounting statements and documents.  When his client’s daughter demanded money, Burroughs provided the client with funds he had stolen from three other unsuspecting clients, all of whom were told by Burroughs that he was investing their money in guaranteed investment contracts.

Through this scheme, Burroughs defrauded clients of a total of approximately $575,000.  Burroughs is required to pay full restitution.

On December 4, 2019, Burroughs pleaded guilty to one count of wire fraud.

Burroughs, who is released on a $100,000 bond, is scheduled to report to prison on June 1, 2020.

This matter was investigated by the Federal Bureau of Investigation and prosecuted by Assistant U.S. Attorney Heather L. Cherry.

The Securities and Exchange Commission filed related civil charges against Burroughs.  (Securities and Exchange Commission v. Lester Burroughs, 3:19-cv-1913).

The Justice Department has established a National Elder Fraud Hotline to provide services to seniors who may be victims of financial fraud.  The Hotline is staffed by experienced case managers who can provide personalized support to callers.  Case managers assist callers with reporting the suspected fraud to relevant agencies and by providing resources and referrals to other appropriate services as needed.  When applicable, case managers will complete a complaint form with the Federal Bureau of Investigation Internet Crime Complaint Center (IC3) for Internet-facilitated crimes and submit a consumer complaint to the Federal Trade Commission on behalf of the caller.  The Hotline’s toll free number is 833-FRAUD-11 (833-372-8311).

Leonard C Boyle, United States Attorney for the District of Connecticut, announced that DOUGLAS SENERTH, 32, of South Windsor, pleaded guilty today in New Haven federal court to a fraud offense related to his theft of approximately $679,000 from his grandparents.

According to court documents and statements made in court, between 2011 and 2019, Senerth defrauded his grandmother and his late grandfather by falsely claiming to be a college student and inducing them to give him approximately $419,000 to pay for nonexistent college tuition and other related expenses, and an additional approximately $260,000 by falsely claiming that he would invest their money into an investment fund run by one of his nonexistent professors.  As part of the scheme, Senerth created fraudulent college transcripts, letters and email accounts that he used to corroborate his lies.

Senerth has been detained in state custody since February 10, 2021, when he was arrested on unrelated charges.

Senerth pleaded guilty to one count of wire fraud, which carries a maximum term of imprisonment of 20 years.  He is scheduled to be sentenced by U.S. District Judge Robert N. Chatigny in Hartford on May 17, 2022.

Senerth has agreed to pay restitution of $679,944.

This investigation is being conducted by the Federal Bureau of Investigation and prosecuted by Assistant U.S. Attorney Heather Cherry.

The Justice Department has established a National Elder Fraud Hotline to provide services to seniors who may be victims of financial fraud.  The Hotline is staffed by experienced case managers who can provide personalized support to callers.  Case managers assist callers with reporting the suspected fraud to relevant agencies and by providing resources and referrals to other appropriate services as needed.  When applicable, case managers will complete a complaint form with the Federal Bureau of Investigation Internet Crime Complaint Center (IC3) for Internet-facilitated crimes and submit a consumer complaint to the Federal Trade Commission on behalf of the caller.  The Hotline’s toll-free number is 833-FRAUD-11 (833-372-8311).  For more information, please visit: https://ovc.ojp.gov/program/stop-elder-fraud/providing-help-restoring-hope.

John H. Durham, United States Attorney for the District of Connecticut, and Kristina O’Connell, Special Agent in Charge of IRS Criminal Investigation in New England, announced that DAVID ADAMS, 58, of Old Saybrook, was sentenced today by U.S. District Judge Vanessa L. Bryant in Hartford to 90 months of imprisonment, followed by three years of supervised release, for failing to pay more than $4.8 million in federal income taxes.

“This defendant engaged the IRS in a decades-long wild goose chase to prevent the agency from collecting the taxes he was required by law to pay,” said U.S. Attorney Durham.  “He hid income, repeatedly lied to IRS collections officers, filed frivolous claims for due process hearings, and bounced numerous checks.  He also misled, and then attempted to implicate, his accountant.  All the while, he had the ability to pay and lived more lavishly than the vast majority of Americans.  Our nation’s tax collection system requires all of us to pay what we owe, or else our society cannot function.  This is an appropriate sentence for an individual who failed to pay his taxes for a good portion of his working life, and likely will never pay all that he owes the citizens of this country.”

“For years, Mr. Adams obstructed IRS efforts to collect back taxes through a series of criminal acts,” said IRS Criminal Investigation Special Agent in Charge O’Connell.  “As a successful entrepreneur, he earned millions and amassed significant wealth, yet willfully chose to evade his significant tax obligations.  Honest taxpayers bear the brunt of this crime, through reduced government services and a greater tax burden.  IRS-CI and the U.S. Attorney’s Office will continue to hold tax cheats accountable, by prosecuting those who undermine the integrity of our tax system.” 

According to court documents and statements made in court, in the early 1980s, and then continuing from 1996 onward, Adams was substantially delinquent in filing his tax returns and paying amounts owed to the IRS.  Starting at least as early as the 1982 tax year, Adams repeatedly engaged with IRS collections officers tasked with trying to get Adams into compliance with the tax laws.  Although IRS collections officers repeatedly advised Adams about his obligations to pay estimated taxes, he continually failed to pay those taxes on time or in sufficient amounts. 

As part of this tax fraud scheme, Adams engaged the services of a certified public accountant to prepare his personal tax returns beginning in approximately 1993, and then gave the accountant false information about his estimated payments, about his income, and then blamed the accountant for making errors on his returns as an excuse for why he should not be required to pay the tax due.

In 2002, Adams sold an online floral business, for which he owed over $1.3 million in tax.  Adams failed to pay that tax liability and instead hung the return up in collections, in a collections due process hearing, and in tax court, while blaming his accountant for purported “errors” when none were made.  As of today, Adams still has a seven-figure balance on that tax year.

In June 2011, Adams sold his partnership interest in another online floral business and received $4,708,419.20 wired into his personal bank account as part of the net proceeds owed to him as a result of the sale.  Although he knew that he owed substantial taxes on that amount, Adams concealed the income from his accountant and failed to declare the income on his 2011 tax return.  At the same time, Adams represented to an IRS revenue officer who was responsible for collecting Adams’s delinquent tax payments and securing Adams’s overdue tax returns, that he had hoped to have funds to pay down his back tax liability (including tax liability associated with the 2002 sale), but that nothing had been “panning out.”  Adams failed to disclose to the revenue officer that he had received $4,708,419.20 in cash less than three weeks earlier.

In June 2012, Adams received an additional $1,320,609.59 into his personal bank account as net proceeds of the 2011 sale.  Although he knew that he owed substantial taxes on that amount, Adams failed to disclose the income to his accountant, and failed to declare it on his tax return for that year.

Adams also misled the U.S. District Court and U.S. Probation Office in the case by failing to disclose on his financial affidavit a bank account containing more than $500,000.

In total, Adams engaged in a more than 20-year effort to inhibit the IRS’s efforts to collect back taxes from him.  Among other things, he bounced checks to the IRS; told IRS collections officers that payment had been sent when it had not; promised to pay delinquent tax liabilities in full and then delayed payment, made only partial payment, failed to pay at all, or paid off one liability while leaving another liability unpaid; claimed that he lacked funds to pay his delinquent tax but failed to disclose that he had access to enough cash to fully pay back his tax liabilities; filed false and fraudulent returns with the IRS; overstated the amounts of estimated taxes paid to the IRS, and failed to declare more than $6 million in income to the IRS.

Adams was arrested on a federal criminal complaint on April 14, 2016.  On October 10, 2017, he pleaded guilty to two counts of tax evasion, three counts of making and subscribing a false tax return, and one count of attempting to interfere with the administration of the IRS laws. 

Judge Bryant ordered Adams to pay back taxes, interest and penalties for tax years 2002, 2006, 2007, 2008, 2009, 2011, and 2012, which total $4,872,172.91.  Interest and penalties will continue to accrue until his tax obligation is paid.

At the conclusion of today’s sentencing proceeding, Adams, who had been released on bond, was remanded to the custody of the U.S. Marshals Service.

U.S. Attorney Durham noted that federal prisoners are required to serve at least 85 percent of their sentenced term of imprisonment and are not eligible for parole.

Adams’s criminal history includes two prior federal convictions.  In 1986, he was convicted of credit card fraud for submitting more than $588,000 in fraudulent credit card sales drafts through his floral business over a three-month period in 1985.  In 1992, he was convicted of two counts of failure to file tax returns, relating to his failing to file federal income tax returns for the 1984 through 1986 tax years.

This matter was investigated by the Internal Revenue Service – Criminal Investigation Division.  The case was prosecuted by Assistant U.S. Attorneys Susan L. Wines and Jennifer R. Laraia.

 

New Haven – The United States Attorney’s Office for the District of Connecticut hosted a Community Policing Awards Ceremony this afternoon that recognized 15 law enforcement officers and community members from cities and towns across the state.

“Today we honor the very best in community policing in Connecticut,” said U.S. Attorney John H. Durham.  “These deserving law enforcement officers understand that community policing is an effective way to prevent crime, solve neighborhood problems and keep our cities and towns safe and secure.  They know that it is critically important to engage with members of the community in positive, friendly and constructive ways, long before a call for service.  My sincere congratulations to each of these award recipients.  I thank them for their invaluable work, which continues to strengthen the communities they serve.



Below is a list of the award winners and the nominations submitted on their behalf.  Photos of today’s ceremony are available on the U.S. Attorney’s Office’s Facebook page.

Clinton Police Department

Chief Vincent DeMaio



Chief of Police Vincent DeMaio, nominated by the Clinton Board of Police Commissioners, has implemented multiple programs geared toward improving relations with the Clinton community while operating within a budget five percent below the previous year.

The Chief reintroduced the DARE program to the elementary and middle school to rave reviews by teachers and parents.  The revamped program focuses on decision-making strategies and awareness.

All Clinton officers have been trained and equipped to administer Narcan to combat opioid overdoses. To date, Narcan has been administered on 15 calls with three being life-saving.

The Child Safety Seat Installation Program is staffed by personnel trained and certified by the National Highway Traffic Safety Institute (NHTSA) in proper child safety seat installation.  The program has installed 100 seats and donated 20 to those unable to afford new car seats. Our trained officers visited the Day Care Centers in Clinton and held seminars to educate the parents on proper use.  This approach reached more people as it removed any fear of going to the police station.  It brought officers closer to the community they live and care about and left a positive message.

Additionally, the Chief has implemented the “R.A.D. Rape & Aggression Defense” program and a redesigned K9 program.  He has engaged the department in multiple social media platforms, created the Shoreline Technical Crimes Investigative Group and implemented the Lethality Assessment program.

The Clinton Police Department continuously looks for ways to educate the public on crime prevention and awareness of public safety hazards, frequently partnering with the school system and other community groups to make public service announcements or host presentations to help make the community safer.  One of the more recent successes was hosting the “Chasing the Dragon” program to raise awareness of the opioid epidemic facing our State and the Nation.

Lastly, Chief DeMaio hosts a monthly radio program on ICRV radio called “SCAM PATROL” which alerts citizens to many scams, frauds and other types of cyber-crime and how to protect themselves and their identities.

Connecticut State Police

Trooper First Class Dawn Taylor

TFC Taylor has approximately 13 years of service with the Connecticut State Police.  She has served as a Patrol Trooper, Academy Instructor, Resident Trooper and Narcotics K9 Handler.  Currently, she is the Resident Trooper in Deep River where she has an excellent reputation within the community.

TFC Taylor is involved in many events and activities in the Deep River and Troop F area.  She is actively involved with Regional School District #4 (Deep River, Essex and Chester).  She regularly visits the schools at bus drop-off and pick-up times and often walks the halls speaking with the students.  TFC Taylor supports the DARE program, conducts K9 demonstrations, attends school events and sporting games.  TFC Taylor is actively involved with many “Tri-Town” area groups to include the “Safety Awareness Committee,” “Youth & Family Coalition,” and “Juvenile Review Board.”  She also teaches a “Drug Endangered Children” (DEC) class at the Academy to new police recruits.

TFC Taylor is very involved with community events, which include the annual Deep River Muster weekend and several other parades and road races.  TFC Taylor’s positive and energized attitude about community policing make her “stand out” among her peers.

Connecticut State Police

Sergeant James T. Scott

Sergeant James Scott champions community policing efforts of the Connecticut State Police from the non-traditional role of supervisor for Recruitment and Selections. Sergeant Scott recognizes where normal recruiting suffers, and employs active recruiting efforts where building trust and community are needed.

In October 2016, noting the need and decline in diverse police applicants nationwide, Sergeant Scott actively sought to build diversity in not only CSP recruitment, but also with state and regional law enforcement.  The efforts in the spirit of building trust and legitimacy between police and the communities they serve begin with creating a workforce that is diverse.  In a recruitment cycle that began post-Ferguson and post-Dallas, it was expected that CSP recruitment might also follow the nationwide trend of fewer applicants, both minority and otherwise.  Sergeant Scott was also facing a recruitment cycle with no budget for recruitment efforts.

Despite these obstacles, Sergeant Scott used outside the box thinking to attract the most sought after candidates. This includes his collaboration with Central Connecticut State University’s Communications Department, where students produced two recruitment videos: one highlighting the multi-dimensional aspects of the duties of the State Police (known as the Action video); and a five-member impactful testimonial video highlighting minority and female troopers, who spoke about the State Police career, both in uniform and plain clothes (known as the Impact Testimonial video). The “Action” video was released upon announcement of the test and ran for three weeks. The “Testimonial” video was released with one week remaining during the application period, specifically designed to target minority and women applicants. He also utilized social media to an extent never before used by CSP in recruitment efforts, in a calculated attempt to reach younger candidates who may not have otherwise engaged with the CSP.

While the results of this campaign were expected to be noticeably lower than previous testing cycles due to recent events and trends (Ferguson, Dallas, etc.), the final numbers recorded for the 2017 recruitment cycle surprisingly were comparable to the 2014 efforts, with a near equal number of overall candidates. More importantly, the majority of individual minority demographic groups rose exponentially, to include a rise in applicants who identified as Hispanic males; African American and Hispanic females; and Asian, Native American and Pacific Islander applicants, each specifically registering as all-time highs (DAS, 2017).

In addition, Sgt. Scott continues to assist in other CSP initiatives through the year. This includes The Albertus Magnus Criminal Justice Camp, where he has assisted with coordinating the camp since its inception. This camp has been hosted free of charge for nine consecutive years, and over 1,000 students have registered to attend.  He also coordinates the annual Battle of the Badges, where he has partnered with Yale University Police Department and organized a bench press fundraiser for the last eight years. Over $5000 has been donated to Smilow Cancer Center as a result. Finally, Sgt. Scott serves in a volunteer leadership capacity for the Tunxis Community College Foundation, where in addition to serving on the board, he personally funds a criminal justice scholarship.

Connecticut State Police

Trooper Katharine Cummings

Trooper Kate Cummings is at the forefront of the Connecticut State Police community policing efforts as the Statewide D.A.R.E. Coordinator.  Although her title is the Statewide D.A.R.E. Coordinator for the Connecticut State Police, the role in which she has served over the course of the past year has evolved to include many aspects of the Juvenile Justice System, current adolescent trends, and the School Resource Officer Programs.  The highlights in community policing that she has accomplished during the 2017-2018 School Year include:

As the Statewide D.A.R.E. Coordinator, she serves as the D.A.R.E. Instructor in communities that do not have a certified D.A.R.E. Officer, a Police Department, or a Resident Trooper Program.  D.A.R.E. is a 10-week program of 45 minute sessions that cover the following topics:  responsibilities, risks, consequences, peer pressure, resistance strategies, and coping skills, bullying/cyber bullying reporting, being a good citizen, and health effects of alcohol and tobacco use.  She has taught 38 complete 10-week D.A.R.E. Programs during the last school year on her own.  In addition to the traditional D.A.R.E. Program, Trooper Cummings sits on the Connecticut Juvenile Justice Oversight and Policy Committee as the Connecticut State Police representative.  This year, the committee drafted a report for the Connecticut Legislature on ways to reduce the number of school-based arrests in the State of Connecticut.  Trooper Cummings is also bilingual as she is fluent in Spanish.  She is able to teach and present in schools where the students are best served by learning important skills and getting information in Spanish. This is illustrated by her presentation in Spanish at Hanover Elementary School in Meriden for their 5th Grade Career Day.

She also serves as one of the Connecticut State Police Social Media Liaisons through the Public Information Officer, and she moderates a public Instagram page, @CT_Dare_Trooper, which has nearly 6,000 followers from around the world.  The page is used to connect with communities to highlight the incredible work of Connecticut's students, showcase the many roles of Connecticut State Troopers, increase our partnerships with local Police Departments and non-profit agencies, provide safety information, and most importantly, serve as a positive social media role model for adolescents.  By using this medium, she connects with a younger generation in a variety of ways and demonstrates how we, as a society, can use social media in a positive, healthy way.

Over the past three years, Trooper Cummings developed internet safety and social media presentations for middle school students, high school students, college students, and a parent presentation, which covers social media trends and ways we can use social media safely and positively. 

Trooper Katharine Cummings has been a significant presence and a key component of the Community Policing effort for the Connecticut State Police.  Her interpersonal talent and bilingual ability gives her the skills to connect with children, teens and adults no matter the venue or issue.  She has provided a template for a multitude of law enforcement officers throughout the State of Connecticut by virtue of her willingness to connect with people no matter who they are and what their needs may be. 

East Hartford Police Department

Lieutenant Joshua Litwin

Lieutenant Josh Litwin has worked with the East Hartford Police Department since 2002 and has served as a Firearms Instructor, Field Training Officer and as an Investigator in the Detective Division.  In his current assignment as the Chief Executive Officer, Lieutenant Litwin has been instrumental in reviving the Community Service Officer program.  In this capacity, Lieutenant Litwin has hosted many community outreach events such as Block Watch Meetings, Toy Drives, and Sandwich with a Cop and Coffee with a Cop events.  He has also been the driving force behind the East Hartford Police Department’s involvement in the National Night Out event.  National Night Out is an annual community-building campaign that promotes police-community partnerships and neighborhood camaraderie to make our neighborhoods safer, more caring places to live.  National Night Out enhances the relationship between neighbors and law enforcement while bringing back a true sense of community.  Furthermore, it provides a great opportunity to bring police and neighbors together under positive circumstances.  Over the last two years, this event has brought hundreds of families throughout the community to the police department to share stories, see demonstrations and have a fun family night out.

Lieutenant Litwin has also participated in a variety of other programs that reach out to local religious and faith based organizations, and he helps to organize and present at the Department’s Citizen Police Academy.  Lieutenant Litwin’s tireless dedication to these community based programs is evident and he continues to look for new ways each year for his Department to create a partnership and improve the quality of life for the community he serves.

Enfield Police Department

Officer Eddie G. Nuno

Officer Eddie Nuno is a 25-year veteran of the Enfield Police Department.  (He undertook service with this agency after a period of service with the United States Coast Guard.)  Over the course of his Enfield Police Department career, Officer Nuno has worked in a variety of capacities, but apparent throughout his tenure has been a true dedication to the concept of community policing.

Officer Nuno serves as the Enfield Police Department’s representative to the town’s Juvenile Review Board, and also serves as the department’s liaison to the Enfield Youth Services Agency.  It is fair to say that he uses his bilingual language skills to serve as the department’s liaison to the town’s Hispanic community.  He is well known, particularly in the Thompsonville section of town, for his regular community interactions, stopping to visit with community youth, joining assorted sports games while they are “in progress,” meeting with landlord associations, and helping businesses do everything possible to succeed.  Enfield is also very fortunate in that Officer Nuno serves as a Field Training Officer, placing him in a position to pass on the skills and positive mindset that he possesses to the next generation of Enfield Police Officers.

Officer Nuno is among the most conscientious and committed of officers. His ability to maintain this demeanor after 25 years of service is indicative of just how deeply he believes in the policing mission.

Town of Groton Department

Officer Richard Savino

Officer Richard Savino is assigned as the Town of Groton Community Policing Officer (CPO) in which position he has been organizing and participating in multiple community events since his appointment.  These efforts have not only raised money for charitable causes, but have bridged the gap between law enforcement and the community he serves and protects.  Officer Savino has been an organizer, participant and supporter in all of the following events, prior to and during his official assignment as the CPO:

“Cop on Top,” where officers spent the night on top of a local car dealership in freezing cold temperatures to raise money for Special Olympics; “Law Enforcement Torch Run,” where officers from around the region run for miles in their communities with the Special Olympics Torch, raising money and awareness for Special Olympics; “Penguin Plunge,” where officers and members of the community dive into freezing ocean waters raising money and awareness for the Special Olympics; “Tip a Cop,” where officers wait on tables at a local restaurant raising money and awareness for Special Olympics; “Coffee With a Cop,” where law enforcement officers visit a local coffee shop encouraging community members to join them in conversation over a cup of coffee; “Bumpers ‘N Books,” where law enforcement and local residents decorate the trunks and bumpers of their vehicles in various popular children’s book themes; bringing the community together while encouraging children to read and visit their local library; “MADD Car Show” where multiple classic car owners display their vehicles while supporting those who have been impacted by drunk or drugged driving, and “National Night Out”  where multiple local businesses, restaurants, law enforcement agencies, emergency medical personnel and health care related organizations gather with the community, eating food, playing games and participating in various events.

The initiatives undertaken by Officer Savino are great examples of what constitutes effective community policing.

In addition to the community policing programs, Officer Savino meets with victims of domestic violence in the community, diligently following up on their cases and assuring that they are getting all of the assistance they need.  Officer Savino has been working with local businesses and residents in dealing with noise complaint issues; understanding the needs and concerns of all parties involved. 

Officer Savino is an example to all and a true leader in his community. 

New Canaan Police Department

Officer Ron Bentley

Officer Ron Bentley has been a member of the New Canaan Police Department since 2005.

Following a brazen daytime violent robbery of a local jewelry store, the New Canaan business community was terrified that this type of crime might happen again.  It was at that time, the New Canaan Police Department decided to create the position of Community Impact Officer. Officer Bentley was appointed to that position and is responsible for the New Canaan business district.  He has built strong relationships with business owners and residents, and has created a sense of safety and community in the center of town.

Officer Bentley helped implement “Coffee with a Cop” to further foster positive relationships between police officers and the community.  He has helped to deter criminal activity, and overall has made the center of New Canaan a safer place to visit.

In addition to his work downtown, Officer Bentley has worked with the town’s youth through his role as baseball coach for the New Canaan High School Varsity Baseball Team and was a previous School Resource Officer at New Canaan High School.

New London Police Department

Sergeant Max Bertsch

Sergeant Max Bertsch has been with the New London Police Department since January 2006.  He has been assigned to the Patrol Division, the School Resource Officer Program and is a certified motorcycle officer.  Sergeant Bertsch is currently assigned to the Patrol Division as a Street Sergeant.

Sergeant Bertsch has organized the National Night Out program for the New London Police Department for the past eight years. This event links police and elementary school youth together in a fun atmosphere at Ocean Beach Park.  Each year the number of children attending and parents has increased, with over 500 in attendance this past August.  Sgt. Bertsch also served as the School Resource officer in New London prior to being promoted.  His devotion to the youth of the city has found him on numerous fishing trips with school-aged children on his own time.  As the SRO, he organized a school based program for high school aged children, similar to a citizens police academy, which continues to today. His efforts with the New London Schools has resulted in great strides being made in connecting youth to police and furthering the goals of Community Based Policing.

Norwalk Police Department

Officer Jean-Maxime Sixto

Born in Haiti, Jean-Maxime Sixto (“Max”) and his family moved to the United States in 1971, making a home in Norwalk.  He, like many other young adults from Norwalk, worked at Stew Leonard’s.  This is where Max honed his gift of conversation.  The Norwalk Police Department hired Max Sixto in January of 1997 and, in 1999, he was assigned to the Community Police Unit.  Officers in the unit worked out of the South Norwalk Train Station, patrolling and conducting outreach to specific areas of South Norwalk.

Officer Sixto was assigned to the Roodner Court Housing Complex.  At the time, Roodner Court was plagued with drug trafficking and violent crime.  The close relationships Max formed with many members of the Roodner Court community were invaluable in combating such crime. That is, many individuals living in Roodner Court had enough trust in Max that they were willing to share information about the rampant crime occurring in their community allowing the police to bring many of the offenders to justice.  The positive effect of Officer Sixto’s constant presence in Roodner Court and his incredibly warm personality were apparent the minute he entered the Housing Complex, whether by bicycle or on foot.  Today, Max cannot step foot in Roodner Court without a resident yelling, “Hey Sixto,” followed by a high-five or a hug.

In addition, Officer Sixto has worked with members of the Roodner Court community to beautify the complex with bright flower plantings.  This had a ripple effect within the complex, with residents pitching in to clean up and to even create two vegetable gardens within the complex.  Officer Sixto also spends a lot of time at the Roodner Court Learning Center, which provides afterschool education opportunities for the youth in Roodner Court.  Officer Sixto reads to the kids and is a positive role model for them.  He also spends time with the kids at Grass Roots Tennis and meets with the junior counselors to discuss leadership issues.  Officer Sixto recently noticed that a young resident of Roodner Court did not have a bicycle, and so he arranged to bring a donated bicycle to the little girl, bringing smiles to her face and to that of her grandmother.

In addition to his duties in Roodner Court, Officer Sixto is often called up to assist with other community outreach events such as Coffee with a Cop, NPD Ice Cream Day, Community Police Holiday Party, SoNo Alliance, Norwalk Open House and many more.

Max is a decorated officer receiving numerous awards and recognitions from not only the Norwalk Police Department, but from the Federal Bureau of Investigation and the United States Attorney’s Office.  Officer Sixto has received numerous letters of appreciation from community members as well as recognition for Community Service from the Seventh Day Adventist Church.

Officer Max Sixto is the definition of a Community Police Officer.  His hard work and dedication to the community are second to none.  He has spent his career working hard to make Norwalk a safer place while creating police-community partnerships.  

Stamford Police Department

Officer Silas Redd

Officer Silas Redd has over 30 years’ experience with the Stamford Police Department and his commitment to the City of Stamford has never wavered.  Over the past 30 years, Officer Redd has helped the police department create and sustain a strong relationship with the community.  This is what we now call “Community Policing.”  Officer Redd has always taken the initiative to foster those relationships long before it became a catch phrase.  It is who he is!

Officer Redd is currently assigned to the Stamford Police Department’s Youth Bureau where he coordinates the Truancy Initiative Program.  He is also a founding member of the Juvenile Review Board, a member of the Absentee Review Board, a founding member of the Community Oriented Policing Program, and a founding member of the Stamford Police Boys Leadership Group.  Officer Redd also conducts mediations between troubled youths and families.  Officer Redd even takes it a step further and works diligently to assist those youth and families in seeking services that will have a positive influence with the families. 

Officer Redd is an advocate for cultivating strong lines of communication between the community and police by working closely with and meeting with community leaders. This is achieved through forums at churches, schools and community events.  Officer Redd has built lasting friendships and partnerships within the community that enable him to remedy and effectively address a host of issues.  Moreover, Officer Redd has been very instrumental in mentoring youth and stressing the importance of education, being a positive influence and making good choices. Officer Redd also spends a great deal of time educating other Stamford officers as to what the community wants and expects from the police. 

Officer Redd has demonstrated an unrivaled passion in educating youth and guiding them in the right direction.  He continues to be an asset for the department, but more importantly the community.  Officer Redd is a credit to the Stamford Police Department and his commitment to Stamford should be emulated by all. 

University of Connecticut Police Department

Officer Justin Cheney

Officer Justin Cheney joined the University of Connecticut Police Department in June of 2015 and immediately began a focus on community oriented policing work.  A long-standing member of the community and alumnus of UConn, Justin quickly became a friendly and recognizable member of the patrol operations section and exemplified the best tenets of community partnership and problem solving.  In 2016, he became a member of the UConn PD Safety Techniques and Awareness Resource Team, the unit of officers that provide educational programming and events across the community.  As a member of the S.T.A.R.T., he provides ongoing instruction and facilitation to the UConn and surrounding community in the areas of self-defense, general safety, primary prevention education to reduce sexual violence, team building and communication workshops, and more.  In the summer of 2017, Justin joined the Community Outreach Unit to engage in community education on a full-time basis.

Justin’s enthusiasm and innovative approach to community policing strategies helped him to propose a dynamic new program in the spring of 2018.  After considerable research in the area, he launched the UCPD Community Outreach Dog program.  With the generous support and assistance of Canine Companions for Independence, Justin was partnered with Tildy, a facility dog.  Tildy, a two-year-old yellow lab and golden retriever mix, was trained by CCI as a facility dog and Justin was matched and trained with her at CCl’s Northeast Training Center in April of 2018.

Tildy and Justin now spend their days engaging with the community in person and through Tildy’s increasingly popular lnstagram page where Justin has masterfully captured Tildy’s “voice” as a means to connect with people.  Justin and Tildy act as the police department’s outreach ambassadors and have promoted creative new ways to build bridges to the community.  Tildy can also act in a limited supportive role to victims of violent crime if her skills would assist in building comfort with the investigative process for the community.  Officer Cheney and Tildy are on lnstagram (uconnpd_officertildy) and have over 900 followers.  Tildy is absolutely adorable and a hit with our community. (They like Justin too!)

On a daily basis, Officer Justin Cheney has been an example of the best community oriented policing strategies in our profession and his innovative approach to the Community Outreach Dog program has opened doors in an unprecedented way.

University of New Haven Police Department

Sergeant Luis Dos Santos

Since joining the University of New Haven Police Department, after a long career at Western Connecticut State University, Sergeant Luis Dos Santos has become an integral part of the University community.  He has shown leadership and initiative in handling traditional police duties and excelled in community outreach.  He regularly volunteers to spearhead new outreach initiatives.  The UNHPD’s primary community policing vehicle is its Residence Hall Officer (RHO) program.  Each officer is assigned as a liaison to a Residence Hall, provides regular interaction with the students and staff, provides support to residence assistants, follows up on police incidents and provides educational programs for residents. Sgt. Dos Santos regularly attends Hall staff meetings, provides educational programs to residents such as “Think before you Drink” and proper behavior at off campus parties.  He assists other officers in presenting career development programs to our public safety discipline students, who are a significant proportion of the student body.  He also assists officers in presenting student safety and self-defense programs.  Some of the outreach programs that he has personally initiated or spearheaded are:

“Drunk Sundaes,” where students don “drunk goggles” and operate a controlled golf cart ride to truly appreciate how impaired driving can affect one’s judgement; “ARC Dream Orientation” for special needs students, and “Do NUT Drink and Drive,” a Public Safety Block Party to kick off National Campus Safety Month.

As a supervisor, Sgt. Dos Santos, provides guidance and assistance to other officers with community outreach programs.  As both a supervisor and officer, he diligently follows up on all incidents within his areas of responsibility.  His interventions and educational talks have mitigated many small problems before they became major issues.  His reputation for thoroughness and commitment to the community is well known throughout the University and the city of West Haven.

In short, Sgt. Dos Santos has become an overall role model and mentor for the University’s student population.

Waterbury Police Department

Sergeant Ryan Bessette

Lisa Velez

Sergeant Ryan Bessette serves as Officer in Charge of the Community Relations Division at the Waterbury Police Department.  This division encompasses various agencies including the Neighborhood Police Officers, Mounted Unit Officers, Police Activities League (PAL) and a civilian Blight Control Team.  This collaborative approach focuses on reaching out to 23 active neighborhood associations, addressing quality of life-related issues, building and fostering relationships with the community and providing mentorship/positive programs for Waterbury youths.  Sergeant Bessette works tirelessly with a team of dedicated officers and civilian personnel to serve the needs of the community and educate residents, all while preventing and solving crimes.

Lisa Velez, President of the Brooklyn Neighborhood Association, has also served as President of the Waterbury Neighborhood Council, which consists of various active neighborhood associations.  She has created a dedicated working relationship with Sergeant Bessette and the entire Community Relations Division.  Lisa has been a longtime advocate of community oriented policing and served to facilitate community engagement.  Importantly, she continues to help strengthen the relationship between the Neighborhood Council and the Waterbury Police Department.

Vanessa Roberts Avery, United States Attorney for the District of Connecticut, announced that BRYAN WILSON, 40, of Madison, was sentenced today by U.S. District Judge Michael P. Shea in Hartford to 24 months of imprisonment, followed by three years of supervised release, for tampering with fentanyl vials at the company where he was employed.  Judge Shea also ordered Wilson to pay a $5,000 fine.

According to court documents and statements made in court, Wilson was employed as a nurse by The Vascular Experts, a Connecticut company that performs outpatient medical procedures.  As part of his duties, Wilson was responsible for conducting sedations on patients and he had access to the secure area in his workplace that contained vials of drugs used as anesthetics, including fentanyl.  In August and September 2021, Wilson took vials of fentanyl that were intended to be used to formulate infusion for patients.  He used a syringe to withdraw the fentanyl from the vials and reinjected saline into the vials so that it would appear as if none of the narcotics were missing.  When another nurse at the company noticed that vials had been tampered with, and Wilson was subsequently questioned by company officials, Wilson admitted that he stole the fentanyl and used it to treat a medical condition.

On February 10, 2022, Wilson pleaded guilty to one count of tampering with a consumer product.

Wilson, who is released on bond, is required to report to prison on January 9, 2023.

Wilson has surrendered his nursing license.

This matter was investigated by the Food and Drug Administration, Office of Criminal Investigations; the DEA’s Hartford Diversion Control Division; and the Connecticut Department of Consumer Protection, Drug Control Division.  The case was prosecuted by Assistant U.S. Attorney Ray Miller.

Leonard C Boyle, United States Attorney for the District of Connecticut, announced that CORTNEY DUNLAP, 37, of Burlington, was sentenced today by U.S. District Judge Kari A. Dooley in Bridgeport to 57 months of imprisonment, followed by three years of supervised release, for operating a wide-ranging scheme that defrauded the Connecticut Medicaid Program of more than $1.3 million.

According to court documents and statements in court, from 2014 to 2020, Dunlap was a Licensed Professional Counselor with offices located on Brainard Road in Hartford.  Dunlap also owned two entities, Inspirational Care and KEYS Program Inc., through which he managed group homes in Hartford, Bristol, Cromwell and Waterbury, including residences for women and children who were victims of domestic abuse.

From August 2018 through October 2020, Dunlap engaged in a scheme to defraud the Connecticut Medicaid Program by submitting claims for psychotherapy services that were purportedly provided to Medicaid clients.  The vast majority of the claims were for occasions and dates of service when no psychotherapy services of any kind had been provided to the Medicaid clients identified in the claims.  On a limited number of occasions, some of the services were rendered by unlicensed individuals who were not qualified or licensed to provide psychotherapy.

The Connecticut Medicaid program suspended Dunlap as a Medicaid provider on approximately April 28, 2020, and, on May 7, 2020, federal law enforcement agents executed a court-authorized search of Dunlap’s Hartford offices.  Dunlap subsequently billed Medicaid for psychotherapy services through Inspirational Care for services that which were not provided, using the provider number of a licensed clinical social worker who did not provide the services and was not aware that her provider number was being used to bill for the nonexistent services.

Dunlap required tenants of the group homes operated or managed by Inspirational Care and KEYS program to provide copies of the Medicaid member cards for the tenants and their children as a condition of the tenants residing at the group homes.  Dunlap then used these Medicaid member numbers to bill Medicaid for psychotherapy services that were not provided to the tenants or their children.  Dunlap used the Medicaid member numbers of approximately 65 tenants or their children to bill Medicaid for fraudulent services, and Medicaid paid Dunlap approximately $543,117 for psychotherapy services that were not provided to these individuals.

In February 2019, the New Haven Public Schools hired Dunlap as a guidance counselor at the New Haven Adult and Continuing Education Center.  In February 2020, Dunlap accessed a database containing personal identifying information of students and former students enrolled at New Haven Adult and Continuing Education, many of whom Dunlap did not have any professional relationship with and had never met.  Dunlap used the information he acquired to determine whether the students were insured by Medicaid and, if so, identified the students’ Medicaid member identification numbers.  He then billed Medicaid for fraudulent psychotherapy services that were never provided to the students.  Dunlap used the personal identifying information and Medicaid member numbers of approximately 135 New Haven Adult and Continuing Education students to bill Medicaid for fraudulent services, and was paid a total of approximately $593,383 by Medicaid for these claims.

Dunlap also fraudulently billed Medicaid for psychotherapy services purportedly provided to employees of Inspirational Care when no such services were provided, and submitted fraudulent claims to Medicaid for psychotherapy services purportedly provided to members of his family when no such services were provided.

Judge Dooley ordered to Dunlap to pay restitution to Medicaid in the amount of $1,313,322.

U.S. Attorney Boyle noted that Connecticut Department of Social Services, working in close cooperation with law enforcement, suspended Medicaid payments to Dunlap and recovered $337,777.63 that Dunlap was slated to receive from Medicaid.  The U.S. Attorney’s Office’s Civil Division also seized and forfeited $412,415.20 from Dunlap’s bank accounts.  Dunlap has made an additional restitution payment of $20,000, leaving a restitution obligation of $543,129.17.

Dunlap was arrested on a criminal complaint on October 14, 2020.  On June 4, 2021, he pleaded guilty to one count of health care fraud.

Dunlap, who is released on bond, is required to report to prison on April 25.

This investigation has been conducted by the Office of the Inspector General of the U.S. Department of Health and Human Services and the Federal Bureau of Investigation, with the assistance of the Office of the Inspector General for the U.S. Department of Housing and Urban Development, the Office of the Inspector General for the U.S. Department of Education, the Medicaid Fraud Control Unit of the Connecticut Chief State’s Attorney’s Office, the Connecticut Attorney General’s Office and the Connecticut Department of Social Services.

This case is being prosecuted by Assistant U.S. Attorney David J. Sheldon with the assistance of Auditor Susan N. Spiegel.

Vanessa Roberts Avery, United States Attorney for the District of Connecticut, David Sundberg, Special Agent in Charge of the New Haven Division of the Federal Bureau of Investigation, and Joleen D. Simpson, Special Agent in Charge of IRS Criminal Investigation in New England, announced that KYLE J. WINE, 41, of Lee’s Summit, Missouri, waived his right to be indicted and pleaded guilty today via videoconference before U.S. District Judge Omar A. Williams in Hartford to fraud and money laundering offenses stemming from a $7 million scheme related to his commercial aircraft supply businesses.

According to court documents and statements made in court, Wine owned and operated various companies engaged in the business of commercial aircraft supply, including JetPro International, LLC (“JetPro”), Nexus Aviation, and Turbotech Partners.  From at least 2018 through 2021, Wine defrauded investors in aircraft-related transactions.  Wine used victims' money to purchase aircraft airframes and engines, sold the aircraft airframes and engines, hid the

resulting profits from his investors, and diverted invested funds for his personal use.

As part of the scheme, Wine induced an investment firm based in Darien, Connecticut, to invest $4.5 million in the purported acquisition and sale of an Airbus A320-231 airframe and two aircraft engines.  Wine sent fictitious correspondence to the victim investor, and created fake domain names and email accounts and the used those email accounts to send fraudulent correspondence to the victim investor, to trick the investor into believing that JetPro was attempting to sell the Airbus airframe and the two aircraft engines to certain buyers.  In fact, Wine had already sold one engine for $2.45 million and the Airbus airframe for $1.3 million.  He never informed the victim investor of those sales and shared none of the proceeds of the sales with the investor.  Wine also used some of these invested funds to purchase another aircraft engine without the knowledge of the victim investor.

In total, Wine’s fraud scheme caused $7,152,666.67 in losses to 13 separate victims.

Wine pleaded guilty to one count of wire fraud, which carries a maximum term of imprisonment of 20 years, and one count of money laundering, which carries a maximum term of imprisonment of 10 years.

Wine is released on bond pending sentencing, which is not scheduled.

This matter is being investigated by the Federal Bureau of Investigation and the Internal Revenue Service – Criminal Investigation Division.  The case is being prosecuted by Assistant U.S. Attorney Jonathan N. Francis.

Vanessa Roberts Avery, United States Attorney for the District of Connecticut, and Jean Pierre Njock, Acting Special Agent in Charge of the New Haven Division of the Federal Bureau of Investigation, today announced that an investigation of a fraud scheme targeting vulnerable victims has resulted in the forfeiture of approximately 151 Bitcoins, as well as other digital assets.

According to court documents, in approximately October 2020, overseas individuals began targeting vulnerable victims, including first generation U.S. citizens and elderly persons, through phone calls by pretending to be members of U.S. law enforcement agencies and telling the victims that their identity had been compromised.  The overseas individuals used computer programs to make it appear as if their phone calls were coming from legitimate government sources.  After gaining the victims’ trust, the overseas individuals requested transfers of money for “safekeeping” with the promise that the victims would receive their money, plus interest, when the perpetrators of the nonexistent identity fraud were captured.  Once the overseas individuals had access to the victims’ money, they moved the money through multiple bank accounts and converted the money to digital currency in the form of Bitcoin and other cryptocurrencies.

Law enforcement investigators traced the victims’ money through the various accounts and identified a digital wallet holding Bitcoin and other cryptocurrencies that had been purchased with the victims’ money.  The U.S. Attorney’s Office applied for and received a civil asset forfeiture seizure warrant for the digital wallet and, following the seizure, filed a civil asset forfeiture complaint against the digital assets, which resulted in an order of forfeiture from the U.S. District Court of the District of Connecticut.

The U.S. Attorney’s Office used the civil asset forfeiture procedure because the digital assets constituted the proceeds of wire fraud.  Although law enforcement continues to investigate the overseas individuals behind this scam, those individuals remain at large.  Civil asset forfeiture allowed the government to recover the victims’ money while the investigation is ongoing.

“This office and our law enforcement partners are prepared to use all tools available to investigate, disrupt, and prosecute fraud schemes, especially scams that target vulnerable populations," said U.S. Attorney Avery.  "We will continue to be at the forefront of investigating and seizing digital assets such as cryptocurrency when those assets are linked to criminal behavior.  Individuals committing crimes will not be able to hide the proceeds of those crimes digitally or elsewhere."

“No matter which cyber tools and methods criminal actors create to defraud members of the public, we at the FBI, U.S. Marshals and the Secret Service dedicate all resources to identifying those responsible and bringing them to justice no matter where they are in the world,” said FBI Acting Special Agent in Charge Njock.  “We encourage everyone to conduct due diligence to verify authenticity of who they are dealing with when conducting business online to avoid being a victim of scams.”

This matter is being investigated by the Federal Bureau of Investigation, the U.S. Secret Service and the U.S. Marshals Service.  This case was prosecuted by Assistant U.S. Attorney David C. Nelson.

The docket number associated with this case is 3:22-cv-01308 (JCH).

Members of the public seeking to confirm they have been contacted by an actual government employee are encouraged to call the local division of the claimed government entity and ask to be connected directly with the officer or agent they were contacted by.  Victims of this scam are encouraged to file a report with their local law enforcement agency and the FBI’s Internet Crime Complaint Center (IC3) at ic3.gov.

Vanessa Roberts Avery, United States Attorney for the District of Connecticut, and Phillip M. Coyne, Special Agent in Charge of the U.S. Department of Health and Human Services, announced that ZAYA POWELL, 25, of Waterbury, was sentenced today by U.S. District Judge Jeffrey A. Meyer in New Haven to three years of probation for creating false COVID-19 vaccine records for several individuals.  Judge Meyer also ordered Powell to pay a $5,000 fine and perform 200 hours of community service.

According to court documents and statements made in court, Powell worked as a Data Entry Specialist for Griffin Health Services Corporation (“Griffin Health”) and, in that role, she traveled to various COVID-19 vaccination sites in Connecticut operated by Griffin Health.  Although Powell did not administer the vaccines, she had access to the Griffin Health electronic health record system and to stacks of blank COVID-19 vaccination cards.  She also had access to the Vaccine Administration Management System (VAMS), a database developed by the Centers for Disease Control (CDC) that tracked COVID-19 vaccine administration.

Between August and October 2021, Powell created fraudulent vaccination records in VAMS for 14 different individuals.  The records indicated that each of the 14 individuals had received a single-dose Johnson & Johnson COVID-19 vaccination at a Griffin Health location when, in fact, none had received any COVID-19 vaccination from Griffin Health or any other health care provider.  In order to create the fraudulent vaccination record, Powell entered each individual’s name and date of birth into VAMS.  She also created fraudulent COVID-19 vaccination cards for each of the 14, and distributed the fraudulent cards to the individuals or to their family members or co-workers.  The fraudulent cards included lot numbers of genuine vaccines that were administered to other Griffin Health patients.

The investigation revealed that four of the 14 individuals who received fraudulent COVID-19 vaccination cards created by Powell were state employees who worked at the Southbury Training School, a Connecticut Department of Developmental Services facility located in Southbury.  The four Southbury Training School employees were “state employees” or “state hospital employees” within the scope of Executive Order 13G issued by Governor Lamont, and were therefore required to meet the vaccination requirements of the Executive Order by September 27, 2021.  The four employees sought and used the fraudulent COVID-19 vaccination cards created by Powell and the false entries in VAMS created by Powell to falsely document that they had received a COVID-19 vaccination.

On August 12, 2022, Powell pleaded guilty to one count of making a false statement relating to a health care matter.

The four Southbury Training School employees were charged in state court and their cases are pending.

This investigation was conducted by the Office of the Inspector General of the U.S. Department of Health and Human Services (HHS-OIG).

U.S. Attorney Avery thanked the Connecticut Department of Public Health, the Connecticut Department of Developmental Services, the Office of the Chief State’s Attorney, and Griffin Health for their assistance in the investigation.

This case was prosecuted by Assistant U.S. Attorney David J. Sheldon.

Vanessa Roberts Avery, United States Attorney for the District of Connecticut, and Phillip M. Coyne, Special Agent in Charge of the U.S. Department of Health and Human Services, announced that ZAYA POWELL, 25, of Waterbury, waived her right to be indicted and pleaded guilty today before U.S. District Judge Jeffrey A. Meyer in New Haven to a false statement offense stemming from her creation of false COVID-19 vaccine records for several individuals.

According to court documents and statements made in court, Powell worked as a Data Entry Specialist for Griffin Health Services Corporation (“Griffin Health”) and, in that role, she traveled to various COVID-19 vaccination sites in Connecticut operated by Griffin Health.  Although Powell did not administer the vaccines, she had access to the Griffin Health electronic health record system and to stacks of blank COVID-19 vaccination cards.  She also had access to the Vaccine Administration Management System (VAMS), a database developed by the Centers for Disease Control (CDC) that tracked COVID-19 vaccine administration.

Between August and October 2021, Powell created fraudulent vaccination records in VAMS for 14 different individuals.  The records indicated that each of the 14 individuals had received a single-dose Johnson & Johnson COVID-19 vaccination at a Griffin Health location when, in fact, none had received any COVID-19 vaccination from Griffin Health or any other health care provider.  In order to create the fraudulent vaccination record, Powell entered each individual’s name and date of birth into VAMS.  She also created fraudulent COVID-19 vaccination cards for each of the 14, and distributed the fraudulent cards to the individuals or to their family members or co-workers.  The fraudulent cards included lot numbers of genuine vaccines that were administered to other Griffin Health patients.

The investigation revealed that four of the 14 individuals who received fraudulent COVID-19 vaccination cards created by Powell were state employees who worked at the Southbury Training School, a Connecticut Department of Developmental Services facility located in Southbury.  The four Southbury Training School employees were “state employees” or “state hospital employees” within the scope of Executive Order 13G issued by Governor Lamont, and were therefore required to meet the vaccination requirements of the Executive Order by September 27, 2021.  The four employees sought and used the fraudulent COVID-19 vaccination cards created by Powell and the false entries in VAMS created by Powell to falsely document that they had received a COVID-19 vaccination.

Powell pleaded guilty to one count of making a false statement relating to a health care matter, an offense that carries a maximum term of imprisonment of five years.  Judge Meyer scheduled sentencing for November 4, 2022.

Powell is released on a $25,000 bond pending sentencing.

This investigation is being conducted by the Office of the Inspector General of the U.S. Department of Health and Human Services (HHS-OIG).

U.S. Attorney Avery thanked the Connecticut Department of Public Health, the Connecticut Department of Developmental Services, and Griffin Health for their assistance in the investigation.

This case is being prosecuted by Assistant U.S. Attorney David J. Sheldon.

Leonard C Boyle, United States Attorney for the District of Connecticut, announced that BRYAN WILSON, 39, of Madison, waived his right to be indicted and pleaded guilty today before U.S. District Judge Michael P. Shea in Hartford to one count of tampering with a consumer product.

According to court documents and statements made in court, Wilson was employed as a nurse by The Vascular Experts, a Connecticut company that performs outpatient medical procedures.  As part of his duties, Wilson was responsible for conducting sedations on patients and he had access to the secure area in his workplace that contained vials of drugs used as anesthetics, including fentanyl.  In August and September 2021, Wilson took vials of fentanyl that were intended to be used to formulate infusion for patients.  He used a syringe to withdraw the fentanyl from the vials and reinjected saline into the vials so that it would appear as if none of the narcotics were missing.

Judge Shea scheduled sentencing for May 5, 2022, at which time Wilson faces a maximum term of imprisonment of 10 years.

Wilson was released on bond pending sentencing.  He has surrendered his nursing license.

This matter is being investigated by the Food and Drug Administration, Office of Criminal Investigations; the DEA’s Hartford Diversion Control Division; and the Connecticut Department of Consumer Protection, Drug Control Division.  The case is being prosecuted by Assistant U.S. Attorney Ray Miller.

Leonard C Boyle, Acting United States Attorney for the District of Connecticut, announced that CORTNEY DUNLAP, 36, of Burlington, waived his right to be indicted and pleaded guilty today before U.S. District Judge Kari A. Dooley in Bridgeport to health care fraud related to a wide-ranging scheme that defrauded the Connecticut Medicaid Program of more than $1.3 million.

According to court documents and statements in court, from 2014 to 2020, Dunlap was a Licensed Professional Counselor with offices located on Brainard Road in Hartford.  Dunlap also owned two entities, Inspirational Care and KEYS Program Inc., through which he managed group homes in Hartford, Bristol, Cromwell and Waterbury, including residences for women and children who were victims of domestic abuse.

From August 2018 through October 2020, Dunlap engaged in a scheme to defraud the Connecticut Medicaid Program by submitting claims for psychotherapy services that were purportedly provided to Medicaid clients.  The vast majority of the claims were for occasions and dates of service when no psychotherapy services of any kind had been provided to the Medicaid clients identified in the claims.  On a limited number of occasions, some of the services were rendered by unlicensed individuals who were not qualified or licensed to provide psychotherapy.

The Connecticut Medicaid program suspended Dunlap as a Medicaid provider on approximately April 28, 2020, and, on May 7, 2020, federal law enforcement agents executed a court-authorized search of Dunlap’s Hartford offices.  Dunlap subsequently billed Medicaid for psychotherapy services through Inspirational Care for services that which were not provided, using the provider number of a licensed clinical social worker who did not provide the services and was not aware that her provider number was being used to bill for the nonexistent services.

Dunlap required tenants of the group homes operated or managed by Inspirational Care and KEYS program to provide copies of the Medicaid member cards for the tenants and their children as a condition of the tenants residing at the group homes.  Dunlap then used these Medicaid member numbers to bill Medicaid for psychotherapy services that were not provided to the tenants or their children.  Dunlap used the Medicaid member numbers of approximately 65 tenants or their children to bill Medicaid for fraudulent services, and Medicaid paid Dunlap approximately $543,117 for psychotherapy services that were not provided to these individuals.

In February 2019, the New Haven Public Schools hired Dunlap as a guidance counselor at the New Haven Adult and Continuing Education Center.  In February 2020, Dunlap accessed a database containing personal identifying information of students and former students enrolled at New Haven Adult and Continuing Education, many of whom Dunlap did not have any professional relationship with and had never met.  Dunlap used the information he acquired to determine whether the students were insured by Medicaid and, if so, identified the students’ Medicaid member identification numbers.  He then billed Medicaid for fraudulent psychotherapy services that were never provided to the students.  Dunlap used the personal identifying information and Medicaid member numbers of approximately 135 New Haven Adult and Continuing Education students to bill Medicaid for fraudulent services, and was paid a total of approximately $593,383 by Medicaid for these claims.

Dunlap also fraudulently billed Medicaid for psychotherapy services purportedly provided to employees of Inspirational Care when no such services were provided, and submitted fraudulent claims to Medicaid for psychotherapy services purportedly provided to members of his family when no such services were provided.

Dunlap was arrested on a criminal complaint on October 14, 2020.

Judge Dooley scheduled sentencing for August 27, 2021, at which time Dunlap faces a maximum term of imprisonment of 10 years.  Dunlap has agreed to pay restitution to Medicaid in the amount of $1,313,322.  To help satisfy his restitution obligation, Dunlap has agreed to forfeit a bank account containing approximately $152,000.

This investigation has been conducted by the Office of the Inspector General of the U.S. Department of Health and Human Services and the Federal Bureau of Investigation, with the assistance of the Office of the Inspector General for the U.S. Department of Housing and Urban Development, the Office of the Inspector General for the U.S. Department of Education, the Medicaid Fraud Control Unit of the Connecticut Chief State’s Attorney’s Office, the Connecticut Attorney General’s Office and the Connecticut Department of Social Services.

This case is being prosecuted by Assistant U.S. Attorney David J. Sheldon with the assistance of Auditor Susan N. Spiegel.

Vanessa Roberts Avery, United States Attorney for the District of Connecticut, announced that DOUGLAS SENERTH, 33, of South Windsor, was sentenced today by U.S. District Judge Robert N. Chatigny in Hartford to 18 months of imprisonment, followed by three years of supervised release, for stealing approximately $679,000 from his grandparents.  Judge Chatigny also ordered Senerth to serve the first six months of his supervised release in home confinement.

According to court documents and statements made in court, between 2011 and 2019, Senerth defrauded his grandmother and his late grandfather by falsely claiming to be a college student and inducing them to give him approximately $419,000 to pay for nonexistent college tuition and other related expenses, and an additional approximately $260,000 by falsely claiming that he would invest their money into an investment fund run by one of his nonexistent professors.  As part of the scheme, Senerth created fraudulent college transcripts, letters and email accounts that he used to corroborate his lies.

Judge Chatigny ordered Senerth to pay restitution of $679,944.

Senerth has been detained in state custody since February 10, 2021, when he was arrested on unrelated charges.  On February 23, 2022, he pleaded guilty in federal court to one count of wire fraud.

Senerth’s state case is pending.  His federal sentence will begin when his state case is resolved.

This investigation was conducted by the Federal Bureau of Investigation and prosecuted by Assistant U.S. Attorney Heather Cherry.

The Justice Department has established a National Elder Fraud Hotline to provide services to seniors who may be victims of financial fraud.  The Hotline is staffed by experienced case managers who can provide personalized support to callers.  Case managers assist callers with reporting the suspected fraud to relevant agencies and by providing resources and referrals to other appropriate services as needed.  When applicable, case managers will complete a complaint form with the Federal Bureau of Investigation Internet Crime Complaint Center (IC3) for Internet-facilitated crimes and submit a consumer complaint to the Federal Trade Commission on behalf of the caller.  The Hotline’s toll-free number is 833-FRAUD-11 (833-372-8311).  For more information, please visit: https://ovc.ojp.gov/program/stop-elder-fraud/providing-help-restoring-hope.

John H. Durham, United States Attorney for the District of Connecticut, announced that HEATHER ALFONSO, 46, of South Carolina, was sentenced today by U.S. District Judge Janet Bond Arterton in New Haven to three years of probation for engaging in a kickback scheme related to fentanyl spray prescriptions. 

According to court documents and statements made in court, Alfonso formerly resided in Connecticut and was employed as an Advanced Practice Registered Nurse (APRN) at Comprehensive Pain and Headache Treatment Center (CPHTC) located in Derby.  As part of her practice, Alfonso prescribed various controlled substances, including Subsys, a fentanyl-based sublingual spray that was approved by the Food and Drug Administration solely for the management of breakthrough pain in cancer patients.  Subsys was manufactured and sold by Insys Therapeutics, an Arizona-based pharmaceutical company.

A review of Medicare Part D prescription drug events for prescribers of Subsys showed that Alfonso was responsible for approximately $2.5 million in claims and was the highest prescriber of the drug in Connecticut.  Interviews with several of Alfonso’s patients, who were Medicare Part D beneficiaries and were prescribed Subsys, revealed that most of them did not have cancer, but had taken the drug to treat their chronic pain.  Medicare and most private insurers did not pay for Subsys unless the patient had an active cancer diagnosis and an explanation that the drug was needed to manage the patient’s cancer pain. 

An investigation revealed that Insys Therapeutics representatives were inducing medical practitioners around the country to prescribe Subsys over other similar medications by paying the medical practitioners to participate in hundreds of sham “Speaker Programs.”  The Speaker Programs, which were typically held at high-end restaurants, were ostensibly designed to gather licensed healthcare professionals who had the capacity to prescribe Subsys and educate them about the drug.  In truth, the events were usually just a gathering of friends and co-workers, most of whom did not have the ability to prescribe Subsys, and no educational component took place.  “Speakers” were paid a fee that ranged from $1,000 to several thousand dollars for attending these dinners.  At times, the sign-in sheets for the Speaker Programs were forged to make it appear that the programs had an appropriate audience of healthcare professionals.

Between approximately January 2013 and March 2015, Insys Therapeutics paid Alfonso approximately $83,000 to act as a “speaker” for more than 70 dinner programs.  In many instances, the dinner programs were only attended by Alfonso and an Insys Therapeutics sales representative.  In other instances, the programs were attended by CPHTC staff and Alfonso’s friends, none of whom had licenses to prescribe controlled substances.

Alfonso’s conduct resulted in a loss to Medicare of $2,564.501.64.  Judge Arterton ordered Alfonso to pay full restitution, jointly and severally with other defendants convicted in this scheme.

On June 25, 2015, Alfonso pleaded guilty to one count of receiving kickbacks in relation to a federal healthcare program.

Several other individuals affiliated with Insys Therapeutics, and medical practitioners involved in this kickback scheme, have been charged and convicted in the District of Connecticut and in other Districts across the U.S.  On May 2, 2019, a federal jury in Boston found John N. Kapoor, the founder and former Executive Chairman of Insys Therapeutics, and four other former Insys executives guilty of racketeering conspiracy.

In sentencing Alfonso, Judge Arterton credited Alfonso’s prompt acceptance of responsibility, her assistance to the government’s prosecution of other defendants, and the extensive testimony she provided during the trial in the District of Massachusetts.

In June 2019, Insys Therapeutics agreed to pay a total of $225 million to resolve criminal and civil investigations of the company.

The investigation in the District of Connecticut has been conducted by the U.S. Department of Health and Human Services Office of the Inspector General and the Federal Bureau of Investigation, with the assistance of the Drug Enforcement Administration’s Tactical Diversion Squad.  The case is being prosecuted by Assistant U.S. Attorneys Douglas P. Morabito, Sarah P. Karwan and Richard M. Molot.

U.S. Attorney Durham encouraged individuals who suspect health care fraud to report it by calling the Health Care Fraud Task Force (203) 785-9270 or 1-800-HHS-TIPS.

The Justice Department today announced the results of its efforts over the past year to protect older adults from fraud and exploitation.  During the past year, the Department and its law enforcement partners tackled matters that ranged from mass-marketing scams that impacted thousands of victims to bad actors scamming their neighbors.  Substantial efforts were also made over the last year to return money to fraud victims. Today, the Department also announced it is expanding its Transnational Elder Fraud Strike Force to amplify efforts to combat scams originating overseas.

“We are intensifying our efforts nationwide to protect older adults, including by more than tripling the number of U.S. Attorneys’ offices participating in our Transnational Elder Fraud Strike Force dedicated to disrupting, dismantling and prosecuting foreign-based fraud schemes that target American seniors,” said Attorney General Merrick B. Garland.  “This expansion builds on the Justice Department’s existing work to hold accountable those who steal funds from older adults, including by returning those funds to the victims where possible.”

“Elder fraud schemes are becoming more sophisticated and more dastardly, and our office will continue to prioritize the prosecution of individuals who victimize vulnerable individuals,” said U.S. Attorney Vanessa Roberts Avery.  “We are also committed to engaging with older members of our community to help them avoid scams that put them at great financial risk.”

From September 2021 to September 2022, Justice Department personnel and its law enforcement partners pursued approximately 260 cases involving more than 600 defendants, both bringing new cases and advancing those previously charged.

Elder fraud cases prosecuted in the District of Connecticut include:

U.S. v. Clason – Matthew Clason, of Cheshire, was a registered investment advisor who stole more than $600,000 from an elderly client.  In December 2021, he was sentenced to 30 months of imprisonment.

U.S. v. Fasasi, et al – Farouq Fasasi and several associates in Connecticut were involved in lottery scams and romance fraud scams that defrauded primarily elderly victims across the country of more than $5 million.  One elderly Connecticut resident lost more than $1 million.  Fasasi and five others were convicted of various charges stemming from the schemes.  In August 2022, Fasasi was sentenced to 14 years of imprisonment. 

U.S. v. Senerth – Douglas Senerth, of South Windsor, stole approximately $679,000 from his grandparents by falsely claiming to be a college student and inducing them to give him money to pay for nonexistent college tuition and other related expenses, and funds that he claimed he would invest on their behalf.  In July 2022, he was sentenced to 18 months of imprisonment.

U.S. v. Singh – Jhanannie Singh, of Queens, New York, stole hundreds of thousands of dollars in U.S. Savings Bonds from an elderly woman for whom she provided home health services, and then enlisted others to help her sell the bonds.  Singh pleaded guilty in August 2022 and awaits sentencing.

U.S. v. Ivy – Gregory Ivy, of New Haven, stole blank checks from a retired woman for whom he performed odd jobs.  Ivy forged the victims signature on some of the checks and deposit them into his personal account, and also provided checks to another individual, who further shared the victim’s bank account information.  The victim lost more than $479,000 through this scheme, and Ivy personally stole more than $162,000.  Ivy pleaded guilty in September 2022 and awaits sentencing.

As part of the District of Connecticut’s elder fraud efforts, it engages in outreach to the community and industry to raise awareness about scams and exploitation and preventing victimization. This year, members of the office have made presentations at several community senior centers in Connecticut, AARP-CT roundtables and law enforcement conferences.

The Justice Department also highlighted three other efforts: expansion of the Transnational Elder Fraud Task Force, success in returning money to victims and efforts to combat grandparent scams.

The Department announced that, as part of its continuing efforts to protect older adults and bring perpetrators of fraud schemes to justice, it is expanding the Transnational Elder Fraud Strike Force, adding 14 new U.S. Attorney’s Offices.  Expansion of the Strike Force will help to coordinate the Department’s ongoing efforts to combat largest and most harmful fraud schemes that target or disproportionately impact older adults.

In the past year, the Justice Department has notified over 550,000 people that they may be eligible for remission payments.  Notifications were made to consumers whose information was sold by one of three data companies prosecuted by the Department and were later victims of “sweepstakes” or “astrology” solicitations that falsely promised prizes or individualized services in return for a fee.  More than 150,000 of those victims cashed checks totaling $52 million, and thousands more are eligible to receive checks.  Also notified were consumers who paid fraudsters perpetrating person-in-need scams and job scams via Western Union.  In the past year, the Department has identified and contacted over 300,000 consumers who may be eligible for remission.  Since March 2020, more than 148,000 victims have received more than $366 million as a result of a 2017 criminal resolution with Western Union for the company’s willful failure to maintain an effective anti-money laundering program and its aiding and abetting of wire fraud.

Over the past year, the Justice Department pursued cases against the perpetrators of “grandparent scams,” otherwise known as “person-in-need scams.”  These scams typically begin when a fraudster, often based overseas, contacts an older adult and poses as either a grandchild, other family member or someone calling on behalf of a family member.  Call recipients are told that their family member is in jeopardy and is urgently in need of money.  When recently sentencing one of eight perpetrators of a grandparent scam indicted under the Racketeer Influenced and Corrupt Organizations Act, a federal judge described such scams “heartbreakingly evil.”  The Department is working with government partners and others to raise awareness about these schemes.

Reporting from consumers about fraud and fraud attempts is critical to law enforcements efforts to investigate and prosecute schemes targeting older adults.  If you or someone you know is age 60 or older and has been a victim of financial fraud, help is available the National Elder Fraud Hotline: 1-833-FRAUD-11 or 833-372-8311.  This Department of Justice Hotline, managed by the Office for Victims of Crime, is staffed by experienced professional who provide personalized support to callers by assessing the needs of the victim and identifying next steps.  Case managers will identify appropriate reporting agencies, provide information to callers to assist them in reporting or connect them with agencies, and provide resources and referrals on a case-by-case basis.  The hotline is staffed seven days a week from 6:00 a.m. to 11:00 p.m.[ET]. English, Spanish and other languages are available. More information about the Department’s elder justice efforts can be found on the Department’s Elder Justice website, www.elderjustice.gov.

Some of the cases that comprise today’s announcement are charges, which are merely allegations, and the defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

Vanessa Roberts Avery, United States Attorney for the District of Connecticut, today announced that JEFFREY SLOCUM, 55, of Johnstown, Pennsylvania, waived his right to be indicted and pleaded guilty yesterday before U.S. District Judge Stefan R. Underhill in Bridgeport to one count of health care fraud and one count of violating the federal anti-kickback statute.

According to court documents and statements made in court, from 2017 to 2022, Slocum, a former resident of East Lyme, was a Licensed Professional Counselor (LPC) with an office located at 300 State Street in New London.  In 2020, the Connecticut Medicaid program (“Medicaid”) notified Slocum that Medicaid was going to audit certain claims for psychotherapy services Slocum had billed to Medicaid between March 2018 and February 2020.  As part of its audit, Medicaid requested patient records for approximately 100 individual psychotherapy services Slocum had billed to Medicaid.

In March 2021, Medicaid notified Slocum that the audit had determined that he had received over $225,000 in payments from Medicaid for services that he had not documented.  Medicaid told Slocum it would begin to collect the overpayment by deducting the overpayment in installments from future payments Medicaid would make to Slocum.  Once Slocum learned the results of the audit and that he would have to pay the money back to Medicaid, he began submitting fraudulent claims to Medicaid for psychotherapy services that he never provided.  All of the fraudulent claims Slocum submitted to Medicaid represented that he had personally provided the nonexistent services.

As part of his plea, Slocum admitted that from March 1, 2020 to February 24, 2022, he submitted fraudulent claims to Medicaid totaling $695,048.

In pleading guilty, Slocum also admitted that he engaged in a scheme to pay kickbacks to his Medicaid patients in order to induce them to receive psychotherapy services from him.  Slocum paid these kickbacks to patients in the form of cash payments, money orders, and Wal-Mart and VISA gift cards.

Judge Underhill scheduled sentencing for November 8, at which time Slocum faces a maximum term of imprisonment of 20 years.  Slocum also has agreed to pay full restitution to Medicaid.

This investigation is being conducted by the Office of the Inspector General of the U.S. Department of Health and Human Services (HHS-OIG) and the Federal Bureau of Investigation, with the assistance of the Connecticut Department of Social Services.  The case is being prosecuted by Assistant U.S. Attorney David J. Sheldon and Auditor Susan Spiegel.

The U.S. Attorney’s Office, Chief State’s Attorney’s Office, and Attorney General’s Office meet regularly as part of The Medicaid Fraud Working Group.  The Working Group also includes representatives from the Connecticut Department of Social Services; the Connecticut Department of Public Health; the Drug Control Division of the Connecticut Department of Consumer Protection; the Office of the Inspector General of the U.S. Department of Health and Human Services, and the FBI.  The Working Group reviews pending issues and cases, identifies trends that might indicate fraudulent activity, and coordinates efforts for maximum results.

People who suspect health care fraud are encouraged to report it by calling 1-800-HHS-TIPS.

Vanessa Roberts Avery, United States Attorney for the District of Connecticut, announced that KYLE J. WINE, 42, of Lee’s Summit, Missouri, was sentenced today by U.S. District Judge Omar A. Williams in Hartford to 132 months of imprisonment, followed by three years of supervised release, for fraud and money laundering offenses stemming from a $7 million scheme related to his commercial aircraft supply businesses.

According to court documents and statements made in court, Wine owned and operated various companies engaged in the business of commercial aircraft supply, including JetPro International, LLC (“JetPro”), Nexus Aviation, and Turbotech Partners.  From at least 2018 through 2021, Wine defrauded investors in aircraft-related transactions.  Wine used victims' money to purchase aircraft airframes and engines, sold the aircraft airframes and engines, hid the resulting profits from his investors, and diverted invested funds for his personal use.

As part of the scheme, Wine induced an investment firm based in Darien, Connecticut, to invest $4.5 million in the purported acquisition and sale of an Airbus A320-231 airframe and two aircraft engines.  Wine sent fictitious correspondence to the victim investor and created fake domain names and email accounts.  He then used those email accounts to send fraudulent correspondence to the victim investor to trick the investor into believing that JetPro was attempting to sell the Airbus airframe and the two aircraft engines to certain buyers.  In fact, Wine had already sold one engine for $2.45 million and the Airbus airframe for $1.3 million.  He never informed the victim investor of those sales and shared none of the proceeds of the sales with the investor.  Wine also used some of these invested funds to purchase another aircraft engine without the knowledge of the victim investor.

In total, Wine’s fraud scheme caused $7,152,666.67 in losses to 13 separate victims.

Judge Williams will issue a restitution order after additional court proceedings.  Wine’s restitution obligation will be reduced to reflect money recouped through the sale of any asset that was part of his fraud scheme.

On July 19, 2022, Wine pleaded guilty to one count of wire fraud and one count of money laundering.  In November 2022, while he was released on bond pending sentencing, Wine created and submitted counterfeit bank statements in an attempt to obtain a loan to purchase a Cadillac Escalade from a Kansas auto dealership.  He has been detained since December 20, 2022, when his bond was revoked.

This is Wine’s second federal conviction.  In 2010, Wine pleaded guilty in the Western District of Missouri to fraud and money laundering offenses stemming from a mortgage fraud scheme that involved approximately $4.4 million in fraudulent loans on 86 properties.  He received a sentence of probation for those offenses.

This matter was investigated by the Federal Bureau of Investigation and the Internal Revenue Service – Criminal Investigation Division.  The case was prosecuted by Assistant U.S. Attorney Jonathan N. Francis.

A medical doctor and entrepreneur was sentenced to 119 months and 29 days in prison today for defrauding his former company’s shareholders and for failing to account for and failing to pay employment taxes, announced Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division, U.S. Attorney Dana J. Boente for the Eastern District of Virginia, Chief Don Fort of the Internal Revenue Service Criminal Investigation (IRS-CI) and Assistant Director in Charge Andrew W. Vale of the FBI’s Washington Field Office.

According to documents filed with the court, in or about September 2000, Sreedhar Potarazu, 51, of Potomac, Maryland, an ophthalmic surgeon licensed in Maryland and Virginia, founded VitalSpring Technologies Inc. (VitalSpring), a Delaware corporation. VitalSpring operated in McLean, Virginia and provided data analysis and services relating to health care expenditures. In or around the end of 2015, VitalSpring started doing business as Enziime LLC, a Delaware corporation. From its inception, Potarazu was VitalSpring’s Chief Executive Officer and President, and served on its Board of Directors.

From at least 2008, Potarazu provided materially false and misleading information to VitalSpring’s shareholders to induce more than $49 million in capital investments in the company. Potarazu represented on numerous occasions that VitalSpring was a financially successful company and that the sale of VitalSpring was imminent, which would have resulted in profits for shareholders. Potarazu also admitted that he concealed from shareholders that VitalSpring failed to account for and pay over more than $7.5 million in employment taxes to the IRS. For example, in 2014, Potarazu provided shareholders with a written summary of operating results that reflected VitalSpring’s 2013 revenues to be approximately $12.9 million when, in fact, the 2013 revenue was less than $1 million.

“Like a director employing actors and props on a stage, Sreedhar Potarazu arranged for an imposter to pose as a buyer, provided a link to a bogus website and supplied fraudulent balance sheets, phony bank statements and false tax returns to convince VitalSpring investors and potential buyers that the company was financially healthy and up-to-date on its taxes,” said Acting Deputy Assistant Attorney General Goldberg. “As a result of his actions, shareholders are out more than $49.5 million and over $7.5 million in employment taxes due to the U.S. Treasury were diverted and never paid. With Potarazu’s conviction and the sentencing hearings in this case, his fraud has been revealed, and today’s imposition of a 119 month sentence holds him fully accountable for his actions.”

“For years Potarazu enriched himself by abusing the trust of his company’s many investors and stealing millions of dollars from them through a complex scheme of fraud and deceit,” said U.S. Attorney Dana J. Boente for the Eastern District of Virginia. “This case is a prime example of this office’s ongoing commitment to bringing white-collar criminals to justice.”

“For almost a decade, Potarazu put greed ahead of his shareholders and employees by building a complex web of deceit and fraud while at the same time evading paying his employment tax liability,” said Chief Don Fort, IRS Criminal Investigation. “Today’s sentencing serves as a reminder that these types of criminal actions will be punished and IRS-CI is committed to bringing culpable individuals to justice.”

“Potarazu ran a multi-million dollar scheme that caused significant financial losses to VitalSpring shareholders for almost a decade,” said Assistant Director in Charge Andrew W. Vale of the FBI’s Washington Field Office. “The FBI is committed to bringing white-collar criminals to justice and we will continue to work closely with our law enforcement partners, to investigate, charge and prosecute those who engage in criminally deceitful business practices.”

Scheme to Defraud

From VitalSpring’s inception, but specifically from 2008 until his arrest in October 2016, Potarazu solicited investments through in-person meetings, emails, telephone conference calls, webinars, and phone calls. From in or about 2008 through in or about 2016, Potarazu raised approximately $49 million from more than 174 victim investors.

Potarazu induced investments from shareholders by making false representations, concealing material facts, and telling deceptive half-truths about VitalSpring’s financial condition, tax compliance, and alleged imminent sale. Potarazu also caused someone to pose as a representative of a prospective buyer on shareholder conference calls to add legitimacy to his claims regarding VitalSpring’s imminent sale.

VitalSpring never generated a profit. Nonetheless, Potarazu falsely represented to shareholders that VitalSpring’s financial position and profitability was improving from 2008 to 2016, and that VitalSpring had millions of dollars in cash reserves. To support his scheme, Potarazu presented fake bank statements to some shareholders that showed inflated balances.

Potarazu also concealed from shareholders that VitalSpring owed substantial employment tax to the IRS. Potarazu provided or caused to be provided false corporate income tax returns to some shareholders that overstated VitalSpring’s income and omitted the accruing employment tax liability.

In November 2014, Potarazu created a Special Review Committee (SRC) in response to a lawsuit filed in Delaware by shareholders that claimed Potarazu misled the victim investors about VitalSpring’s finances, the status of the impending sale, and Potarazu’s compensation. Potarazu provided the SRC with false financial records, fake tax returns, and fake bank statements to induce the SRC to believe that VitalSpring was financially healthy and to cause the SRC to make materially false representations to the Delaware court and victim investors. He also falsely represented that the alleged imminent sale would yield substantial returns to the shareholders, and used this to induce additional investments. Members of the SRC traveled interstate to the Eastern District of Virginia to attend meetings in which Potarazu presented false information for their review.

In truth, there was no imminent sale pending. Potarazu provided false financial records, including fake balance sheets, fabricated bank statements, and false tax returns, to several prospective buyers, financial advisors and investment banks. In December 2014, when he was questioned by Prospective Buyer 1 as to the accuracy and authenticity of bank records provided, Potarazu presented false or misleading emails purporting to be from a bank employee to bolster the legitimacy of the false bank records. Potarazu also presented Prospective Buyer 1 with a link to a fake website that was made to look like a website for a major national bank, and which referred Prospective Buyer 1 to VitalSpring’s false bank statements, and used a shadow, secondary email account assigned to a VitalSpring employee to provide false information to Prospective Buyer 1, thereby creating the appearance that Potarazu had not provided the information.

In October 2014, Prospective Buyer 2 informed Potarazu that it was no longer interested in VitalSpring. Nevertheless, Potarazu continued to represent to shareholders for months thereafter that there was a deal pending with Prospective Buyer 2. In March 2015 and February 2016, Potarazu organized, or caused to be organized, conference calls with shareholders to discuss the alleged sale. In advance of the calls, Potarazu obtained questions from the shareholders and used them to prepare the individual who posed as a representative of Prospective Buyer 2 for each call.

From 2011 to 2015, in addition to his salary paid by VitalSpring, Potarazu diverted at least $5 million from the victim investors and VitalSpring for his own personal use.

Employment Tax Fraud

Potarazu admitted that from 2007 to 2016, VitalSpring accrued employment tax liabilities of more than $7.5 million. Potarazu withheld taxes from VitalSpring employees’ wages, but failed to fully pay over the amounts withheld to the IRS. As CEO and President of VitalSpring, Potarazu was a “responsible person” obligated to collect, truthfully account for, and pay over VitalSpring’s employment taxes. Ultimate and final decision-making authority regarding VitalSpring’s business activities rested with Potarazu.

Potarazu was aware of the employment tax liability as early as 2007 and between 2007 and 2016, was frequently apprised of VitalSpring’s employment tax responsibilities by his employees. In addition, IRS special agents interviewed Potarazu in 2011 and informed him of the employment tax liability. In all but one quarter between the first quarter of 2007 and the last quarter of 2011, as well as the second and third quarters of 2015, Potarazu failed to file VitalSpring’s Employer’s Quarterly Federal Tax Return (Forms 941) with the IRS. Potarazu also failed to pay over any of the employment tax withheld from VitalSpring’s employees’ wages in all but one quarter between the second quarter of 2007 and the third quarter of 2011, as well as the third and fourth quarters of 2015.

Between 2008 and 2015, instead of paying over employment tax, Potarazu caused VitalSpring to make millions of dollars of expenditures, including thousands of dollars in transfers to himself and others, the publication of his book, “Get Off the Dime,” a sedan car service and travel.

In addition to the term of prison imposed, U.S. District Court Judge Gerald Bruce Lee ordered Potarazu to serve three years of supervised release, and to pay $49,511,169 in restitution to the shareholders and $7,691,071 to the IRS, and forfeiture of several homes, vehicles, and bank accounts. He was remanded into custody.

Acting Deputy Assistant Attorney General Goldberg and U.S. Attorney Boente commended special agents of IRS CI and the FBI, who conducted the investigation, and Assistant Chief Caryn Finley and Trial Attorney Jack Morgan of the Tax Division, and Assistant U.S. Attorney Jack Hanly, who prosecuted the case.

Additional information about the Tax Division’s enforcement efforts can be found on the division’s website.

On Dec. 2, a federal jury in Greeneville, Tennessee, convicted Peter Bolos, 44, of Tampa, Florida, of 22 counts of mail fraud, conspiracy to commit health care fraud and introduction of a misbranded drug into interstate commerce, following a month-long trial.

According to court documents and evidence presented at trial, Bolos and his co-conspirators, Andrew Assad, Michael Palso, Maikel Bolos, Larry Smith, Scott Roix, HealthRight LLC, Mihir Taneja, Arun Kapoor, and Sterling Knight Pharmaceuticals, as well as various other companies owned by them, deceived pharmacy benefit managers (PBMs), such as Express Scripts and CVS Caremark, regarding tens of thousands of prescriptions. The PBMs processed and approved claims for prescription drugs on behalf of insurance companies. Bolos and his co-conspirators defrauded the PBMs into authorizing claims worth more than $174 million that private insurers such as Blue Cross Blue Shield of Tennessee, and public insurers such as Medicaid and TRICARE, paid to pharmacies controlled by the co-conspirators.

Court documents and evidence at trial established that Bolos, Assad and Palso owned and operated Synergy Pharmacy in Palm Harbor, Florida. Under their direction, Synergy agreed with Scott Roix, a Florida telemarketer operating under the name HealthRight, to generate prescriptions for Synergy and the other pharmacies involved in the scheme. The prescriptions were typically for drugs such as pain creams, scar creams and vitamins. To obtain the prescriptions, evidence showed Roix used HealthRight’s telemarketing platform as a telemedicine service, calling consumers and deceiving them into agreeing to accept the drugs and to provide their personal insurance information. HealthRight then paid doctors to authorize the prescriptions through its telemedicine platform, even though the doctors never communicated directly with the patients and relied solely on the telemarketers’ screening process as the basis for their authorizations. Because this faulty and fraudulent process made the prescriptions invalid, the drugs were misbranded under the Food, Drug and Cosmetic Act. Synergy and the other pharmacies nonetheless dispensed the drugs to consumers as part of the scheme, so that Bolos could submit fraudulent reimbursement claims.

Court documents and evidence at trial established that during the conspiracy, which lasted from May 2015 through April 2018, Bolos paid Roix more than $30 million to buy at least 60,000 invalid prescriptions generated by HealthRight. Evidence showed Bolos selected specific medications for the prescriptions that he could submit for highly profitable reimbursements. In addition, Bolos used illegal means to hide his activity from the PBMs so that he could remain undetected. Evidence showed that Bolos was responsible for at least $89 million out of the total $174 million in fraudulently paid billings.

“The defendants deceived consumers in order to facilitate the distribution of drugs without proper medical oversight, and overbilled insurers for illegal prescriptions,” said Deputy Assistant Attorney General Arun G. Rao of the Justice Department’s Civil Division. “The Department will continue to investigate and prosecute individuals who use telemedicine to advance fraudulent schemes that violate the Food, Drug, and Cosmetic Act.”

“The United States Attorney’s Office for the Eastern District of Tennessee applauds the unwavering efforts of the multiple agencies involved in this collaborative investigation to bring this extensive healthcare fraud and misbranding scheme to justice,” said Acting U.S. Attorney Francis M. Hamilton III for the Eastern District of Tennessee. “The scope and nature of this fraud and misbranding scheme shock the conscience. Patients were given medications that they neither requested nor wanted, and the trial proof demonstrated that the prescriptions were specifically chosen by Bolos to maximize the fraudulent scheme’s profits, rather than for the patients’ healthcare needs. The guilty verdict against Bolos and the guilty pleas obtained from his co-defendants should send a strong message that the Department of Justice will aggressively prosecute fraud against health insurance providers.”

“Healthcare fraud is an egregious crime problem that impacts every American,” said Special Agent in Charge Joseph E. Carrico of the FBI’s Knoxville Field Office. “The guilty verdict was a result of a multi-agency investigation into a complex health care fraud scheme that required substantial investigative resources. Along with its law enforcement partners, the FBI remains committed to investigate these crimes and prosecute all those that are intent in defrauding the American public." 

“Distributing misbranded prescription drugs in the U.S. marketplace places patients’ health at risk,” said Special Agent in Charge Justin C. Fielder of the FDA Office of Criminal Investigations Miami Field Office. “We will continue to pursue and bring to justice those who put profits ahead of public health.”

“Bolos and his co-conspirators used their pharmacies to fraudulently bill insurance companies hundreds of millions of dollars, and that type of health care fraud impacts everyone,” said Special Agent in Charge John Condon of Homeland Security Investigations (HSI) Tampa. “HSI will continue to work with our law enforcement partners at the federal, state and local level to investigate all fraud and bring those responsible to justice.”

“Bolos and his co-conspirators sought to increase their profits by executing a comprehensive health care fraud scheme involving innocent patients,” said Special Agent in Charge Derrick L. Jackson of the U.S. Department of Health and Human Services, Office of Inspector General. “This conviction should serve as a warning to individuals who wish to deceive the government and steal from taxpayers. Alongside our law enforcement partners, we will continue to pursue medical professionals who engage in fraudulent activity.”

“The verdict in this case sends a clear message that these types of schemes will not be tolerated,” said Special Agent in Charge Matthew Modafferi of the U.S. Postal Service Office of Inspector General in the Northeast Area Field Office. “The Special Agents of the U.S. Postal Service Office of Inspector General will continue to work closely with the U.S. Attorney’s Office and our law enforcement partners to bring to justice those who commit these kinds of offenses.”

Roix, Assad, Palso, Smith, Maikel Bolos and various associated business entities previously pleaded guilty to their roles in the conspiracy. Taneja, Kapoor, and Sterling Knight pleaded guilty to felony misbranding in a conspiracy with Bolos. U.S. District Judge J. Ronnie Greer set sentencing for Bolos for May 19, 2022, in the United States District Court for the Eastern District of Tennessee at Greeneville. Sentencings for the other defendants will be set for dates in 2022.

The trial and plea agreements resulted from a multi-year investigation conducted by the U.S. Department of Health & Human Services Office of Inspector General (Nashville); Food and Drug Administration Office of Criminal Investigations (Nashville); U.S. Postal Service, Office of Inspector General (Buffalo); Federal Bureau of Investigation (Knoxville and Johnson City, Tennessee); Office of Personnel Management Office of Inspector General (Atlanta); and the Department of Homeland Security, Homeland Security Investigations (Tampa). The U.S. Marshals Service also assisted in the investigation and the forfeiture of assets.

Assistant U.S. Attorneys TJ Harker and Mac Heavener for the Eastern District of Tennessee and Trial Attorney David Gunn of the Department of Justice Civil Division’s Consumer Protection Branch in Washington, and a former Assistant U.S. Attorney in Knoxville, prosecuted and tried the case. They were assisted by Barbra Pemberton, Bryan Brandenburg and April Denard from the U.S. Attorney’s office. 

The Justice Department, along with federal partners, announced today a $7.2 billion settlement with Deutsche Bank resolving federal civil claims that Deutsche Bank misled investors in the packaging, securitization, marketing, sale and issuance of residential mortgage-backed securities (RMBS) between 2006 and 2007.  This $7.2 billion agreement represents the single largest RMBS resolution for the conduct of a single entity.  The settlement requires Deutsche Bank to pay a $3.1 billion civil penalty under the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA).  Under the settlement, Deutsche Bank will also provide $4.1 billion in relief to underwater homeowners, distressed borrowers and affected communities.

“This resolution holds Deutsche Bank accountable for its illegal conduct and irresponsible lending practices, which caused serious and lasting damage to investors and the American public,” said Attorney General Loretta E. Lynch.  “Deutsche Bank did not merely mislead investors: it contributed directly to an international financial crisis.  The cost of this misconduct is significant: Deutsche Bank will pay a $3.1 billion civil penalty, and provide an additional $4.1 billion in relief to homeowners, borrowers, and communities harmed by its practices.  Our settlement today makes clear that institutions like Deutsche Bank cannot evade responsibility for the great cost exacted by their conduct.”

“This $7.2 billion resolution – the largest of its kind – recognizes the immense breadth of Deutsche Bank’s unlawful scheme by demanding a painful penalty from the bank, along with billions of dollars of relief to the communities and homeowners that continue to struggle because of Wall Street’s greed,” said Principal Deputy Associate Attorney General Bill Baer.  “The Department will remain relentless in holding financial institutions accountable for the harm their misconduct inflicted on investors, our economy and American consumers.” 

“In the Statement of Facts accompanying this settlement, Deutsche Bank admits making false representations and omitting material information from disclosures to investors about the loans included in RMBS securities sold by the Bank.  This misconduct, combined with that of the other banks we have already settled with, hurt our economy and threatened the banking system,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “To make matters worse, the Bank’s conduct encouraged shoddy mortgage underwriting and improvident lending that caused borrowers to lose their homes because they couldn’t pay their loans.  Today’s settlement shows once again that the Department will aggressively pursue misconduct that hurts the American public.”

“Investors who bought RMBS from Deutsche Bank, and who suffered catastrophic losses as a result, included individuals and institutions that form the backbone of our community,” said U.S. Attorney Robert L. Capers for the Eastern District of New York.  “Deutsche Bank repeatedly assured investors that its RMBS were safe investments.  Instead of ensuring that its representations to investors were accurate and transparent, so that investors could make properly informed investment decisions, Deutsche Bank repeatedly misled investors and withheld critical information about the loans it securitized.  Time and again, the bank put investors at risk in pursuit of profit.  Deutsche Bank has now been held accountable.”  

“Deutsche Bank knowingly securitized billions of dollars of defective mortgages and subsequently made false representations to investors about the quality of the underlying loans,” said Special Agent In Charge Steven Perez of the Federal Housing Finance Agency, Office of the Inspector General. “Its actions resulted in enormous losses to investors to whom Deutsche Bank sold these defective Residential Mortgage-Backed Securities. Today’s announcement reaffirms our commitment to working with our law enforcement partners to hold accountable those who deceived investors in pursuit of profits, and contributed to our nation’s financial crisis.  We are proud to have worked with the U.S. Department of Justice and the U.S Attorney’s Office for the Eastern District of New York.”

As part of the settlement, Deutsche Bank agreed to a detailed Statement of Facts.  That statement describes how Deutsche Bank knowingly made false and misleading representations to investors about the characteristics of the mortgage loans it securitized in RMBS worth billions of dollars issued by the bank between 2006 and 2007.  For example:

Deutsche Bank represented to investors that loans securitized in its RMBS were originated generally in accordance with mortgage loan originators’ underwriting guidelines.  But as Deutsche Bank now acknowledges, the bank’s own reviews confirmed that “aggressive” revisions to the loan originators’ underwriting guidelines allowed for loans to be underwritten to anyone with “half a pulse.”  More generally, Deutsche Bank knew, based on the results of due diligence, that for some securitized loan pools, more than 50 percent of the loans subjected to due diligence did not meet loan originators’ guidelines.

 

Deutsche Bank also knowingly misrepresented that loans had been reviewed to ensure the ability of borrowers to repay their loans.  As Deutsche Bank acknowledges, the bank’s own employees recognized that Deutsche Bank would “tolerate misrepresentation” with “misdirected lending practices” as to borrower ability to pay, accepting even blocked-out borrower pay stubs that concealed borrowers’ actual incomes.  As a Deutsche Bank employee stated, “What goes around will eventually come around; when performance (default) begins affecting profits and/or the investors who purchase the securities, only then will Wall St. take notice.  For now, the buying continues.”

 

Deutsche Bank concealed from investors that significant numbers of borrowers had second liens on their properties. In one instance, a supervisory Deutsche Bank trader specifically instructed his team that if investors asked about second liens, “‘[t]ell them verbally . . . [b]ut don’t put in the prospectus.’”  Deutsche Bank knew that these second liens increased the likelihood that a borrower would default on his or her loan.

 

Deutsche Bank purchased and securitized loans with substantial defects to provide “flexibility” to the mortgage originators on whom Deutsche Bank’s RMBS program depended for a continued supply of loans.  Indeed, after the president of a large mortgage originator told Deutsche Bank he was “very upset with the rejection percentage,” Deutsche Bank’s diligence team was instructed, on three separate occasions, to clear loans it previously determined should be rejected.  

 

While Deutsche Bank conducted due diligence on samples of loans it securitized in RMBS, Deutsche Bank knew that the size and composition of these loan samples frequently failed to capture loans that did not meet its representations to investors.  In fact, Deutsche Bank knew “the more you sample, the more you reject.”

 

Deutsche Bank knowingly and intentionally securitized loans originated based on unsupported and fraudulent appraisals.  Deutsche Bank knew that mortgage originators were “‘giving’ appraisers the value they want[ed]” and expecting the resulting appraisals to meet the originators’ desired value, regardless of the actual value of the property.  Deutsche Bank concealed its knowledge of pervasive and consistent appraisal fraud, instead representing to investors home valuation metrics based on appraisals it knew to be fraudulent.  Deutsche Bank misrepresented to investors the value of the properties securing the loans securitized in its RMBS and concealed from investors that it knew that the value of the properties securing the loans was far below the value reflected by the originator’s appraisal. 

 

By May 2007, Deutsche Bank knew that there was an increasing trend of overvalued properties being sold to Deutsche Bank for securitization.  As one employee noted, “We are finding ourselves going back quite often and clearing large numbers of loans [with inflated appraisals] to bring down the deletion percentages.”  Deutsche Bank nonetheless purchased and securitized such loans because it received favorable prices on the fraudulent loans.  Ultimately, Deutsche Bank enriched itself by paying reduced prices for risky loans while representing to investors valuation metrics based on appraisals the Bank knew to be inflated.

 

Deutsche Bank represented to investors that disclosed borrower FICO scores were accurate as of the “cut-off date” of the RMBS issuance.  However, Deutsche Bank knowingly represented borrowers’ FICO scores as of the time of the origination of their loans despite the bank’s knowledge that these scores had often declined materially by the cut-off date.

Assistant U.S. Attorneys Edward K. Newman, Matthew R. Belz, Jeremy Turk, and Ryan M. Wilson of the U.S. Attorney’s Office for the Eastern District of New York investigated Deutsche Bank’s conduct in connection with the issuance and sale of RMBS between 2006 and 2007. The investigation was conducted with the Office of the Inspector General for the Federal Housing Finance Agency.

The $3.1 billion civil monetary penalty resolves claims under FIRREA, which authorizes the federal government to impose civil penalties against financial institutions that violate various predicate offenses, including wire and mail fraud.  It is one of the largest FIRREA penalties ever paid.  The settlement does not release any individuals from potential criminal or civil liability.  As part of the settlement, Deutsche Bank has agreed to fully cooperate with investigations related to the conduct covered by the agreement.

Deutsche Bank will also provide $4.1 billion in the form of relief to aid consumers harmed by its unlawful conduct.  Specifically, Deutsche Bank will provide loan modifications, including loan forgiveness and forbearance, to distressed and underwater homeowners throughout the country.  It will also provide financing for affordable rental and for-sale housing throughout the country. Deutsche Bank’s provision of consumer relief will be overseen by an independent monitor who will have authority to approve the selection of any third party used by Deutsche Bank to provide consumer relief.

To report RMBS fraud, go to: http://www.stopfraud.gov/rmbs.html.

About the RMBS Working Group:

The RMBS Working Group, part of the Financial Fraud Enforcement Task Force, was established by the Attorney General in late January 2012.  The Working Group has been dedicated to initiating, organizing, and advancing new and existing investigations by federal and state authorities into fraud and abuse in the RMBS market that helped precipitate the 2008 Financial Crisis.  The Working Group’s efforts to date have resulted in settlements providing for tens of billions of dollars in civil penalties and consumer relief from banks and other entities that are alleged to have committed fraud in connection with the issuance of RMBS.

# # #

CLEVELAND – Federal, county, and local law enforcement officials today announced that 59 individuals were charged and arrested in connection with firearms-trafficking, narcotics, conspiracy, or other firearms offenses after a three month, violent-crime-reduction initiative in Cleveland this summer. The vast majority were charged in United States District Court, while the remaining individuals were charged in state court. These individuals were apprehended in a series of coordinated arrests made during the last two weeks.

United States Attorney Rebecca C. Lutzko made the announcement earlier today. Bureau of Alcohol, Tobacco, Firearms, and Explosives (“ATF”) Director Steven M. Dettelbach, United States Marshal Peter J. Elliott, and Cleveland Mayor Justin M. Bibb provided additional details relating to the initiative, as well as regarding larger firearms enforcement and violence-prevention efforts.

"The Justice Department's work to disrupt and dismantle the criminal gun trafficking pipelines that flood our communities with illegal guns had never been more urgent than it is now," said Attorney General Merrick B. Garland. "That is why our prosecutors and agents are working more closely than ever before with our local law enforcement partners to get illegal guns off of our streets and hold accountable those who put illegal guns in the hands of violent criminals."

Indictments and complaints were recently unsealed in federal court. They detail a lengthy investigation, led by ATF, that focused on reducing firearms-related crime in several areas of Cleveland by studying data about areas with gun-crime violence, then identifying illegal firearms sellers to disrupt their trafficking. The investigation resulted in the seizure of over 240 firearms, 203 of which law enforcement purchased from illegal sellers and permanently removed from Cleveland’s streets. NIBIN data shows that a significant number of those firearms are connected to violent criminal activity, including homicides and felonious assaults, that took place in Cleveland and surrounding Northeast Ohio suburbs in 2022 and 2023. Of the purchased firearms, 17 are “ghost guns”—meaning, unserialized and untraceable firearms, typically assembled at home—and 28 are machinegun conversion devices or “switches”—a device that enables a firearm to fire in fully automatic mode.

In one case, law enforcement purchased more than 50 firearms from a group of 7 people working together to sell firearms on Cleveland’s streets, even though none of the involved individuals holds a federal firearms license. Those firearms included stolen firearms, firearms with obliterated serial numbers, “switches,” already-loaded firearms, assault rifles, and firearms that had been previously used to commit violent crimes. Sometimes, these individuals also sold controlled substances to law enforcement officers at the same time. In two additional cases, law enforcement purchased, respectively, 33 firearms (including “switches”) and 23 firearms (including “switches”) from two other individuals who do not hold a federal firearms license. Many of these sales took place in public parking lots of business establishments during business hours or in recreational areas while nearby uninvolved, law-abiding citizens were engaged in their day-to-day errands or engaged in recreational activities.

Also during this investigation, the ATF identified 5 individuals who were actively engaged in a conspiracy to conduct a home invasion and rob, at gunpoint, what they believed to be a “stash house” containing several kilograms of cocaine. Law enforcement intervened before these individuals could carry out their plan. Additionally, during this investigation, law enforcement purchased or seized almost 1.5 kilograms of cocaine, 215 grams of cocaine base, almost 3 kilograms of methamphetamine, 686 fentanyl pills, almost 1.5 kilograms of heroin/fentanyl mix, and 1,144 MDMA pills (otherwise known as Molly or Ecstasy).

Some defendants were charged together, but several others were charged individually. In all cases, however, the charges stemmed from the extensive, targeted, and sustained effort this past summer, led by ATF and assisted by other federal, state, and local law enforcement partners, to clamp down on the illegal firearms trafficking, use, and possession, as well as the associated distribution of drugs, in Cleveland.

The following is a breakdown of the charges in United States District Court, according to court documents:



MALACHI BERRY, 21, Cleveland, DARVELL JACKSON, 20, Cleveland, and STEVEN ARMSTRONG, 19, Cleveland, were charged together in a Conspiracy to Possess a Machinegun. JACKSON and ARMSTRONG were further charged with Illegal Possession of a Machinegun.



In the same indictment, these individuals, along with NIMAR LINDER, 21, Cleveland, were also charged with Conspiracy to Engage in the Business of Dealing  Firearms without a Federal Firearms License.



ARMSTRONG and LINDER were charged as Felons in Possession of a Firearm.

 

According to court documents, the following individuals have been indicted on Distribution of Drugs charges:



CARLOS DUPREE, 43, Cleveland, DOMINIQUE GOLDSBY, 32, Cleveland, JESSE MCDADE, 41, Cleveland, NORMAN YOUNG, 37, Cleveland, MARTIN

GOODSON, 41, Cleveland, LAJUAN ERWIN, 25, Mayfield Heights, CHEVEZ MOORER, 23, Cleveland, AARON WIMBLEY, 22, Garfield Heights, ALEXANDER

DUNCAN, 19, Cleveland, DAMIEN BODY, 39, Cleveland, DERRICK DONALD, 41, Cleveland, NAHUM HOLMES, 31, Brook Park, AKIL EDMONDS, 39, Cleveland, WILLIE C. JACKSON, 36, Cleveland, and DEANDRE SMITH, 36, Cleveland.

 

Indicted together were JOSEAN ORTIZ-STUART, 34, Cleveland, JESUS VEGA, 29, Cleveland, who were both charged with Distribution of Drugs. Also named in that indictment was GERALD MATOS, 38, Cleveland, who was charged with being a Felon in Possession of a Firearm.

 

Indicted together were ELIAS PAGAN 32, Cleveland, IVAN SANTANA, 26, Cleveland, ANGEL SANTIAGO, 46, also of Cleveland. PAGAN also faces numerous charges for Distribution of Drugs, as well being a Felon in Possession of Firearms, and both PAGAN and SANTANA were also charged with Engaging in the Business of Importing, Manufacturing, or Dealing in Firearms Without a Federal Firearms License.

SANTIAGO is also charged with Distribution of Drugs.

 

AMBRAY UNDERWOOD, 25, Euclid, was charged in an indictment for Conspiracy to Distribute Drugs, and Drug Distribution.

 

WILLIE EARL JACKSON, 26, Cleveland, and SHANE PLATS, 31, Ashtabula, were charged in the same indictment with Engaging in the Business of Dealing Firearms without a Federal Firearms License. WIILIE EARL JACKSON was also charged in that indictment with Trafficking in Firearms.

 

DESHONN BROWN age, 19, Cleveland; DEMARIUS JEFFERSON, 18, Cleveland, were both charged with Illegal Possession of Machineguns.

 

JACOB PLUMB, 40, Parma, was charged with Distribution of Drugs and Possession of a Firearm in Furtherance of a Drug Trafficking Crime.

 

ISAIAH OVERTON, 23, Cleveland, and CHARLES MORRIS, 33, East Cleveland, were charged in a single indictment with Distribution of Drugs. Additionally, OVERTON was charged with Using and Carrying a Firearm During and in Relation to a Drug Trafficking Crime.

 

CORTE’Z BUGGS, 29, Cleveland was charged in an indictment with Distribution of Drugs and Receipt of Firearm while Under Felony Indictment.

 

MICHAEL MCPHERRAN, 38, Parma, Ohio, was charged with Conspiracy to Distribute Drugs, and Distribution of Drugs.

 

HAROLD PEARL, 39, Cleveland, was charged with Distribution of Drugs and being a Felon in Possession of a Firearm.

 

Charged by complaint with Conspiracy to Possess with Intent to Distribute Drugs and Possession of a Firearm in Furtherance of a Drug Trafficking Crime were ALANTE HEARD, 33, Cleveland, ANTONIO SWEENEY, 24, Cleveland, MAURICE COMMONS, 22, North Randall, and MARKUS WILLIAMS, 33, Cleveland.

 

Charged with being a Felon in Possession of a Firearm were MARQUIS HENSON, 38, Cleveland, DEON BROWN, 19, Cleveland, and CLARENCE PAYNE, 38, Cleveland.

 

KENNETH SMITH, 23, East Cleveland, was charged with Engaging in the Business of Dealing Firearms without a Federal Firearms License, Illegal Possession of a Machinegun, and being a Felon in Possession of Firearms.

 

ANDRE LEWIS, 35, Cleveland, was charged with Distribution of Drugs and Using and Carrying a Firearm During and in Relation to a Drug Trafficking Crime.

 

DEVAUNTY LEWIS, 31, Cleveland, NICHOLAS JOHNSON, 33, Cleveland, were charged jointly in an indictment with Conspiracy to Engage in the Business of Importing, Manufacturing, or Dealing in Firearms without a Federal Firearms License, and Conspiracy to Engage in Firearms Trafficking. Both were individually charged with Engaging Business in Dealing with Firearms Without a License and Trafficking in Firearms.



LEWIS was also charged with being a Felon in Possession of a Firearm.



JOHNSON was also charged with Engaging in the Business of Importing, Manufacturing, or Dealing in Firearms without a Federal Firearms License.

 

The following were charged in an indictment with Conspiracy to Engage in the Business of Importing, Manufacturing, or Dealing in Firearms Without a Federal Firearms License: MAURICE STERETT, 39, Cleveland, ANTONIO CROSS, 22, Cleveland, MARVELL ROACH, 43, Willoughby, KENNETH TIMBERLAKE, 30, Cleveland, and TRAVIS WILLIAMS, 46, Cleveland.



STERETT, CROSS, TIMBERLAKE, and WILLIAMS were further charged, individually, with Engaging in the Business of Importing, Manufacturing, or Dealing in Firearms Without a Federal Firearms License.



STERETT, CROSS, ROACH, TIMBERLAKE, and WILLIAMS were also charged with Conspiracy to Engage in Firearms Trafficking and individual counts of Firearms Trafficking.



STERETT, TIMBERLAKE, TRAVIS WILLIAMS, and ROACH were also charged with being a Felon in Possession of Firearms.



STERETT was further charged with Distribution of Drugs.



Finally, CROSS was also charged with Illegal Transfer of a Machinegun.

 

DARION SHELTON, 20, Cleveland, was charged with Engaging in the Business of Dealing Firearms without a Federal Firearms License, and Trafficking in Firearms in connection with machinegun conversation devices or “switches.” He has also been charged with Illegal Possession of a Machinegun.



The following is a breakdown of the charges in the Cuyahoga County Court of Common Pleas, according to court documents:

 

MARCEL BATTLE, 30, Canton, Drug Trafficking.

 

AVANT WILSON, 22, Cleveland, Receiving Stolen Property (Motor Vehicle).

 

NATHAN ROBY, 44, Cleveland, Drug Trafficking.

 

RAYMOND CALLAHAN, 34, Cleveland, Drug Trafficking.

 

RAPHAEL DEEN, 30, Cleveland, Drug Trafficking.

 

TERRY LYONS, 33, Cleveland, Drug Trafficking.



 An indictment or complaint is only a charge and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.



If convicted, each defendant’s sentence will be determined by the Court after review of factors unique to this case, including the defendant’s prior criminal records, if any, the defendant’s role in the offense and the characteristics of the violation. In all cases, the sentence will not exceed the statutory maximum, and, in most cases, it will be less than the maximum.

 

The investigation preceding the indictments was led by the Bureau of Alcohol, Tobacco, Firearms and Explosives (“ATF”), with assistance from the Cleveland Division of Police (“CDP”), the United States Marshals Service (“USMS”), the Drug Enforcement Administration (“DEA”), the Federal Bureau of Investigation (“FBI”), the Department of Homeland Security Investigations (“HSI”), the Ohio Bureau of Criminal Investigation (“BCI”), the Ohio Adult Parole Authority (“APA”), the Ohio Investigative Unit (“OIU”), Customs and Border Patrol (“CBP”), Air and Marine Division, the Ohio State Highway Patrol (“OSP”), and the Cuyahoga County Sheriff’s Office. This Operation was also part of an Organized Crime Drug Enforcement Task Forces (OCDETF) initiative. The cases stemming from this investigation are being prosecuted by a team of AUSAs in the U.S. Attorney’s Office, led by AUSA Kelly Galvin, and by the Cuyahoga County Prosecutor’s Office.

Today, Mohamad Jamal Khweis, 27, of Alexandria, Virginia, was convicted by a federal jury for providing material support to the Islamic State of Iraq and al-Sham (ISIS), a designated foreign terrorist organization.

Dana J. Boente, Acting Assistant Attorney General for National Security, and U.S. Attorney for the Eastern District of Virginia; and Andrew W. Vale, Assistant Director in Charge of the FBI’s Washington Field Office, made the announcement after U.S. District Judge Liam O’Grady accepted the verdict.

“Khweis is not a naïve kid who didn’t know what he was doing,” said Dana J. Boente, Acting Assistant Attorney General for National Security, and U.S. Attorney for the Eastern District of Virginia. “He is a 27-year-old man who studied criminal justice in college. He strategically planned his travel to avoid law enforcement suspicion, encrypted his communications, and planned for possible alibis. Khweis knew exactly what he was doing, knew exactly who ISIS was, and was well aware of their thirst for extreme violence. Nonetheless, this did not deter him. Instead, Khweis voluntarily chose to join the ranks of a designated foreign terrorist organization, and that is a federal crime, even if you get scared and decide to leave. This office, along with the National Security Division and our investigative partners, are committed to tracking down anyone who provides or attempts to provide material support to a terrorist organization.”

“Mohamad Khweis purposefully traveled overseas with the intent to join ISIL in support of the terrorist group’s efforts to conduct operations and execute attacks to further their radical ideology,” said Andrew W. Vale, Assistant Director in Charge in Charge of the FBI’s Washington Field Office. “Furthermore, when ISIL leaders questioned Khweis' commitment to serving as a suicide bomber to carry out acts of terrorism, Khweis stated that he agreed and recognized that ISIL uses violence in its expansion of its caliphate. Today’s verdict underscores the dedication of the FBI and our partners within the Joint Terrorism Task Force in pursuing and disrupting anyone who poses a risk of harm to U.S. persons or interests or by providing material support to a terrorist group.”

According to court records and evidence presented at trial, Khweis left the U.S. in mid-December 2015, and ultimately crossed into Syria through the Republic of Turkey in late December 2015. Before leaving, Khweis quit his job, sold his car, closed online accounts, and did not tell his family he was leaving to join ISIS. During his travel to the Islamic State, he used numerous encrypted devices to conceal his activity, and downloaded several applications on his phone that featured secure messaging or anonymous web browsing. Khweis used these applications to communicate with ISIS facilitators to coordinate and secure his passage to the Islamic State.

After arriving in Syria, Khweis stayed at a safe house with other ISIS recruits in Raqqa and filled out ISIS intake forms, which included his name, age, skills, specialty before jihad, and status as a fighter. When Khweis joined ISIS, he agreed to be a suicide bomber. In February 2017, the U.S. military recovered his intake form, along with an ISIS camp roster that included Khweis’ name with 19 other ISIS fighters.

During the trial, Khweis admitted to spending approximately 2.5 months as an ISIS member, traveling with ISIS fighters to multiple safe houses and participating in ISIS-directed religious training. Kurdish Peshmerga military forces detained Khweis in March 2016. A Kurdish Peshmerga official testified at trial that he captured Khweis on the battlefield after Khweis left an ISIS-controlled neighborhood in Tal Afar, Iraq.

On a cross examination, Khweis admitted he consistently lied to U.S. and Kurdish officials about his involvement with ISIS, and that he omitted telling U.S. officials about another American who had trained with ISIS to conduct an attack in the U.S.

The jury convicted Khweis, a U.S. citizen, on all three charged counts, including providing and conspiring to provide material support or resources to ISIS, and a related firearms count. Khweis faces a mandatory minimum of 5 years and a maximum penalty of life in prison when sentenced on October 13. Actual sentences for federal crimes are typically less than the maximum penalties. A federal district court judge will determine any sentence after taking into account the U.S. Sentencing Guidelines and other statutory factors.

Trial Attorney Raj Parekh of the National Security Division’s Counterterrorism Section and Assistant U.S. Attorney Dennis Fitzpatrick for the Eastern District of Virginia are prosecuting the case. The FBI’s Joint Terrorism Task Force provided assistance in this case.

Federal, county, and local law enforcement officials today announced that 59 individuals were charged and arrested in connection with firearms-trafficking, narcotics, conspiracy, or other firearms offenses after a three month, violent-crime-reduction initiative in Cleveland this summer. The vast majority were charged in U.S. District Court, while the remaining individuals were charged in state court. These individuals were apprehended in a series of coordinated arrests made during the last two weeks. 

“The Justice Department’s work to disrupt and dismantle the criminal gun trafficking pipelines that flood our communities with illegal guns has never been more urgent than it is now,” said Attorney General Merrick B. Garland. “That is why our prosecutors and agents are working more closely than ever before with our local law enforcement partners to get illegal guns off of our streets and hold accountable those who put illegal guns in the hands of violent criminals.”

Indictments and complaints were recently unsealed in federal court. They detail a lengthy investigation, led by the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), that focused on reducing firearms-related crime in several areas of Cleveland by studying data about areas with gun-crime violence, then identifying illegal firearms sellers to disrupt their trafficking. The investigation resulted in the seizure of over 240 firearms, 203 of which law enforcement purchased from illegal sellers and permanently removed from Cleveland’s streets. National Integrated Ballistic Information Network (NIBIN) data shows that a significant number of those firearms are connected to violent criminal activity, including homicides and felonious assaults, that took place in Cleveland and surrounding Northeast Ohio suburbs in 2022 and 2023. Of the purchased firearms, 17 are “ghost guns” – meaning, unserialized and untraceable firearms, typically assembled at home – and 28 are machinegun conversion devices or “switches” – a device that enables a firearm to fire in fully automatic mode.  

In one case, law enforcement purchased more than 50 firearms from a group of seven people working together to sell firearms on Cleveland’s streets, even though none of the involved individuals hold a federal firearms license. Those firearms included stolen firearms, firearms with obliterated serial numbers, “switches,” already-loaded firearms, assault rifles, and firearms that had been previously used to commit violent crimes. Sometimes, these individuals also sold controlled substances to law enforcement officers at the same time. In two additional cases, law enforcement purchased, respectively, 33 firearms (including “switches”) and 23 firearms (including “switches”) from two other individuals who do not hold a federal firearms license. Many of these sales took place in public parking lots of business establishments during business hours or in recreational areas while nearby uninvolved, law-abiding citizens were engaged in their day-to-day errands or engaged in recreational activities.

Also, during this investigation, the ATF identified five individuals who were actively engaged in a conspiracy to conduct a home invasion and rob, at gunpoint, what they believed to be a “stash house” containing several kilograms of cocaine. Law enforcement intervened before these individuals could carry out their plan. Additionally, during this investigation, law enforcement purchased or seized almost 1.5 kilograms of cocaine, 215 grams of cocaine base, almost three kilograms of methamphetamine, 686 fentanyl pills, almost 1.5 kilograms of heroin/fentanyl mix, and 1,144 MDMA pills (otherwise known as Molly or Ecstasy). 

Some defendants were charged together, but several others were charged individually. In all cases, however, the charges stemmed from the extensive, targeted, and sustained effort this past summer, led by the ATF and assisted by other federal, state, and local law enforcement partners, to clamp down on the illegal firearms trafficking, use, and possession, as well as the associated distribution of drugs, in Cleveland. 

The following is a breakdown of the charges in U.S. District Court, according to court documents:





Malachi Berry, 21; Darvell Jackson, 20; and Steven Armstrong, 19, all of Cleveland, were charged together with conspiracy to possess a machinegun. Jackson and Armstrong were further charged with illegal possession of a machinegun. In the same indictment, these individuals, along with Nimar Linder, 21, of Cleveland, were also charged with conspiracy to engage in the business of dealing firearms without a federal firearms license. Armstrong and Linder were charged as felons in possession of a firearm.





Carlos Dupree, 43, of Cleveland; Dominique Goldsby, 32, of Cleveland; Jesse Mcdade, 41, of Cleveland; Norman Young, 37, of Cleveland; Martin Goodson, 41, of Cleveland; Lajuan Erwin, 25, of Mayfield Heights; Chevez Moorer, 23, of Cleveland; Aaron Wimbley, 22, of Garfield Heights; Alexander Duncan, 19, of Cleveland; Damien Body, 39, of Cleveland; Derrick Donald, 41, of Cleveland; Nahum Holmes, 31, of Brook Park; Akil Edmonds, 39, of Cleveland; Willie C. Jackson, 36, of Cleveland; and Deandre Smith, 36, of Cleveland, were indicted on distribution of drugs charges.





Josean Ortiz-Stuart, 34, and Jesus Vega, 29, both of Cleveland, were indicted together and both charged with distribution of drugs. Also named in that indictment was Gerald Matos, 38, of Cleveland, who was charged with being a felon in possession of a firearm.





Elias Pagan, 32, Ivan Santana, 26, and Angel Santiago, 46, all of Cleveland, were indicted together. Pagan faces numerous charges for distribution of drugs, as well being a felon in possession of firearms, and both Pagan and Santana were also charged with engaging in the business of importing, manufacturing, or dealing in firearms without a federal firearms license. Santiago is also charged with distribution of drugs.





Ambray Underwood, 25, of Euclid, was charged in an indictment for conspiracy to distribute drugs, and drug distribution.





Willie Earl Jackson, 26, of Cleveland, and Shane Plats, 31, of Ashtabula, were charged in the same indictment with engaging in the business of dealing firearms without a federal firearms license. Wiilie Earl Jackson was also charged in that indictment with trafficking in firearms.





Deshonn Brown, 19, and Demarius Jefferson, 18, both of Cleveland, were both charged with illegal possession of machineguns.





Jacob Plumb, 40, of Parma, was charged with distribution of drugs and possession of a firearm in furtherance of a drug trafficking crime.





Isaiah Overton, 23, of Cleveland, and Charles Morris, 33, of East Cleveland, were charged in a single indictment with distribution of drugs. Additionally, Overton was charged with using and carrying a firearm during and in relation to a drug trafficking Crime.





Corte’z Buggs, 29, of Cleveland, was charged in an indictment with distribution of Drugs and receipt of firearm while under felony indictment.





Michael Mcpherran, 38, of Parma, was charged with conspiracy to distribute drugs and distribution of drugs.





Harold Pearl, 39, of Cleveland, was charged with distribution of drugs and being a felon in possession of a firearm.





Alante Heard, 33, of Cleveland; Antonio Sweeney, 24, of Cleveland; Maurice Commons, 22, of North Randall; and Markus Williams, 33, of Cleveland, were charged by complaint with conspiracy to possess with intent to distribute drugs and possession of a firearm in furtherance of a drug trafficking crime.





Marquis Henson, 38; Deon Brown, 19; and Clarence Payne, 38, all of Cleveland, were charged with being a felon in possession of a firearm.





Kenneth Smith, 23, of East Cleveland, was charged with engaging in the business of dealing firearms without a federal firearms license, illegal possession of a machinegun, and being a felon in possession of firearms.





Andre Lewis, 35, of Cleveland, was charged with distribution of drugs and using and carrying a firearm during and in relation to a drug trafficking crime.





Devaunty Lewis, 31, and Nicholas Johnson, 33, both of Cleveland, were charged jointly in an indictment with conspiracy to engage in the business of importing, manufacturing, or dealing in firearms without a federal firearms license, and conspiracy to engage in firearms trafficking. Both were individually charged with engaging business in dealing with firearms without a license and trafficking in firearms. Lewis was also charged with being a felon in possession of a firearm. Johnson was also charged with engaging in the business of importing, manufacturing, or dealing in firearms without a federal firearms license.





Maurice Sterett, 39, of Cleveland; Antonio Cross, 22, of Cleveland; Marvell Roach, 43, of Willoughby; Kenneth Timberlake, 30, of Cleveland; and Travis Williams, 46, of Cleveland, were charged in an indictment with conspiracy to engage in the business of importing, manufacturing, or dealing in firearms without a federal firearms license. Sterett, Cross, Timberlake, and Williams were further charged, individually, with engaging in the business of importing, manufacturing, or dealing in firearms without a federal firearms license. Sterett, Cross, Roach, Timberlake, and Williams were also charged with conspiracy to engage in firearms trafficking and individual counts of firearms trafficking. Sterett, Timberlake, Travis Williams, and Roach were also charged with being a felon in possession of firearms. Sterett was further charged with distribution of drugs. Cross was also charged with illegal transfer of a machinegun.





Darion Shelton, 20, of Cleveland, was charged with engaging in the business of dealing firearms without a federal firearms license, and trafficking in firearms in connection with machinegun conversation devices or “switches.” He has also been charged with illegal possession of a machinegun.





The following is a breakdown of the charges in the Cuyahoga County Court of Common Pleas, according to court documents:





Marcel Battle, 30, of Canton: drug trafficking;





Avant Wilson, 22, of Cleveland: receiving stolen property (motor vehicle);





Nathan Roby, 44, of Cleveland: drug trafficking;





Raymond Callahan, 34, of Cleveland: drug trafficking;





Raphael Deen, 30, of Cleveland: drug trafficking;





Terry Lyons, 33, of Cleveland: drug trafficking;





If convicted, a federal district court judge will determine any penalty after considering the U.S. Sentencing Guidelines and other statutory factors.

Attorney General Garland and U.S. Attorney Rebecca C. Lutzko for the Northern District of Ohio made the announcement. ATF Director Steven M. Dettelbach, U.S. Marshal Peter J. Elliott, and Cleveland Mayor Justin M. Bibb provided additional details relating to the initiative, as well as regarding larger firearms enforcement and violence-prevention efforts.

ATF investigated these cases, with assistance from the Cleveland Division of Police, U.S. Marshals Service, the Drug Enforcement Administration, FBI, Homeland Security Investigations, Ohio Bureau of Criminal Investigation, the Ohio Adult Parole Authority, Ohio Investigative Unit, Customs and Border Patrol, Air and Marine Division, Ohio State Highway Patrol, and the Cuyahoga County Sheriff’s Office.  

Assistant U.S. Attorney Kelly Galvin and other Assistant U.S. Attorneys for the Northern District of Ohio and the Cuyahoga County Prosecutor’s Office are prosecuting the cases.

An indictment or complaint is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

A federal jury today convicted two Bucharest, Romania, residents of 21 counts related to their scheme to infect victim computers with malware in order to steal credit card and other information to sell on dark market websites, mine cryptocurrency and engage in online auction fraud, announced Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division and U.S. Attorney Justin E. Herdman of the Northern District of Ohio.

Bogdan Nicolescu, 36, and Radu Miclaus, 37, were convicted after a 12-day trial of conspiracy to commit wire fraud, conspiracy to traffic in counterfeit service marks, aggravated identity theft, conspiracy to commit money laundering and 12 counts each of wire fraud.  Sentencing has been set for Aug. 14, 2019 before Chief Judge Patricia A. Gaughan of the Northern District of Ohio.

According to testimony at trial and court documents, Nicolescu, Miclaus, and a co-conspirator who pleaded guilty, collectively operated a criminal conspiracy from Bucharest, Romania.  It began in 2007 with the development of proprietary malware, which they disseminated through malicious emails purporting to be legitimate from such entities as Western Union, Norton AntiVirus and the IRS. When recipients clicked on an attached file, the malware was surreptitiously installed onto their computer.

This malware harvested email addresses from the infected computer, such as from contact lists or email accounts, and then sent malicious emails to these harvested email addresses.  The defendants infected and controlled more than 400,000 individual computers, primarily in the United States.

Controlling these computers allowed the defendants to harvest personal information, such as credit card information, user names and passwords.  They disabled victims’ malware protection and blocked the victims’ access to websites associated with law enforcement.

Controlling the computers also allowed the defendants to use the processing power of the computer to solve complex algorithms for the financial benefit of the group, a process known as cryptocurrency mining.

The defendants used stolen email credentials to copy a victim’s email contacts.  They also activated files that forced infected computers to register email accounts with AOL.  The defendants registered more than 100,000 email accounts using this method.  They then sent malicious emails from these addresses to the compromised contact lists.  Through this method, they sent tens of millions of malicious emails.

When victims with infected computers visited websites such as Facebook, PayPal, eBay or others, the defendants would intercept the request and redirect the computer to a nearly identical website they had created.  The defendants would then steal account credentials.  They used the stolen credit card information to fund their criminal infrastructure, including renting server space, registering domain names using fictitious identities and paying for Virtual Private Networks (VPNs) which further concealed their identities.

The defendants were also able to inject fake pages into legitimate websites, such as eBay, to make victims believe they were receiving and following instructions from legitimate websites, when they were actually following the instructions of the defendants.

They placed more than 1,000 fraudulent listings for automobiles, motorcycles and other high-priced goods on eBay and similar auction sites.  Photos of the items were infected with malware, which redirected computers that clicked on the image to fictitious webpages designed by the defendants to resemble legitimate eBay pages.

These fictitious webpages prompted users to pay for their goods through a nonexistent “eBay Escrow Agent” who was simply a person hired by the defendants.  Users paid for the goods to the fraudulent escrow agents, who in turn wired the money to others in Eastern Europe, who in turn gave it to the defendants.  The payers/victims never received the items and never got their money back.

This resulted in a loss of millions of dollars.

The Bayrob group laundered this money by hiring “money transfer agents” and created fictitious companies with fraudulent websites designed to give the impression they were actual businesses engaged in legitimate financial transactions.  Money stolen from victims was wired to these fraudulent companies and then in turn wired to Western Union or Money Gram offices in Romania.  European “money mules” used fake identity documents to collect the money and deliver it to the defendants. 

The FBI investigated the case, with assistance from the Romanian National Police.  Senior Counsel Brian Levine of the Criminal Division’s Computer Crime and Intellectual Property Section (CCIPS) and Assistant U.S. Attorneys Duncan T. Brown and Brian McDonough of the Northern District of Ohio prosecuted the case.  The Office of International Affairs also provided assistance in this case.

A federal jury in Little Rock, Arkansas, found Eric Scott Kindley, 52, a private prisoner transport officer, guilty of sexually assaulting two different women in his custody during two different transports in 2014 and 2017, and for knowingly possessing a firearm in furtherance of the 2017 sexual assault.

“The defendant was a prison transport officer who abused his law enforcement authority by sexually assaulting prisoners entrusted to his custody.  That is a federal crime, and the Department of Justice will vigorously investigate and prosecute law enforcement officers who unlawfully use their position to abuse those in their custody,”   said Assistant Attorney General Eric Dreiband for the Civil Rights Division. “Today’s conviction was made possible by the brave women who testified about their abuse, and the tireless work of federal investigators and prosecutors over the last three years.”

"Kindley took advantage of his authority to exploit the very people he was entrusted with transporting across the country,” said Sean Kaul, Special Agent in Charge of the FBI Phoenix Field Office. “We commend the many victims, across the nation, who came forward to report this despicable crime. This conviction should serve as notice that anyone who uses their authority to exploit individuals in their custody, will be held accountable and the FBI will continue to aggressively pursue these types of cases. We would like to thank the FBI agents across the country whose tireless efforts helped bring Kindley to justice and the Department of Justice for their tremendous work on this case.”

Evidence at trial showed that Kindley operated a private prisoner transport company that contracted with local jails throughout the country to transport individuals who were arrested on out-of-state warrants. Kindley transported individuals alone, without any oversight, in his unmarked white minivan, often for hundreds of miles. The jury heard from six women whom he transported between 2013 and 2017, all of whom described Kindley’s pattern of conduct. Kindley transported them alone over long distances, handcuffed and shackled in the backseat of the van. Kindley forced them to listen to sexually explicit comments that escalated in intensity and depravity. Some women dealt with the comments by trying to make a joke of it; others attempted to talk back and end the comments, while others sat silently. In each instance, Kindley drove to desolate locations, putting the women in fear of being sexually assaulted, severely hurt, or worse.   

One of those women testified at trial that when Kindley transported her Alabama to Arizona in 2017, he stopped his van in a deserted area near Little Rock and sexually assaulted her while she was handcuffed, reminding her, as he did with other victims that she was “an inmate in transport” and that no one would believe her if she reported her. A second woman testified that when Kindley transported her in 2014, he stopped his van in a deserted area, also in Arkansas, and forced her to perform a sex act on him. A third woman testified that during her transport by Kindley in 2013 from Florida to Texas, he pulled his van over on the side of a dark road and sexually assaulted her. A fourth woman also testified that during her  2012 transport by from Nevada to California, Kindley stopped his van in a deserted park. He forced her to perform a sex act on him in a park bathroom. A fifth woman testified that during her 2013 transport from California to Montana, Kindley attempted to sexually assault her after he pulled over on the side of the road during a snowstorm. The jury heard testimony that none of the women who testified knew one another.

Kindley is also under indictment in the Central District of California for committing similar offenses related to his sexual assault of two other women in his custody in 2012 and 2017, and for brandishing a firearm during one of the sexual assaults. One of those women testified at this trial.

Kindley faces a maximum of life in prison. A sentencing date has not yet been set.

This case is being investigated by the Phoenix Division of the FBI with assistance from FBI field offices throughout the United States. It is being prosecuted by Special Litigation Counsel Fara Gold and Trial Attorney Maura White of the Criminal Section of the Civil Rights Division of the U.S. Department of Justice, with assistance from the United States Attorney’s Offices for the Eastern District of Arkansas and the District of Arizona.

A Beverly Hills, California, resident pleaded guilty today to filing false tax returns which did not report his offshore accounts in Germany and Israel and did not report the income earned on those accounts, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman and U.S. Attorney Nicola T. Hanna of the Central District of California.    

According to the plea agreement and related court documents, Teymour Khoubian pleaded guilty to filing false tax returns for tax years 2009 and 2010 that failed to report foreign financial accounts in Germany and Israel, and failed to report income earned on those accounts. Between 2005 and 2012, Khoubian jointly owned multiple accounts at Bank Leumi in Israel with his mother that held between $15 million and $20 million. Additionally, since at least 2005, Khoubian also owned a foreign account at Commerzbank AG in Germany. Despite his ownership interest in these accounts and a legal requirement to declare all offshore accounts containing $10,000 or more, Khoubian prepared false tax returns for tax years 2005 through 2011 that did not fully disclose his foreign accounts, nor report all the interest income earned on those accounts. For instance, Khoubian’s Bank Leumi accounts generated interest income in excess of $4 million between 2005 and 2010, none of which was reported to the Internal Revenue Service (IRS).  The total tax loss associated with the Bank Leumi accounts is approximately $ 1.2 million. 

At least since 2009, Khoubian was aware of the IRS’s Offshore Voluntary Disclosure Program (the OVDP).  The OVDP allowed U.S. taxpayers to voluntarily disclose their previously unreported foreign accounts and pay a reduced penalty to resolve their civil liability for not declaring foreign accounts to U.S. authorities. During 2011 and 2012, Bank Leumi requested that Khoubian sign a Form W-9 for U.S. tax reporting purposes. In an August 13, 2012, recorded telephone conversation with a banker at Bank Leumi, Khoubian stated that the reason he did not want to sign a Form W-9, was "because you have to pay half of it."

In 2012 and 2014, Khoubian knowingly made multiple false statements to IRS special agents investigating his foreign accounts, including falsely stating that the Bank Leumi accounts were not in his name, that he did not own a bank account in Germany from 2005 to 2010, that he closed his German bank account and moved all of that money to the United States, and that none of the money in his German bank account was moved to Israel.      

As part of the plea agreement, Khoubian agreed to the entry of a civil judgment against him for an FBAR penalty in the amount of $7,686,004.  Khoubian further agreed to pay an additional $612,310 in restitution to the IRS.     

 Khoubian faces a maximum of three years in prison for each of the tax counts to which he pleaded guilty, as well as monetary penalties and a period of supervised release.                     

This case is being prosecuted by Trial Attorneys Christopher S. Strauss and Ellen M. Quattrucci of the Justice Department’s Tax Division, with the assistance of Assistant United States Attorney Robert Conte of the U.S. Attorney’s Office for the Central District of California, and was investigated by the Internal Revenue Service-Criminal Investigation.   

JOON LLC, d/b/a AJIN USA (Ajin), an auto-parts manufacturing company, was sentenced in federal court today in Montgomery, Alabama, after pleading guilty to a charge related to the death of a machinery operator.

Regina Elsea, who was 20 years old, worked at Ajin’s Cusseta, Alabama, facility.  On June 18, 2016, she entered an enclosure — called a “cell” — containing several robots and other pieces of machinery.  While she was inside the cell, troubleshooting a sensor fault, one of the machines started up and Elsea was struck by a robotic arm.  She died of her injuries. 

The Occupational Safety and Health Act (OSH Act) requires employers to develop and utilize procedures to de-energize machinery during maintenance and servicing activities to prevent the kind of unplanned startup that killed Elsea.  These procedures are often referred to as “lockout/tagout.”  Ajin knew these procedures were required and had developed them, but Ajin also knew that — over a period of at least two years — supervisors did not effectively enforce them.

In the 15 minutes prior to Elsea’s fatal injury — in the presence of their supervisors — workers entered cells to troubleshoot machinery without following lockout/tagout no less than five times, and the supervisors did not take any action to stop or reprimand them.  In two other instances, the supervisors themselves entered a cell without following lockout/tagout.  At the time of Elsea’s fatal injury, several individuals were inside the cell, none of whom had followed lockout/tagout procedures to de-energize the machinery within the cell.

Ajin pleaded guilty to a willful violation of the OSH Act standard requiring the use of lockout/tagout procedures.  U.S. Magistrate Judge Stephen Michael Doyle sentenced Ajin to pay a $500,000 fine — the statutory maximum — $1,000,000 in restitution to Elsea’s estate, and a three-year term of probation, during which Ajin must comply with a safety compliance plan, overseen by a third-party auditor.  Among other things, the safety compliance plan requires a full review of Ajin’s lockout/tagout procedures, weekly inspections to ensure compliance, and creation of a mechanism for employees to report any safety concerns about the facility anonymously.

“Regina’s tragic death was preventable,” said Principal Deputy Assistant Attorney General Jonathan D. Brightbill of the Justice Department’s Environment and Natural Resources Division.  “OSH Act standards exist to protect American workers, but employers must actually implement them.  When safety policies exist only on paper, tragedies like this occur.  Ajin knew its supervisors and managers were turning a blind eye to the company’s safety procedures.  Now, Ajin must take responsibility for its conduct.  It will implement the safety compliance plan, and work to make its facility safer for its employees.  Employers should be aware that they must follow workplace safety laws.” 

“Every worker expects to return home safely at the end of his or her shift,” said U.S. Attorney Louis V. Franklin Sr. of the Middle District of Alabama.  “The OSH Act was passed to ensure that workers could trust that their employers create and maintain a safe work environment.  While most companies abide by the OSH Act, the unfortunate reality is that some of them do not.  Ajin failed to comply with the OSH Act and, as a direct result of their failure, Regina Elsea did not return home safely at the end of her shift.  Her death was preventable and Ajin’s failure to keep her out of harm’s way is inexcusable.  I hope this prosecution sends a message to companies that people are their most valuable resource and complying with the OSH Act is a must in protecting its employees.” 

“Employers are responsible for worker safety and health, and the failure in this situation was tragic,” said Principal Deputy Assistant Secretary of Labor for Occupational Safety and Health Loren Sweatt.  “Well-known safety procedures were repeatedly ignored that could have prevented this tragedy.  While nothing can ever replace the loss of life, the court has sent a clear message that such disregard for worker safety is unacceptable.”

The case was prosecuted by Assistant U.S. Attorney Stephanie Billingslea and former Assistant U.S. Attorney Ben M. Baxley of the Middle District of Alabama and Trial Attorney Erica H. Pencak of the Environment and Natural Resources Division’s Environmental Crimes Section.  The case was investigated by the U.S. Department of Labor Office of Investigations.

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.

Three people are now in custody in relation to the fatal raid that occurred in January 2019 on Harding Street in Houston, Texas, announced Assistant Attorney General Eric Dreiband of the Department of Justice’s Civil Rights Division, U.S. Attorney Ryan K. Patrick for the Southern District of Texas and Special Agent in Charge Perrye K. Turner of the FBI.

A federal grand jury returned the nine count indictment Nov. 14 against Gerald M. Goines, 55, and Steven M. Bryant, 46, both former Houston Police Department (HPD) officers. Also charged is Patricia Ann Garcia, 53. All are residents of Houston. The indictment was unsealed this morning as authorities took all three into custody. They are expected to make their initial appearances before U.S. Magistrate Judge Dena H. Palermo at 2 p.m. central time.

The federal indictment stems from the Jan. 28 narcotics raid HPD conducted on the 7800 block of Harding Street in Houston. The enforcement action resulted in the deaths of two residents at that location. 

Goines is charged with two counts of depriving the victims’ constitutional right to be secure against unreasonable searches. The indictment alleges Goines made numerous materially false statements in the state search warrant he obtained for their residence. The execution of that warrant containing these false statements resulted in the death of the two individuals as well as injuries to four other persons, according to the indictment.

Goines and Bryant are charged with obstructing justice by falsifying records. Goines allegedly made several false statements in his tactical plan and offense report prepared in connection with that search warrant. The indictment alleges Bryant falsely claimed in a supplemental case report he had previously assisted Goines in the Harding Street investigation. Bryant allegedly identified a brown powdery substance (heroin) he retrieved from Goines’ vehicle as narcotics purchased from the Harding Street residence Jan. 27.

Goines is further charged with three separate counts of obstructing an official proceeding. The federal grand jury alleges Goines falsely stated Jan. 30 that a particular confidential informant had purchased narcotics at the Harding Street location three days prior. He also falsely stated Jan. 31 that a different confidential informant purchased narcotics at that residence that day, according to the charges. On Feb. 13, he also falsely claimed he had purchased narcotics at that residence on that day. The indictment alleges none of these statements were true.

The charges against Garcia allege she conveyed false information by making several fake 911 calls. Specifically, on Jan. 8, she allegedly made several calls claiming her daughter was inside the Harding Street location. According to the indictment, Garcia added that the residents of the home were addicts and drug dealers and that they had guns – including machine guns – inside the home. The charges allege none of Garcia’s claims were true.

If convicted of the civil rights charges, Goines faces up to life in prison. Each obstruction count carries a potential 20-year sentence, while Garcia faces a five-year term of imprisonment for conveying false information.

The FBI is conducting the investigation. Assistant U.S. Attorneys Alamdar S. Hamdani, Arthur R. Jones and Sharad S. Khandelwal, and Special Litigation Counsel Jared Fishman of the Department of Justice’s Civil Rights Division, are prosecuting the case. 

An indictment is a formal accusation of criminal conduct, not evidence. A defendant is presumed innocent unless convicted through due process of law.

A Massachusetts man was sentenced yesterday to 33 months in prison followed by two years of supervised release for a scheme to illegally export defense technical data to foreign nationals in Turkey in connection with the fraudulent manufacturing of parts and components used by the U.S. military, in violation of the Arms Export Control Act. The U.S. Department of Defense (DOD) later determined that some of the parts were substandard and unsuitable for use by the military.

On Aug. 10, 2022, Arif Ugur, 53, of Cambridge, pleaded guilty to two counts of wire fraud, two counts of violating the Arms Export Control Act and one count of conspiring to violate the Arms Export Control Act.

“The defendant willfully defrauded the Department of Defense and gave access to controlled defense information to individuals in a foreign country for personal gain,” said Assistant Attorney General Matthew G. Olsen of the Justice Department’s National Security Division. “This type of brazen disregard for our export control laws threatens our military readiness and technological advantage and will not be tolerated by this department.”

According to court documents, in 2015, Ugur, founded and was the sole managing partner of the Anatolia Group Limited Partnership (Anatolia), a domestic limited partnership registered in Massachusetts. Beginning in approximately July 2015, Ugur bid on and acquired numerous contracts to supply the DOD with various parts and components intended for use by the U.S. military. Many of these contracts required that the parts be manufactured in the United States. Both in bids submitted to DOD and in subsequent email communications with DOD representatives, Ugur falsely claimed that Anatolia was manufacturing the parts in the United States. In fact, Anatolia was a front company with no manufacturing facilities whatsoever. Unbeknownst to DOD, Ugur contracted with a company in Turkey to make the parts and then passed them off to DOD as if they had been manufactured by Anatolia in the United States. Because they had not been manufactured in the United States in accordance with the contacts, Ugur failed to allow DOD to inspect the parts prior to delivery to the U.S. military. Many of the parts were substandard and some could not be used at all.

To enable the Turkish company to manufacture the parts, Ugur shared technical specifications and drawings of the parts with his co-conspirators overseas, some of whom were employees of the Turkish company. Ugur also provided his overseas co-conspirators with access to DOD’s online library of technical specifications and drawings. Because of their military applications, many of these parts were designated as Defense Articles under the International Traffic in Arms Regulations (ITAR) and the United States Munitions List (USML). Thus, an export license was required to export the parts and related technical data (blueprints, specifications, etc.) from the United States to Turkey. Ugur knew of these restrictions, but nonetheless exported technical data controlled under the ITAR and USML to employees of the Turkish manufacturer without an export license.

Assistant Attorney General Matthew G. Olsen of the Justice Department’s National Security Division; U.S. Attorney Rachael S. Rollins for the District of Massachusetts; Special Agent in Charge Patrick J. Hegarty of the Department of Defense, Office of Inspector General, Defense Criminal Investigative Service, Northeast Field Office; Special Agent in Charge Matthew B. Millhollin of Homeland Security Investigations in Boston; and Acting Special Agent in Charge Rashel Assouri of the U.S. Department of Commerce Office of Export Enforcement, Boston Field Office made the announcement.

Assistant U.S. Attorneys Jason A. Casey and Timothy H. Kistner for the District of Massachusetts prosecuted the case.

Four Peruvian residents have been extradited to the United States, where they stand accused of operating a large-scale extortion scheme from 2012 through 2015, the Justice Department and U.S. Postal Inspection Service today announced. 

Jesus Gerardo Gutierrez Rojas, 37, Maria de Guadalupe Alexandra Podesta Bengoa, 38, Virgilio Ignacio Polo Davila, 43, and Omar Alfredo Portocarrero Caceres, 39, face federal charges in Miami. Peruvian authorities arrested the four in late 2017, based upon a U.S. indictment. All four remained incarcerated in Peru since the time of their arrest. Peru approved their extradition to the U.S. on Jan. 18, 2019.

“The Department of Justice will pursue criminals who target and extort U.S. consumers, wherever they are,” said Assistant Attorney General Jody Hunt for the Department of Justice’s Civil Division. “Those who extort U.S. consumers by phone cannot escape justice by placing their calls from abroad. I thank the Republic of Peru for extraditing these individuals to face charges in U.S. courts.”  

“Individuals who defraud American consumers will be brought to justice, no matter where they are located,” said U.S. Attorney Ariana Fajardo Orshan for the Southern District of Florida. “Protecting the elderly and vulnerable members of our community from extortion schemes, such as this one, is a top priority of this Office and the Department of Justice, and I thank the U.S. Postal Inspection Service for their unwavering commitment to rid the U.S. mail system of these schemes. This is a reminder to our community to be wary of those individuals who threaten imprisonment, a negative credit score or a change in immigration status; please report those threats immediately.”

“The U.S. Postal Inspection Service will continue to aggressively investigate and pursue those who threaten U.S. consumers and extort them of their hard earned money, regardless of what country they operate from,” said U.S. Postal Inspector in Charge Antonio J. Gomez. “The U.S. Postal Inspection Service appreciates the continued partnership with the Department of Justice’s Consumer Protection Branch in pursuing South American call center operators who victimize consumers through the U.S. mail.” 

Podesta, Polo, and Portocarrero allegedly managed and operated Peruvian call centers that placed calls to Spanish-speaking consumers across the United States while lying and threatening them into paying fraudulent settlements for nonexistent debts. Many of the consumer victims were elderly. Gutierrez was allegedly the general manager of a larger company where he worked in partnership with Podesta, Polo, and Portocarrero to facilitate their extortion scheme. The defendants’ associates in Miami collected the payments and sometimes shipped packages to victims in the U.S. 

According to the allegations in the indictment, Podesta, Polo, Portocarrero, and their employees in Peru used Internet-based telephone calls and claimed to be attorneys and government representatives to threaten victims in the United States. The callers falsely claimed that victims failed to pay for or receive a delivery of products. The callers also falsely claimed that victims would be sued and that the companies would obtain large monetary judgements against them. Some victims were also threatened with negative marks on their credit reports, imprisonment, or immigration status. The callers said these threatened consequences could be avoided if the victims immediately paid “settlement fees.” Many victims made monetary payments based on these baseless threats.  

A 34-count federal indictment was filed against the defendants in the U.S. District Court for the Southern District of Florida on Dec. 6, 2016, and was unsealed upon the defendants’ extradition to the U.S. The defendants are approved to face 12 extortion counts pending against them. An indictment merely alleges that crimes have been committed. All defendants are presumed innocent until proven guilty beyond a reasonable doubt.

The case is being prosecuted by Trial Attorney Phil Toomajian of the Department of Justice’s Consumer Protection Branch. The Postal Inspection Service investigated the case. The Criminal Division’s Office of International Affairs, the U.S. Attorney’s Office of the Southern District of Florida, the Diplomatic Security Service, and the Peruvian National Police provided critical assistance. 

A federal judge in Greeneville, Tennessee, sentenced two Florida men for their roles in a multimillion-dollar health care fraud scheme.

Peter Bolos, 44, of Tampa, was convicted by a federal jury in December 2021 of conspiracy to commit health care fraud, 22 counts of mail fraud and introduction of a misbranded drug into interstate commerce. U.S. District Judge J. Ronnie Greer sentenced Bolos to 14 years in prison and ordered him to pay more than $24.6 million in restitution and $2.5 million in forfeiture. The court also sentenced Bolos’s co-defendant, Michael Palso, 48, of Tampa, to 33 months in prison and ordered him to pay more than $24.6 million in restitution. Palso previously pleaded guilty to his role in the conspiracy, as did 14 other defendants in related cases. The remaining defendants are scheduled to be sentenced later this week.

According to court documents and evidence presented at trial, Bolos, Palso and their co-conspirators, Andrew Assad, Scott Roix, Larry Smith, Mihir Taneja, Arun Kapoor and Maikel Bolos, as well as various other companies owned or controlled by some of these individuals, deceived pharmacy benefit managers (PBMs), such as Express Scripts and CVS Caremark, regarding tens of thousands of prescriptions. The PBMs processed and approved claims for prescription drugs on behalf of insurance companies. Bolos and his co-conspirators defrauded the PBMs into authorizing millions of dollars’ worth of claims that private insurers such as Blue Cross Blue Shield of Tennessee, and public insurers such as Medicaid and TRICARE, paid to pharmacies controlled by the co-conspirators.

“The significant sentences imposed by the court are a reflection of the gravity of the crimes that the defendants in this case committed,” said Deputy Assistant Attorney General Arun G. Rao, head of the Civil Division’s Consumer Protection Branch. “The department will continue to work with law enforcement partners to prosecute those who take advantage of telemedicine to perpetrate fraud schemes.”

“The scale of the prescription-drug fraud scheme orchestrated by these defendants and their conspirators was astonishing, and the Court’s prison sentences reflect the seriousness of their crimes,” said U.S. Attorney Francis M. Hamilton III for the Eastern District of Tennessee.  “The financial harm caused by health care fraud hurts all Americans, and the United States Attorney’s Office for the Eastern District of Tennessee will continue to support the cooperation among its federal law enforcement partners that is necessary to bring criminal swindlers like these defendants to justice.”

“This sentencing is the result of a multi-agency investigation into a complex telemedicine pharmacy fraud scheme, requiring substantial investigative resources,” said Special Agent in Charge Joseph E. Carrico of the FBI’s Knoxville Field Office. “The FBI, with its law enforcement partners, will remain vigilant to assure that unscrupulous individuals who exploit our health care system are brought to justice.”

“Distributing misbranded prescription drugs in the U.S. marketplace places patients’ health at risk,” said Special Agent in Charge Justin C. Fielder of the FDA Office of Criminal Investigations (OCI) Miami Field Office. “We will continue to pursue and bring to justice those who put profits ahead of public health.”

“Bolos and his co-conspirators abandoned their responsibilities in the health care industry through an elaborate fraud scheme and manipulated the system without regard for patient need or medical necessity to line their pockets,” said Special Agent in Charge John Condon of Homeland Security Investigations (HSI) Tampa. “This significant sentence should serve as a warning to anyone who attempts to deceive the government and steal from taxpayers.”

“Providers who solicit beneficiaries’ personal information and use it to defraud federal health care programs not only undermine the integrity of those programs; they also divert valuable taxpayer dollars for self-serving purposes,” said Special Agent in Charge Tamala E. Miles of the Department of Health and Human Services, Office of Inspector General (HHS-OIG). “HHS-OIG is proud to work alongside our law enforcement partners to investigate and hold accountable perpetrators of federal health care fraud.”

“The U.S. Postal Service, Office of Inspector General, will continue to vigorously investigate those who commit frauds against federal benefit programs and the U.S. Postal Service,” said Special Agent in Charge Matthew Modafferi of the U.S. Postal Service, Office of Inspector General Northeast Area Field Office. “The sentencing in this case sends a clear message to pharmaceutical companies that tactics like these will not be tolerated. The U.S. Postal Service, Office of Inspector General would like to thank our law enforcement partners and the Department of Justice for their dedication and efforts in this investigation.”

Court documents and evidence at trial established that Bolos, Assad and Palso owned and operated Synergy Pharmacy in Palm Harbor, Florida. Under their direction, Synergy employed Scott Roix, a Florida telemarketer operating under the name HealthRight, to generate prescriptions for Synergy and the other pharmacies involved in the scheme. The prescriptions were typically for drugs such as pain creams, scar creams and vitamins. To obtain the prescriptions, Roix used HealthRight’s telemarketing platform as a telemedicine service, cold-calling consumers and deceiving them into agreeing to accept the drugs and to provide their personal insurance information. HealthRight then paid doctors to authorize the prescriptions through its telemedicine platform, even though the doctors never communicated directly with the patients and relied solely on the telemarketers’ screening process as the basis for their authorizations. Because this faulty and fraudulent process made the prescriptions invalid, the drugs were misbranded under the Food, Drug and Cosmetic Act. Synergy and the other pharmacies nonetheless dispensed the drugs to consumers as part of the scheme, so that Bolos could submit fraudulent reimbursement claims.

Court documents and evidence at trial established that during the conspiracy, which lasted from May 2015 through April 2018, Bolos and Palso, along with co-defendant Andrew Assad, paid Roix millions of dollars to buy at least 60,000 invalid prescriptions generated by HealthRight. Bolos selected specific medications for the prescriptions that he could submit for profitable reimbursements at inflated prices. In addition, Bolos, Palso, and Assad used illegal means to hide his activity from the PBMs so that they could remain undetected.

The sentencings for the remaining defendants — all of whom pleaded guilty prior to trial — are scheduled to occur later this week. Larry Smith, Alpha-Omega Pharmacy, Germaine Pharmacy, Zoetic Pharmacy, Tanith Enterprises LLC, ULD Wholesale Group and Taneja will be sentenced on May 17. Kapoor, Sterling Knight Pharmaceuticals and Maikel Bolos will be sentenced on May 18. Assad, Roix and HealthRight LLC will be sentenced on May 19. All of the sentencings will occur before Judge Greer in the U.S. District Court for the Eastern District of Tennessee at Greeneville.

The trial verdict and plea agreements resulted from a multi-year investigation conducted by the HHS-OIG (Nashville); FDA-OCI (Nashville); U.S. Postal Service, Office of Inspector General (Buffalo); FBI (Knoxville and Johnson City, Tennessee); OPM-OIG (Atlanta); and HSI (Tampa). The U.S. Marshals Service also assisted in the investigation and the forfeiture of assets.

Assistant U.S. Attorney Mac Heavener of the U.S. Attorney’s Office for the Eastern District of Tennessee and Senior Trial Attorney David Gunn of the Civil Division’s Consumer Protection Branch in Washington are prosecuting the case. They were assisted by Barbra Pemberton, Bryan Brandenburg and April Denard from the U.S. Attorney’s Office.   

Attorney General William P. Barr announced today the appointment of Timothy Shea as Interim U.S. Attorney for the District of Columbia, pursuant to 28 U.S.C. § 546, effective February 3. The Office is the largest U.S. Attorney’s Office in the country, serving as both the local and the federal prosecutor for the nation’s capital, with over 300 attorneys responsible for litigation before over 100 judges in federal and local courts.

“I am pleased to appoint Tim Shea as Interim U.S. Attorney for the District of Columbia. Tim brings to this role extensive knowledge and expertise in law enforcement matters as well as an unwavering dedication to public service, reflected in his long and distinguished career in state and federal government,” said Attorney General William P. Barr. “His reputation as a fair prosecutor, skillful litigator, and excellent manager is second-to-none, and his commitment to fighting violent crime and the drug epidemic will greatly benefit the city of Washington. I would also like to express my gratitude to Jessie Liu, who has served with distinction as U.S. Attorney for the District of Columbia since 2017, and has been nominated to a new role at the Department of the Treasury.”

Shea served as Associate Deputy Attorney General from 1990-1992 and as Counselor to the Attorney General since 2019. In both roles, he advised the Attorney General on law enforcement operations, criminal justice policy, and management issues affecting the Department. He recently spearheaded the Department’s Operation Relentless Pursuit, a crackdown targeting violent crime in seven U.S. cities.

From 1992-1997, Shea served as an Assistant U.S. Attorney in the Eastern District of Virginia where he prosecuted federal criminal cases, including violent crimes, drug trafficking, fraud cases, perjury and obstruction of justice investigations, federal tax fraud and evasion cases, civil rights matters, and public corruption cases. He headed the Task Force responsible for investigating and prosecuting crimes at the District of Columbia correctional facilities at Lorton, supervising AUSAs and D.C. government attorneys. He was also the coordinator for matters related to the Criminal Enforcement Child Support.

In state government, Shea served as the Chief of Public Protection Bureau in the Massachusetts Attorney General’s office where he managed several divisions staffed by attorneys and investigators. In that position, he was responsible for the enforcement of state law related to consumer protection, civil rights, antitrust, regulated industries, insurance rate setting, telecommunications, energy, environment, public charities, and elder protection. Shea also served in Congressional roles, including as Chief Counsel and Staff Director of the U.S. Senate Permanent Subcommittee on Investigations under the chairmanship of Senator Susan Collins and on the U.S. House Appropriations Committee professional staff under Ranking Republican Member Silvio O. Conte. During his 20 years of private practice, Shea served as Of Counsel for Bingham McCutchen and Morgan Lewis, handling complex civil litigation.

Shea earned his J.D. degree magna cum laude in 1991 from the Georgetown University Law Center where he was elected to the Order of the Coif. He was also a senior staff member of the America Criminal Law Review. He received his B.A. degree magna cum laude from Boston College in 1982 where he received the Kenealy Award for Academic Excellence.

SHERMAN, Texas – An Oklahoma City, OK woman has been convicted of various federal crimes related to an international drug trafficking conspiracy in the Eastern District of Texas, announced U.S. Attorney Brit Featherston today.

Debra Lynn Mercer-Erwin, 60, was found guilty by a jury following a two-week trial before U.S. District Judge Amos Mazzant.  Mercer-Erwin was convicted of money laundering; wire fraud; conspiracy to manufacture and distribute cocaine; and conspiracy to manufacture and distribute cocaine knowing it would be imported into the United States.

“In the aircraft world, planes registered in the United States and displaying a ‘N’ tail-number, are coveted as being properly vetted and trusted to legally operate around the world.  Mercer-Erwin found ways to exploit the registration process in order to profit from illegally obtained money being paid for her services,” said U. S. Attorney Featherston.  “Mercer-Erwin became a drug dealer when she became aware of planes she had registered were being used to transport large quantities of cocaine.   Mercer-Erwin knew that many of her clients were in the illegal drug business and she hid their identities and the sources of their money in order to reap a large profit.  She became a money launderer when she created fake sales of planes that were not actually for sale in order to hide and move drug money.  Transnational criminal organizations require assistance to operate in the U.S. and Mercer-Erwin facilitated the drug dealing by exploiting the plane registration process.”

“This investigation required cooperation between our international partners, investigating agents and our prosecutors,” added U.S. Attorney Featherston.  “They did an amazing job putting the case together, and they are to be commended for their work.”

“This guilty verdict stems from the collaborative efforts of our trusted international, federal, state and local law enforcement partners,” said Lester R. Hayes Jr., Special Agent in Charge HSI Dallas. “Disrupting the illegal activities of transnational criminal organizations is one of HSI ‘s highest priorities and is enhanced by our partnerships at all levels. After listening to testimony of high-ranking leaders of the Columbian and Nicaraguan governments, I am convinced this investigation has significantly decreased the flow of narcotics smuggled into the U.S.”

“This investigation and successful prosecution serves as an example of how federal, state, and international law enforcement agencies work together to take down those involved in large scale money laundering in support of international drug trafficking organizations,” said Special Agent in Charge Trey McClish of the Dallas Field Office of the Department of Commerce’s Office of Export Enforcement (OEE).   “OEE and our law enforcement partners will continue to identify, investigate, and dismantle transnational criminal organizations who pose a threat to our national security.” 

According to information presented in court, between 2010 and 2020, Mercer-Erwin conspired with others to enable the distribution of cocaine in the United States by purchasing and illegally registering aircraft under foreign corporations and other individuals for export to other countries.  Non-US citizens are allowed to register an aircraft with the FAA if the aircraft is placed in a trust that is managed by a U.S. trustee. Mercer-Erwin was the owner of Wright Brothers Aircraft Title (WBAT) and Aircraft Guaranty Corporation (AGC). WBAT often served as an escrow agent for transactions involving AGC and was the designated party responsible for FAA filings related to AGC aircraft. AGC, a corporation at that time operating out of Onalaska, Texas, an east Texas town in the Eastern District of Texas, without an airport.  AGC acted as trustee to over 1,000 aircrafts with foreign owners. This allowed the foreign nationals to receive an “N” tail number for their aircrafts. The “N” tail number is valuable because foreign countries are less likely to inspect a U.S.-registered aircraft for airworthiness or force down an American aircraft.   

According to prosecutors, several of the illegally registered and exported aircraft were used by transnational criminal organizations in Colombia, Venezuela, Ecuador, Belize, Honduras, Guatemala, and Mexico to smuggle large quantities of cocaine destined for the United States.  The illicit proceeds from the subsequent drug sales were then transported as bulk cash from the United States to Mexico and used to buy more aircraft and cocaine. Aircraft purchases were typically completed by foreign nationals working for transnational criminal organizations who came to the United States with drug proceeds and purchased aircraft valued in the hundreds of thousands of dollars. 

Mercer-Erwin exploited her position as trustee to circumvent U.S. laws by disguising the true identity of the foreign owners, failing to conduct due diligence as to the identity of the foreign owners, providing false aircraft locations, and falsifying and forging documents. Trial testimony revealed the investigation was initiated after aircraft filing irregularities were discovered in tandem with numerous AGC aircraft found carrying substantial amounts of cocaine. The testimony further revealed additional aircraft in AGC’s trust were not seized but found by foreign officials destroyed or abandoned near clandestine landing strips in several South American countries. Some of these wrecked or abandoned aircraft still contained muti-ton kilos of cocaine onboard, and few, if any, of the seized or destroyed aircraft were in the location they were reported to be located. When authorities confronted Mercer-Erwin as the representative of AGC, she refused to comply and each time law enforcement would seize an AGC registered aircraft laden with drugs, Mercer-Erwin attempted to distance herself from the narcotic’s trafficking by transferring ownership of the aircraft using fictitious information to conceal the nature, location, source, ownership, and control of the aircraft. 

Additionally, Mercer-Erwin and co-defendants participated in a series of bogus aircraft sales transactions in order to conceal the movement of illegally obtained funds. The co-defendants would provide buyers and investors with fabricated documents and supply false representations regarding the bogus sale of an unsellable aircraft. The aircraft was unsellable because, unbeknownst to the buyers, the true owners of the aircraft had no knowledge or intention of selling the aircraft. Other bogus sales presented to buyers consisted of aircraft that was owned by a commercial airline and previously decommissioned and inoperable. None of the aircraft presented to the buyers were for sale.

The defendants would convince the buyer to place a deposit into an escrow account with WBAT, the title company owned by Mercer-Erwin, pending the completion of the sale. Once the money was placed in WBAT’s escrow account, the buyers were responsible for the interest accrued, and an escrow fee would be charged. In a typical sale, the deposit would remain in the escrow account. However, Mercer-Erwin would transfer the money from the escrow account to bank accounts controlled by the co-conspirators.

Since the aircraft was not truly for sale, the purchase of the aircraft would inevitably fall through, and the deposit would have to be returned. The co-conspirators would repeat the process by luring another buyer for the purchase of another unsellable aircraft. Each transaction would pay for the previous one, and Mercer-Erwin would receive an escrow fee ranging from $25,000 to $150,000 for her participation in the scheme.

Mercer-Erwin was the only defendant to proceed to trial. Co-defendants Kayleigh Moffett and Carlos Rocha Villaurrutia pleaded guilty on April 10, 2023. Moffett pleaded guilty to wire fraud and conspiracy to commit export violations, and Villaurrutia pleaded guilty to conspiracy to manufacture and distribute cocaine knowing it would be unlawfully imported into the United States; conspiracy to commit money laundering; and conspiracy to commit export violations. Four other defendants have active arrest warrants but are not in custody and are presumed innocent until proven guilty.

Mercer-Erwin was indicted by a federal grand jury in February 2021.  She faces up to life in federal prison.  The maximum statutory sentence prescribed by Congress is provided here for information purposes, as the sentencing will be determined by the court based on the advisory sentencing guidelines and other statutory factors.  A sentencing hearing will be scheduled after the completion of a presentence investigation by the U.S. Probation Office.

This is an Organized Crime Drug Enforcement Task Force (OCDETF) case and is being investigated by Homeland Security Investigations (Dallas, Brownsville, Laredo, Guatemala, Colombia, Honduras, Mexico, and Transnational Criminal Investigative Units); Department of Commerce, Bureau of Industry and Security (Dallas and Houston offices); Department of Transportation Office of Inspector General (DOT-OIG); Office of Export Enforcement; Polk County Constable Precinct 1; Southeast Texas Export Investigations Group; Internal Revenue Service; Federal Aviation Administration (FAA); Estado Mayor De La Defensa Nacional Guatemala; Fuerza Aerea Guatemalteca; and Fuerza Aerea Colombiana.  OCDETF identifies, disrupts, and dismantles the highest-level drug traffickers, money launderers, gangs, and transnational criminal organizations that threaten the United States by using a prosecutor-led, intelligence-driven, multi-agency approach that leverages the strengths of federal, state, and local law enforcement agencies against criminal networks.

This case was prosecuted by Assistant U.S. Attorneys Ernest Gonzalez, Heather Rattan, and Lesley Brooks. 

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Two biofuel company owners were sentenced to prison for conspiracy and making false statements to the U.S. Environmental Protection Agency (EPA) and conspiracy to defraud the IRS and preparing a false tax claim.  

U.S. District Judge John E. Jones III sentenced Ben Wootton, 55 of Savannah, Georgia, to 70 months and Race Miner, 51, of Marco Island, Florida, to 66 months, after a jury convicted both defendants and their company, Keystone Biofuels Inc. (Keystone), in April 2019.  The company was originally located in Shiremanstown, Pennsylvania, and later in Camp Hill, Pennsylvania.  Miner was the founder and chief executive officer of Keystone.  Wootton was president of Keystone, and a former member of the National Biodiesel Board.  The court ordered both men to pay restitution of $4,149,383.41 to the IRS and restitution of $5,076,376.07 to the Pennsylvania Department of Environmental Protection.  Wootton and Miner will also have to serve a three-year term of supervised release after their term of imprisonment.  Keystone was sentenced to five years’ probation and ordered to pay restitution of $4,149,383.41 to the IRS and restitution of $5,076,376.07 to the Pennsylvania Department of Environment Protection criminal fine.

“The EPA and IRS renewable fuels incentive programs are important components of the Congressional program to increase the use of biofuels to benefit the environment,” said Principal Deputy Assistant Attorney General Jonathan D. Brightbill of the Justice Department’s Environment and Natural Resources Division.  “Today’s sentences are a strong reminder that the federal government will not allow supposed “green” conmen to illegally take advantage of federal and state programs that are meant to offer financial incentives to enhance the environment and energy sustainability.”

“The complex fraud perpetrated by the defendants in this case struck directly at the heart of a government program that was specifically created to benefit the environment, business owners and the community at large,” said U.S. Attorney David J. Freed of the Middle District of Pennsylvania.  “Encouraging companies to develop and provide for sale clean renewable fuels is truly a win-win proposition for everyone.  Unfortunately, the defendants used this program to benefit only themselves.  Today’s sentences send a clear message that my office, our federal partners and the United States Department of Justice will not tolerate renewable fuels fraud and related offenses.”

“The defendants defrauded the IRS and sought to profit from a system intended to protect the environment,” said Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division.  “The Tax Division will continue to aggressively investigate and prosecute with our partners such tax crimes.”

“Today’s sentencing demonstrates there are real penalties for those defrauding the Renewable Fuel Standard (RFS) program,” said Jessica Taylor, Director of the EPA’s criminal enforcement program. “With this action EPA and its enforcement partners are continuing to protect both the integrity of the RINs program and the American taxpayer.”  

“Wootton and Miner actively engaged in a multimillion-dollar scheme designed to rob the government and line their own pockets.  Today, they learned there is a steep price to be paid for such greed,” said Jim Lee, Chief, IRS Criminal Investigation (IRS-CI).  “It is the partnerships between IRS-CI and other federal agencies like the EPA that allow cases like this to come to fruition, holding accountable those who seek to enrich themselves through fraudulent means.”    

“The only green resource these two cared about was money, and they told lie after lie to perpetuate their fraud,” said Special Agent in Charge Michael J. Driscoll of the FBI's Philadelphia Field Office. “Fair warning to anyone else seeking to scam the U.S. government and taxpayers like this: the FBI and our partners stand ready to investigate and hold you accountable as well.”

Wootton, Miner, and Keystone falsely represented that they were able to produce a fuel meeting the requirements set by the American Society for Testing and Materials (ASTM) for biodiesel (a renewable fuel) and adopted by the EPA, and as such were entitled to create renewable fuel credits, known as RINs, based on each gallon of renewable fuel produced.  The fuel and the RINs have financial value and could be sold and purchased by participants within the federal renewable fuels commercial system. 

Wootton and Miner were also convicted of fraudulently claiming federal tax refunds based on IRS’s Biofuel Mixture Credit.  The Biodiesel Mixture Credit is a type of “blender’s credit” for persons or businesses who mix biodiesel with diesel fuel and use or sell the mixture as a fuel.  Wootton and Miner caused Keystone to fraudulently claim tax refunds based on non-qualifying fuel and, in at least some instances, non-existent or non-mixed fuel.  In an attempt to hide their fraud scheme, the men created false corporate books and records and sham financial transactions to account for the nonexistent and non-qualifying fuel, and to create the appearance of legitimacy.

The prosecution of Wootton, Miner and Keystone is the first prosecution of a case under the federal renewable fuels program based on fuel that did not meet the program renewable fuel quality standards. 

The case was prosecuted by Senior Litigation Counsel Howard P. Stewart of the Environment and Natural Resources Division’s Environmental Crimes Section, Assistant U.S. Attorney Geoffrey MacArthur, Special Assistant U.S. Attorney David Lastra, and Trial Attorneys Mark Kotila and Michael C. Vasiliadis of the Tax Division.  EPA Region III Criminal Investigation Division, IRS Criminal Investigation and the FBI Philadelphia’s Harrisburg Resident Agency investigated the matter.

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.

A Texas man was taken into custody on allegations he fraudulently obtained more than $1.1 million in Paycheck Protection Program (PPP) loans, announced Acting Assistant Attorney General Brian C. Rabbitt of the Justice Department’s Criminal Division and U.S. Attorney Ryan K. Patrick for the Southern District of Texas.

Joshua Thomas Argires, 29, of Houston, Texas, is charged in a criminal complaint, unsealed Monday upon his arrest, with making false statements to a financial institution, wire fraud, bank fraud and engaging in unlawful monetary transactions.  He made his initial appearance Monday before U.S. Magistrate Judge Peter Bray.

Argires allegedly perpetrated a scheme to file two fraudulent loan applications seeking more than $1.1 million in forgivable loans.  The Small Business Administration (SBA) guarantees the loans for COVID-19 relief through the PPP under the Coronavirus Aid, Relief and Economic Security (CARES) Act. 

The complaint alleges Argires submitted two fraudulent PPP loan applications to federally insured banks.  One of these applications was submitted on behalf of an entity called Texas Barbecue; the other was filed on behalf of a company called Houston Landscaping.  Argires allegedly claimed these two companies had numerous employees and hundreds of thousands of dollars in payroll expenses. 

According to the complaint, neither Texas Barbecue nor Houston Landscaping has employees or pays wages consistent with the amounts claimed in the PPP loan applications.  The complaint further asserts that both of these loans were funded, but that none of the funds were used for payroll or other expenses authorized under the PPP.  Rather, the funds received on behalf of Texas Barbecue were invested in a cryptocurrency account, while the funds obtained for Houston Landscaping were held in a bank account and slowly depleted via ATM withdrawals, according to the charges.

The CARES Act is a federal law enacted March 29.  It is designed to provide emergency financial assistance to millions of Americans who are suffering the economic effects resulting from the COVID-19 pandemic.  One source of relief the CARES Act provides is the authorization of up to $349 billion in forgivable loans to small businesses for job retention and certain other expenses through the PPP.  In April 2020, Congress authorized over $300 billion in additional PPP funding.

The PPP allows qualifying small businesses and other organizations to receive loans with a maturity of two years and an interest rate of one percent.  Businesses must use PPP loan proceeds for payroll costs, interest on mortgages, rent and utilities.  The PPP allows the interest and principal to be forgiven if businesses spend the proceeds on these expenses within a set time period and use at least a certain percentage of the loan towards payroll expenses.   

A federal criminal complaint is merely an accusation. A defendant is presumed innocent until proven guilty beyond a reasonable doubt in a court of law. 

The Federal Housing Finance Agency Office of the Inspector General (OIG), SBA OIG and U.S. Postal Inspection Service’s Houston Division conducted the investigation. Trial Attorney Timothy A. Duree of the Criminal Division’s Fraud Section and Assistant U.S. Attorney James McAlister for the Southern District of Texas are prosecuting the case.     

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.

 

A long-time Philadelphia-area political consultant and attorney was sentenced today for his role in two criminal schemes to violate federal campaign finance laws announced Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division and U.S. Attorney William M. McSwain of the Eastern District of Pennsylvania.

Kenneth Smukler, 57, of Villanova, Pennsylvania, was sentenced to 18 months in prison followed by one year of supervised release by the Honorable Jan E. DuBois.  In the 2012 Democratic primary election for Pennsylvania’s First Congressional District, Jimmie Moore, a former Philadelphia Municipal Court Judge, ran against the incumbent Congressman Bob Brady.  Assisted and directed by Smukler, Moore executed a corrupt deal in which he agreed to withdraw from the race in exchange for funds from the Bob Brady for Congress campaign (the Brady campaign) to be used to pay off Moore’s campaign debts.  Those debts included money that Jimmie Moore for Congress (the Moore campaign) owed to several vendors, to Moore himself and to Moore’s campaign manager, Carolyn Cavaness. On Feb. 29, 2012, Moore withdrew from the race and Cavaness had prepared a list of debts owed by the Moore campaign, which they provided to Smukler, a campaign consultant for the Brady campaign.  Smukler arranged for the Moore campaign to receive $90,000 from the Brady campaign through false documents and a series of concealing pass-throughs, including the consulting firm of another Brady associate and co-conspirator, D.A. Jones.  Smukler ensured that the Brady campaign reported none of the concealed payments, which exceeded the federal contribution limits, to the Federal Election Commission (FEC).  Rather, he executed the scheme by ensuring that the three installments were falsely and illegally disguised from the FEC and the public as payments for poll and consulting services.

Later, during the 2014 Democratic primary election for Pennsylvania’s Thirteenth Congressional District, Smukler again committed federal campaign finance offenses, this time for the benefit of another client, Marjorie Margolies, a former Member of the U.S. House of Representatives.  Smukler, a veteran of prior Margolies political campaigns, ran the Margolies campaign in 2014. 

In April 2014, during a close primary race, the Margolies campaign was running out of money that it could legally spend in the primary.  Smukler then caused the Margolies campaign to illegally spend general election funds in his attempt to win the primary election for his client.  He further lied about his illegal spending to the campaign’s lawyer.  That lawyer, in turn, unwittingly reported Smukler’s lies to the FEC in response to a complaint filed by another candidate. Additionally, Smukler caused excessive campaign contributions and illegal conduit contributions to the Margolies campaign, all of which were hidden or disguised from the campaign’s FEC filings.

“When political operatives like Kenneth Smukler engage in hidden illegal campaign finance schemes, they undermine the integrity of the electoral process,” said Assistant Attorney General Benczkowski.  “This is a just sentence that reflects the seriousness of these crimes.”

“In order to win at all costs, Smukler knowingly and purposefully undermined our democratic process by misusing campaign funds and lying about it,” said U.S. Attorney McSwain. “My Office will continue to prosecute public corruption wherever and whenever we uncover it. Now Smukler is headed to jail, and I am grateful that the Court imposed a just sentence reinforcing the fact that this kind of corruption will never be tolerated.”

On Dec. 3, 2018, a jury found Smukler guilty of one count of conspiracy, two counts of excessive campaign contributions, two counts of false statements, two counts of conduit contributions, one count of willfully causing a false statement to the FEC and one count of obstruction of justice.     

Former Public Integrity Section Trial Attorney Jonathan I. Kravis and the FBI investigated the case.  Richard C. Pilger, Director of the Election Crimes Branch of the Public Integrity Section, Trial Attorney Rebecca Moses of the Public Integrity Section and Assistant U.S. Attorney Eric L. Gibson of the Eastern District of Pennsylvania prosecuted the case.

Massachusetts-based medical device manufacturer Alere Inc. and its subsidiary Alere San Diego (Alere) have agreed to pay the United States $33.2 million to resolve allegations that Alere caused hospitals to submit false claims to Medicare, Medicaid, and other federal healthcare programs by knowingly selling materially unreliable point-of-care diagnostic testing devices, the Justice Department announced today.

       

“The United States is fortunate that innovative healthcare companies regularly develop medical devices that improve patients’ lives, often in remarkable ways,” said Acting Assistant Attorney General Chad A. Readler for the Justice Department’s Civil Division.  “But the Department will hold medical device manufacturers accountable if they knowingly sell defective products that waste taxpayer dollars and adversely impact patient care.”   

 

The United States alleged that between January 2006 and March 2012, Alere knowingly sold materially unreliable rapid point-of-care testing devices marketed under the trade name Triage®.  The Triage® devices aided in the diagnosis of acute coronary syndromes, heart failure, drug overdose, and other serious conditions, and the devices were frequently used in emergency departments where timely decisions are critical to ensuring proper patient care.  According to the government’s allegations, Alere received customer complaints that put it on notice that certain devices it sold produced erroneous results that had the potential to create false positives and false negatives that adversely affected clinical decision-making.  Nonetheless, the company failed to take appropriate corrective actions until FDA inspections prompted a nationwide product recall in 2012.  Of the $33.2 million to be paid by Alere, $28,378,893 will be returned to the federal government and a total of $4,860,779 will be returned to individual states, which jointly funded claims for Triage devices submitted to state Medicaid programs.        

 

“Physicians who work to treat patients with suspected myocardial infarctions rely upon devices such as Alere’s Triage Cardiac products for quick and accurate readings," said Stephen M. Schenning, Acting United States Attorney for the District of Maryland.  "When manufacturers such as Alere make changes to the specifications that affect the product’s reliability without informing physicians or the FDA, patient care is put at substantial risk.”

 

“Congress passed the False Claims Act on March 2, 1863 to protect taxpayer dollars from fraud and abuse and to allow private citizens to join the effort,” said Maureen R. Dixon, Special Agent in Charge for the U.S. Department of Health and Human Services Office of Inspector General in Philadelphia.   “We will continue to work with concerned citizens, the Department of Justice and our investigative partners to ensure the federal government only pays for honest, high quality, health care products and services.”

 

The settlement with Alere resolves a lawsuit filed under the whistleblower provision of the False Claims Act, which permits private parties to file suit on behalf of the United States for false claims and share in a portion of the government’s recovery.  The civil lawsuit was filed by Amanda Wu, who formerly worked for Alere as a senior quality control analyst.  As part of today’s resolution, Ms. Wu will receive approximately $5.6 million.

 

The settlement with Alere was the result of a coordinated effort among the U.S. Attorney’s Office for the District of Maryland, the Commercial Litigation Branch of the Justice Department’s Civil Division, and the National Association of Medicaid Fraud Control Units, with assistance from the FDA’s Office of Chief Counsel, and HHS’ Office of Counsel to the Inspector General. The investigation was conducted by HHS-OIG, FDA’s Office of Criminal Investigations, and the Department of Defense Criminal Investigative Services.

 

The claims resolved by this settlement are allegations only, and there has been no determination of liability.  The lawsuit is captioned United States ex rel. Amanda Wu v. Alere San Diego, et al., No. GLR-11-CV-1808. 

A complaint was unsealed today, charging two U.S. citizens with federal crimes related to Iran.  Muzzamil Zaidi, 36, a U.S. citizen who resides in Qom, Iran, was charged with acting in the United States as an agent of the government of Iran without first notifying the Attorney General.  Zaidi, Asim Naqvi, 36, a U.S. citizen who lives in Houston, Texas, and Ali Chawla, 36, a Pakistani national who lives in Qom, Iran, were all charged with violations of the International Emergency Economic Powers Act.  The complaint alleges that both charges stem from the defendants’ campaign to transport U.S. currency from the United States to Iran on behalf of the Supreme Leader of Iran in 2018 and 2019. Both Zaidi and Naqvi were arrested in Houston yesterday, Aug. 18, 2020.

“Disrupting Iran’s ability to raise U.S. dollars is key to combating its ability to sponsor international terrorism and destabilize the Middle East, including through its military presence in Yemen,” said Assistant Attorney General for National Security John C. Demers.  “Zaidi, Naqvi, and Chawla allegedly raised money in the United States on behalf of Iran’s Supreme Leader, and illegally channeled these dollars to the government of Iran.  As a result of today’s charges, their unlawful scheme has been exposed and brought to an end.  The U.S. Department of Justice and its National Security Division are committed to holding accountable individuals who operate covert networks within the United States in order to provide support and funds to hostile foreign governments like Iran in violation of U.S. law.”

“This case is significant on many levels,” said Michael R. Sherwin, Acting United States Attorney for the District of Columbia.  “To begin, as alleged in the criminal complaint, the defendants have considerable operational links to the IRGC, which has conducted multiple terrorist operations throughout the world over the past several years.  The life-blood of these terrorist operations is cash – and the defendants played a key role in facilitating that critical component.”

“Today’s charges demonstrate our commitment to preventing agents of hostile foreign governments from having access and freedom to operate within the borders of the United States,” said James A. Dawson, acting Assistant Director in Charge of the FBI’s Washington Field Office.  “In addition to being charged with acting as an illegal agent of Iran, Zaidi allegedly operated with his co-conspirators at the behest of the Iranian government — a known sponsor of terrorism — to overtly solicit U.S. money to further Iranian causes, in violation of the International Emergency Economic Powers Act (IEEPA).  This is why IEEPA was established: to prevent hostile foreign governments from leveraging the U.S. financial system in furtherance of their global destabilizing endeavors.” 

“The arrests today are the direct result of the undeterred efforts of the FBI Houston Counterterrorism investigative team,” said FBI Houston Field Office Special Agent in Charge, Perrye K. Turner.  “By engaging in around the clock collaboration with multiple Field Offices and Intelligence Community partners, our agents ensure that those who send money to terrorist regimes will ultimately be held accountable and lose their freedom.”  

As alleged in the affidavit in support of a criminal complaint, Zaidi offered his services to the Supreme Leader of Iran in or around July 2015 and said that he could serve the “Islamic Republic in the socio-political or another field.”  The complaint alleges that Zaidi traveled to Syria in or around June 2018 and that, while there, flew to an active war zone in an armed Iranian military or intelligence aircraft.  The complaint alleges that Zaidi had access to bases under the command of Iran’s Islamic Revolutionary Guard Corps (IRGC) while in that war zone, including a “Sepah Qods” (IRGC Qods Force) base.  The IRGC was designated as a terrorist organization by the U.S on April 4, 2019.  Qassem Soleimani, a major general in the IRGC, was commander of the Qods Force until he was killed in a U.S. airstrike on Jan. 3, 2020.

According to the complaint, in December 2018, Zaidi and other members of an organization known as “Islamic Pulse,” including Chawla, received the permission of the Supreme Leader of Iran to collect khums, a religious tax, on the Supreme Leader’s behalf, and to send half of that money to Yemen.  The complaint alleges that permission was formalized on or about Feb. 28, 2019, in a letter confirming the permission of the Supreme Leader of Iran and another Ayatollah to spend khums money in Yemen.

Based on the complaint, in or around July 2019, Islamic Pulse released a video soliciting donations for its purported Yemen campaign that showed money moving from the United States and other Western countries to Yemen through Iran.  The complaint alleges that Chawla replied to donors’ concerns about how the campaign was able to get money into Yemen by stating that the matter could not be discussed over email.  The complaint further alleges that Chawla sought U.S. dollars specifically, stated that Islamic Pulse could not accept electronic transfers, and admitted that Islamic Pulse was not a registered charity. 

The complaint alleges that after the United States placed sanctions on the Supreme Leader of Iran in June 2019, Zaidi told Naqvi that the action was a “straight hit on khums.”  The complaint alleges that in summer and fall 2019 Zaidi and Naqvi continued to collect U.S. currency in the United States and have it transported it to Iran, sometimes via Iraq, structured in such a way as to avoid reporting requirements.  After a group of 25 travelers carried money destined for Iran on behalf of Zaidi and Naqvi in October 2019, Zaidi and Naqvi discussed the screening the travelers underwent at the airport and Naqvi’s hope that none of the travelers would confess to authorities upon their return.

The complaint alleges that, during his current stay in the United States, which began in June 2020, Zaidi has exhibited behavior that is consistent with having received training from a foreign government or foreign intelligence service, such as the government of Iran or IRGC.  According to the complaint, that behavior includes a reluctance to discuss matters over the phone, or even over encrypted applications, because Zaidi claims that doing so could be dangerous.

The charges in criminal complaints are merely allegations, and every defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt. The maximum penalty for a violation of 18 U.S.C. § 951 is 10 years, and the maximum penalty for a violation of the International Emergency Economic Powers Act is 20 years.  The maximum statutory sentence is prescribed by Congress and is provided here for informational purposes.

The investigation into this matter was conducted by the FBI’s Washington Field Office and Houston Field Office.  The case is being prosecuted by the National Security Section of the U.S. Attorney’s Office for the District of Columbia, along with the Counterintelligence and Export Control Section and Counterterrorism Section of the National Security Division of the Department of Justice.