KANSAS CITY, Mo. – Tom Larson, Acting United States Attorney for the Western District of Missouri, announced that a former Honeywell employee was sentenced in federal court today for engaging in a fraud scheme that caused a loss of more than $50,000.

Trent L. Christie, 37, of Olathe, Kan., was sentenced by U.S. District Judge Howard F. Sachs to one year and one day in federal prison without parole. Christie has also fully paid $50,480 in restitution to Honeywell.

Christie was employed at the Kansas City branch of Honeywell Federal Manufacturing and Technologies, a management and operating contractor for the National Nuclear Security Administration (NNSA), which is the agency under the U.S. Department of Energy responsible for enhancing national security through the military application of nuclear science.

On Dec. 15, 2016, Christie pleaded guilty to four counts of wire fraud. Christie admitted that, in his capacity as a Honeywell employee with purchasing authority, he submitted purchase orders for approximately 129 pieces of equipment, all without the permission or knowledge of either Honeywell or the NNSA. None of the equipment was classified.

Christie engaged in his fraud scheme from June 15, 2010, to Aug. 27, 2014. The costs to Honeywell and subsequently to the NNSA of the unnecessary equipment was approximately $50,480.

After receiving the equipment, Christie advertised the items for sale on eBay. If sold, he removed the items from the Honeywell facility and shipped them, often from his personal residence, to the purchaser. Total sales by Christie netted him approximately $20,847.

This case was prosecuted by Senior Litigation Counsel Gregg R. Coonrod. It was investigated by the Department of Energy, Office of the Inspector General.

JEFFERSON CITY, Mo. – Nineteen defendants, primarily from the Columbia and Kansas City, Missouri, areas, have been indicted by a federal grand jury for their roles in a $1.2 million insurance fraud conspiracy that involved false claims of injuries suffered in car accidents.

Lawrence Courtney Lawhorn, 32, and Latoya Marie Brown, 35, who resided in Columbia and in the Kansas City area; Lauren Courtney Luque, 34, Michael Jadon Carter, 30, Tiera Rachell Wallace, 38, Lanay Deshawn Wallace, 26, Dylan James Danielsson, 26, Larell Montez Banks, 27, Kathy Davvy Kimhang, 29, Michael Lee Gene Stapleton, 34, and Cedrick Shawndale Goldman, 44, all of Columbia; Matthew Stephen Akins, 32, who resided in Columbia and Fulton, Mo.; Michael Stuart Smith, 34, Taron Donte Ford, 35, Dontay Laray Campbell, 31, and Eriona Tyjaez Fleeks, 28, all of Kansas City, Mo.; Cornelius Deshawn Phelps, 35, who resided in Kansas City and Lee’s Summit, Mo.; Tara Colleen Jackson, 57, of Independence, Mo.; and Maurice Frank Penny, 37, of St. Louis, Mo., were charged in a 69-count superseding indictment returned under seal by a federal grand jury in Springfield, Mo., on Nov. 18, 2020. 

The superseding indictment was unsealed and made public today upon the arrests and initial court appearances of several defendants. The superseding indictment replaces an indictment returned on Aug. 19, 2020, which originally charged only Lawhorn and Luque with eight counts related to the fraud conspiracy.

The federal indictment charges all 19 defendants with participating in a conspiracy that defrauded six insurance companies of a total of $1,234,581 from June 2017 to July 2020. Conspirators allegedly submitted false claims that they had suffered bodily injuries and that they would be personally liable for any medical bills related to insurance claims. Conspirators, some of whom were involved in multiple incidents, received thousands of dollars, and in some cases tens of thousands of dollars, based on these false claims. According to the indictment, however, none of the conspirators made any payments to medical providers and instead used the funds for their personal expenses.

Lawhorn was directly involved in two incidents in which he received separate payments of $1,500 and $17,350 from insurance companies, the indictment says. In eight additional incidents, Lawhorn allegedly sent emails to insurance companies, made telephone calls to insurance companies, directed others what to tell insurance companies, reviewed insurance policies prior to incidents, witnessed release agreements, and assumed the identity of parties to the incidents or people related to parties to these incidents in communication with insurance companies.

Luque (with whom Lawhorn was in a romantic relationship), Jackson (who is Lawhorn’s mother), Carter, Banks, and Stapleton each received fraudulent insurance payments of $50,000 or more, according to the indictment. Lawhorn also was in romantic relationships with Kimhang and Brown, who has a child in common with Lawhorn. Brown was involved in three incidents, the indictment says, and received a total of $44,269 in insurance payments. Kimhang received a fraudulent insurance payment of $18,429, according to the indictment.

In addition to the wire fraud conspiracy, most of the defendants are charged with participating in a mail fraud conspiracy. Lawhorn and Carter are also charged together in a money-laundering conspiracy. The indictment also charges various defendants in 38 counts of wire fraud, six counts of attempted wire fraud, and 20 counts of mail fraud. Lawhorn is also charged with one count of aggravated identity theft. Lawhorn and Luque are also charged together in one count of aggravated identity theft.

The charges contained in this indictment are simply accusations, and not evidence of guilt. Evidence supporting the charges must be presented to a federal trial jury, whose duty is to determine guilt or innocence.

This case is being prosecuted by Assistant U.S. Attorney Aaron M. Maness. It was investigated by the FBI and the Bureau of Alcohol, Tobacco, Firearms and Explosives.

KANSAS CITY, Mo. – A Dumfries, Virginia, man was convicted by a federal jury today for his role in wire fraud and money laundering conspiracies as part of a nearly $3 million romance fraud scheme.

Henry N. Asomani, 34, a naturalized U.S. citizen from Ghana, was found guilty of one count of conspiracy to commit wire fraud, two counts of wire fraud, one count of conspiracy to commit money laundering, and two counts of money laundering. The court ordered Asomani taken into federal custody at the close of today’s proceedings to await sentencing.

Evidence introduced during the trial indicated that Asomani was the middle man who received the proceeds of the fraud conspiracy from unknown co-conspirators into his bank accounts. Asomani transferred the funds among various accounts; he kept a portion of the proceeds for himself, and funneled the rest of the proceeds to co-conspirators in Ghana. Asomani operated five different companies with 16 different accounts at eight different banks.

Asomani received a total of $2,993,354 from more than a dozen victims across the United States, including three victims in the Kansas City metropolitan area, from Sept. 15, 2015, to Oct. 17, 2017. Although bank investigators and FBI agents repeatedly warned Asomani that his bank accounts were receiving the proceeds of a fraud scheme, he continued to receive the funds and simply closed accounts when funds were frozen, then opened new accounts at a different bank.

Unknown co-conspirators targeted individuals through online dating websites with various romance frauds. The unknown co-conspirators impersonated individuals who were involved in businesses overseas. They convinced the victims that they needed funds to help with moving gold from a foreign country, orphanage expenses, and school and travel expenses. The co-conspirators told the victims they would share the profits when the gold was returned to the United States. In fact, none of the victims received any profit or received any gold from the co-conspirators.

For example, one victim who resides in Lee’s Summit, Missouri, set up a profile on ChristianMingle.com following the death of her husband to brain cancer. In October 2015, an individual claiming to be “Larry B. White” initiated contact with her. Following numerous conversations by email and telephone, “White” convinced the victim to invest in a Ghana gold mine. “White” promised a 40 percent return on the investment of money. From November 2015 through January 2016, under the direction of “White,” the victim sent funds to multiple entities by check and wire totaling approximately $3,292,000. Of that amount, $2,292,000 was transferred to accounts controlled by Asomani. Asomani spent $50,000 of those proceeds to make a down payment on a 2019 silver Lexus NX300. To date, the victim has not received any money or gold profits from “White.”

Another victim, who resides in Kansas City, Missouri, met “Bradley Fischer” on ChristianMingle.com. “Fischer” convinced the victim to send funds for school expenses, travel expenses, and to start a new life in Kansas City. On July 19, 2017, the victim wired $24,000 to Asomani’s bank account. “Fischer” promised to pay the victim back when he got to Kansas City.  To date, the victim has received $1,000 back from “Fischer.”

Other victims reside in New Jersey, Alaska, Oklahoma, Florida, Texas, Kansas, and Iowa.

Asomani wired $1,789,416 from his bank accounts in the United States to bank accounts in Ghana. He spent approximately $342,278 on auto purchases and auto- or shipping-related expenses as part of the money-laundering scheme. Asomani shipped 18 vehicles to Ghana, having a declared value of approximately $284,190.

Following the presentation of evidence, the jury in the U.S. District Court in Kansas City, Mo., deliberated for approximately two hours before returning the guilty verdict to U.S. District Judge Roseann Ketchmark, ending a trial that began Monday, Dec. 9.

Under federal statutes, Asomani is subject to a sentence of up to 20 years in federal prison without parole on each of the four conspiracy and wire fraud counts, and up to 10 years in federal prison without parole on each of the two money laundering counts. The maximum statutory sentence is prescribed by Congress and is provided here for informational purposes, as the sentencing of the defendant 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 United States Probation Office.

This case is being prosecuted by Assistant U.S. Attorneys Paul S. Becker and Matthew Blackwood. It was investigated by the FBI.

KANSAS CITY, Mo. – Timothy A. Garrison, United States Attorney for the Western District of Missouri, announced that a former Liberty, Mo., man was sentenced in federal court today for an investment fraud scheme.

Henry Thomas Hammond, 61, of Ponte Vedra Beach, Fla., formerly of Liberty, was sentenced by U.S. District Judge Stephen R. Bough to one year and one day in federal prison without parole. The court also ordered Hammond to pay $2,266,325 in restitution to his victims.

Hammond, who pleaded guilty to conspiracy to commit wire fraud on Jan. 13, 2017, owned, operated or was involved in several businesses, including Longhorn Construction, Inc.; Longhorn Properties, LLC; Longhorn Development Group, Inc.; Longhorn Construction, North American Investment Group, Inc., and others.

Hammond admitted that he participated in a fraudulent investment scheme from June 2009 through July 2010 in which eight victim investors lost a total of $2,266,325. Some of the money invested by victims of the scheme was used by Hammond for his personal benefit.

Co-Conspirator A (who is not identified) promoted himself to Hammond and others as an international financier who could provide financing for substantial building projects. With the housing and economic collapse in 2008, conventional borrowing scaled back, making it difficult for individuals, businesses and developers to obtain financing. Alternative financing programs became more prominent. Some claimed to employ leveraged bank instruments and Collateralized Mortgage Obligations (a mortgage-backed security that contains a pool of mortgages bundled together, broken down into tranches and sold as investments) and European trading platforms. Co-Conspirator A also claimed to have a Strategic Investment Program that was connected with the Maranatha Platform (a trading platform connected to the Maranatha Church that engaged in leveraged investments), one of the major European trading platforms.

This program and others promoted by Co-Conspirator A were nonexistent and Co-Conspirator A operated each of them opaquely and as a fraud scheme.

According to court documents, Hammond was willfully blind to the fact that the investment program was a fraudulent scam. Hammond knew or should have known the material information that he passed on to investors was false and turned a blind eye to warning signs that the investment programs were a fraudulent scam. As a result of these actions, Hammond and his co-conspirators lulled the investors into investing additional money and/or discouraged them from withdrawing from the investment program and seeking a refund of their invested funds.

In July 2010, Hammond told certain investors the Strategic Investment Program would not be paying and offered to roll investor funds into a hotel project; the hotel project was never completed.

This case was prosecuted by Assistant U.S. Attorney Jane Pansing Brown. It was investigated by the FBI.

 

MISSOULA — A Missoula man with prior federal felony convictions for gun-related crimes today admitted to illegally possessing multiple firearms, which had no serial numbers, U.S. Attorney Jesse Laslovich said.

Luke Aldon Hayes, 42, pleaded guilty to an information charging him with felon in possession of a firearm. Hayes faces a maximum of 15 years in prison, a $250,000 fine and three years of supervised release.

U.S. District Judge Donald W. Molloy presided and set sentencing for Feb. 14, 2024. The court will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors. Hayes was detained pending further proceedings.

In court documents, the government alleged that Hayes had two prior federal felony convictions for firearms-related offenses when, on Aug. 9, while at work in Bonner, he accidentally shot himself in the foot. Hayes left work immediately and drove to his residence in East Missoula. Law enforcement responded to Hayes’ residence and eventually searched his mother’s car because she was seen moving a black, plastic case from the house to the vehicle. Officers seized the black case, which contained seven handguns. None of the guns had serial numbers, and one of them, a .40-caliber pistol, was accompanied by a high-capacity magazine capable of holding 22 rounds of ammunition. In addition, Hayes agreed to the forfeiture of firearms recovered on Aug. 9 along with other guns, ammunition and accessories recovered later by law enforcement.

Assistant U.S. Attorney Timothy J. Racicot is prosecuting the case. The FBI’s Montana Regional Violent Crime Task Force conducted the investigation.

This case is part of Project Safe Neighborhoods (PSN), a program bringing together all levels of law enforcement and the communities they serve to reduce violent crime and gun violence, and to make our neighborhoods safer for everyone. On May 26, 2021, the Department launched a violent crime reduction strategy strengthening PSN based on these core principles: fostering trust and legitimacy in our communities, supporting community-based organizations that help prevent violence from occurring in the first place, setting focused and strategic enforcement priorities, and measuring the results.

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KANSAS CITY, Mo. – A Kansas City, Mo., woman pleaded guilty in federal court today to her role in two separate conspiracies that resulted in more than $900,000 in fraudulent Paycheck Protection Program (PPP) loans being issued under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

Renetta Golden-Larimore, 55, pleaded guilty before U.S. District Judge Brian C. Wimes to two counts of conspiracy to commit wire fraud, contained in two separate federal indictments.

The CARES Act established several new temporary programs and provided for the expansion of others to address the COVID-19 pandemic. Among these programs, the Paycheck Protection Program (PPP) authorized forgivable loans to small businesses to retain workers and maintain payroll, make mortgage interest payments, lease payments, and utility payments.

By pleading guilty today, Golden-Larimore admitted that from February 2021 to May 2022 she conspired with others to submit false and fraudulent applications for PPP loans. The scheme caused over $900,000 in fraudulent PPP loans to be issued to ineligible borrowers, some of which were forgiven even though the funds were not used for the purposes specified in the PPP.

Golden-Larimore admitted she prepared and filed fraudulent PPP loan applications on behalf of other persons. Generally, she charged fees between $2,000 and $7,000 for her assistance in filing false and fraudulent PPP loans, earning a total of at least $75,833 from the scheme. Golden-Larimore created counterfeit IRS forms for nonexistent businesses and with inflated income for existing businesses in order to qualify the borrower for a PPP loan.

Golden-Larimore prepared approximately 43 false PPP loan applications that were funded and numerous other false applications that were rejected. The total loss to the Small Business Administration was $908,278.

Twenty other persons have been charged and convicted in the Golden-Larimore fraud scheme in these two cases and five additional cases.

Under the terms of today’s plea agreement, Golden-Larimore must forfeit to the government at least $75,833, which represents the proceeds she personally obtained from the scheme, and pay $908,278 in restitution to the Small Business Administration, representing the total fraud loss associated with the wire fraud scheme.

Under federal statutes, Golden-Larimore is subject to a sentence of up to 20 years in federal prison without parole. The maximum statutory sentence is prescribed by Congress and is provided here for informational purposes, as the sentencing of the defendant 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 United States Probation Office.

This case is being prosecuted by Assistant U.S. Attorney Paul S. Becker. It was investigated by IRS-Criminal Investigation and the Kansas City, Mo., Police Department.

JEFFERSON CITY, Mo. – An Indianapolis, Indiana, man has pleaded guilty in federal court to his role in the armed robbery of a Walgreens pharmacy in Jefferson City, Missouri.

Daijahn Antwan Reed, 22, pleaded guilty before U.S. Magistrate Judge Willie J. Epps Jr. on Tuesday, Aug. 17, to one count of armed robbery and one count of brandishing a firearm during a crime of violence.

Reed, who was scheduled to begin trial next week, is the third and final defendant to plead guilty in this case. Co-defendant Jerome Scott King, 22, of Speedway, Indiana, was sentenced to 14 years in federal prison without parole. Co-defendant Raymond Allen Craig, 23, of Indianapolis, was sentenced to 11 years and three months in federal prison without parole. Although Reed and his co-defendants are aware of the identity of a fourth participant in this crime, according to court documents, none of them have identified that individual.

Reed admitted that he and three other men robbed the Walgreens at 2002 Missouri Boulevard at gunpoint shortly after midnight on July 25, 2018. Police officers arrived as the robbers were running from the business. They fled in a vehicle driven by King. As officers followed in pursuit, occupants of the vehicle began throwing items from the vehicle, including more than 4,000 tablets of various controlled substances taken during the robbery with an aggregate value of $9,264.

Multiple officers pursued the vehicle eastbound on U.S. Highway 54 into Callaway County. The Missouri State Highway Patrol deployed spike strips at the U.S. 54-AA/OO interchange. King’s vehicle began to slow, left the highway, crossed the outer road and crashed near Jazel Lane in Holts Summit, Missouri. King and Craig were apprehended; an unidentified man escaped. Officers recovered the loaded Smith & Wesson 9mm handgun used in the pharmacy robbery. The firearm had been stolen from Indianapolis, Indiana.

A witness called the Jefferson City Police Department at about 4:15 a.m. the same day. The witness reported that Reed, who had not made it to the getaway car after the robbery, knocked on his door and asked to use the phone. Reed spoke with the witness for several hours and admitted that he robbed the Walgreens store. The witness told officers that Reed was on the roof of the O’Reilly Auto Parts store, 1010 Missouri Blvd., in Jefferson City. Officers arrested Reed at that location.

King admitted he entered the Walgreens to conduct surveillance and then reported the number of persons inside to Craig. Craig, Reed, and the fourth individual entered the pharmacy wearing medical masks over their faces and medical style gloves on their hands. The unidentified man displayed a firearm and confronted the store clerk. One of the thieves, whose identity could not be determined from the surveillance video, zip-tied the clerk’s hands behind his back while a firearm was pointed at his head, led him to the rear of the business near the pharmacy area, and forced him down on the floor. Craig and Reed jumped over the counter and confronted the pharmacist, brandishing a firearm in a threatening manner, and removed controlled substances from the pharmacy. Both Reed and Craig handled the firearm and brandished it in a threatening manner in the direction of the pharmacist.

Under federal statutes, Reed is subject to a sentence of up to 20 years in federal prison without parole for the robbery, plus a mandatory minimum of seven years in federal prison without parole for the firearm offense, up to a sentence of life in federal prison without parole. The maximum statutory sentence is prescribed by Congress and is provided here for informational purposes, as the sentencing of the defendant 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 United States Probation Office.

This case is being prosecuted by Special Assistant U.S. Attorney Heather D. Richenberger and Assistant U.S. Attorney Jim Lynn. It was investigated by the Jefferson City, Mo., Police Department, and the Bureau of Alcohol, Tobacco, Firearms and Explosives.

KANSAS CITY, Mo. – A Dumfries, Virginia, man has been sentenced in federal court for his role in wire fraud and money laundering conspiracies as part of a $3.2 million romance fraud scheme.

Henry N. Asomani, 35, a naturalized U.S. citizen from Ghana, was sentenced by U.S. District Judge Roseann Ketchmark on Tuesday, Aug. 25, to 10 years in federal prison without parole. The court also ordered Asomani to pay $3.2 million in restitution to his victims, and to forfeit to the government the money he profited from the scheme.

On Dec. 13, 2019, Asomani was found guilty at trial of one count of conspiracy to commit wire fraud, two counts of wire fraud, one count of conspiracy to commit money laundering, and two counts of money laundering.

Asomani was the middle man who received the proceeds of the fraud conspiracy from victims and transferred the proceeds to unknown co-conspirators. Asomani transferred the funds among various accounts; he kept a portion of the proceeds for himself, and funneled the rest of the proceeds to co-conspirators in Ghana. Asomani operated five different companies with 16 different accounts at eight different banks.

Asomani received funds sent by more than a dozen victims across the United States, including three victims in the Kansas City metropolitan area, from Sept. 15, 2015, to Oct. 17, 2017. Although bank investigators and FBI agents warned Asomani that his bank accounts were receiving the proceeds of a fraud scheme, he continued to receive the funds and simply opened new accounts when funds were frozen, or accounts were closed by the banks.

Unknown co-conspirators targeted victims through online dating websites with various romance frauds. The unknown co-conspirators impersonated individuals who were involved in businesses overseas. They convinced the victims that they needed funds to help with moving gold from a foreign country, orphanage expenses, and school and travel expenses. The co-conspirators told the victims they would share the profits when the gold was returned to the United States. In fact, none of the victims received any profit or received any gold from the co-conspirators.

According to court documents, some victims suffered substantial financial hardship as a result of the fraud scheme. Some victims lost their retirement savings and some victims were forced to declare bankruptcy. Some victims borrowed money or took cash advances from credit cards in order to send money.

The trial testimony from 13 victims established a loss of over $3.2 million. For example, one victim who resided in Lee’s Summit, Missouri, set up a profile on ChristianMingle.com following the death of her husband to brain cancer. In October 2015, an individual claiming to be “Larry B. White” initiated contact with her. Following numerous conversations by email and telephone, “White” convinced the victim to invest in a Ghana gold mine. “White” promised a 40 percent return on the investment of money. From November 2015 through January 2016, under the direction of “White,” the victim sent funds to multiple entities by check and wire totaling approximately $3,292,000. Of that amount, $2,292,000 was transferred to accounts controlled by Asomani. Asomani spent $50,000 of those proceeds to make a down payment on a 2019 silver Lexus NX300. The victim never received any money or gold profits from “White.”

Another victim, who resides in Kansas City, Missouri, met “Bradley Fischer” on ChristianMingle.com. “Fischer” convinced the victim to send funds for school expenses, travel expenses, and to start a new life in Kansas City. On July 19, 2017, the victim wired $24,000 to Asomani’s bank account. “Fischer” promised to pay the victim back when he got to Kansas City.  The victims received $1,000 back from “Fischer” after she realized she was being defrauded and confronted the individual.

Other victims reside in New Jersey, Alaska, Oklahoma, Florida, Texas, Kansas, and Iowa.

Asomani wired $1,789,416 from his bank accounts in the United States to bank accounts in Ghana. He spent approximately $342,278 on auto purchases and auto- or shipping-related expenses as part of the money-laundering scheme. Asomani shipped 18 vehicles to Ghana, having a declared value of approximately $284,190.

This case was prosecuted by Assistant U.S. Attorneys Paul S. Becker and Matthew Blackwood. It was investigated by the FBI.

KANSAS CITY, Mo. – A Jersey City, New Jersey, man whose suitcase, which contained more than three kilograms of cocaine, was found aboard a bus traveling through Kansas City, Mo., pleaded guilty in federal court today to his role in a conspiracy to distribute cocaine.

Jose A. Cordero, 31, pleaded guilty before U.S. District Judge Greg Kays to one count of conspiracy to distribute a controlled substance.

Officers of the Missouri Western Interdictions and Narcotics Task Force (MoWIN) were conducting interdiction activities at a Kansas City, Mo., bus station on Oct. 22, 2018. As passengers unboarded from a bus that originated in Los Angeles, California, officers used a drug-sniffing police dog to conduct an open-air check of the luggage on the bottom compartment of the bus. The dog alerted to a black Samsonite suitcase with a Newark, N.J., destination tag. However, none of the passengers on the bus claimed ownership of the suitcase. Cordero was not a passenger on the bus.

Detectives considered the suitcase abandoned and searched its contents to identify the owner. Inside the suitcase, detectives found three sealed mailing envelopes that contained a total of 6.63 pounds (3,009.73 grams) of cocaine.

Detectives also found a United Airlines bar code label on the suitcase that identified the owner of the suitcase as “Jo Cordero Jr.” Cordero had flown on United Airlines from Newark to Los Angeles on Oct. 8, 2018. Cordero departed Los Angeles to return to Newark on Oct. 19 and the cocaine was found on the bus in Kansas City, which had traveled for 36 hours, on Oct. 22.

During a forensic examination of the suitcase and its contents, investigators identified Cordero’s DNA from the waistband of a pair of underwear and his fingerprints from one of the bundles of cocaine.

During the investigation, another individual who was on the bus, Sergio Gonzalez-Bedolla, 24, of Chowchilla, Calif., was found in possession of 2.8 kilograms of heroin in his backpack. Gonzalez-Bedolla pleaded guilty in a separate and unrelated case and was sentenced to six years in federal prison without parole.

Under federal statutes, Cordero is subject to a mandatory minimum sentence of five years in federal prison without parole, up to a sentence of 40 years in federal prison without parole. The maximum statutory sentence is prescribed by Congress and is provided here for informational purposes, as the sentencing of the defendant 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 United States Probation Office.

This case is being prosecuted by Assistant U.S. Attorney Bradley K. Kavanaugh. It was investigated by the Drug Enforcement Administration, the MoWIN Task Force, and the Kansas City, Mo., Police Department.

SPRINGFIELD, Mo. – A Marshfield, Missouri, woman has been sentenced in federal court for multiple fraud schemes totaling more than $1 million that involved Medicaid payments to her dental clinics, failing to pay over payroll taxes and collecting unemployment benefits she wasn’t entitled to receive.

Pamela M. Van Drie, 59, was sentenced by U.S. District Judge M. Douglas Harpool on Wednesday, Oct. 9, to four years and nine months in federal prison without parole. The court also ordered Van Drie to pay $1,139,794 in restitution.

Van Drie and her husband, Lorin G. Van Drie, 60, were convicted at trial on Feb. 20, 2019, of all 40 counts contained in a federal indictment.

Pamela and Lorin Van Drie were the owners of All About Smiles, LLC, a Springfield company that provided dental services at clinics in Springfield (until it closed in November 2015), Mountain Grove, Missouri (until it closed in October 2014), and Bolivar, Missouri (until it closed in March 2014). They also owned PL Family Management Company, LLC, which managed the staff for those clinics.

$885,748 Health Care Fraud Conspiracy

    Pamela Van Drie participated in a conspiracy to commit health care fraud from Oct. 6, 2010, to Aug. 19, 2015. This conspiracy consisted of two fraud schemes. Pamela Van Drie and Dr. James R. Dye, a dentist at the clinics, conspired to fraudulently bill Medicaid for speech aid prosthetics they did not provide to Medicaid beneficiaries. They also conspired to bill Medicaid for dentures and other dental services for beneficiaries who were ineligible to receive such services because the services were not medically necessary.

In the first scheme, Pamela Van Drie and Dye purchased Ortho-Tain orthodontic appliances (designed to straighten teeth without braces) for approximately $50 each, provided them to Medicaid pediatric beneficiaries and billed each such appliance to Medicaid as a speech aid prosthesis for approximately $695. They knew the Ortho-Tain appliances should have been billed to Medicaid as orthodontic services; they also knew Medicaid did not cover orthodontic services unless the Medicaid program’s requirements were met and they received precertification, which required review by a dentist/orthodontist employed by Medicaid. They billed the Ortho-Tain appliances as speech aid prostheses in order to bypass the precertification requirement.

Between Oct. 6, 2010, and Aug. 19, 2015, Pamela Van Drie submitted and received payment for approximately 241 claims submitted for speech aid prostheses.  On each claim, All About Smiles (or its predecessor company) was paid between $675 to $695, for an approximate total amount of $165,700.

In the second scheme, Pamela Van Drie and Dye arranged for All About Smiles to provide dentures and other dental services to adults who did not qualify for Medicaid reimbursement. They submitted claims to Medicaid for those dentures and other dental services, knowing that Medicaid’s requirements were not met. Pamela Van Drie, through All About Smiles, submitted and received $720,048 on numerous claims for dentures and other dental services that lacked the required written referral from a physician.

Dye pleaded guilty on Feb. 11, 2016, to health care fraud in a separate but related case. According to court documents, the Missouri Dental Board suspended Dye’s license, a suspension that arose from his substandard care for patients at the Van Dries’s clinics.

    $194,751 Payroll Tax Fraud Conspiracy

Pamela and Lorin Van Drie participated in a conspiracy to defraud the government by failing to pay over to the IRS payroll taxes from Jan. 31, 2013, to Jan. 31, 2015. Although payroll taxes were withheld from the paychecks of employees at All About Smiles and PL Family Management Company, the Van Dries failed to pay over to the IRS approximately $194,751 in payroll taxes.

The Van Dries diverted a substantial amount of money from their businesses during this period. Rather than paying the payroll taxes due and owing, the Van Dries purchased and made payments on a 2013 Tracker boat and trailer, a recreational vehicle, multiple vehicles (including a 2010 Hummer and a 2009 Mercedes), several utility trailers, two golf carts, a motorcycle, expenses associated with two homes and family vacations in Florida, and a pulling truck called “Momma’s Money,” which Pamela Van Drie’s son used in pulling competitions throughout Missouri.

Additional Charges

In addition to these two criminal conspiracies, Pamela Van Drie was found guilty of eight counts of health care fraud related to fraudulent claims for speech aid prosetheses and 10 counts of health care fraud related to fraudulent claims for dentures and other dental services.

Pamela Van Drie also was found guilty of one count of theft of public money related to $3,520 in unemployment benefits that she was not entitled to receive while working full-time at All About Smiles. From June 2012 through the end of December 2012, Medicaid paid into Pamela and Lorin Van Drie’s business bank account three-quarters of a million dollars. Also during that time period, Pamela Van Drie took a weeklong vacation to a resort in Florida. Nonetheless, from June 2012 through January 2013, Pamela Van Drie falsely certified to the Missouri Department of Employment Security 31 times that she was not employed, was available and searching for work, and was not receiving any type of employment income.

In addition to the payroll tax conspiracy, Lorin Van Drie also was found guilty of 18 counts of failure to pay over employment tax and one count of theft of public money related to $11,840 in unemployment benefits that he was not entitled to receive while working at his own construction company and doing maintenance work at All About Smiles.

Under federal statutes, Lorin Van Drie is subject to a sentence of up to 10 years in federal prison without parole for theft of unemployment benefits and five years in federal prison without parole on each additional count of conviction. The maximum statutory sentence is prescribed by Congress and is provided here for informational purposes, as the sentencing of the defendant will be determined by the court based on the advisory sentencing guidelines and other statutory factors. A sentencing hearing has not been scheduled.

This case is being prosecuted by Assistant U.S. Attorneys Cindi S. Woolery and Steve Mohlhenrich and Special Assistant U.S. Attorney Shannon Kempf of the Missouri Attorney General’s Office. It was investigated by Health and Human Services – Office of Inspector General, the Missouri Attorney General’s Office Medicaid Fraud Control Unit and IRS-Criminal Investigation.

INDIANAPOLIS— A federal grand jury has returned an indictment charging Christi Lee Dodd, 51, of Fishers, Indiana, with wire fraud and forging the signature of a federal judge. According to the court documents, Dodd first filed for Chapter 7 bankruptcy in the Southern District of Indiana in January 2015. In April 2015, a federal bankruptcy judge issued a signed discharge order releasing Dodd from liability for any remaining debts not resolved in the bankruptcy proceedings.In December 2019, Dodd again filed for Chapter 13 bankruptcy in the Southern District of Indiana, but later decided not to proceed and moved to have the 2019 case dismissed. In June 2022, the bankruptcy court dismissed Dodd’s 2019 bankruptcy petition. The court did not issue a discharge order in the 2019 case, and none of Dodd’s unpaid debts were resolved.In 2023, Dodd allegedly created and forged a discharge order purporting to absolve her of debts related to her 2019 Chapter 13 bankruptcy petition. Dodd emailed the fraudulent document to a financial institution purportedly proving that she had received a discharge in her 2019 bankruptcy case so that she could obtain a line of credit to pay outstanding debts owed by the trucking business she owned.The emailed document was purportedly filed in Dodd’s second bankruptcy case with the heading, “DISCHARGE OF DEBTOR IN A CHAPTER 13 CASE.” As alleged in the indictment, the forged document was in fact created by Dodd using the discharge order from her first bankruptcy under Chapter 7 and contained the forged signature of the judge who issued the 2015 discharge order.“Protecting the integrity and efficiency of the bankruptcy system is an important priority of the Department of Justice. Our office is committed to working closely with our partners at the U.S. Trustee Program to uphold the law and protect the interests of debtors and creditors,” said Zachary A. Myers, United States Attorney for the Southern District of Indiana.“The filing of a fraudulent court order containing the forged signature of a bankruptcy judge strikes at the very core of the integrity of the bankruptcy system and will not be tolerated,” said Nancy J. Gargula, United States Trustee for Indiana and the Central and Southern Districts of Illinois (Region 10).  “We are grateful for U.S. Attorney Myers and our law enforcement partners for their commitment to protect the integrity of the bankruptcy process in the Southern District of Indiana., as demonstrated by this indictment.”The FBI and U.S. Trustee’s Office is investigating this case in collaboration with the Southern District of Indiana Bankruptcy Fraud Working Group. The United States Trustee Program is the component of the Department of Justice responsible for overseeing the administration of bankruptcy cases and litigating to enforce the bankruptcy laws. If convicted, Dodd faces up to twenty-five years in federal prison.U.S. Attorney Myers thanked Assistant U.S. Attorney Adam Eakman, who is prosecuting this case.An indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.###

KANSAS CITY, Mo. – A Kansas City, Mo., man was sentenced in federal court today for a nearly $500,000 investment fraud scheme.

Ryan Scott Luscombe, 45, was sentenced by U.S. District Judge Roseann Ketchmark to 15 years in federal prison without parole. The court also ordered Luscombe to pay $483,482 in restitution to his victims.

Luscombe was found guilty at trial on Feb. 12, 2018, of three counts of wire fraud, two counts of mail fraud and one count of money laundering.

Luscombe solicited investments for his business, Five Star Trading Group, Inc., claiming to investors that he would utilize his expertise in stock trading to produce exorbitant returns. Instead, evidence introduced during the trial indicated that nearly all the investor funds, which totaled $483,482, was used by Luscombe on personal expenditures in 2013, 2014 and 2015, including the purchase of a 2010 BMW 750I and a trip to Bermuda.

Several victim investors used money from their retirement accounts to invest with Luscombe. None of Luscombe’s investors have received funds from returns or the return of their original investment.

During the course of the scheme to defraud victims of their investment money, Luscombe represented himself as a wealthy individual and a successful day trader capable of producing tremendous returns on investments. Luscombe lied to investors about his past success in order to obtain their money for his own personal use and financial gain.

Luscombe told investors he was creating a new business to manage over $50 million from three investors in Arizona. Luscombe claimed he would be the primary investment trader, but because the dollar amount to be invested would be too large for one person to handle, he was recruiting additional individuals to assist in his trading endeavor. In exchange for a fee or investment in the business, Luscombe offered to train the additional individuals in his trading strategy. Eventually, Luscombe told investors he would allow a small number of friends and family to take advantage or “piggyback” off the investment strategy of the larger investors.

Luscombe’s stated investment strategy was to trade securities in the stock market based on the identification of trends in the upward or downward direction of the stock price. Luscombe told investors the risk was very low and minimal because he constantly monitored the stock price. Luscombe told investors he had been in the trading business for many years and had previously made millions of dollars.

Luscombe regularly provided positive projected investment return updates to the victims regarding their investments, and claimed investor money would be utilized for trading and generating profits for investors. As a direct result of these conversations, investors entrusted their money to him.

Investors never authorized Luscombe to spend investment money on personal expenditures. Luscombe never told investors their investment money would be spent on his personal expenditures. A salary for Luscombe was not authorized by investors. At the time of investment, Luscombe never informed investors that investment funds would be utilized to pay his salary. An analysis of financial activity revealed Luscombe’s spending of investor funds included the following:

(a) $83,088 in cash and cash equivalents;

(b) $78,542 in retail expenses;

(c) $67,990 in restaurants and entertainment;

(d) $52,925 in vehicle expenses;

(e) $45,940 in travel expenses;

(f) $41,058 in rent and utilities;

(g) $39,673 in investment firm losses, fees, and interest1; and

(h) $21,144 in nutrition, fitness and beauty expenses.

Luscombe was not registered with the Financial Industry Regulatory Authority as a broker dealer or as an investment advisor representative. Luscombe and Five Star Trading Group were not registered with the Missouri Secretary of State – Securities Division.

In 2016, Luscombe notified the victims that all of their investor funds had been lost in trading and that Five Star was forced to close down.

This case was prosecuted by Assistant U.S. Attorney Brent Venneman and Special Assistant U.S. Attorney Courtney R. Pratten. It was investigated by the FBI.

 

KANSAS CITY, Mo. – U.S. Attorney Tim Garrison, at a joint press conference with Kansas City Mayor Quinton Lucas and Kansas City Police Chief Rick Smith, announced today that 518 arrests have been made by local and federal law enforcement officers in Operation LeGend.

“On behalf of the team of federal law enforcement agencies involved in this groundbreaking initiative, I made certain promises when Operation LeGend was launched,” Garrison said. “Those promises have been kept. The FBI, the ATF, the DEA, and the U.S. Marshals Service worked collaboratively and effectively with the Kansas City Police Department and other local law enforcement agencies to accomplish the objectives of Operation LeGend. We created a model for others to follow. Our success in Kansas City is now being duplicated in eight more cities across the nation.”

Promises Made, Promises Kept

“We promised that Operation LeGend would be a short-term, high-impact strategy to freeze the escalation of violent crime and respond to the record number of homicides in Kansas City this year,” Garrison said. “That promise was kept. Operation LeGend has had a significant impact on violent crime in Kansas City, and those efforts will continue.”

During the 10 weeks from the announcement of Operation LeGend on July 8 through Sept. 16, homicides in Kansas City were down 22 percent, non-fatal shootings were down 24 percent, and aggravated assaults were down 44 percent, as compared to the 10 weeks before July 8.

“We promised that federal agents would work alongside local law enforcement, in a supportive role to provide additional support and assistance,” Garrison said. “That promise was kept, and in the process, valuable lessons were gained for how to confront violent crime.”

For example, the FBI has doubled the number of agents working violent crime cases and embedded agents with the Kansas City Police Department’s violent crime unit. The ATF has added a new unit that is permanently embedded with Kansas City’s assault squad. Intelligence has been gained and shared among law enforcement agencies to improve future investigations. “These strategies for collaborating with local law enforcement have been successful, and will continue,” Garrison said.

“We promised there would be no storm troopers patrolling the streets of Kansas City, no interference with the civil rights of protesters engaged in public demonstrations,” Garrison said. “Despite accusations of a federal occupation, we have worked cooperatively with both local law enforcement and local community leaders. None of those dire predictions from our critics came to pass.”

“I’ve also said, from the start of Operation LeGend, that law enforcement would not be the sole solution to violent crime,” Garrison added. “Violence is a community issue, and requires a community-wide response.”

“I hope that by keeping the promises we made, by doing what we said we would do, we’ve established a level of trust and credibility that will continue to bear fruit,” Garrison said.

Among those arrested since the launch of Operation LeGend, 126 are federal defendants in the Western District of Missouri (with additional federal cases referred to U.S. Attorney’s Offices in Kansas and Texas). Among the remaining arrests, 37 were homicide cases. In addition to the arrests, agents and officers have seized 176 firearms, large quantities of illegal drugs, and several stolen vehicles during Operation LeGend.

Among the homicide arrests made under Operation LeGend was the defendant charged in state court with murder of 4-year-old LeGend Taliferro, in whose memory the operation was named.

The U.S. Attorney’s Office does not track cases that are referred for prosecution in state court or in other districts. Defendants have been charged in the Western District of Missouri with the following federal crimes: 

-    70 defendants have been charged with firearms-related offenses;

-    45 defendants have been charged with drug trafficking offenses;

-    11 defendants have been charged with other violent crimes.

Operation LeGend

Operation LeGend is a federal partnership with local law enforcement to address the increase in homicides and violent crime in Kansas City, Mo., in 2020. The operation honors the memory of four-year-old LeGend Taliferro, one of the youngest fatalities during a record-breaking year of homicides and shootings. Additional federal agents were assigned to the operation from the FBI, Drug Enforcement Administration, the Bureau of Alcohol, Tobacco, Firearms and Explosives, and the U.S. Marshals Service.

KANSAS CITY, Mo. – Tom Larson, Acting United States Attorney for the Western District of Missouri, announced that a former wedding photographer in Raymore, Mo., was sentenced in federal court today for a fraud scheme to dupe dozens of women into having sex – which he recorded – under the guise they were rehearsing for a pornography movie.

Mario Ambrose Antoine, 34, of Raymore, was sentenced by U.S. District Judge Beth Phillips to 10 years in federal prison without parole.

On May 12, 2017, Antoine pleaded guilty to one count of wire fraud. Antoine admitted that he defrauded numerous victims in a scheme that lasted from Aug. 28, 2011, until Oct. 11, 2016. Antoine, posing in various roles as a company owner, recruiter, talent manager, photographer and videographer for multiple fictitious companies and private modeling websites (such as “Playboy Worldwide,” and “Playboy Asia”), induced women to engage in sexual and pornographic activity with him. Antoine promised the women, who signed contracts and modeling release forms, they would be paid thousands of dollars by these fictitious entities for their auditioning and modeling activity.

More than two dozen women victimized by this scheme were identified and located by investigators. Victims of the wire fraud scheme were promised payments cumulatively totaling at least $550,000 and as much as $1.5 million.

According to court documents, weeks and months would pass and none of these women were ever paid. When the young women asked when the money would arrive, they were given excuses. Eventually, in many cases, Antoine engaged in a blackmail and extortion scheme. He created fake Facebook profiles through which he contacted the friends, boyfriends or employers of these women and informed them that the young woman was a porn star. These messages would often be accompanied by pictures of the young women engaged in sexual activity.

This case was prosecuted by Assistant U.S. Attorneys Patrick D. Daly and David A. Barnes. It was investigated by the FBI, the Raymore, Mo., Police Department and the Office of the Missouri Attorney General.

KANSAS CITY, Mo. – A Desert Hot Springs, California, man pleaded guilty in federal court today to smuggling more than four kilograms of methamphetamine from Los Angeles, Calif., to Indianapolis, Indiana aboard a bus traveling through Kansas City, Missouri.

Gary A. Aquerrebere, 63, pleaded guilty before U.S. District Judge Greg Kays to one count of possessing methamphetamine with the intent to distribute.

According to today’s plea agreement, Aquerrebere was traveling through Kansas City on April 15, 2019. Members of the Missouri Western Interdiction and Narcotics Task Force (MoWIN) utilized a drug-sniffing dog, which alerted to a suitcase in the luggage compartment of the bus. Initially, none of the passengers on the bus claimed ownership of the luggage, which had a baggage claim ticket with Aquerrebere’s name, but eventually Aquerrebere admitted the suitcase was his.

When officers searched the suitcase, they found 10 bundles inside a cardboard box. The bundles, wrapped in clear cellophane and black electrical tape, contained a total of 4.356 kilograms of pure methamphetamine.

Under federal statutes, Aquerrebere is subject to a sentence of up to 20 years in federal prison without parole. The maximum statutory sentence is prescribed by Congress and is provided here for informational purposes, as the sentencing of the defendant 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 United States Probation Office.

This case is being prosecuted by Assistant U.S. Attorney D. Michael Green. It was investigated by the Drug Enforcement Administration and the Kansas City, Mo., Police Department.

KANSAS CITY, Mo. – Six defendants have been indicted for their roles in a conspiracy that resulted in more than $240,000 in fraudulent Paycheck Protection Program (PPP) loans being issued under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

Renetta Golden-Larimore, 54, Tajona Manning, 31, and Tashawn Mayfield, 24, all of Kansas City, Mo., Camonte Henderson, 25, of Raytown, Mo., Quinniece Smith, 33, of Dallas, Texas, and Dannisha Taylor 32, of New Orleans, Louisiana, were charged in a seven-count indictment returned under seal by a federal grand jury in Kansas City, Mo., on Wednesday, Oct. 18. That indictment was unsealed and made public today.

The federal indictment alleges that each of the six defendants participated in a conspiracy to submit false and fraudulent applications for PPP loans from March 2021 to January 2022. The scheme allegedly caused more than $240,000 in fraudulent PPP loans to be issued to ineligible borrowers, some of which were forgiven even though the funds were not used for the purposes specified in the PPP.

According to the indictment, Golden-Larimore prepared and filed fraudulent PPP loan applications on behalf of the other co-conspirators. She allegedly received payments between $2,000 and $7,000 from the loan proceeds for her assistance in filing false and fraudulent PPP loan applications. Golden-Larimore created counterfeit IRS forms for nonexistent businesses, the indictment says, and inflated income for existing businesses in order to qualify the borrower for a PPP loan.

Manning, Mayfield, Henderson, Smith, and Taylor each received a PPP loan of $20,832.

In addition to the conspiracy, Manning, Mayfield, Henderson, and Taylor each are charged with one count of wire fraud. Smith is also charged with two counts of wire fraud.

The indictment also contains forfeiture allegations, which would require Golden-Larimore to forfeit to the government at least $75,833, which represents the proceeds she obtained from the conspiracy, and each of the remaining defendants to forfeit to the government $20,832, which represents the proceeds they obtained from the conspiracy.

In a separate case, Golden-Larimore was also charged in an April 26, 2023, federal indictment for her role in a similar conspiracy that resulted in nearly $250,000 in fraudulent PPP loans being issued to a dozen Kansas City metropolitan area residents.

The charges contained in this indictment are simply accusations, and not evidence of guilt. Evidence supporting the charges must be presented to a federal trial jury, whose duty is to determine guilt or innocence.

This case is being prosecuted by Assistant U.S. Attorney Paul S. Becker. It was investigated by IRS-Criminal Investigation and the Kansas City, Mo., Police Department.

KANSAS CITY, Mo. – Tom Larson, Acting United States Attorney for the Western District of Missouri, announced today that an Ohio man who defrauded multiple NFL players – including a player for the Kansas City Chiefs – out of nearly $25,000 earmarked for charitable causes, has been indicted by a federal grand jury.

Camario A. Richardson, 38, of Maple Heights, Ohio, was charged in a five-count indictment returned under seal by a federal grand jury in Kansas City, Mo., on Sept. 13, 2017. That indictment was unsealed and made public upon Richardson’s arrest in Ohio on Friday, Oct. 13, 2017, and his initial appearance in the U.S. District Court in the Northern District of Ohio. Richardson is scheduled to appear at 1 p.m. on Oct. 30, 2017, in the Western District of Missouri for subsequent court proceedings.

The federal indictment charges Richardson with one count of mail fraud and four counts of wire fraud.

According to the indictment, Richardson claimed to have contacts with Nike and agreed to deliver Nike-branded merchandise to five NFL players. None of the victim players are identified by name in court documents.

Richardson allegedly told a Kansas City Chiefs player that he could provide 300 Nike-branded backpacks for a “Book Bag Giveaway” charitable event for children in need of a school backpack at the start of the 2016 school year. Richardson was paid $6,000 for the backpacks in April 2016, the indictment says, but failed to deliver them.

The indictment alleges that Richardson engaged in the same fraud scheme by taking thousands of dollars from the players of three other NFL teams, all as payment for backpacks those players planned to give away at similar charitable events. As a result of Richardson’s fraud scheme, the indictment says, all four victim players purchased backpacks from another source for their charitable events.

The indictment also alleges that Richardson engaged in a fraud scheme by taking money from another NFL player as payment for athletic shoes that he failed to provide.

In June 2016, Richardson allegedly took $6,480 from a Tampa Bay Buccaneers player and $6,480 from an Indianapolis Colts player, each of whom were promised 300 backpacks that Richardson failed to deliver, and $4,320 from a Cincinnati Bengals player who was promised 200 backpacks that Richardson failed to deliver. In March 2016, Richardson allegedly took $1,500 from a San Diego Chargers player for athletic shoes that Richardson failed to deliver. Richardson’s fraud scheme resulted in a total loss of approximately $24,780.

 

Larson cautioned that the charges contained in this indictment are simply accusations, and not evidence of guilt.

This case is being prosecuted by Criminal Division Chief Gene Porter. It was investigated by the U.S. Secret Service and the Lee’s Summit, Mo., Police Department.

 

KANSAS CITY, Mo. – A St. Joseph, Mo., woman pleaded guilty in federal court today to using the stolen identities of prison inmates to fraudulently obtain federal unemployment benefits under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

Brooke Stewart, 38, pleaded guilty before U.S. District Judge Brian C. Wimes to one count of stealing government property.

By pleading guilty today, Stewart admitted that she facilitated the filing of false claims for unemployment benefits by using the stolen identity information of five  individuals who were incarcerated in state or federal prison and therefore not eligible to receive Missouri and enhanced unemployment benefits. Stewart also fraudulently received federal unemployment benefits in her own name and another person.

As a result of her fraud scheme, Stewart stole at least $139,663 in benefits under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which provided additional federal pandemic unemployment compensation to eligible individuals receiving other unemployment benefits under state laws.

None of the inmates whose identity information was stolen actually received any of the fraudulently obtained benefits. Among those individuals whose stolen identity information was used to obtain benefits from May 2020 to June 2021 were federal defendants Garland Nelson and Brooke Beckley. Nelson is serving a 32-year federal prison sentence for a cattle fraud scheme that led to two murders in Braymer, Mo., and for illegally possessing a firearm, as well as two life sentences in a separate state case for the murders. Beckley is serving a 40-year prison sentence for her role in the murder of a Mexican national who was executed to help her avoid paying a debt owed in a drug-trafficking conspiracy in the Springfield, Mo., area.

Under federal statutes, Stewart is subject to a sentence of up to 10 years in federal prison without parole. The maximum statutory sentence is prescribed by Congress and is provided here for informational purposes, as the sentencing of the defendant 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 United States Probation Office.

This case is being prosecuted by Assistant U.S. Attorney Paul S. Becker. It was investigated by the Department of Homeland Security, Office of Inspector General and the Department of Labor, Office of Inspector General – Office of Investigations & Labor Racketeering Fraud.

KANSAS CITY, Mo. – A Weatherby Lake, Mo., man was sentenced in federal court today for falsely claiming ownership in a firm that fraudulently received hundreds of millions of dollars in government contracts set aside for service-disabled veterans and certified minorities.

“So-called ‘Rent-A-Vet’ schemes often rely on the complicity of dishonest veterans to make the fraud seem credible,” said U.S. Attorney Teresa Moore. “This defendant used his status as a minority and a service-disabled veteran to unfairly enrich himself and others at the expense of honest firms who actually qualified for hundreds of millions of dollars in government contracts.”

Stephon Ziegler, 61, was sentenced by U.S. District Judge Roseann Ketchmark to 12 months in federal prison without parole.

“Today’s outcome demonstrates the commitment of the Department of Defense Office of Inspector General's Defense Criminal Investigative Service (DCIS) and our law enforcement partners to hold accountable those who manipulate the DoD procurement process in furtherance of personal interests,” said Acting Special Agent in Charge Gregory P. Shilling of the DCIS Southwest Field Office.  “We take these matters seriously and will continue to aggressively investigate fraud allegations involving DoD equities.”

“The Veterans Administration Office of Inspector General will continue to vigorously pursue contractors that defraud programs intended to benefit our nation’s veterans with disabilities,” said Special Agent in Charge Gregory Billingsley of the Department of Veterans Affairs Office of Inspector General’s Central Field Office. “We thank the U.S. Attorney’s Office and our law enforcement partners for their efforts in this joint investigation.”

On May 21, 2019, Ziegler pleaded guilty to one count of making a false statement to the U.S. Department of Veterans Affairs. Ziegler, an African-American service-disabled veteran, admitted that he falsely claimed to be the owner of Zieson Construction Company, a Missouri corporation whose primary business was obtaining federal construction contracts set aside for award to qualified small businesses. Zieson used Ziegler’s status to compete for federal contracts designated for businesses owned by service-disabled veterans and minorities.

In reality, Ziegler admitted, he did not control the day-to-day operations or the long-term decision making of Zieson. Ziegler signed Zieson checks when requested to do so, signed bids for government jobs when requested to do so, and served as a courier of checks and invoices when requested to do so. Patrick Michael Dingle, 51, of Parkville, Mo., and his co-conspirators set up, controlled, and operated Zieson, and received most of the profits from Zieson. None of the co-conspirators qualified as a minority nor a veteran.

When a site inspector for the U.S. Department of Veterans Affairs visited Zieson operations on Feb. 20, 2015, Ziegler appeared at the Zieson office in Riverside, Mo., even though he did not regularly use an office there, to create the illusion that he actually controlled Zieson. Ziegler denied Zieson’s affiliation with the co-conspirators who actually controlled Zieson when questioned by the site inspector. Ziegler told the Veterans Administration site inspector that he, Ziegler, operated seven different offices in three states, even though he knew that he did not in fact operate or control Zieson.

Between 2009 and 2018, Zieson was awarded approximately 199 federal contracts set aside for award to small businesses, minority-owned small businesses, and veteran-owned small businesses for which the government paid Zieson approximately $335 million.

Ziegler received approximately $434,383 as a result of his participation in the fraud scheme. From 2010 through 2018, Ziegler received approximately $114,670 in distributions, $242,713 in home renovations, and $77,000 as a down payment on his house. Additionally, Ziegler received $781,639 as his salary from 2010 through 2018.

Matthew C. McPherson, 46, of Olathe, Kansas, who was charged in a separate but related case, was sentenced on Jan. 5, 2022, to two years and four months in federal prison without parole. McPherson also has forfeited to the government $5,516,786, which represents his share of the fraud proceeds. On June 3, 2019, McPherson pleaded guilty to one count of conspiracy to commit wire fraud and major program fraud.

McPherson’s co-conspirator, Patrick Michael Dingle,51, of Parkville, Mo., pleaded guilty on Sept. 13, 2020, and awaits sentencing. Dingle pleaded guilty to one count of conspiracy to commit wire and major program fraud. Dingle also pleaded guilty, in a separate case, to one count of filing a false tax return.

This case was prosecuted by Assistant U.S. Attorney Paul S. Becker and former Assistant U.S. Attorney Stacey Perkins Rock. It was investigated by the Department of Veterans Affairs, Office of Inspector General; the Department of Defense Criminal Investigative Service; the U.S. General Services Administration, Office of Inspector General; the U.S. Small Business Administration, Office of Inspector General; the Army Criminal Investigation Command, Major Procurement Fraud Unit; the Department of Agriculture, Office of Inspector General; IRS-Criminal Investigation; the U.S. Secret Service; the Air Force Office of Special Investigations, Procurement Fraud; the Naval Criminal Investigative Service; the Defense Contract Audit Agency - Operations Investigative Support (OIS); the U.S. Department of Labor, Office of Inspector General; and the Department of Labor, Employee Benefits Security Administration (EBSA).

INDIANAPOLIS- Courtney Anguiano, 37, of Texas, has been sentenced to xx years in federal prison after pleading guilty to conspiracy to commit healthcare fraud.

According to court documents, Business 1, based in Indianapolis, Indiana, developed prescription medicines and then created savings card programs for the medicines. The savings card programs were designed to lower the out-of-pocket costs incurred by patients purchasing the medicines. After obtaining a savings card, patients were able to use it at the time of purchase or after the fact, by seeking reimbursements.

Between September 1, 2017, and July 26, 2020, Anguiano led seven other individuals in a conspiracy to defraud Business 1 by submitting fraudulent reimbursement requests under three savings card programs. The conspirators claimed that they had incurred significant costs when they purchased the drugs at issue, but none of them were actually prescribed the drugs during the relevant period.

Members of the conspiracy submitted 189 false reimbursement requests. Anguiano herself personally submitted 65 false claims. Acting through a contractor, Business 1 approved the fraudulent requests and paid the members of the conspiracy $648,528.22. Anguiano and her co-conspirators stole over 90% of the savings card program funds for one of the medications.

In an effort to avoid detection, Anguiano submitted some of her reimbursement requests under an alias or an altered version of her true name.

“This heinous fraud scheme stole nearly $650,000 from savings programs were created to help patients struggling to afford specialty medications,” said U.S. Attorney Zachary A. Myers. “For years, these scammers targeted the program intended for financially vulnerable patients with utter disregard for the harm they caused. The serious federal prison sentence imposed here demonstrates that our office will continue to work with closely with the FBI to investigate healthcare fraud schemes and hold the perpetrators accountable.”

“Investigating fraud and identifying those who perpetrate is one of our top priorities and this sentence should put others on notice that this illegal activity will not be tolerated,” said FBI Indianapolis Special Agent in Charge Herbert J. Stapleton. “We will continue to work with our partners to ensure those to who take advantage of the system for their own greed are held accountable.”

The FBI investigated this case. The sentence was imposed by U.S. District Court Judge James P. Hanlon. Judge Hanlon also ordered that Anguiano be supervised by the U.S. Probation Office for 2 years following her release from federal prison and pay $648,528.22 in restitution.

U.S. Attorney Myers thanked Assistant United States Attorneys Matthew B. Miller, Meredith Wood, and Kyle Sawa, who prosecuted this case.

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SPRINGFIELD, Mo. – A Sarcoxie, Missouri man has been sentenced in federal court for illegally possessing firearms, including a machine gun.

Leng Lee, 37, was sentenced by U.S. District Judge Roseann Ketchmark on Thursday, Aug. 13, to nine years in federal prison without parole.

On Aug. 26, 2019, Lee pleaded guilty to one count of being a felon in possession of firearms and to one count of illegally possessing a machine gun.

According to court documents, law enforcement officers participated in the controlled delivery of an international mail package from China addressed to Lee at his residence on April 23, 2019. The parcel contained seven parts (selector switches) that are used to convert a Glock semi-automatic pistol to fire in full-automatic mode. Lee is a convicted felon who is prohibited from possessing firearms and is not licensed to possess a machine gun.

Officers executed a search warrant at Lee’s residence and found numerous firearms, more than 5,000 rounds of ammunition, firearm suppressors, methamphetamine, and marijuana. A total of 18 firearms were seized from Lee by law enforcement officers. Lee told officers that a couple of the firearms were given to him by his deceased father, but the others were purchased by him at gun shows or during hand-to-hand transactions. None of the firearms were purchased from a licensed firearms dealer. 

Lee admitted to placing the order for the selector switches and told officers that he had 10-15 past deliveries of the selector switches. Lee said he was able to convert and successfully fire a Glock pistol as a fully automatic firearm.

Under federal law, it is illegal for anyone who has been convicted of a felony to be in possession of any firearm or ammunition. Lee has two prior felony convictions for burglary, and prior felony convictions for being a felon in possession of a firearm, vandalism, and grand theft auto. Lee faces pending charges in Newton County, Mo., that include the illegal use of firearms and assault against a family member.

This case was prosecuted by Assistant U.S. Attorney Patrick Carney. It was investigated by Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI), the Bureau of Alcohol, Tobacco, Firearms and Explosives, the U.S. Postal Inspection Service, and the Newton, Mo., Sheriff’s Department.

SPRINGFIELD, Mo. – A Missouri state representative was convicted by a federal trial jury today for a nearly $900,000 COVID-19 fraud scheme, as well as a separate $200,000 fraud scheme in which she made false claims about a fake stem cell treatment marketed through her clinics in southern Missouri, and for illegally providing prescription drugs to clients of those clinics.

“This is an elected official who stole money from the public, a purported humanitarian who cheated and lied to her patients, and a medical professional who illegally distributed drugs,” said U.S. Attorney Teresa Moore. “She violated her position of trust to selfishly enrich herself at the expense of others. But a jury of her peers, in a unanimous verdict, saw through her smokescreen of excuses and ridiculous claims, and now she will be held accountable for her criminal behavior.”

Patricia “Tricia” Ashton Derges, 64, of Nixa, Mo., was found guilty of 10 counts of wire fraud, 10 counts of distributing drugs over the internet without a valid prescription, and two counts of making false statements to a federal law enforcement agent.

Derges was elected in November 2020 as a Missouri state representative in District 140 (Christian County). Derges, who is not a physician but is licensed as an assistant physician, operates three for-profit Ozark Valley Medical Clinic locations in Springfield, Ozark, and Branson, Mo. Derges also operates the non-profit corporation Lift Up Someone Today, Inc., with a medical and dental clinic in Springfield.

“Derges betrayed the confidence entrusted in her as both an elected lawmaker and an assistant physician,” said Charles Dayoub, Special Agent in Charge of FBI Kansas City. “She took advantage of a global pandemic to benefit herself financially with complete disregard, not only to her constituents, but to the oath she took as a health care professional to do no harm. Today’s verdict, decided by a jury of her peers, is a direct message to those who wish to profit on the backs of others: the FBI will vigorously pursue any individual who abuses their position of power and the trust of Missourians for their own gain.”

“By putting personal profit before the health and welfare of her constituents, this official egregiously violated the duties of her position as an elected public servant,” said Curt L. Muller, Special Agent in Charge with the Department of Health and Human Services, Office of Inspector General (HHS-OIG). “HHS-OIG will not tolerate any attempts to defraud federal health care programs, particularly those that steal from essential taxpayer funds and endanger public health.”

COVID-19 Fraud Scheme

Derges was convicted of three counts of wire fraud related to her attempt to fraudulently receive nearly $900,000 in CARES Act funds. Derges actually was awarded $296,574 in CARES Act funds for Lift Up, although Lift Up did not provide any COVID-19 testing services to its patients. In fact, Lift Up’s medical clinic closed at the beginning of the COVID-19 pandemic and remained closed from March to June 2020.

Derges sought CARES Act funding for COVID-19 testing that had been provided, and already paid for, at her for-profit Ozark Valley Medical Clinic. Derges requested reimbursement for $379,294 in COVID-19 testing and related expenses, and future funding in the amount of $503,350. In total, Derges applied for $882,644 from the CARES Act Relief Fund on Lift Up’s behalf.

Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act in March 2020, which provided $150 billion to states, tribal governments, and units of local government. Missouri was allocated approximately $2.3 billion. Missouri allocated approximately $34 million in CARES Act funds to Greene County. To administer the CARES Act funds it received, the Greene County Commission created the CARES Act Relief Fund to “promote recovery by funding programs and services that support the needs of those impacted by the COVID-19 public health emergency.” An advisory council of 30 citizen volunteers was appointed to review funding requests and make funding recommendations to the Greene County Commission.

Derges claimed in her application to the Greene County CARES Act Relief Fund that Lift Up provided COVID-19 testing and she sought reimbursement for “COVID-19 eligible expenses” that Lift Up had incurred. To support her claim, Derges provided invoices totaling $296,574 from Dynamic DNA for more than 3,000 COVID-19 laboratory tests. Derges submitted the Dynamic DNA invoices as Lift Up expenditures, although they were actually for testing done at Derges’s for-profit Ozark Valley Medical Clinic.

Lift Up, a non-profit charity, and Ozark Valley Medical Clinic, a for-profit corporation, are separate legal entities. Ozark Valley Medical Center had already received payment from its clients of approximately $517,000 for these COVID-19 tests. Ozark Valley Medical Center charged clients, patients, or their patients’ employers approximately $167 per sample for its COVID-19 testing services. Derges concealed from Greene County that these COVID-19 tests had already been paid for by other payors.

In December 2020, the Greene County Commission awarded Lift Up $296,574 in CARES Act funding based upon Lift Up’s fraudulent application and the Dynamic DNA invoices Derges had submitted. Derges deposited the check into Lift Up’s bank account, then transferred the funds into Ozark Valley Medical Center’s bank account.

Derges provided several more invoices from Dynamic DNA to Greene County later in December 2020 to further support her application for Lift Up, although the invoices were actually for testing done for clients at Ozark Valley Medical Center, raising the total to $589,143 for 6,177 COVID-19 tests. Derges concealed from Greene County that Ozark Valley Medical Center already had been paid approximately $1 million by clients, patients, or their patients’ employers, for these COVID-19 tests.

Stem Cell Fraud Scheme

Derges also was convicted of seven counts of wire fraud related to a nearly $200,000 fraud scheme, which lasted from December 2018 to May 2020. Derges marketed a stem cell treatment that actually utilized amniotic fluid that did not contain any stem cells. The federal indictment charged her with defrauding four specific victims, each of whom testified during the trial.

Derges exclusively obtained amniotic fluid, which she marketed under the name Regenerative Biologics, from the University of Utah. Derges advertised Ozark Valley Medical Clinic as a “Leader in … Regenerative Medicine,” including stem cells, and marketed her “stem cell” practice through seminars, media interviews, and social media. Derges made similar claims in personal consultations.

In fact, however, the amniotic fluid Derges administered to her patients did not contain mesenchymal stem cells, or any other stem cells. The amniotic fluid she obtained from the University of Utah was a sterile filtered amniotic fluid allograft (a tissue graft comprised of human amniotic membrane and amniotic fluid components derived from placental tissue). The amniotic fluid allograft was “acellular,” meaning it did not contain any cells, including stem cells.

Despite being told that the University of Utah’s amniotic fluid allograft was “acellular” and did not contain mesenchymal stem cells, Derges continued to tell her patients and the public that the amniotic fluid allograft contained stem cells.

Derges administered amniotic fluid, which she falsely claimed contained stem cells, to patients who suffered from, among other things, tissue damage, kidney disease, chronic obstructive pulmonary disease (COPD), Lyme disease, and urinary incontinence. In an April 11, 2020, Facebook post Derges wrote of amniotic fluid allograft: “This amazing treatment stands to provide a potential cure for COVID-19 patients that is safe and natural.”

The University of Utah sold its amniotic fluid allograft to Derges for approximately $244 per milliliter and $438 for two milliliters. Derges charged her patients $950 to $1,450 per milliliter. In total, Derges’s patients paid her approximately $191,815 for amniotic fluid that did not contain stem cells.

Controlled Substances Act

Derges also was convicted of 10 counts of distributing Oxycodone and Adderall over the internet without valid prescriptions. The indictment alleges that Derges, without conducting in-person medical evaluations of the patients, wrote electronic prescriptions for Oxycodone and Adderall for patients and transmitted them to pharmacies over the internet.

Because none of the assistant physicians whom Derges employed at Ozark Valley Medical Clinic could prescribe Schedule II controlled substances, it was the standard practice of the assistant physicians to see a patient and later communicate to Derges the controlled substances they wanted her to prescribe to their patients. Derges, without conducting an in-person medical evaluation of the patients as required by federal law, wrote electronic prescriptions for the patients and transmitted the prescriptions over the internet to pharmacies.

False Statements

Derges also was convicted of two counts of making false statements to federal agents investigating this case in May 2020.

Derges told agents that the amniotic fluid allograft that she used in her practice contained mesenchymal stem cells, which she knew was false. Derges also told federal agents that she had not treated a patient for urinary incontinence with amniotic fluid allograft, which she knew was false.

Assistant Physician

Derges is not a physician but is licensed as an assistant physician. An assistant physician is a mid-level medical professional in the state of Missouri. Under Missouri law, medical school graduates who have not been accepted into a residency program but have passed Step 1 and Step 2 of the United States Medical Licensing Examination may apply to become an assistant physician. State law mandates that assistant physicians practice pursuant to a collaborative practice arrangement with a licensed physician.

Derges obtained her medical degree from the Caribbean Medical University of Curacao in May 2014 but was not accepted into a post-graduate residency program. Derges was licensed as an assistant physician by the state of Missouri on Sept. 8, 2017.

Following the presentation of evidence, the jury in the U.S. District Court in Springfield, Mo., deliberated for about six hours over two days before returning guilty verdicts on all counts to U.S. District Judge Brian C. Wimes, ending a trial that began Monday, June 13.

Under federal statutes, Derges is subject to a sentence of up to 20 years in federal prison without parole on each of the 10 wire fraud counts and on each of the 10 drug distribution counts, and a sentence of up to five years in federal prison without parole on each of the two false statements counts. The maximum statutory sentence is prescribed by Congress and is provided here for informational purposes, as the sentencing of the defendant 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 United States Probation Office.

This case is being prosecuted by Assistant U.S. Attorney Shannon Kempf and Supervisory Assistant U.S. Attorney Randall D. Eggert. It was investigated by the FBI, Health and Human Services – Office of Inspector General, the DEA and the Missouri Attorney General’s Medicaid Fraud Control Unit.

 

KANSAS CITY, Mo. – Timothy A. Garrison, United States Attorney for the Western District of Missouri, announced that a Kansas City, Mo., man was convicted by a federal trial jury today of a nearly $500,000 investment fraud scheme.

 

Ryan Scott Luscombe, 45, of Kansas City, was found guilty of all six counts contained in a June 6, 2017, federal indictment. Luscombe was convicted of three counts of wire fraud, two counts of mail fraud and one count of money laundering.

 

Luscombe solicited investments for his business, Five Star Trading Group, Inc., claiming to investors that he would utilize his expertise in stock trading to produce exorbitant returns. Instead, evidence introduced during the trial indicated that the entirety of investor funds, which totaled $483,482, was used by Luscombe on personal expenditures in 2013, 2014 and 2015, including the purchase of a 2010 BMW 750I and a trip to Bermuda.

 

To date, none of Luscombe’s investors have received funds from returns or their original investment.

 

During the course of the scheme to defraud victims of their investment money, Luscombe represented himself as a wealthy individual and a successful day trader capable of producing tremendous returns on investments.

 

Luscombe told investors he was creating a new business to manage over $50 million from three investors in Arizona. Luscombe claimed he would be the primary investment trader, but because the dollar amount to be invested would be too large for one person to handle, he recruited two people to assist in his trading endeavor. In exchange for a fee or investment in the business, Luscombe offered to train the additional individuals in his trading strategy. Eventually, Luscombe told investors he would allow a small number of friends and family to take advantage or “piggyback” off the investment strategy of the larger investors.

 

Luscombe’s stated investment strategy was to trade securities in the stock market based on the identification of trends in the upward or downward direction of the stock price. Luscombe told investors the risk was very low and minimal because he constantly monitored the stock price. Luscombe told investors he had been in the trading business for many years and had previously made millions of dollars.

 

Luscombe regularly provided positive projected investment return updates to the victims regarding their investments, and claimed investor money would be utilized for trading and generating profits for investors. As a direct result of these conversations, investors entrusted their money to him.

 

Investors never authorized Luscombe to spend investment money on personal expenditures. Luscombe never told investors their investment money would be spent on his personal expenditures. A salary for Luscombe was not authorized by investors. At the time of investment, Luscombe never informed investors that investment funds would be utilized to pay his salary. An analysis of financial activity revealed Luscombe’s spending of investor funds included the following:

(a) $83,088 in cash and cash equivalents;

(b) $78,542 in retail expenses;

(c) $67,990 in restaurants and entertainment;

(d) $52,925 in vehicle expenses;

(e) $45,940 in travel expenses;

(f) $41,058 in rent and utilities;

(g) $39,673 in investment firm losses, fees, and interest; and

(h) $21,144 in nutrition, fitness and beauty expenses.

 

Luscombe was not registered with the Financial Industry Regulatory Authority as a broker dealer or as an investment advisor representative. Luscombe and Five Star Trading Group were not registered with the Missouri Secretary of State – Securities Division.

 

Following the presentation of evidence, the jury in the U.S. District Court in Kansas City, Mo., deliberated for a little over two hours before returning the guilty verdicts to U.S. District Judge Roseann Ketchmark, ending a trial that began Monday, Feb. 12, 2018.

 

Under federal statutes, Luscombe is subject to a sentence of up to 20 years in federal prison without parole on each of the fraud counts, and sentence of up to 10 years in federal prison without parole for money laundering. The maximum statutory sentence is prescribed by Congress and is provided here for informational purposes, as the sentencing of the defendants 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 United States Probation Office.

 

This case is being prosecuted by Assistant U.S. Attorney Brent Venneman and Special Assistant U.S. Attorney Courtney R. Pratten. It was investigated by the FBI.

JEFFERSON CITY, Mo. – Two Columbia, Mo., residents were sentenced in federal court today for their roles in a $1.1 million insurance fraud scheme that involved false claims of injuries suffered in faked car accidents.

Michael Lee Gene Stapleton, 37, and Latoya Marie Brown, 37, were sentenced in separate appearances before U.S. District Judge Roseann Ketchmark. Stapleton was sentenced to four years and three months in federal prison without parole and ordered to pay $166,363 in restitution to his victims. Brown was sentenced to four years in federal prison without parole and ordered to pay $72,069 in restitution to her victims.

On April 6, 2023, Stapleton pleaded guilty to two counts of aiding and abetting mail fraud. On Feb. 14, 2023, Brown pleaded guilty to one count of conspiracy to commit wire fraud and one count of conspiracy to commit mail fraud.

This case stems from a long investigation by the FBI into co-defendant Lawrence Courtney Lawhorn, 36, of Kansas City, Mo. (formerly of Columbia), for a series of automobile accidents throughout Missouri. All but one of those accidents were staged. The conspiracy defrauded six insurance companies of a total of $1,234,581 from June 2017 to July 2020.

Lawhorn recruited friends, acquittances, family, and friends of friends to participate in the staged accidents. Conspirators went to various medical providers, claiming injuries from the staged accidents and requesting various testing, such a MRIs, CT scans, and/or X-rays. Conspirators then submitted false claims to insurance companies that they had suffered bodily injuries and that they would be personally liable for any medical bills related to insurance claims. Conspirators, some of whom were involved in multiple incidents, received thousands of dollars, and in some cases tens of thousands of dollars, based on these false claims. However, none of the conspirators made any payments to medical providers and instead used the funds for their personal expenses.

Brown admitted she was involved in three incidents and received a total of $44,269 in insurance payments. Two of the accidents were in Boone County, Mo., and one of the accidents was in Kansas City, Mo.

Stapleton admitted that he and co-defendant Tara Colleen Jackson, 60, of Independence, Mo., who is Lawhorn’s mother, participated in a staged automobile accident in Kansas City, Mo. State Farm issued a $50,000 check to Stapleton and a $50,000 check to Jackson. None of the medical bills totaling $188,920 at Research Medical Center (where Stapleton was treated) and St. Luke’s East Hospital (where Jackson was treated) have been paid.

Stapleton and Brown are among 16 defendants who have been sentenced in this case.

Lawhorn pleaded guilty on June 8, 2023, to one count of conspiracy to commit wire fraud, one count of conspiracy to commit mail fraud, and one count of aggravated identity theft. Lawhorn also pleaded guilty in a separate and unrelated case to commit wire fraud. His sentencing date has not yet been scheduled.

Jackson pleaded guilty on April 6, 2023, to one count of conspiracy to commit wire fraud and one count of conspiracy to commit mail fraud and awaits sentencing.

This case is being prosecuted by Assistant U.S. Attorney Aaron M. Maness. It was investigated by the FBI and the Bureau of Alcohol, Tobacco, Firearms and Explosives.

KANSAS CITY, Mo. – A dozen Kansas City metropolitan residents have been indicted for their roles in a conspiracy that resulted in nearly $250,000 in fraudulent Paycheck Protection Program (PPP) loans being issued under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

Renetta Golden-Larimore, 54, Don A. Baker, 47, Stephan Booth, 40, Candace E. Hill-Williams, 25, Reisjon Larimore, 25, Teiara M. Mercer, 23, Padgit L. Smith, 48, Joseph Valdivia III, 45, Salvadore Valdivia, 41, and Mone’y C. Woods, 21, all of Kansas City, Mo.; Cameron P. Henderson, 27, of Independence, Mo.; and Roger Larimore, 27, of Raytown, Mo., were charged in a 13-count indictment returned under seal by a federal grand jury in Kansas City, Mo., on April 26, 2023. The indictment was unsealed and made public today upon the arrests and initial court appearances of several defendants.

According to the indictment, Golden-Larimore prepared and filed fraudulent PPP loan applications on behalf of the other co-conspirators. She allegedly received payments between $2,000 and $7,000 from the loan proceeds for her assistance in filing false and fraudulent PPP loan applications. Golden-Larimore created counterfeit IRS forms for nonexistent businesses, the indictment says, and inflated income for existing businesses in order to qualify the borrower for a PPP loan.

Each of the defendants received a PPP loan of either $20,832 or $20,833.

In addition to the conspiracy, Golden-Larimore is charged with 12 counts of wire fraud. Each of the remaining defendants are also charged with aiding and abetting her in one of those wire fraud counts for the fraudulent loan they received.

The indictment also contains a forfeiture allegation, which would require each of the defendants to forfeit to the government any property obtained from the proceeds of the alleged offenses, including a money judgment of $20,832 for each defendant.

In a separate case that arose from the federal investigation, Theresa R. Griswold, 42, of Olathe, Kansas, has pleaded guilty to wire fraud after obtaining a fraudulent PPP loan during this conspiracy. Griswold admitted she received a fraudulent $20,832 PPP loan.

The charges contained in this indictment are simply accusations, and not evidence of guilt. Evidence supporting the charges must be presented to a federal trial jury, whose duty is to determine guilt or innocence.

This case is being prosecuted by Assistant U.S. Attorney Paul S. Becker. It was investigated by IRS-Criminal Investigation and the Kansas City, Mo., Police Department.

KANSAS CITY, Mo. – A Phoenix, Arizona, woman pleaded guilty in federal court today to smuggling approximately 23 kilograms of methamphetamine and more than a kilogram of fentanyl aboard a bus passing through Kansas City, Mo., enroute to St. Louis, Mo.

Alexus C. Sparks, 26, pleaded guilty before U.S. District Judge Brian C. Wimes to participating in a conspiracy to distribute fentanyl and methamphetamine and to one count of possessing fentanyl and methamphetamine to distribute.

According to today’s plea agreement, law enforcement officers with the Missouri Western Interdiction Task Force (MoWIN) were conducting narcotic interdiction activities at a Kansas City, Mo., bus terminal on June 6, 2022. A bus originating from Los Angeles, California,, arrived at the terminal for a brief layover. After the passengers disembarked, a detective brought his police drug-sniffing dog onto the bus. The dog alerted to a pink floral duffel bag and a white hard-side suitcase, which were sitting near each other, and which were left on the bus after the passengers had disembarked. The duffel bag and suitcase were taken off the bus and placed on a bench directly in front of the bus in order to identify the owners when reboarding commenced.

As Sparks began to reboard the bus, she picked up the duffel bag. When an officer asked her if she owned the bag, she stated, “yes.” When he identified himself as a law enforcement officer, however, she recanted. Sparks was detained for investigation, and later admitted to officers that the duffel bag belonged to her and that she was transporting illegal drugs to St. Louis.

Officers searched the duffel bag and found two bundles that contained a total of 20.4 pounds (approximately 9.2 kilograms) of methamphetamine and a rectangular brick that contained 2.3 pounds (more than one kilogram) of fentanyl.

None of the passengers claimed the suitcase, which was determined to be abandoned. When officers opened the suitcase, they found 12 bundles that contained a total of 30.4 pounds (approximately 13.8 kilograms) of methamphetamine. Officers contacted another passenger on the bus, who was seated in the seat where the suitcase had been found. The bus tickets for both Sparks and this passenger were purchased at the same time at a bus terminal in Las Vegas, Nevada. This passenger was also detained and charged as a co-defendant.

Under federal statutes, Sparks is subject to a mandatory minimum sentence of 10 years in federal prison without parole, up to a sentence of life in federal prison without parole. The maximum statutory sentence is prescribed by Congress and is provided here for informational purposes, as the sentencing of the defendant 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 United States Probation Office.

This case is being prosecuted by Assistant U.S. Attorneys Gregg R. Coonrod and Maureen Brackett. It was investigated by the Missouri Western Interdiction Task Force (MoWIN).

            WASHINGTON – Enis Jevric, 42, a Sergeant with the Metropolitan Police Department (MPD), pleaded guilty today in federal court to violating the constitutional rights of 27-year old An’Twan Gilmore by using excessive force, on August 25, 2021, in a police shooting that killed Mr. Gilmore. Jevric also pleaded guilty to a charge of involuntary manslaughter under D.C. law. The plea was announced by U.S. Attorney Matthew M. Graves and FBI Assistant Director in Charge David Sundberg, of the Washington Field Office. U.S. District Court Judge Randolph Moss scheduled a sentencing hearing for July 1, 2024. 

            According to documents filed with the court, the defendant willfully used unconstitutionally excessive and unreasonable force by shooting Mr. Gilmore. Specifically, shortly before 3:00 am on August 25, 2021, the defendant and other MPD officers were dispatched to respond to a call for an armed man—later identified as Mr. Gilmore—who was either asleep or unconscious in the driver’s seat of a car that was stopped at the intersection of New York Avenue and Florida Avenue, N.E.  The defendant approached the car and directed another officer to knock on its windows to rouse Mr. Gilmore.  When Mr. Gilmore awoke, the car moved forward several feet, stopped briefly, and then moved forward again. As it did so, the defendant fired his MPD-issued firearm at the car four times. The car rolled down New York Avenue, and the defendant fired at it six more times. Three of the defendant’s shots struck Mr. Gilmore, who died a short time later from his wounds. No other officer fired at Mr. Gilmore. 

            “Police officers are sworn to uphold the law and ensure the safety of the community, and we are grateful for the overwhelming majority of Metropolitan Police Department officers who do their difficult and dangerous jobs honorably,” said U.S. Attorney Matthew M. Graves. “But Officer Jevric violated the Constitution and abused his position by recklessly using deadly force where none was necessary, resulting in the tragic and unjustified loss of Mr. Gilmore’s life—a tragedy that has permanently changed the lives of Mr. Gilmore’s family and friends. The U.S. Attorney’s Office is committed to protecting the civil rights of everyone within the District and to holding accountable all who violate those rights.”

            “As a sworn police officer, Jevric knew the acceptable boundaries in which he was authorized to use deadly force,” said Assistant Director in Charge Sundberg. “His willful disregard of these rules resulted in Mr. Gilmore’s tragic and untimely death. While no judicial process will adequately address the loss that the Gilmore family has suffered in this situation, we are committed to ensuring the fullest administration of justice on behalf of the victim and his family.”

            As part of his guilty plea, the defendant admitted that his conduct constituted unconstitutional, unreasonable force, and that he acted willfully, in reckless disregard of Mr. Gilmore’s Fourth Amendment right to be free from excessive force by police. He also admitted that his conduct created an extreme risk of death to Mr. Gilmore and was a gross deviation from a reasonable standard of care.

            This case was investigated by the FBI’s Washington Field Office, with extensive assistance from the FBI Laboratory including the Laboratory Shooting Reconstruction Team. It is being prosecuted by the Fraud, Public Corruption, and Civil Rights Section of the U.S. Attorney’s Office for the District of Columbia.

SPRINGFIELD, Mo. – A Marshfield, Missouri, man whose wife was sentenced earlier for her role in a Medicaid fraud scheme involving their dental clinics was sentenced in federal court today for failing to pay over payroll taxes and collecting unemployment benefits he wasn’t entitled to receive.

Lorin G. Van Drie, 61, was sentenced by U.S. District Judge M. Douglas Harpool to two years and eight months in federal prison without parole. The court also ordered Van Drie to pay restitution in an amount yet to be determined.

Van Drie and his wife, Pamela M. Van Drie, 60, were convicted at trial on Feb. 20, 2019, of all 40 counts contained in a federal indictment. Lorin Van Drie was convicted of stealing public money, participating in a conspiracy to defraud the government, and 18 counts of failing to pay over employment taxes. Pamela Van Drie was sentenced on Oct. 9, 2019, to four years and nine months in federal prison without parole. The court also ordered her to pay $1,139,794 in restitution.

Lorin and Pamela Van Drie were the owners of All About Smiles, LLC, a Springfield company that provided dental services at clinics in Springfield (until it closed in November 2015), Mountain Grove, Missouri (until it closed in October 2014), and Bolivar, Missouri (until it closed in March 2014). They also owned PL Family Management Company, LLC, which managed the staff for those clinics.

Lorin and Pamela Van Drie participated in a conspiracy to defraud the government by failing to pay over to the IRS payroll taxes from Jan. 31, 2013, to Jan. 31, 2015. Although payroll taxes were withheld from the paychecks of employees at All About Smiles and PL Family Management Company, the Van Dries failed to pay over to the IRS approximately $194,751 in payroll taxes.

The Van Dries diverted a substantial amount of money from their businesses during this period. According to court documents, they lived a lavish lifestyle while some of their employees’ paychecks bounced. Rather than paying the payroll taxes due and owing, the Van Dries purchased and made payments on a 2013 Tracker boat and trailer, a recreational vehicle, multiple vehicles (including a 2010 Hummer and a 2009 Mercedes), several utility trailers, two golf carts, a motorcycle, expensive diamond jewelry, expenses associated with two homes and family vacations in Florida, and a pulling truck called “Momma’s Money,” which their son used in pulling competitions throughout Missouri.

In addition to the payroll tax conspiracy, Lorin Van Drie was found guilty of 18 counts of failure to pay over employment tax. Lorin Van Drie also was found guilty of one count of theft of public money related to $26,880 in unemployment benefits that he was not entitled to receive from October 2010 through June 2012. During that time, he was working at his own construction company (LVD Construction) and being paid to do maintenance at their dental clinics.

Lorin Van Drie was not charged with health care fraud like his wife, but he was aware of the schemes and that the billing practices of his companies violated Medicaid regulations. He made no efforts to correct the unlawful situation.

$885,748 Health Care Fraud Conspiracy

Pamela Van Drie participated in a conspiracy to commit health care fraud from Oct. 6, 2010, to Aug. 19, 2015. This conspiracy consisted of two fraud schemes. Pamela Van Drie and Dr. James R. Dye, a dentist at the clinics, conspired to fraudulently bill Medicaid for speech aid prosthetics they did not provide to Medicaid beneficiaries. They also conspired to bill Medicaid for dentures and other dental services for beneficiaries who were ineligible to receive such services because the services were not medically necessary.

In addition to these two criminal conspiracies, Pamela Van Drie was found guilty of eight counts of health care fraud related to fraudulent claims for speech aid prosetheses and 10 counts of health care fraud related to fraudulent claims for dentures and other dental services.

Pamela Van Drie also was found guilty of one count of theft of public money related to $3,520 in unemployment benefits that she was not entitled to receive while working full-time at All About Smiles. From June 2012 through the end of December 2012, Medicaid paid into Pamela and Lorin Van Drie’s business bank account $750,000. Also during that time period, Pamela Van Drie took a weeklong vacation to a resort in Florida. Nonetheless, from June 2012 through January 2013, Pamela Van Drie falsely certified to the Missouri Department of Employment Security 31 times that she was not employed, was available and searching for work, and was not receiving any type of employment income.

Dye pleaded guilty on Feb. 11, 2016, to health care fraud in a separate but related case. According to court documents, the Missouri Dental Board suspended Dye’s license, a suspension that arose from his substandard care for patients at the Van Dries’s clinics.

This case was prosecuted by Assistant U.S. Attorneys Cindi S. Woolery and Steve Mohlhenrich and Special Assistant U.S. Attorney Shannon Kempf of the Missouri Attorney General’s Office. It was investigated by Health and Human Services – Office of Inspector General, the Missouri Attorney General’s Office Medicaid Fraud Control Unit and IRS-Criminal Investigation.

JEFFERSON CITY, Mo. – A Kansas City, Mo., man who formerly lived in Columbia, Mo., has pleaded guilty in federal court to his role in a $1.1 million insurance fraud conspiracy that involved false claims of injuries suffered in car accidents, as well as to his role in a conspiracy to fraudulently obtain COVID-19 relief benefits.

Lawrence Courtney Lawhorn, 35, pleaded guilty before U.S. Magistrate Judge Willie J. Epps, Jr., on Thursday, June 8, to the charges contained in two separate federal indictments. In the first indictment, Lawhorn pleaded guilty to one count of conspiracy to commit wire fraud, one count of conspiracy to commit mail fraud, and one count of aggravated identity theft. In the second indictment, Lawhorn pleaded guilty to conspiracy to commit wire fraud.

Lawhorn is among 17 defendants who have pleaded guilty to their roles in the scheme that defrauded six insurance companies from June 2017 to July 2020. Conspirators submitted false claims that they had suffered bodily injuries and that they would be personally liable for any medical bills related to insurance claims. Conspirators, some of whom were involved in multiple incidents, received thousands of dollars, and in some cases tens of thousands of dollars, based on these false claims. However, none of the conspirators made any payments to medical providers and instead used the funds for their personal expenses.

Lawhorn was directly involved in two incidents in which he received separate payments of $1,500 and $17,350 from insurance companies. In several other incidents, Lawhorn sent emails to insurance companies, made telephone calls to insurance companies, directed others what to tell insurance companies, reviewed insurance policies prior to incidents, witnessed release agreements, and assumed the identity of parties to the incidents or people related to parties to these incidents in communication with insurance companies.

By pleading guilty today, Lawhorn admitted to his involvement in nine automobile accidents in June and December 2017, in May and August 2018, and in January, February, August, October and December 2019 as part of the insurance fraud scheme that resulted in a total loss to his victims of $1,148,198. Most of the accidents were in Columbia and Kansas City, Mo., with one accident in St. Louis, Mo.

FBI agents seized Lawhorn’s iPhone and Apple Mac laptop when he was arrested in the insurance fraud case. A detective with the Boone County Cyber Crimes Task Force found evidence of additional fraud after searching those devices, which led to Lawhorn being indicted in the second case.

By pleading guilty in the second federal indictment today, Lawhorn admitted that he fraudulently obtained three $10,000 COVID-19 economic relief loans for non-existent businesses in his name and in the names of two other individuals as part of a fraud conspiracy. He also applied online for loans in the names of five more individuals, but those applications were rejected.

Under the CARES Act, the federal Economic Injury Disaster Loans (EIDL) provided loan assistance, including $10,000 in advances for small businesses.  EIDL proceeds could be used to pay fixed debts, payroll, accounts payable, and other bills associated with small businesses that could have been paid had the pandemic not occurred. A business applying for EIDL relief was eligible for an advance of $1,000 per employee up to 10 employees that did not have to be repaid.

Under federal statutes, Lawhorn is subject to a sentence of up to 20 years in federal prison without parole on each of the three conspiracy charges, plus a mandatory consecutive sentence of two years for aggravated identity theft. The maximum statutory sentence is prescribed by Congress and is provided here for informational purposes, as the sentencing of the defendant 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 United States Probation Office.

These cases are being prosecuted by Assistant U.S. Attorney Aaron M. Maness. They were investigated by the FBI, the Bureau of Alcohol, Tobacco, Firearms and Explosives, the National Insurance Crime Bureau, the Kansas City, Mo., Police Department, the Boone County, Mo., Sheriff’s Department and the Missouri State Highway Patrol.

KANSAS CITY, Mo. – An Ohio man who defrauded multiple NFL players – including a player for the Kansas City Chiefs – out of nearly $25,000 earmarked for charitable causes, pleaded guilty in federal court today.

Camario A. Richardson, 39, of Maple Heights, Ohio, pleaded guilty before U.S. District Judge Stephen R. Bough to one count of mail fraud.

Richardson claimed to have contacts with Nike and agreed to deliver Nike-branded merchandise to five NFL players. None of the victim players are identified by name in court documents.

The specific charge to which Richardson pleaded guilty involved a Kansas City Chiefs player who paid $6,000 to Richardson to provide 300 Nike-branded backpacks. The backpacks were for a “Book Bag Giveaway” charitable event for children in need of a school backpack at the start of the 2016 school year. Richardson was paid in April 2016, but never delivered any backpacks.

Richardson also admitted that he engaged in the same fraud scheme by taking $17,280 from the players of three other NFL teams, all as payment for backpacks those players planned to give away at similar charitable events. In June 2016, Richardson took $6,480 from a Tampa Bay Buccaneers player and $6,480 from an Indianapolis Colts player, each of whom were promised 300 backpacks that Richardson failed to deliver, and $4,320 from a Cincinnati Bengals player who was promised 200 backpacks that Richardson failed to deliver. 

As a result of Richardson’s fraud scheme, all four victim players purchased backpacks from another source for their charitable events.

Richardson also admitted that he engaged in a fraud scheme by taking $1,500 from a San Diego Chargers player in March 2016 for athletic shoes that he failed to provide. 

The total fraud loss caused by Richardson’s criminal conduct was $24,780. Under the terms of today’s plea agreement, Richardson must pay $24,780 in restitution to his victims.

Under federal statutes, Richardson is subject to a sentence of up to 20 years in federal prison without parole. The maximum statutory sentence is prescribed by Congress and is provided here for informational purposes, as the sentencing of the defendant 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 United States Probation Office.

This case is being prosecuted by Criminal Division Chief Gene Porter. It was investigated by the U.S. Secret Service and the Lee’s Summit, Mo., Police Department.

 

U.S. Attorney Tim Garrison announces a federal indictment against Patricia Derges







SPRINGFIELD, Mo. – An elected Missouri state representative has been indicted by a federal grand jury for a fraud scheme in which she made false claims about a supposed stem cell treatment marketed through her clinics in southern Missouri, and for illegally providing prescription drugs to clients of those clinics.

“This defendant abused her privileged position to enrich herself through deception,” said U.S. Attorney Tim Garrison. “The indictment alleges she lied to her patients and she lied to federal agents. As an elected official and a health care provider, she deserves to be held to a high standard. This grand jury indictment exposes her deception and holds her accountable for her actions.”

Patricia “Tricia” Ashton Derges, 63, of Nixa, Missouri, was charged in a 20-count indictment returned under seal by a federal grand jury in Springfield, Mo. The indictment was unsealed and made public today following Derges’s self-surrender and initial court appearance.

This investigation began as a result of false or misleading statements made by Derges in April 2020 to a Springfield television station regarding her potential use of stem cells to treat COVID-19. Derges was elected in November 2020 as a Missouri state representative in District 140 (Christian County). Derges, who is not a physician but is licensed as an assistant physician, operates three Ozark Valley Medical Clinic locations in Springfield, Ozark, and Branson, Mo.

“We place our hope and our trust in health care providers and government officials,” said Timothy Langan, Special Agent in Charge of FBI Kansas City. “The defendant’s actions are not only a betrayal of that trust, but her actions erode the very core of our confidence in a system we rely on. Derges vowed to do no harm as a health care professional and was elected to serve the people, not deceive them. She used her position for personal gain and damaged the public’s trust.”

“Medical professionals who knowingly abuse their power by prescribing medications, without ensuring they are for legitimate medical purposes, take advantage of the public’s trust,” said Inez Davis, St. Louis Division Diversion Program Manager for the Drug Enforcement Administration. “With the support of our enforcement partners, DEA will investigate to the maximum extent of our ability to ensure these individuals are prevented from risking lives within our communities.”

“Ms. Derges knowingly provided false information and made false claims about the medical treatment she was providing, and these falsehoods may have significant consequences for the patients she served,” said Curt L. Muller, Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services.  “We will continue to hold accountable individuals who abuse their positions of power to prey on unsuspecting individuals.”

Wire Fraud Scheme

The federal indictment charges Derges with eight counts of wire fraud related to five specific victims (identified by their initials).These five victims were among those who lost a total of nearly $200,000 in the fraud scheme, which lasted from December 2018 to May 2020.

During this time, Derges exclusively obtained amniotic fluid, which she marketed under the name Regenerative Biologics, from the University of Utah. Derges advertised Ozark Valley Medical Clinic as a “Leader in … Regenerative Medicine,” including stem cells, and marketed her “stem cell” practice through seminars, media interviews, and social media. The federal indictment cites an August 2019 seminar in which Derges told her audience that the amniotic fluid she used in her stem cell practice was a “stem cell shot” and that it contained “mesenchymal stem cells.” According to the indictment, Derges made similar claims in personal consultations.

In fact, however, the amniotic fluid Derges administered to her patients did not contain mesenchymal stem cells, or any other stem cells. The amniotic fluid she obtained from the University of Utah was a sterile filtered amniotic fluid allograft (a tissue graft comprised of human amniotic membrane and amniotic fluid components derived from placental tissue). The amniotic fluid allograft was “acellular,” meaning it did not contain any cells, including stem cells. 

Despite being told that the University of Utah’s amniotic fluid allograft was “acellular” and did not contain mesenchymal stem cells, Derges allegedly continued to tell her patients and the public that the amniotic fluid allograft contained stem cells. 

Derges administered amniotic fluid, which she falsely claimed contained stem cells, to patients who suffered from, among other things, tissue damage, kidney disease, chronic obstructive pulmonary disease (COPD), Lyme disease, erectile dysfunction, and urinary incontinence. In an April 11, 2020, Facebook post Derges wrote of amniotic fluid allograft: “This amazing treatment stands to provide a potential cure for COVID-19 patients that is safe and natural.”

The University of Utah sold its amniotic fluid allograft to Derges for approximately $244 per milliliter and $438 for two milliliters. Derges charged her patients $950 to $1,450 per milliliter. In total, Derges’s patients paid her approximately $191,815 for amniotic fluid that did not contain stem cells.

The Controlled Substances Act

The federal indictment charges Derges with 10 counts of distributing Oxycodone and Adderall over the internet without valid prescriptions. 

The indictment alleges that Derges, without conducting in-person medical evaluations of the patients, wrote electronic prescriptions for Oxycodone and Adderall for patients and transmitted them to pharmacies over the internet.

Because none of the assistant physicians whom Derges employed at Ozark Valley Medical Clinic could prescribe Schedule II controlled substances, the indictment says, it was the standard practice of the assistant physicians to see a patient and later communicate to Derges the controlled substances they wanted her to prescribe to their patients. Derges, allegedly without conducting an in-person medical evaluation of the patients, wrote electronic prescriptions for the patients and transmitted the prescriptions over the internet to pharmacies.

False Statements

The federal indictment charges Derges with two counts of making false statements to federal agents investigating this case in May 2020. 

Derges allegedly told agents that the amniotic fluid allograft that she used in her practice contained mesenchymal stem cells, which she knew was false. Derges also allegedly told federal agents that she had not treated a patient for urinary incontinence with amniotic fluid allograft, which she knew was false.

The charges contained in this indictment are simply accusations, and not evidence of guilt. Evidence supporting the charges must be presented to a federal trial jury, whose duty is to determine guilt or innocence.

Assistant Physician

Derges is not a physician but is licensed as an assistant physician. An assistant physician is a mid-level medical professional in the state of Missouri. Under Missouri law, medical school graduates who have not been accepted into a residency program but have passed Step 1 and Step 2 of the United States Medical Licensing Examination may apply to become an assistant physician. State law mandates that assistant physicians practice pursuant to a collaborative practice arrangement with a licensed physician.

Derges obtained her medical degree from the Caribbean Medical University of Curacao in May 2014 but was not accepted into a post-graduate residency program. Derges was licensed as an assistant physician by the state of Missouri on Sept. 8, 2017.

This case is being prosecuted by Assistant U.S. Attorney Shannon Kempf. It was investigated by the FBI, Health and Human Services – Office of Inspector General, and the DEA.

Derges Indictment.pdf

JEFFERSON CITY, Mo. – Two Columbia, Mo., residents pleaded guilty in federal court today to their roles in a $1.2 million insurance fraud conspiracy that involved false claims of injuries suffered in car accidents.

Latoya Marie Brown, 37, who also lived in the Kansas City, Mo., area, and Cedrick Shawndale Goldman, 46, each pleaded guilty in separate appearances before U.S. Magistrate Judge Willie J. Epp, Jr., to one count of conspiracy to commit wire fraud and one count of conspiracy to commit mail fraud.

By pleading guilty today, Brown and Goldman admitted they were part of a conspiracy that defrauded six insurance companies of a total of $1,234,581 from June 2017 to July 2020. Conspirators submitted false claims that they had suffered bodily injuries and that they would be personally liable for any medical bills related to insurance claims. Conspirators, some of whom were involved in multiple incidents, received thousands of dollars, and in some cases tens of thousands of dollars, based on these false claims. However, none of the conspirators made any payments to medical providers and instead used the funds for their personal expenses.

Brown admitted she was involved in three incidents and received a total of $44,269 in insurance payments. Goldman admitted he was involved in one incident and received a $14,900 insurance payment. Neither Brown nor Goldman have paid any of their hospital or medical bills with the insurance proceeds they received.

Under federal statutes, Brown and Goldman each are subject to a sentence of up to 40 years in federal prison without parole. The maximum statutory sentence is prescribed by Congress and is provided here for informational purposes, as the sentencing of the defendant 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 United States Probation Office.

This case is being prosecuted by Assistant U.S. Attorney Aaron M. Maness. It was investigated by the FBI and the Bureau of Alcohol, Tobacco, Firearms and Explosives.

SPRINGFIELD, Mo. – A performer at a Branson, Missouri, theater pleaded guilty in federal court today to stealing more than $85,000 from hundreds of his own audience members who donated to his non-existent charity for foster children.

“For several years, this performer took advantage of his own audiences by pulling at their heartstrings while stealing from their pockets,” said Acting U.S. Attorney Teresa A. Moore. “He cynically and greedily victimized donors who falsely believed they were helping foster children. There’s no way to know how much cash was actually stolen, but we intend to seek restitution for the victims law enforcement has identified, as well as prison time and a hefty fine.”

James Patrick Garrett, 65, of Branson, waived his right to a grand jury and pleaded guilty to a federal information that charges him with one count of wire fraud.

“Today’s plea is a reminder that the United States Secret Service is committed to aggressively investigating and pursuing those who commit financial crimes,” said Brandon C. Bridgeforth, Special Agent in Charge, U.S. Secret Service Kansas City Field Office. “This defendant used his theater and platform as a performer, to prey on the generosity of those attending his performances. The defendant took advantage of these people who thought they were helping children in need, and then defrauded them. This investigation is a testament to the strong partnership between the Secret Service, the Branson, Mo., Police Department and the U.S. Attorney’s Office.”

“The Branson Police Department is always looking out for the best interest of our residents and visitors,” said Branson Police Chief Jeff Matthews. “We initiated this investigation and presented it to our federal partners at the United States Secret Service last year. They adopted the case and were successful in presenting it to the U.S. Attorney for prosecution. These kinds of relationships and partnerships help us protect our community and the values Branson is known for.”

Garrett performed the John Denver Tribute at the Branson IMAX. The show, which Garrett performed approximately six days a week throughout the year, consists of musicians covering songs made popular by the late John Denver and other classic country artists.

On Nov. 3, 2012, Garrett created Diamond Jym Ranch, Inc., with himself as president and a member of its board of directors. According to its articles of incorporation, Diamond Jym Ranch was ostensibly created for “the purpose of establishing homes for displaced or homeless boys or girls, to provide training and education for such children, to provide them with food, lodging, and their well being.”

By pleading guilty today, Garrett admitted that he victimized his audience members through a fraud scheme that lasted from March 2016 to August 2020. At the conclusion of each John Denver Tribute, Garrett solicited members of his audience to donate to Diamond Jym Ranch. Garrett falsely told audiences that he had created homes for foster children in Branson and Texas. Garrett told audience members their donations to Diamond Jym Ranch would go to support the foster homes and to support foster children. None of those claims were true, and Garrett knew they were false at the time he made the representations.

Garrett placed a donation box at the exit of the theatre where he performed the John Denver Tribute. Hundreds of audience members left their donations in the donation box. Garrett also directed audience members who wanted to make monthly or regular donations to Diamond Jym Ranch to mail their checks to his home address in Branson.

Garrett admitted that he used the money that he raised for his personal living expenses, which included frequently dining out at Branson restaurants, credit card debt, rent, taxes, mortgage payments, health insurance, and automobile insurance.

In total, over the course of many years, Garrett induced hundreds of John Denver Tribute audience members to make financial donations to Diamond Jym Ranch for the purpose of supporting foster children and homes for foster children. Garrett’s scheme to defraud resulted in a collective loss to his victims of at least $85,525.

The specific charge to which Garrett pleaded guilty today involves a $1,000 contribution made by an audience member identified in court documents as “D.C.,” a resident of Illinois. Garrett used D.C.’s donation for his own personal purposes and not to the benefit of foster children.

Under federal statutes, Garrett is subject to a sentence of up to 20 years in federal prison without parole. The maximum statutory sentence is prescribed by Congress and is provided here for informational purposes, as the sentencing of the defendant 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 United States Probation Office.

This case is being prosecuted by Assistant U.S. Attorney Shannon Kempf. It was investigated by the U.S. Secret Service and the Branson, Mo., Police Department, as part of the U.S. Secret Service Financial Crimes Task Force. 

JEFFERSON CITY, Mo. – An Indianapolis, Indiana, man was sentenced in federal court today for his role in the armed robbery of a Walgreens pharmacy in Jefferson City, Missouri.

Daijahn Antwan Reed, 22, was sentenced by U.S. District Judge Roseann Ketchmark to 11 years and three months in federal prison without parole.

On Aug. 17, 2021, Reed pleaded guilty to one count of armed robbery and one count of brandishing a firearm during a crime of violence.

According to court documents, the armed robbery was part of a larger scheme of violence perpetuated by the Indianapolis-based organization called The Mob for which Reed and his co-conspirators worked. This group and others committed similar offenses across the United States during the spring and summer of 2018.

Reed is the third and final defendant to be sentenced in this case. Co-defendant Jerome Scott King, 22, of Speedway, Indiana, was sentenced to 14 years in federal prison without parole. Co-defendant Raymond Allen Craig, 23, of Indianapolis, was sentenced to 11 years and three months in federal prison without parole. Although Reed and his co-defendants are aware of the identity of a fourth participant in this crime, according to court documents, none of them have identified that individual.

Reed admitted that he and three other men robbed the Walgreens at 2002 Missouri Boulevard at gunpoint shortly after midnight on July 25, 2018. Police officers arrived as the robbers were running from the business. They fled in a vehicle driven by King. As officers followed in pursuit, occupants of the vehicle began throwing items from the vehicle, including more than 4,000 tablets of various controlled substances taken during the robbery with an aggregate value of $9,264.

Multiple officers pursued the vehicle eastbound on U.S. Highway 54 into Callaway County. The Missouri State Highway Patrol deployed spike strips at the U.S. 54-AA/OO interchange. King’s vehicle began to slow, left the highway, crossed the outer road and crashed near Jazel Lane in Holts Summit, Missouri. King and Craig were apprehended; an unidentified man escaped. Officers recovered the loaded Smith & Wesson 9mm handgun used in the pharmacy robbery. The firearm had been stolen from Indianapolis.

A witness called the Jefferson City Police Department at about 4:15 a.m. the same day. The witness reported that Reed, who had not made it to the getaway car after the robbery, knocked on his door and asked to use the phone. Reed spoke with the witness for several hours and admitted that he robbed the Walgreens store. The witness told officers that Reed was on the roof of the O’Reilly Auto Parts store, 1010 Missouri Blvd., in Jefferson City. Officers arrested Reed at that location.

Reed later threatened the life of the witness, according to court documents. After being arrested, Reed conspired with Craig to murder the occupant of the home that Reed ran to for sanctuary following the armed robbery.

King admitted he entered the Walgreens to conduct surveillance and then reported the number of persons inside to Craig. Craig, Reed, and the fourth individual entered the pharmacy wearing medical masks over their faces and medical style gloves on their hands. The unidentified man displayed a firearm and confronted the store clerk. One of the thieves, whose identity could not be determined from the surveillance video, zip-tied the clerk’s hands behind his back while a firearm was pointed at his head, led him to the rear of the business near the pharmacy area, and forced him down on the floor. Craig and Reed jumped over the counter and confronted the pharmacist, brandishing a firearm in a threatening manner, and removed controlled substances from the pharmacy. Both Reed and Craig handled the firearm and brandished it in a threatening manner in the direction of the pharmacist.

This case was prosecuted by Special Assistant U.S. Attorney Heather D. Richenberger and Assistant U.S. Attorney Jim Lynn. It was investigated by the Jefferson City, Mo., Police Department, and the Bureau of Alcohol, Tobacco, Firearms and Explosives.

SPRINGFIELD, Mo. – A former Missouri state representative was sentenced in federal court today for a nearly $900,000 COVID-19 fraud scheme, as well as a separate $200,000 fraud scheme in which she made false claims about a fake stem cell treatment marketed through her clinics in southern Missouri, and for illegally providing prescription drugs to clients of those clinics.

“This disgraced health care professional exploited her patients, some with terminal illnesses, who came to her for medical care,” said U.S. Attorney Teresa Moore. “This disgraced former public official exploited her constituents as the community struggled during the Covid-19 pandemic by stealing public funds. She lied to her patients, to her community, and to federal agents. Today’s sentence holds her accountable for her fraud and deceit.”

Patricia “Tricia” Ashton Derges, 64, of Nixa, Mo., was sentenced by U.S. District Judge Brian C. Wimes to six years and three months in federal prison without parole. The court also ordered Derges to pay $500,600 in restitution to her victims.

“Derges exploited her position as an elected official and a medical professional to benefit herself financially with complete disregard, to not only her constituents, but to the oath she took as a health care professional to do no harm,” said Charles Dayoub, Special Agent in Charge of FBI Kansas City. “She not only fraudulently received nearly $300,000 in CARES Act funds, but also deceived patients by marketing fake stem cell treatment and illegally provided drugs to clients of her clinics. Her actions were a betrayal of trust, eroding the very core of our confidence in a system we rely on and damaging the public’s trust not only in our elected officials but in our health care system.”

“This official violated the trust of her constituents and her duties as an elected official, by putting personal profit before her community's health and well-being,” said Curt L. Muller, Special Agent in Charge with the Department of Health and Human Services, Office of Inspector General (HHS-OIG). “Her sentencing demonstrates that there are consequences for stealing taxpayer dollars and endangering public health. HHS-OIG will continue to investigate allegations of federal health care fraud and to ensure that these funds are used for their intended purposes.”

On June 28, 2022, Derges was found guilty at trial of 10 counts of wire fraud, 10 counts of distributing drugs over the internet without a valid prescription, and two counts of making false statements to a federal law enforcement agent.

Derges was elected in November 2020 as a Missouri state representative in District 140 (Christian County) and served one term. Derges, who was never a physician, surrendered her assistant physician’s license on June 29, 2023. Derges formerly operated three for-profit Ozark Valley Medical Clinic locations in Springfield, Ozark, and Branson, Mo. Derges also operated the non-profit corporation Lift Up Someone Today, Inc., with a medical and dental clinic in Springfield.

COVID-19 Fraud Scheme

Derges was convicted of three counts of wire fraud related to her attempt to fraudulently receive nearly $900,000 in CARES Act funds. Derges actually was awarded $296,574 in CARES Act funds for Lift Up, although Lift Up did not provide any COVID-19 testing services to its patients. In fact, Lift Up’s medical clinic closed at the beginning of the COVID-19 pandemic and remained closed from March to June 2020.

Derges sought CARES Act funding for COVID-19 testing that had been provided, and already paid for, at her for-profit Ozark Valley Medical Clinic. Derges requested reimbursement for $379,294 in COVID-19 testing and related expenses, and future funding in the amount of $503,350. In total, Derges applied for $882,644 from the CARES Act Relief Fund on Lift Up’s behalf.

Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act in March 2020, which provided $150 billion to states, tribal governments, and units of local government. Missouri was allocated approximately $2.3 billion. Missouri allocated approximately $34 million in CARES Act funds to Greene County. To administer the CARES Act funds it received, the Greene County Commission created the CARES Act Relief Fund to “promote recovery by funding programs and services that support the needs of those impacted by the COVID-19 public health emergency.” An advisory council of 30 citizen volunteers was appointed to review funding requests and make funding recommendations to the Greene County Commission.

Derges claimed in her application to the Greene County CARES Act Relief Fund that Lift Up provided COVID-19 testing and she sought reimbursement for “COVID-19 eligible expenses” that Lift Up had incurred. To support her claim, Derges provided invoices totaling $296,574 from Dynamic DNA for more than 3,000 COVID-19 laboratory tests. Derges submitted the Dynamic DNA invoices as Lift Up expenditures, although they were actually for testing done at Derges’s for-profit Ozark Valley Medical Clinic.

Lift Up, a non-profit charity, and Ozark Valley Medical Clinic, a for-profit corporation, are separate legal entities. Ozark Valley Medical Center had already received payment from its clients of approximately $517,000 for these COVID-19 tests. Ozark Valley Medical Center charged clients, patients, or their patients’ employers approximately $167 per sample for its COVID-19 testing services. Derges concealed from Greene County that these COVID-19 tests had already been paid for by other payors.

In December 2020, the Greene County Commission awarded Lift Up $296,574 in CARES Act funding based upon Lift Up’s fraudulent application and the Dynamic DNA invoices Derges had submitted. Derges deposited the check into Lift Up’s bank account, then transferred the funds into Ozark Valley Medical Center’s bank account.

Derges provided several more invoices from Dynamic DNA to Greene County later in December 2020 to further support her application for Lift Up, although the invoices were actually for testing done for clients at Ozark Valley Medical Center, raising the total to $589,143 for 6,177 COVID-19 tests. Derges concealed from Greene County that Ozark Valley Medical Center already had been paid approximately $1 million by clients, patients, or their patients’ employers, for these COVID-19 tests.

Stem Cell Fraud Scheme

Derges also was convicted of seven counts of wire fraud related to a nearly $200,000 fraud scheme, which lasted from December 2018 to May 2020. Derges marketed a stem cell treatment that actually utilized amniotic fluid that did not contain any stem cells. The federal indictment charged her with defrauding four specific victims, each of whom testified during the trial.

Derges exclusively obtained amniotic fluid from the University of Utah, which she marketed under the name Regenerative Biologics. Derges advertised Ozark Valley Medical Clinic as a “Leader in … Regenerative Medicine,” including stem cells, and marketed her “stem cell” practice through seminars, media interviews, and social media. Derges made similar claims in personal consultations.

In fact, however, the amniotic fluid Derges administered to her patients did not contain mesenchymal stem cells, or any other stem cells. The amniotic fluid she obtained from the University of Utah was a sterile filtered amniotic fluid allograft (a tissue graft comprised of human amniotic membrane and amniotic fluid components derived from placental tissue). The amniotic fluid allograft was “acellular,” meaning it did not contain any cells, including stem cells.

Despite being told by the University of Utah that the University of Utah’s amniotic fluid allograft was “acellular” and did not contain mesenchymal stem cells, Derges continued to tell her patients and the public that the amniotic fluid allograft contained stem cells.

Derges administered amniotic fluid, which she falsely claimed contained stem cells, to patients who suffered from, among other things, tissue damage, kidney disease, chronic obstructive pulmonary disease (COPD), Lyme disease, and urinary incontinence. In an April 11, 2020, Facebook post Derges wrote of amniotic fluid allograft: “This amazing treatment stands to provide a potential cure for COVID-19 patients that is safe and natural.”

The University of Utah sold its amniotic fluid allograft to Derges for approximately $244 per milliliter and $438 for two milliliters. Derges charged her patients $950 to $1,450 per milliliter. In total, Derges’s patients paid her approximately $191,815 for amniotic fluid that did not contain stem cells.

Controlled Substances Act

Derges also was convicted of 10 counts of distributing Oxycodone and Adderall over the internet without valid prescriptions. Derges, without conducting in-person medical evaluations of the patients, wrote electronic prescriptions for Oxycodone and Adderall for patients and transmitted them to pharmacies over the internet.

Because none of the assistant physicians whom Derges employed at Ozark Valley Medical Clinic could prescribe Schedule II controlled substances, it was the standard practice of the assistant physicians to see a patient and later communicate to Derges the controlled substances they wanted her to prescribe to their patients. Derges, without conducting an in-person medical evaluation of the patients as required by federal law, wrote electronic prescriptions for the patients and transmitted the prescriptions over the internet to pharmacies.

False Statements

Derges also was convicted of two counts of making false statements to federal agents investigating this case in May 2020.

Derges told agents that the amniotic fluid allograft that she used in her practice contained mesenchymal stem cells, which she knew was false. Derges also told federal agents that she had not treated a patient for urinary incontinence with amniotic fluid allograft, which she knew was false.

This case was prosecuted by Assistant U.S. Attorney Shannon Kempf and Supervisory Assistant U.S. Attorney Randall D. Eggert. It was investigated by the FBI, Health and Human Services – Office of Inspector General, the DEA and the Missouri Attorney General’s Medicaid Fraud Control Unit.

JEFFERSON CITY, Mo. – A Kansas City, Mo., man was sentenced in federal court today for his role in a $1.1 million insurance fraud scheme that involved false claims of injuries suffered in car accidents.

Michael Stuart Smith, also known as “Black Mike,” 36, was sentenced by U.S. District Judge Roseann Ketchmark to four years in federal prison without parole. The court also ordered Smith to pay $40,836 in restitution to his victims.

On April 26, 2022, Smith pleaded guilty to participating in a conspiracy to commit wire fraud and to participating in a conspiracy to commit mail fraud.

This case stems from a long investigation by the FBI into co-defendant Lawrence Courtney Lawhorn, 35, of Kansas City, Mo. (formerly of Columbia, Mo.), for a series of automobile accidents throughout Missouri. All but one of those accidents were staged.

Lawhorn recruited friends, acquittances, family, and friends of friends to participate in the staged accidents. Conspirators went to various medical providers, claiming injuries from the staged accidents and requesting various testing, such a MRIs, CT scans, and/or X-rays. Conspirators then submitted false claims to insurance companies that they had suffered bodily injuries and that they would be personally liable for any medical bills related to insurance claims. Conspirators, some of whom were involved in multiple incidents, received thousands of dollars, and in some cases tens of thousands of dollars, based on these false claims. However, none of the conspirators made any payments to medical providers and instead used the funds for their personal expenses.

Smith admitted that he participated in two of the staged automobile accidents on May 12, 2018, and Feb. 27, 2019.

Lawhorn pleaded guilty on Thursday, June 8, to one count of conspiracy to commit wire fraud, one count of conspiracy to commit mail fraud, and one count of aggravated identity theft. Lawhorn also pleaded guilty in a separate and unrelated case to commit wire fraud. His sentencing date has not yet been scheduled.

This case is being prosecuted by Assistant U.S. Attorney Aaron M. Maness. It was investigated by the FBI and the Bureau of Alcohol, Tobacco, Firearms and Explosives.

KANSAS CITY, Mo. – A St. Joseph, Mo., woman was sentenced in federal court today for using the stolen identities of prison inmates to fraudulently obtain federal unemployment benefits under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

Brooke Stewart, 39, was sentenced by U.S. District Judge Brian C. Wimes to two years and six months in federal prison without parole. The court also ordered Stewart to pay $139,663 in restitution to the Missouri Dept of Employment Security and a $50 fine.

On May 18, 2023, Stewart pleaded guilty to one count of stealing government funds. Stewart admitted that she facilitated the filing of false claims for unemployment benefits by using the stolen identity information of five individuals who were incarcerated in state or federal prison and therefore not eligible to receive Missouri and enhanced unemployment benefits. Stewart also fraudulently received federal unemployment benefits in her own name and another person.

As a result of her fraud scheme, Stewart stole at least $139,663 in benefits under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which provided additional federal pandemic unemployment compensation to eligible individuals receiving other unemployment benefits under state laws. These funds were intended to assist persons who were unemployed because of the pandemic.

None of the inmates whose identity information was stolen actually received any of the fraudulently obtained benefits. Among those individuals whose stolen identity information was used to obtain benefits from May 2020 to June 2021 were federal defendants Garland Nelson and Brooke Beckley. Nelson is serving a 32-year federal prison sentence for a cattle fraud scheme that led to two murders in Braymer, Mo., and for illegally possessing a firearm, as well as two life sentences in a separate state case for the murders. Beckley is serving a 40-year prison sentence for her role in the murder of a Mexican national who was executed to help her avoid paying a debt owed in a drug-trafficking conspiracy in the Springfield, Mo., area.

Stewart was on supervision from a 2019 state court conviction for trafficking in stolen identities, which resulted in a 10-year suspended sentence, at the time of this federal offense. A revocation hearing has been ordered in that case.

This case was prosecuted by Assistant U.S. Attorney Paul S. Becker. It was investigated by the Department of Homeland Security, Office of Inspector General and the Department of Labor, Office of Inspector General – Office of Investigations & Labor Racketeering Fraud.

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.