HOUSTON - An Indian national was sentenced to 20 years in prison for his role in operating and funding India-based call centers that defrauded U.S. victims out of millions of dollars between 2013 and 2016.

U.S. District Judge David Hittner sentenced Hitesh Madhubhai Patel aka Hitesh Hinglaj, 44, of Ahmedabad, India, for wire fraud conspiracy and general conspiracy to commit identification fraud, access device fraud, money laundering and impersonation of a federal officer or employee. Patel was also ordered to pay restitution of $8,970,396 to identified victims of his crimes.

“The long arm of federal law enforcement was key to bringing this con artist to justice,” said U.S. Attorney Ryan K. Patrick of the Southern District of Texas.  “Transnational call center scams are complex cases to investigate and prosecute but our agencies are up to the task.  Many of these fraudsters prey on the most vulnerable from the perceived safety of foreign lands so there is no sorry in seeing him head to prison.  His access to a phone is now greatly diminished. Across the globe, U.S. law enforcement is chasing and dismantling these schemes.”

“The defendant defrauded vulnerable U.S. victims out of tens of millions of dollars by spearheading a conspiracy whose members boldly impersonated federal government officials and preyed on victims’ fears of adverse government action,” said Acting Attorney General Brian C. Rabbitt of the Justice Department’s Criminal Division. “Today’s sentence demonstrates the department’s commitment to prosecuting high-level perpetrators of such nefarious schemes. Even fraudsters operating scams from beyond our borders are not beyond the reach of the U.S. judicial system.”

According to admissions in his plea agreement, Patel and his co-conspirators perpetrated a complex scheme in which employees from call centers in Ahmedabad, India, impersonated officials from the IRS and U.S. Citizenship and Immigration Services (USCIS) and engaged in other telephone call scams designed to defraud victims throughout the United States. U.S. victims were threatened with arrest, imprisonment, fines or deportation if they did not pay alleged monies owed to the government. Those who fell victim were instructed how to provide payment, including by purchasing general purpose reloadable (GPR) cards or wiring money. Upon payment, the call centers would immediately turn to a network of “runners” based in the United States to liquidate and launder the fraudulently obtained funds.

In his plea, Patel admitted to operating and funding several India-based call centers from which the fraud schemes were perpetrated, including the call center HGLOBAL. Patel corresponded by email and WhatsApp messaging frequently with his co-defendants to exchange credit card numbers, telephone scam scripts and call center operations instructions. The scripts included IRS impersonation, USCIS impersonation, Canada Revenue Agency impersonation, Australian Tax Office impersonation, payday loan fraud, U.S. Government grant fraud and debt collection fraud.

A co-defendant described Patel as “the top person in India and the boss for whom most of the other defendants worked,” and the owner of multiple call centers. Another stated Patel was arrested in India in 2016, but then paid a bribe and was released. Additionally, Patel admitted that a reasonably foreseeable loss of more than $25 million but less than $65 million was attributable to him, based on the government’s evidence against him. 

Patel was prosecuted in the United States after being extradited from Singapore in April 2019 to face charges in this large-scale telefraud and money laundering scheme. Singapore authorities apprehended Patel at the request of the United States pursuant to a provisional arrest warrant in September 2018 after Patel flew there from India.

“For years, this individual preyed on the fears of his victims to perpetuate a global scheme to manipulate U.S. institutions and taxpayers,” said Special Agent in Charge Mark B. Dawson of Immigration and Customs Enforcement’s Homeland Security Investigations (HSI). “Working with our law enforcement partners around the globe we have successfully executed the first ever large-scale, multi-jurisdictional investigation and prosecution targeting the India call center scam industry to hold him accountable for his illegal acts and deter similar scams in the future.”

“Since 2013, American taxpayers have been subjected to unprecedented attempts to fraudulently obtain money by individuals utilizing Indian call centers to impersonate IRS employees and scam American taxpayers,” said J. Russell George, the Treasury Inspector General for Tax Administration (TIGTA). “We appreciate the support of our law enforcement partners.”

“The sentence imposed today provides a clear deterrent to those who would seek to enrich themselves by extorting the most vulnerable in our society through these types of scams,” said Special Agent in Charge David Green of the Department of Homeland Security Office of Inspector General (DHS-OIG).  “These foreign call center operators and their U.S. based affiliates should know that their actions carry real life consequences, both for their victims and for themselves, and that there are dedicated agents and prosecutors who will work tirelessly to identify them, find them and hold them accountable for their crimes.”

The indictment in this case, which was unsealed in October 2016, charged Patel and 60 other individuals and entities with general conspiracy, wire fraud conspiracy and money laundering conspiracy. A total of 24 domestic defendants associated with this transnational criminal scheme were previously convicted and sentenced to terms of imprisonment of up to 20 years in the Southern District of Texas, District of Arizona and Northern District of Georgia. The defendants were also ordered to pay millions of dollars in victim restitution and money judgments and to forfeit seized assets. Some defendants were ordered to be removed based on their illegal immigration status, with another defendant having his U.S. citizenship revoked due to a separate conviction for immigration fraud. Charges remain pending for other India-based defendants. They are presumed innocent unless and until convicted through due process of law. 

HSI, DHS-OIG and TIGTA led the investigation of this case. The Justice Department’s Office of International Affairs and HSI Singapore provided significant support in securing and coordinating Patel’s arrest and extradition, working in concert with their counterparts at the Singapore Attorney General’s-Chambers and the Singapore Police Force.

Also providing significant support during the course of the investigation and prosecutions related to this scheme were the Ft. Bend County Sheriff’s Office; police departments in Hoffman Estates and Naperville, Illinois, and Leonia, New Jersey; San Diego County District Attorney’s Office Family Protection/Elder Abuse Unit; Secret Service; Small Business Administration - Office of Inspector General; IOC-2; INTERPOL Washington; USCIS; State Department’s Diplomatic Security Service; and the U.S. Attorney’s Offices of the Northern District of Alabama, District of Arizona, Central and Northern Districts of California, District of Colorado, Northern and Middle Districts of Florida, Northern District of Georgia, Northern District of Illinois, Northern District of Indiana, Eastern District of Louisiana, District of Nevada and the District of New Jersey.  The Federal Communications Commission’s Enforcement Bureau provided assistance in TIGTA’s investigation. Additionally, the Executive Office for U.S. Attorneys, Legal and Victim Programs provided significant support to the prosecution.

Assistant U.S. Attorneys Mark McIntyre and Craig Feazel of the Southern District of Texas prosecuted the case along with Trial Attorney Mona Sahaf of the Criminal Division’s Human Rights and Special Prosecutions Section (HRSP), former Trial Attorney Amanda S. Wick of the Criminal Division’s Money Laundering and Asset Recovery Section. Kaitlin Gonzalez of HRSP was the paralegal for this case.     

A Department of Justice website has been established to provide information about the case to already identified and potential victims and the public. Anyone who believes they may be a victim of fraud or identity theft in relation to this investigation or other telefraud scam phone calls may contact the FTC via this website.

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

HOUSTON - An Indian national has entered a guilty plea for his role in operating and funding India-based call centers which defrauded thousands of victims out of millions of dollars between 2013 and 2016. 

Hitesh Madhubhai Patel aka Hitesh Hinglaj, 43, of Ahmedabad, India, pleaded guilty to conspiracy to commit wire fraud as well as a general conspiracy to commit identification fraud, access device fraud, money laundering and to impersonate a federal officer or employee.

“Hitesh Patel played a prominent role in this massive, India-based fraud scheme that bilked vulnerable Americans out of millions of dollars,” said Assistant Attorney General Brian Benczkowski of the Justice Department’s Criminal Division. “This important resolution would not have occurred without the assistance of our Singaporean colleagues, to whom we extend our deep appreciation.”

Patel and his conspirators perpetrated a complex scheme in which employees from call centers in Ahmedabad, India, impersonated officials from the IRS and U.S. Citizenship and Immigration Services (USCIS). They also engaged in other telephone call scams designed to defraud victims throughout the United States.  U.S. victims were threatened with arrest, imprisonment, fines or deportation if they did not pay alleged monies owed to the government. Those who fell victim to the scammers were instructed how to provide payment, including by purchasing general purpose reloadable (GPR) cards or wiring money. Upon payment, the call centers would immediately turn to a network of “runners” based in the United States to liquidate and launder the fraudulently-obtained funds.

In his plea, Patel admitted to operating and funding several India-based call centers from which the fraud schemes were perpetrated, including organizational co-defendant call center HGLOBAL. Patel frequently corresponded by email and WhatsApp messaging with co-defendants to exchange credit card numbers, telephone scam scripts, deposit slips, payment information, call center operations information, instructions and bank account information. The scripts included impersonation of IRS, USCIS, Canada Revenue Agency and Australian Tax Office personnel as well as payday loan, U.S. government grant and debt collection fraud schemes.

Patel also received monthly income and expense reports to his personal email from the call centers and used his Indian cell phone number to access GPR cards through automated telephone systems on many occasions.

A co-defendant described Patel as “the top person in India and the boss for whom most of the other defendants worked.” Another co-defendant claimed Patel was arrested in India in 2016, but paid a bribe and was released. Additionally, Patel admitted he was accountable for approximately $25-65 million.    

Patel was extradited from Singapore in April 2019 to face charges in this large-scale telefraud and money laundering scheme.  Singapore authorities apprehended Patel at the request of the United States pursuant to a provisional arrest warrant in September 2018 after Patel flew there from India.  

U.S. District Judge David Hittner accepted the plea today and set sentencing for April 3. At that time, Patel faces up to 20 years in prison for the wire fraud conspiracy and five years for the general conspiracy. Both counts also carry the possibility of a fine of up $250,000 or twice the gross gain or loss from the offense.

A total of 24 domestic defendants associated with this transnational criminal scheme have already been convicted and sentenced to up to 20 years in prison in the Southern District of Texas, District of Arizona and Northern District of Georgia. They were also ordered to pay millions of dollars in victim restitution and money judgments and to forfeit seized assets. Some defendants were removed from the country based on their illegal immigration status, while another defendant had his U.S. citizenship revoked due to a separate conviction for immigration fraud. Charges remain pending for other India-based defendants. They are presumed innocent unless and until convicted through due process of law.

Immigration and Customs Enforcement’s Homeland Security Investigations (HSI), Department of Homeland Security – Office of Inspector General and  Treasury Inspector General for Tax Administration conducted the investigation. The Department of Justice’s Office of International Affairs and HSI Singapore provided significant support in securing and coordinating Patel’s arrest and extradition, working in concert with their counterparts at the Singapore Attorney General’s-Chambers and the Singapore Police Force.

Assistant U.S. Attorneys Mark McIntyre and Craig Feazel of are prosecuting the case along with Trial Attorney Mona Sahaf of the Criminal Division’s Human Rights and Special Prosecutions Section and  Amanda Wick of the Criminal Division’s Money Laundering and Asset Recovery Section.

HOUSTON – An Indian national has been extradited to the United States from Singapore to face charges related to his role as an operator of a call center network that targeted U.S victims. The massive India-based telephone impersonation fraud and money laundering conspiracy defrauded thousands of U.S. residents out of hundreds of millions of dollars.

U.S. Attorney Ryan K. Patrick made the announcement along with Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, Executive Associate Director Derek N. Benner of Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), Inspector General J. Russell George of the U.S. Treasury Inspector General for Tax Administration (TIGTA) and Acting Inspector General John Kelly of the Department of Homeland Security (DHS) Office of Inspector General (OIG).

Hitesh Madhubhai Patel, 42, of Ahmedabad, India, arrived in the United States and is scheduled to be arraigned today before U.S. Magistrate Judge Peter Bray at 1:30 p.m. in Houston. The indictment, which was unsealed in October 2016, charged Patel and 60 other individuals and entities with general conspiracy, wire fraud conspiracy and money laundering conspiracy. The case is assigned to the Honorable David Hittner of the Southern District of Texas.

“I cannot compliment enough the hard work and effort put into this case by the agents, analysts and attorneys of the many agencies involved,” said Patrick.  “Large complex international cases like these often take years to bring in foreign-based defendants. I applaud our global partners in helping bring this case closer to a conclusion.”

“Hitesh Patel operated a call center that allegedly preyed upon vulnerable U.S. citizens as part of a massive fraud scheme,” said Benczkowski. “This extradition once again demonstrates the Department’s unwavering commitment to disrupt and dismantle the India-based call center scam industry and to work with our foreign partners to hold accountable those who perpetrate schemes that defraud our citizens.”

“Today’s extradition should serve as a strong deterrent to anyone considering taking part in similar scams, and I hope it provides a sense of justice for the victims as well,” said Benner. “HSI will continue to utilize its unique investigative mandate, in conjunction with our local, state and federal partners, to attack and dismantle the criminal enterprises who would seek to manipulate U.S. institutions and taxpayers.”

“Since 2013, the IRS impersonation scam has been on a relentless path, claiming more than 15,000 victims who have collectively suffered over $75 million in losses,” said George. “TIGTA’s investigations, often conducted with other federal agencies, have identified 140 scammers, including Patel, who have preyed upon taxpayers. Today’s extradition and arraignment are proof that TIGTA and its law enforcement partners will be equally relentless in rooting out individuals who fraudulently identify themselves as IRS employees in order to extort money from taxpayers. We especially appreciate the cooperation of the Government of Singapore for its role in the extradition.”

“This historic extradition should serve as notice to transnational criminal organizations of the lengths DHS is willing to go to arrest those who would enrich themselves by extorting the most vulnerable in our society,” said Special Agent in Charge David Green of DHS-OIG, Houston Field Office. “The owners, managers and employees of overseas call centers who target U.S. residents should know that our pursuit of justice for victims of their scams does not stop at the water’s edge. We will continue to work with our international partners to identify these fraudsters, track them down and hold them accountable for their crimes.”

Singapore authorities apprehended Patel at the request of the United States pursuant to a provisional arrest warrant on Sept. 21, 2018, after flying from India to Singapore. The Singaporean Minister for Law issued a warrant on March 25, 2019, for Patel to be delivered into custody of the United States.

The indictment alleges Patel operated the HGlobal call center conglomerate and participated in a complex fraudulent scheme involving a network of call centers based in Ahmedabad, India. Using information obtained from data brokers and other sources, India-based conspirators allegedly called potential victims while impersonating officials from the IRS or Citizenship and Immigration Services.  According to the indictment, the call center conspirators then threatened victims with arrest, imprisonment, fines or deportation if they did not pay taxes or penalties to the government. When victims agreed to pay, the call centers used a network of U.S.-based conspirators to quickly liquidate and launder the extorted funds through the use of stored value cards or via wire transfers.  As alleged in the indictment, the stored value cards were often registered by the scammers using misappropriated personal identifying information of thousands of identity theft victims, and conspirators collected the wire transfers by using fake names and fraudulent identifications.

According to the indictment, the call center conspirators also defrauded victims through other schemes, including via offering fake short-term loans or grants.  The indictment alleges onspirators would then request a good-faith deposit to show the victims’ ability to pay back the loan or a fee to process the grant. The victims of the alleged scam never received any money after making the requested payment.

A total of 24 domestic defendants associated with this transnational criminal scheme have previously been convicted and sentenced to terms of imprisonment of up to 20 years in the Southern District of Texas, District of Arizona and Northern District of Georgia. The defendants were also ordered to pay millions of dollars in victim restitution and money judgments and to forfeit seized assets.  Some defendants were ordered to be deported based on their illegal immigration status, with another defendant having his U.S. citizenship revoked due to a separate conviction for immigration fraud. The remaining India-based defendants have yet to be arraigned in this case.

HSI, DHS-OIG and TIGTA conducted the investigation. The Department of Justice’s Office of International Affairs and HSI Singapore provided significant support in securing and coordinating Patel’s arrest and extradition, working in concert with their counterparts at the Singapore Attorney General’s-Chambers and the Singapore Police Force. 

Assistant U.S. Attorneys Mark McIntyre and Craig Feazel are prosecuting the case along with Trial Attorneys Michael Sheckels and Mona Sahaf of the Criminal Division’s Human Rights and Special Prosecutions Section, Amanda Wick of the Criminal Division’s Money Laundering and Asset Recovery Section.

A Department of Justice website has been established to provide information about the case to victims and the public. Anyone who believes they may be a victim of fraud or identity theft in relation to this investigation or other telefraud scam phone calls may contact the FTC via this website.

Anyone seeking additional information about telefraud scams generally, or preventing identity theft or fraudulent use of their identity information, may find helpful information on the IRS tax scams website, the FTC phone scam website, and the FTC identity theft website.

 

An indictment is a formal accusation of criminal conduct, not evidence.

A defendant is presumed innocent unless convicted through due process of law.

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A court-authorized international law enforcement operation led by the U.S. Justice Department disrupted a botnet used to commit cyber attacks, large-scale fraud, child exploitation, harassment, bomb threats, and export violations.

As part of this operation, YunHe Wang, 35, a People’s Republic of China national and St. Kitts and Nevis citizen-by-investment, was arrested on May 24 on criminal charges arising from his deployment of malware and the creation and operation of a residential proxy service known as “911 S5.”

According to an indictment unsealed on May 24, from 2014 through July 2022, Wang and others are alleged to have created and disseminated malware to compromise and amass a network of millions of residential Windows computers worldwide. These devices were associated with more than 19 million unique IP addresses, including 613,841 IP addresses located in the United States. Wang then generated millions of dollars by offering cybercriminals access to these infected IP addresses for a fee.

“This Justice Department-led operation brought together law enforcement partners from around the globe to disrupt 911 S5, a botnet that facilitated cyber-attacks, large-scale fraud, child exploitation, harassment, bomb threats, and export violations,” said Attorney General Merrick B. Garland. “As a result of this operation, YunHe Wang was arrested on charges that he created and operated the botnet and deployed malware. This case makes clear that the long arm of the law stretches across borders and into the deepest shadows of the dark web, and the Justice Department will never stop fighting to hold cybercriminals to account.”

“Working with our international partners, the FBI conducted a joint, sequenced cyber operation to dismantle the 911 S5 Botnet—likely the world’s largest botnet ever,” said FBI Director Christopher Wray.  “We arrested its administrator, Yunhe Wang, seized infrastructure and assets, and levied sanctions against Wang and his co-conspirators. The 911 S5 Botnet infected computers in nearly 200 countries and facilitated a whole host of computer-enabled crimes, including financial frauds, identity theft, and child exploitation. This operation demonstrates the FBI’s commitment to working shoulder-to-shoulder with our partners to protect American businesses and the American people, and we will work tirelessly to unmask and arrest the cybercriminals who profit from this illegal activity.”

According to court documents, Wang allegedly propagated his malware through Virtual Private Network (VPN) programs, such as MaskVPN and DewVPN (torrent distribution models that he operated) and pay-per-install services that bundled his malware with other program files, including pirated versions of licensed software or copyrighted materials. Wang then managed and controlled approximately 150 dedicated servers worldwide, approximately 76 of which he leased from U.S. based online service providers. Using the dedicated servers, Wang deployed and managed applications, commanded and controlled the infected devices, operated his 911 S5 service, and provided paying customers with access to proxied IP addresses associated with the infected devices.

“As alleged in the indictment, Wang created malware that compromised millions of residential computers around the world and then sold access to the infected computers to cybercriminals,” said Principal Deputy Assistant Attorney General Nicole M. Argentieri, head of the Justice Department’s Criminal Division. “These criminals used the hijacked computers to conceal their identities and commit a host of crimes, from fraud to cyberstalking. Cybercriminals should take note. Today’s announcement sends a clear message that the Criminal Division and its law enforcement partners are firm in their resolve to disrupt the most technologically sophisticated criminal tools and hold wrongdoers to account.”

“YunHe Wang created and administered a residential proxy service—a botnet known as 911 S5—that affected millions of computers all over the world,” said U.S. Attorney Damien M. Diggs for the Eastern District of Texas. “He will now be held accountable. Proxy services like 911 S5 are pervasive threats that shield criminals behind the compromised IP addresses of residential computers worldwide. Successfully tackling a problem of this scale is only possible with strong collaboration and exceptional investigative work between our law enforcement partners at home and abroad, and we stand ready to hold accountable anyone—no matter where they are located—who exploits our telecommunications infrastructure for their own criminal purpose.”

Cybercriminals then used proxied IP addresses purchased from 911 S5 to conceal their true originating IP addresses and locations, and anonymously commit a wide array of offenses. These offenses including financial crimes, stalking, transmitting bomb threats and threats of harm, illegal exportation of goods, and receiving and sending child exploitation materials. Since 2014, 911 S5 allegedly enabled cybercriminals to bypass financial fraud detection systems and steal billions of dollars from financial institutions, credit card issuers, and federal lending programs.

911 S5 customers allegedly targeted certain pandemic relief programs. For example, the United States estimates that 560,000 fraudulent unemployment insurance claims originated from compromised IP addresses, resulting in a confirmed fraudulent loss exceeding $5.9 billion. Additionally, in evaluating suspected fraud loss to the Economic Injury Disaster Loan (EIDL) program, the United States estimates that more than 47,000 EIDL applications originated from IP addresses compromised by 911 S5. Millions of dollars more were similarly identified by financial institutions in the United States as loss originating from IP addresses compromised by 911 S5.

The 911 S5 client interface software, which was hosted on U.S.-based servers, enabled cybercriminals located outside of the United States to purchase goods with stolen credit cards or criminally derived proceeds, and illegally export them outside of the United States contrary to U.S. export laws, such as the Export Administration Regulations (EAR). The 911 S5 client interface may also contain encryption or other features which subject it to export controls detailed in the EAR. Accordingly, downloads of the 911 S5 client interface software by certain foreign nationals without a license may constitute violations of the EAR.

“The disruption, seizure, and arrest of the perpetrator(s) responsible for the 911 S5 cybercriminal enterprise demonstrates the forward leaning posture of the Department of Defense Office of Inspector General Defense Criminal Investigative Service (DCIS) Cyber Field Office,” said DCIS Director Kelly P. Mayo. “This investigation showcases the critical import of identifying and pursuing emerging threats and technologies targeting our warfighters, and the industrial base that supports them. Today’s announcement illustrates the magnitude of cooperation within federal law enforcement and our foreign partners pursuing criminals in the rapidly evolving cybercrime arena.”

The indictment further alleges that from 2018 until July 2022, Wang received approximately $99 million from his sales of the hijacked proxied IP addresses through his 911 S5 operation, either in cryptocurrency or fiat currency. Wang used the illicitly gained proceeds to purchase real property in the United States, St. Kitts and Nevis, China, Singapore, Thailand, and the United Arab Emirates. The indictment identifies dozens of assets and properties subject to forfeiture, including a 2022 Ferrari F8 Spider S-A, a BMW i8, a BMW X7 M50d, a Rolls Royce, more than a dozen domestic and international bank accounts, over two dozen cryptocurrency wallets, several luxury wristwatches, 21 residential or investment properties (across Thailand, Singapore, the U.A.E., St. Kitts and Nevis, and the United States), and 20 domains.

Law enforcement initially focused on 911 S5 during an investigation of a money laundering and smuggling scheme, where criminal actors in Ghana and the United States used hijacked IP addresses purchased from 911 S5 to place fraudulent orders using stolen credit cards on the Army and Air Force Exchange Service (AAFES) online e-commerce platform known as ShopMyExchange. Although approximately 2,525 fraudulent orders valued at $5.5 million were submitted, credit card fraud detection systems and federal investigators were able to thwart the bulk of the attempted purchases, reducing the actual loss to approximately $254,000.

“The conduct alleged here reads like it’s ripped from a screenplay: A scheme to sell access to millions of malware-infected computers worldwide, enabling criminals over the world to steal billions of dollars, transmit bomb threats, and exchange child exploitation materials—then using the scheme’s nearly $100 million in profits to buy luxury cars, watches, and real estate,” said Assistant Secretary for Export Enforcement Matthew S. Axelrod of the U.S. Department of Commerce’s Bureau of Industry and Security (BIS). “What they don’t show in the movies though is the painstaking work it takes by domestic and international law enforcement, working closely with industry partners, to take down such a brazen scheme and make an arrest like this happen.” 

Wang is charged with conspiracy to commit computer fraud, substantive computer fraud, conspiracy to commit wire fraud, and conspiracy to commit money laundering. If convicted on all counts, Wang faces a maximum penalty of 65 years in prison.

This operation was a coordinated multiagency effort led by law enforcement in the United States, Singapore, Thailand, and Germany. Agents and officers searched residences, seized assets valued at approximately $30 million, and identified additional forfeitable property valued at approximately $30 million. The operation also seized 23 domains and over 70 servers constituting the backbone of Wang’s prior residential proxy service and the recent incarnation of the service. By seizing multiple domains tied to the historical 911 S5, as well as several new domains and services directly linked to an effort to reconstitute the service, the government has successfully terminated Wang’s efforts to further victimize individuals through his newly formed service Clourouter.io and closed the existing malicious backdoors.

On May 28, the Treasury Department’s Office of Foreign Assets Control (OFAC) issued financial sanctions against Wang, Jingping Liu, and Yanni Zheng, for their activities associated with 911 S5, and three entities for being owned or controlled by Wang.

The FBI Dallas and Denver Field Offices, DCIS Cyber Field Office, and BIS Office of Export Enforcement’s Dallas field office are investigating the case.

Trial Attorneys Candy Heath and Lydia Lichlyter of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorneys Camelia Lopez and William Tatum for the Eastern District of Texas are prosecuting the case.

The Department appreciates the significant assistance provided by the Attorney-General’s Chambers of Singapore, Singapore Police Force (SPF), Royal Thai Police, and the Office of the Attorney General and the Anti-Money Laundering Office of the Kingdom of Thailand. The Justice Department’s Office of International Affairs and Money Laundering and Asset Recovery Section provided crucial support to this operation. The Treasury Department’s OFAC also provided support to this operation. Additionally, the Department offers its thanks to Chainalysis, the Shadowserver Foundation, and Microsoft for the assistance provided by each during the investigation and the operation.

For more information or to determine if you are a victim of 911 S5 malware, please visit www.fbi.gov/911S5.

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





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In San Antonio today, 24-year-old Brennan R. Diaz was sentenced to a total of 56 months in federal prison followed by five years of supervised release for scheming with his mother to steal over $1 million from a local church owned by his grandfather, announced United States Attorney Richard L. Durbin, Jr., U.S. Secret Service Special Agent in Charge Lee Dotson, and Internal Revenue Service-Criminal Investigation Special Agent in Charge William Cotter.

United States District Judge Xavier Rodriguez also ordered that Diaz pay $985,346.06 in restitution.  The restitution figure does not include seized assets valued at more than $100,000 which were returned to the victim.

On September 20, 2016, Diaz pleaded guilty to one count of bank fraud, one count of aggravated identity theft and one count of money laundering.  His mother, Deborah A. Diaz, pleaded guilty on June 30, 2016, to one count of bank fraud and one count of conspiracy to commit bank fraud. 

By pleading guilty, both defendants admitted that between February 2015 and October 2015, they conspired to defraud the La Obra Milagrosa Church (aka “The Miracle Center Church”) (TMC).  Neither defendant had authority to sign TMC Church checks, however, they forged the family member’s signature on dozens of TMC business checks. 

Deborah Diaz, who is currently on bond, is scheduled to be sentenced at 1:30pm on January 11, 2017.

This joint investigation was conducted by the Financial Crimes Section of the U.S. Secret Service South Texas Regional Task Force and the Internal Revenue Service-Criminal Investigation.  Other agencies involved in the Task Force include the San Antonio Police Department, Bexar County Sheriff’s Office, Bexar County District Attorney’s Office and Texas Department of Public Safety-Criminal Investigations Division.  Assistant United States Attorney Thomas P. Moore is prosecuting this case on behalf of the Government.

In San Antonio today, an Ashburn, VA-based software engineering company called QuantaDyn Corporation (QuantaDyn) entered a guilty plea to a federal charge in connection with a bribery and government contract fraud scheme that spanned more than a decade and impacted contract awards worth hundreds of millions of dollars.  In addition, the corporation has agreed to pay a $6.3 million fine and more than $37 million in restitution.

That announcement was made today by U.S. Attorney John F. Bash; Special Agent in Charge Jamie Willemin of the General Services Administration—Office of the Inspector General (GSA-OIG), Greater Southwest and Rocky Mountain Investigations Division; Special Agent in Charge Richard D. Goss of the Internal Revenue Service-Criminal Investigation (IRS-CI), Houston Field Office; Special Agent in Charge Michael Mentavlos of the Defense Criminal Investigative Service (DCIS), Southwest Field Office; Special Agent in Charge Ray Rayos of the U.S. Army Criminal Investigation Command, Southwestern Fraud Field Office (USACID); and, Special Agent in Charge Blair Holmstrand of the Air Force Office of Special Investigations (AFOSI), Procurement Fraud Detachment 3 in San Antonio.

William T. Dunn, Jr., the majority owner, President and Chief Executive Officer for QuantaDyn, appeared before U.S. District Judge Fred Biery and entered a guilty plea on behalf of the corporation to conspiracy to commit wire fraud.  In addition to the fines and restitution, Judge Biery assessed a money judgment forfeiture against the corporation in the amount of $22,834,526.31 and forfeiture of seized assets in the amount of $7,099,863.77.  Judge Biery also placed QuantaDyn on probation for five years. 

“I am proud that our team and our law-enforcement partners were able to obtain justice for the American taxpayer in this case.  We will not tolerate fraud against important federal programs,” stated U.S. Attorney Bash.

In October 2019, a federal grand jury in San Antonio returned an indictment against QuantaDyn, one of its owners, Herndon, VA, resident David Joseph Bolduc, Jr.; San Antonio resident Keith Alan Seguin; and, Atlanta, GA, area resident Rubens Wilson Fiuza Lima. 

The indictment alleges the defendants carried out their contract fraud scheme from 2006 to 2018.  Specifically, Bolduc and QuantaDyn paid more than $2.3 million in bribes to Seguin, a civilian employee of the 502 Trainer Development Squadron at Randolph Air Force Base in San Antonio, who was intimately involved in the government contract process.  In return, Seguin used his position to steer lucrative government contracts and sub-contracts to QuantaDyn for aircraft and close-air-support training simulators.  The indictment further alleges that a portion of the bribe money paid to Seguin was laundered through Fiuza Lima’s business, Impex, Inc., for a ten percent fee. 

The three-count indictment charges Bolduc, QuantaDyn, Seguin and Fiuza Lima with one count of conspiracy to defraud the U.S., one count of conspiracy to commit wire fraud, and one count of conspiracy to commit money laundering.

Upon conviction, Bolduc, Seguin and Fiuza Lima could face terms of imprisonment up to five years for conspiracy to defraud the U.S., up to 20 years for conspiracy to commit wire fraud, and up to 20 years for conspiracy to commit money laundering.  This case is currently scheduled for jury selection and trial on February 1, 2021, before Judge Biery in San Antonio. 

“GSA plays a vital role in the government's ability to procure mission-critical products. Contractors and subcontractors are expected to be honest, transparent, and fair when doing business with the United States. American taxpayers can expect allegations of corrupt business practices to be thoroughly investigated by GSA OIG and its investigative partners to protect the integrity of the procurement process and the mission of our warfighters,” stated GSA-OIG Special Agent in Charge Willemin, Greater Southwest and Rocky Mountain Investigations Division.

“Today's sentencing is a direct result of the excellent partnership between multiple federal agencies and the U.S. Attorney’s Office in combating violations of Federal law,” said IRS-CI Special Agent in Charge Goss. “IRS Criminal Investigation will continue to pursue corporations such as QuantaDyn, who illegally target our nation’s tax dollars for personal financial gain by defrauding our government and the United States armed forces.”

“The Defense Criminal Investigative Service will utilize all available resources to pursue allegations of fraud and corruption bearing effect on the DoD and America's warfighters,” stated DCIS Southwest Field Office Special Agent in Charge Mentavlos.  “This outcome is an example of the steadfast commitment of DCIS, and our Law Enforcement partners, to ensuring the integrity of the DoD contract process and taxpayer resources.”

“Today’s sentencing represents the success of the US Army CID Major Procurement Fraud Unit and partner agencies in policing and maintaining the integrity of our defense procurement systems,” stated USACID Major Procurement Fraud Unit Special Agent in Charge Rayos.  

“The collaboration between GSA-OIG, DCIS, U.S. Army CID, IRS-CI, AFOSI, and the U. S. Attorney’s Office of the Western District of Texas, has been significant and we are looking forward to seeing the final results of the hard work put forth by all agencies involved,” said AFOSI Special Agent in Charge Holmstrand.

Simultaneous with the corporation entering a guilty plea in the criminal case, the Department of Justice today announced that the United States and QuantaDyn have reached a settlement agreement to resolve civil allegations related to the bribery scheme. QuantaDyn’s agreement to pay $37,757,713.91 in restitution ordered by Judge Biery today will resolve the company’s civil False Claims Act liability for the scheme. Dunn separately paid $500,000 to resolve his personal False Claims Act liability.

“When government contractors pay bribes to military contracting officials to obtain contracts, they prevent both our military and the American taxpayers from receiving products that are procured fairly and objectively and at a reasonable price,” said Acting Assistant Attorney General Jeffrey Bossert Clark for the Department of Justice’s Civil Division.  “Today’s settlement demonstrates our continuing commitment to protecting the integrity of the government’s procurement process and ensuring that is untainted by fraud and corruption.” 

The GSA-OIG, IRS-CI, DCIS, USACID, and AFOSI continue to investigate this case.  Individuals who may have information about this scheme or these defendants are asked to call the GSA-OIG fraud reporting hot line at (800) 424-5210, send an email to Fraudnet@gsaig.gov, or go online to www.gsaig.gov and click on the “report FRAUD” link.  U. S. Attorney Bash extends his appreciation to the U.S. Attorney’s Offices in the Eastern District of Virginia, Southern District of Ohio, and Northern District of Georgia for their valuable assistance. 

Assistant U.S. Attorney William F. Lewis, Jr., Special Assistant U.S. Attorney Jay Porier, and Assistant U.S. Attorney Alan Buie are prosecuting this case on behalf of the government.  Assistant U.S. Attorneys Jacquelyn Christilles and Thomas Parnham are handling the civil case on behalf of the government.

It is important to note that an indictment is merely a charge and should not be considered as evidence of guilt.  The defendants are presumed innocent until proven guilty in a court of law.

#####

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

In El Paso this afternoon, a federal judge sentenced 38-year-old Adan Reyes to 35 years in prison followed by five years of supervised release for his leader ship role of an organization responsible for trafficking thousands of kilograms of marijuana announced United States Attorney Richard Durbin, Jr.; Interim Special Agent in Charge Scott Brunner, Federal Bureau of Investigation, El Paso Division; Special Agent in Charge Will Glaspy, U.S. Drug Enforcement Administration, El Paso Division; Special Agent in Charge William “Bill” Cotter, Internal Revenue Service-Criminal Investigation; and, Special Agent in Charge Waldemar Rodriguez, Homeland Security Investigations, El Paso.

 

In addition to the prison term, United States District Judge Frank Montalvo ordered that Reyes pay a $36,975,000 money judgment. He also ordered that Reyes forfeit to the Government seized assets valued at more than $3 million including multiple real estate properties in El Paso and Ruidoso (NM), vehicles, and firearms—all of which were purchased with proceeds derived from drug trafficking activities—and over $23,000 in U.S. Currency.

 

On July 28, 2016, Reyes pleaded guilty to a ten-count superseding indictment, which contained both conspiracy and substantive charges of possession of a controlled substance with intent to distribute and money laundering. By pleading guilty, Reyes admitted that from August 2006 to November 2015, he employed a network of individuals (the Reyes Drug Trafficking Organization) to traffic multiple thousands of kilograms of marijuana from El Paso to the Dumas, Texas area where it was warehoused before it was delivered to locations primarily in the Midwest portion of the United States. Proceeds from the distribution of marijuana were subsequently delivered to Reyes and used to further the criminal organization.

 

To date, 14 members of the Reyes DTO have been convicted and sentenced to federal prison for their role in the drug trafficking and money laundering scheme. Sentences handed down range from one year to 35 years in federal prison.

 

“Investigating and combating transnational criminal organizations, like the Adan Reyes drug trafficking organization, is one of the top criminal priorities of the El Paso FBI. This investigation is an outstanding example of joint cooperation between federal, state and local law enforcement agencies,” stated Scott Brunner, Acting Special Agent in Charge of the El Paso Division of the FBI.

 

This prosecution resulted from an Organized Crime Drug Enforcement Task Force (OCDETF) investigation conducted by agents with the Federal Bureau of Investigation (FBI), Drug Enforcement Administration (DEA), Internal Revenue Service-Criminal Investigation (IRS-CI), Homeland Security Investigations (HSI), U.S. Border Patrol, El Paso Police Department, Dumas Police Department, Texas Rangers, Arizona Financial Crimes Task Force and the El Paso County Sheriff’s Office.

 

“This case highlights the impact multiple agencies can have when they join forces. We will continue to work together and pursue those involved in smuggling and distribution of dangerous drugs to our communities,” stated DEA Special Agent in Charge Will R. Glaspy.

 

“Today’s sentencing of Adan Reyes shows that defendants who attempt to launder their drug money through the purchase of real estate and a lavish lifestyle will pay a hefty price,” said Special Agent in Charge William Cotter, IRS Criminal Investigation, San Antonio Field Office. “This investigation sends a strong message about the financial investigative capabilities of IRS Criminal Investigation Special Agents and their law enforcement partners.”

 

The principal mission of the OCDETF program is to identify, disrupt and dismantle the most serious drug trafficking, weapons trafficking and money laundering operations, and those primarily responsible for the nation’s illegal drug supply.

PHOENIX, Ariz. – Today, United States Attorney Gary M. Restaino announced criminal charges against seven defendants in connection with alleged schemes to defraud Medicare and Medicaid (specifically AHCCCS, the Arizona Health Care Cost Containment System). The charges filed in federal court are part of the Department of Justice’s 2024 National Health Care Fraud Enforcement Action.

The charges in these cases stem from schemes to obtain, in the aggregate, hundreds of millions of dollars in fraudulent billings.  For example, Rita Anagho, acting primarily though her company, Tusa Integrated Clinic LLC (“TUSA”), was charged for fraudulently billing AHCCCS approximately $69.7 million for behavioral healthcare services.  ANAGHO primarily targeted AHCCCS’s American Indian Health Program (“AIHP”) and billed for services that were never provided or not provided as represented.  AHCCCS provides health care services to Native Americans through AIHP, and there has been widespread fraud reported in which residential and outpatient treatment centers recruited Native Americans and other individuals to exploit the AIHP under AHCCCS.  Many of the patients recruited for TUSA were Native Americans or other individuals who were enrolled in AIHP, and in some cases, patients were switched from their existing AHCCCS insurance plan to AIHP, regardless of whether the patient was Native American.

In another matter, Daud Koleosho and Adam Mutwol, acting primarily though their company, Community Hope Wellness Center LLC (“CHWC”), fraudulently billed AHCCCS approximately $57.7 million for behavioral health care services.  They too primarily targeted the AIHP, billed AHCCCS for services that were never provided, and overbilled for services that were provided, all to the detriment of the AIHP.

In another case, Alexandra Gehrke and Jeffrey King were charged for targeting elderly Medicare patients, many of whom were terminally ill in hospice care, for medically unnecessary wound grafts.  Medicare and other health care benefit programs paid over $600 million based on the false and fraudulent claims they submitted for these vulnerable beneficiaries.  Gehrke and King were arrested on June 17, 2024, at Sky Harbor International Airport as they were attempting to board a flight out of the country.

“It does not matter if you are a trafficker in a drug cartel or a corporate executive or medical professional employed by a health care company, if you profit from the unlawful distribution of controlled substances, you will be held accountable,” said Attorney General Merrick B. Garland. “The Justice Department will bring to justice criminals who defraud Americans, steal from taxpayer-funded programs, and put people in danger for the sake of profits.”

“These cases involve not just massive fraud to steal public funds, but also exploitation of vulnerable victims and the misappropriation of resources earmarked for Native American communities,” said U.S. Attorney Restaino.  “The U.S. Attorney’s Office and our investigative partners will pursue justice against those who perpetrate these sorts of schemes with the utmost vigor.”

The charges announced today by U.S. Attorney Restaino are part of a strategically coordinated, two-week nationwide law enforcement action that resulted in criminal charges against 193 defendants for their alleged participation in health care fraud and opioid abuse schemes that resulted in the submission of over $2.75 billion in alleged false billings. The defendants allegedly defrauded programs entrusted for the care of the elderly and disabled to line their own pockets, and the Government, in connection with the enforcement action, seized over $231 million in cash, luxury vehicles, gold, and other assets.

The Health Care Fraud Unit’s National Rapid Response, Florida, Gulf Coast, Los Angeles, Midwest, Northeast, and Texas Strike Forces; U.S. Attorneys’ Offices for the Southern District of Alabama, District of Arizona, Central District of California, Northern District of California, Southern District of California, District of Connecticut, Middle District of Florida, Southern District of Florida, Northern District of Illinois, Eastern District of Kentucky, Western District to Kentucky, Eastern District of Louisiana, Middle District of Louisiana, Western District of Louisiana, Eastern District of Michigan, Western District of Michigan, Southern District of Mississippi, District of Montana, District of New Jersey, Eastern District of New York, Eastern District of North Carolina, Western District of Oklahoma, District of Rhode Island, Eastern District of Tennessee, Middle District of Tennessee, Eastern District of Texas, Northern District of Texas, Southern District of Texas, Eastern District of Virginia, Western District of Virginia, Southern District of West Virginia, and Eastern District of Wisconsin; and State Attorney Generals’ Offices for Arizona, California, Illinois, Indiana, Louisiana, New York, Oklahoma, Pennsylvania, Puerto Rico, Rhode Island, and South Dakota are prosecuting the cases in the National Enforcement Action, with assistance from the Health Care Fraud Unit’s Data Analytics Team. Descriptions of each case involved in today’s enforcement action are available on the Department’s website here.

“We will not tolerate fraud that preys on patients who need and deserve high quality health care,” said the Honorable Christi A. Grimm, the Department of Health and Human Services Inspector General (HHS-OIG). “The hard work of the HHS-OIG team and our outstanding law enforcement partners makes today’s action possible. We must protect taxpayer dollars and keep Americans safe from harms to their health, privacy, and financial well-being.”

“Fraud against government funded health care systems not only costs taxpayers billions each year, but as we’ve seen in Arizona, deprives critical care and benefits for our most vulnerable populations,” said Brian Driscoll, acting special agent in charge of the FBI’s Phoenix Field Office.  “People who participate in this type of fraud will continue to catch the eye of the FBI.”

The following individuals have been charged in the District of Arizona as part of this National Enforcement Action: 

•           Alexandra Gehrke, charged by indictment on June 18, 2024; CR-24-01040-PHX-ROS

•           Jeffery King, charged by indictment on June 18, 2024; CR-24-01040-PHX-ROS

•           Bethany Jameson, charged by information June 24, 2024; CR-24-01068-PHX-DWL

•           Carlos Ching, charged by information June 24, 2024; CR-24-01075-PHX-MTL

•           Rita Anagho, charged by indictment on June 18, 2024; CR-24-01044-PHX-MTL

•           Adam Mutwol, charged by information June 25, 2024; CR-24-01097-PHX-SPL

•           Daud Koleosho, charged by information June 25, 2024; CR-24-01098-PHX-MTL

Alexandra Gehrke, 38, and Jeffrey King, 49, of Scottsdale, were charged by indictment with conspiracy, health care fraud, receiving kickbacks, and money laundering in connection with an alleged scheme to fraudulently bill Medicare $900 million for highly expensive amniotic allografts. The defendants targeted elderly Medicare patients, many of whom were terminally ill in hospice care, through their companies—Apex Mobile Medical LLC, Apex Medical LLC, Viking Medical Consultants LLC, and APX Mobile Medical LLC. The defendants caused unnecessary and extremely expensive amniotic grafts to be applied to these vulnerable patients’ wounds indiscriminately, without coordination with the patients’ treating physicians, without proper treatment for infection, to superficial wounds that did not need this treatment, and in sizes excessively larger than the wound. In just sixteen months, Medicare paid the defendants more than $600 million as a result of their fraud scheme, paying on average more than a million dollars per patient for these unnecessary grafts. The defendants received more than $330 million in illegal kickbacks from the graft distributor in exchange for purchasing and ordering the grafts billed to Medicare. Significant assets were seized upon the defendants’ arrests, including luxury vehicles, gold, and bank accounts totaling more than $70 million. The case is being prosecuted by Trial Attorney Shane Butland of the National Rapid Response Strike Force and Assistant U.S. Attorney Matthew Williams of the U.S. Attorney’s Office for the District of Arizona.

Bethany Jameson, 53, of Gilbert, is charged by information with conspiracy to commit wire fraud in connection with the APX scheme. As alleged in the information, Jameson was paid by Apex Mobile Medical and APX to apply medically unnecessary allografts to Medicare beneficiaries that were procured through kickbacks and bribes. Between November 2022 and August 2023, Apex Mobile Medical and APX billed Medicare over $71 million for allografts applied by Jameson. Medicare paid over $49 million based on those false and fraudulent claims. The case is being prosecuted by Trial Attorney Shane Butland of the National Rapid Response Strike Force and Assistant U.S. Attorney Matthew Williams of the U.S. Attorney’s Office for the District of Arizona.

Carlos Ching, 55, of Phoenix, is charged by information with conspiracy to commit health care fraud in connection with the APX scheme. As alleged in the information, Ching was paid by APX to apply medically unnecessary allografts to Medicare patients that were procured through kickbacks and bribes. Between June 2023 and January 2024, APX fraudulently billed Medicare over $87 million for allografts applied by Ching. Medicare paid APX over $65 million based on those false and fraudulent claims. And from January 2024 through March 2024, Ching, through his company H3 Medical Clinic LLC, billed Medicare over $5 million for allografts that he procured through kickbacks and bribes and applied to Medicare beneficiaries without medical necessity. Medicare paid over $4 million based on those false and fraudulent claims. The case is being prosecuted by Trial Attorney Shane Butland of the National Rapid Response Strike Force and Assistant U.S. Attorney Matthew Williams of the U.S. Attorney’s Office for the District of Arizona.

Rita Anagho, 52, of San Tan Valley, was charged by indictment with conspiracy to commit health care fraud, health care fraud, money laundering, and obstruction of justice in connection with an alleged $69 million scheme involving a substance abuse treatment clinic in Arizona. As alleged in the indictment, Anagho owned Tusa Integrated Clinic LLC (“Tusa”), an outpatient treatment center, which was purportedly in the business of providing addiction treatment services for persons suffering from alcohol and drug addiction. Tusa enrolled as a provider with Arizona’s Medicaid agency, Arizona Health Care Cost Containment System, and submitted false and fraudulent claims for services that were not provided, were not provided as billed, were so substandard that they failed to serve a treatment purpose, were not used as part of any treatment plan, and were medically unnecessary. Anagho also instructed former Tusa employees to create false therapy notes for sessions they did not conduct in 2023 after she was served with a subpoena for Tusa’s records as part of the government’s investigation of this fraud. The case is being prosecuted by Assistant Chief James Hayes and Trial Attorney Sarah Edwards of the National Rapid Response Strike Force and Assistant U.S. Attorney Matthew Williams of the U.S. Attorney’s Office for the District of Arizona.

Adam Mutwol, 45, of Tempe, and Daud Koleosho, 44, of Gilbert, were charged by separate informations with conspiracy to commit health care fraud in connection with an alleged $57 million substance abuse treatment fraud scheme. As alleged in the informations, Mutwol and Koleosho owned Community Hope Wellness Center LLC (“CHWC”), an outpatient treatment center, which was purportedly in the business of providing addiction treatment services for persons suffering from alcohol and drug addiction. CHWC enrolled as a provider with Arizona Medicaid. To obtain and retain patients for CHWC whose insurance could be billed for substance abuse treatment services, Mutwol and Koleosho offered and paid kickbacks and bribes to owners of residences that housed substance abuse treatment patients, in exchange for these residence owners referring patients for treatment to CHWC. Mutwol and Koleosho submitted $57 million of false and fraudulent claims to Arizona Medicaid for treatment services that were not provided, were not provided as billed, were not provided by qualified personnel, were so substandard that they failed to serve a treatment purpose, were not part of any treatment plan, and were medically unnecessary. The case is being prosecuted by Trial Attorney S. Babu Kaza of the Midwest Strike Force, Assistant Chief James Hayes of the National Rapid Response Strike Force, and Assistant U.S. Attorney Matthew Williams of the U.S. Attorney’s Office for the District of Arizona.

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

The investigations in Arizona were conducted by the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG); the Federal Bureau of Investigation (FBI); the Department of Veterans Affairs, Office of Inspector General (VA-OIG); and the Defense Criminal Investigative Service (DCIS).  The United States Attorney’s Office, District of Arizona, Phoenix, and the Department of Justice’s Criminal Division, Fraud Section, are handling these prosecutions.

 

CASE NUMBERS:                 CR-24-01040-PHX-ROS

                                               CR-24-01068-PHX-DWL

                                               CR-24-01075-PHX-MTL

                                               CR-24-01044-PHX-MTL

                                               CR-24-01097-PHX-SPL

                                               CR-24-01098-PHX-MTL

RELEASE NUMBER:    2024-085_ National Health Care Fraud Enforcement Action

 

# # #

For more information on the U.S. Attorney’s Office, District of Arizona, visit http://www.justice.gov/usao/az/

Follow the U.S. Attorney’s Office, District of Arizona, on X @USAO_AZ for the latest news.

 

ALBUQUERQUE – Ray L. Smith, 52, a former resident of Las Vegas, N.M., was sentenced yesterday afternoon in federal court in Albuquerque, N.M., to 48 months of imprisonment for his conviction on drug trafficking and money laundering charges.  Smith will be on supervised release for three years after completing his prison sentence.  Smith also was ordered to forfeit to the United States $1,062,592 in cash, five properties located in New Mexico and Arizona, and nine vehicles.  He also was ordered to pay $5,000 in community restitution and a $5,000 fine.

Smith and co-defendant Tamara Phillips, 47, of Kingman, Ariz., were arrested by the DEA in Feb. 2016, and charged in a four-count indictment that was filed in Feb. 2016, alleging drug trafficking and money laundering offenses.  The indictment subsequently was superseded in May 2017, and charged Smith and Phillips with conspiring to distribute synthetic cannabinoids, maintaining premises for the purpose of distributing synthetic cannabinoids, and participating in a conspiracy to launder drug proceeds.  According to the superseding indictment, between Feb. 2010 and Feb. 2016, Smith and Phillips participated in a conspiracy to distribute synthetic cannabinoids from three businesses in New Mexico and Arizona owned by Smith that were jointly managed by Smith and Phillips

The superseding indictment alleged that Smith and Phillips used the three businesses – “Smokin Body Jewelry” stores located in Las Vegas, Raton and Kingman – to sell synthetic cannabinoids.  Employees at the stores allegedly sold synthetic cannabinoids to customers while acting at the direction of Smith and Phillips.  The superseding indictment included information about two alleged drug transactions occurring on Sept. 29, 2015; the first involved the sale of $1,687.46 of synthetic cannabinoids by an employee at the Raton store, and the second involved the sale of $1,556.91 of synthetic cannabinoids by an employee at the Las Vegas store.  The superseding indictment included forfeiture allegations seeking forfeiture of property and other assets constituting the proceeds of the drug trafficking offenses charged in the superseding indictment or that were used to facilitate those crimes including seven parcels of real property located in New Mexico and Arizona, funds in 20 bank accounts, a safety deposit box, and four vehicles.

During law enforcement operations executed on Feb. 18, 2016, law enforcement agents and officers seized 18 bank accounts, a safety deposit box and the eight parcels of real property identified in the indictment.  They also executed six search warrants, including search warrants for each of the three stores, a second commercial property in Kingman, and two residences.  The estimated aggregate value of the real property, currency and other assets seized on Feb. 18, 2016, exceeded $2.3 million, including approximately $380,000 in cash.  The agents and officers also seized approximately 11 kilograms (24.2 pounds) of precursor chemicals allegedly shipped from China in the primary residence of Smith and Phillips.  In addition, approximately 25 kilograms (55 pounds) of suspected synthetic cannabinoids with a street value of $250,000 were seized from the three stores and the residence of Smith and Phillips.

On Nov. 2, 2017, Smith pled guilty to four counts of the superseding indictment charging him with conspiracy to distribute synthetic cannabinoids, two counts of maintaining a drug-involved premises, and conspiracy to commit money laundering.   In entering the guilty plea, Smith acknowledged that from Feb. 2010 through Feb. 2016, he was the founder, owner and proprietor of “Smokin’ Body Jewelry,” which operated at various times from 2010 through 2016 in New Mexico and Arizona.  Smith admitted that during that timeframe, he conspired to sell large quantities of synthetic cannabinoids to the general public. 

Smith further admitted that synthetic cannabinoids were “Smokin Body Jewelry’s” best-selling item, and that he engaged in the routine practice of mixing, transferring and spreading deposits throughout personal and business bank accounts in order to conceal the source of his revenue as primarily derived from the unlawful sale of synthetic cannabinoids.  Smith admitted he used revenue from the sale of synthetic cannabinoids to pay for his personal salary and the salaries of store employees, and to purchase several parcels of land, property and vehicles. 

Phillips has entered a plea of not guilty to the charges in the superseding indictment and is scheduled for trial in May 2018.  Charges in indictments are merely accusations and defendants are presumed innocent unless found guilty in a court of law.

This case was investigated by the DEA’s offices in Albuquerque, N.M., and Flagstaff, Lake Havasu and Yuma, Ariz., with assistance from the Raton Police Department and the Mohave Area General Narcotics Enforcement Team.  Assistant U.S. Attorneys Shaheen P. Torgoley and Joel R. Meyers are prosecuting the case.

 The synthetic cannabinoids charged in the indictment are commonly referred to as “spice.”  According to the DEA, over the past several years, there has been a growing use of synthetic cannabinoids.  Smoke-able herbal blends marketed as being “legal” and providing a marijuana-like high have become increasingly popular because they are easily available and, in many cases, more potent and dangerous than marijuana.  These products consist of plant material that has been coated with dangerous psychoactive compounds that mimic THC, the active ingredient in marijuana.  These substances, however, have not been approved by the Food and Drug Administration for human consumption, and there is no oversight of the manufacturing process.  Synthetic cannabinoids often are labeled as incense to mask their intended purpose.

ALBUQUERQUE, N.M. – Alexander M.M. Uballez, United States Attorney for the District of New Mexico, and Raul Bujanda, Special Agent in Charge of the FBI Albuquerque Field Office, announced today that John Lopez was arraigned on a 27-count indictment charging him with 16 counts of wire fraud and 11 counts of mail fraud. Lopez, 71, of Flagstaff, Arizona, will remain on conditions of release pending trial, which has not been scheduled.

A federal grand jury indicted Lopez on Dec. 20, 2022. According to the indictment and other court records, Lopez was the founder and president of Personal Money Management Company (PMMCO), which ostensibly provided financial management services to clients, many of whom were retired or near retirement. Beginning in 2014, Lopez held himself out as an investment advisor with considerable expertise who could consistently and substantially beat the market average return on investment.

Lopez allegedly communicated to clients and prospective clients various false promises and misrepresentations related to his investment ability and strategy. As alleged in the indictment, Lopez falsely told clients and prospective clients that he could guarantee annual returns of 10 percent on their principal investment no matter how volatile the stock market might be, and that he could make an annualized 19.2-percent return on a retirement investment, in which clients would keep their initial principal investment as well. Lopez allegedly claimed that he had developed a computer program or algorithm that resulted in consistent and substantial above-average market returns on investments.  He allegedly told clients and prospective clients that he would invest their money primarily in stocks and bonds, moving their money between those two investment instruments when market indicators or his computer algorithm told him to move them between the two.

From February 2014 through November 2021, Lopez received approximately $19.4 million from clients. During that same period, rather than invest primarily in stocks and bonds, Lopez allegedly purchased $13.3 million in precious metals, such as gold and silver. Lopez disbursed approximately $6.1 million to clients, which he allegedly represented as investment gains.

After securing client money, Lopez allegedly generated periodic account statements, purportedly showing substantial investment gains. For example, in November 2021, a client received a purported account statement reflecting that an investment of $200,000 with Lopez and PMMCO in 2016 had grown to $3,289,273, a 1,544-percent increase over an approximate five-year period. This growth calculation excluded a $565,000 withdrawal during 2021. In October 2021, those statements represented that PMMCO client account values were collectively worth approximately $39 million.

On Nov. 9 and 10, 2021, government agents seized PMMCO assets, mostly comprising precious metals, which were valued at less than $15 million.

Lopez allegedly continued to generate deceptive PMMCO account statements after the government seized PMMCO’s assets. On May 31, 2022, those statements represented PMMCO client account values worth approximately $49 million.

An indictment is only an allegation. A defendant is presumed innocent unless and until proven guilty. If convicted, Lopez faces up to 20 years in prison.

The FBI Albuquerque Field Office and the U.S. Marshals Service investigated this case. The U.S. Attorney’s Office is prosecuting the case.

The U.S. Attorney’s Office brought a separate civil forfeiture action on April 15, 2022, seeking to forfeit assets seized in November 2021. Litigation in the civil proceeding is ongoing.

# # #

ALBUQUERQUE – Ray L. Smith, 51, a former resident of Las Vegas, N.M., who now resides in Kingman, Ariz., pled guilty today in federal court in Albuquerque, N.M., to drug trafficking and money laundering charges.  Smith entered the guilty plea under a plea agreement that recommends a prison sentence within the range of 12 to 57 months followed by a term of supervised release to be determined by the court.

 

The DEA arrested Smith and co-defendant Tamara Phillips, 47, also of Kingman, on Feb. 19, 2016, who were charged in a four-count indictment that was filed in the U.S. District Court for the District of New Mexico on Feb. 9, 2016.  The indictment subsequently was superseded on May 24, 2017, to charge Smith and Phillips with conspiring to distribute synthetic cannabinoids, maintaining premises for the purpose of distributing synthetic cannabinoids, and participating in a conspiracy to launder drug proceeds.  According to the superseding indictment, between Feb. 2010 and Feb. 2016, Smith and Phillips participated in a conspiracy to distribute synthetic cannabinoids from three businesses in New Mexico and Arizona owned by Smith that were jointly managed by Smith and Phillips

 

The superseding indictment alleged that Smith and Phillips used the three businesses – “Smokin Body Jewelry” stores located in Las Vegas, Raton and Kingman – to sell synthetic cannabinoids.  Employees at the stores allegedly sold synthetic cannabinoids to customers while acting at the direction of Smith and Phillips.  The superseding indictment included information about two alleged drug transactions occurring on Sept. 29, 2015; the first involved the sale of $1,687.46 of synthetic cannabinoids by an employee at the Raton store, and the second involved the sale of $1,556.91 of synthetic cannabinoids by an employee at the Las Vegas store.  The superseding indictment included forfeiture allegations seeking forfeiture of property and other assets constituting the proceeds of the drug trafficking offenses charged in the superseding indictment or that were used to facilitate those crimes including seven parcels of real property located in New Mexico and Arizona, funds in 20 bank accounts, a safety deposit box, and four vehicles.

 

During law enforcement operations executed on Feb. 18, 2016, law enforcement agents and officers seized 18 bank accounts, a safety deposit box and the eight parcels of real property identified in the indictment.  They also executed six search warrants, including search warrants for each of the three stores, a second commercial property in Kingman, and two residences in Kingman.  The estimated aggregate value of the real property, currency and other assets seized on Feb. 18, 2016, exceeded $2.3 million, including approximately $220,000 in cash.  The agents and officers also seized approximately 11 kilograms (24.2 pounds) of precursor chemicals allegedly shipped from China in the primary residence of Smith and Phillips.  In addition, approximately 25 kilograms (55 pounds) of suspected synthetic cannabinoids with a street value of $250,000 were seized from the three stores and the residence of Smith and Phillips.

 

During today’s proceedings, Smith pled guilty to four counts of the superseding indictment charging him with conspiracy to distribute synthetic cannabinoids, two counts of maintaining a drug-involved premises, and conspiracy to commit money laundering.   In entering the guilty plea, Smith acknowledged that from Feb. 2010 through Feb. 2016, he was the founder, owner and proprietor of “Smokin’ Body Jewelry,” which operated at various times from 2010 through 2016 in New Mexico and Arizona.  Smith admitted that during that timeframe, he conspired to sell large quantities of synthetic cannabinoids to the general public. 

 

Smith further admitted that synthetic cannabinoids were “Smokin Body Jewelry’s” best-selling item, and that he engaged in the routine practice of mixing, transferring and spreading deposits throughout personal and business bank accounts in order to conceal the source of his revenue as primarily derived from the unlawful sale of synthetic cannabinoids.  Smith admitted he used revenue from the sale of synthetic cannabinoids to pay for his personal salary and the salaries of store employees, and to purchase several parcels of land, property and vehicles. 

 

A sentencing hearing for Smith has yet to be scheduled.

 

Phillips has entered a plea of not guilty to the charges in the superseding indictment.  Charges in indictments are merely accusations and defendants are presumed innocent unless found guilty in a court of law.

 

This case was investigated by the DEA’s offices in Albuquerque, N.M., and Flagstaff, Lake Havasu and Yuma, Ariz., with assistance from the Raton Police Department and the Mohave Area General Narcotics Enforcement Team.  Assistant U.S. Attorney Shaheen P. Torgoley is prosecuting the case.

 

The synthetic cannabinoids charged in the indictment are commonly referred to as “spice.”  According to the DEA, over the past several years, there has been a growing use of synthetic cannabinoids.  Smoke-able herbal blends marketed as being “legal” and providing a marijuana-like high have become increasingly popular because they are easily available and, in many cases, more potent and dangerous than marijuana.  These products consist of plant material that has been coated with dangerous psychoactive compounds that mimic THC, the active ingredient in marijuana.  These substances, however, have not been approved by the Food and Drug Administration for human consumption, and there is no oversight of the manufacturing process.  Synthetic cannabinoids often are labeled as incense to mask their intended purpose.

A Davie woman was convicted of wire fraud and conspiracy to commit wire fraud in federal court on Tuesday.

Benjamin G. Greenberg, United States Attorney for the Southern District of Florida, and Gary L. Smith, Special Agent in Charge, Treasury Inspector General for Tax Administration (TIGTA), made the announcement.

Amy E. Ahrens, 38, was found guilty after a two-day trial of seven counts of wire fraud, in violation of Title 18, United States Code, Section 1343, and one count of  conspiracy to commit wire fraud, in violation of Title 18, United States Code, Section 1349, for her role in an IRS impersonation scam.  At sentencing, the defendant faces up to twenty years imprisonment, a $250,000 fine, up to five years of supervised release, and restitution as to each count.  The defendant is scheduled to be sentenced by U.S. District Judge William P. Dimitrouleas on September 12, 2018 at 1:15 P.M. in Fort Lauderdale.

According to evidence presented at trial, an IRS impersonation scam is operated by individuals who falsely represent themselves as employees of the IRS to obtain money from victims. Typically, those executing the fraudulent scheme make unsolicited telephone calls to people and tell them that they are IRS agents or officers calling on behalf of the IRS.  During these calls, the call recipient is told that they have an outstanding IRS debt that must be paid immediately.  The impersonator further threatens the call recipient with either arrest, seizure of property or a lawsuit if they do not immediately settle the bogus IRS debt.  Victims are subsequently instructed to wire money to individuals they believe are IRS employees to avoid arrest, property seizure or a lawsuit.

According to the evidence presented at trial, Ahrens used her Bank of America and Wells Fargo accounts to receive money from victims of the scam.  The trial testimony revealed that five victims received telephone calls purported to be from the IRS.  The victims were threatened with arrest or having their assets seized if they did not pay a fictitious IRS tax debt.  The callers made these threats and used other methods of intimidation to persuade the victims to make large cash deposits in the Ahrens’ bank accounts. 

The evidence at trial further showed that between November 3, 2017 and November 8, 2017, Ahrens received seven cash deposits in her bank accounts totaling $47,366.  The trial evidence and testimony established that Ahrens withdrew $46,950 in cash and used a portion of the money for a vacation in Las Vegas.

Since October 2013, TIGTA has received reports of more than 2.3 million impersonation related calls with more than 13,500 victims reporting losses of over $67 million. 

Mr. Greenberg commended the investigative efforts of TIGTA and the U.S. Department of the Treasury.  The case was prosecuted by Assistant U.S. Attorney Laurence J. Bardfeld.

Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.

LOS ANGELES – A Tarzana man was sentenced today to 30 months in federal prison for running a nearly $6 million scheme in which he knowingly sold used skin-tightening medical devices that were deliberately misbranded as new, as well as counterfeit devices that he claimed were to be used with fat-reducing laser machines.

Kambiz Youabian, 50, was sentenced by United States District Judge Dale S. Fischer, who also ordered him to pay $5,937,049 in restitution and ordered the forfeiture of $1,685,396 in seized assets.

Youabian pleaded guilty in January 2023 to one count of mail fraud and one count of introducing a misbranded medical device into interstate commerce.

Youabian owned and operated MSY Technologies Inc., a West Los Angeles-based company that did business under the names “Thermagen” and “Global Electronic Supplies” (GES).

From March 2016 to June 2022, Youabian purchased used transducers, which are medical devices used to tighten the skin of dermatology patients by delivering ultrasound energy to a patient’s skin. Used properly, transducers are designed to provide no more than 2,400 treatments. After this number is reached, the devices are considered depleted and should be disposed of in accordance with health code regulations.

Through GES, Youabian purchased depleted transducers for nominal sums, typically $50. Youabian then remanufactured the depleted transducers and added fabricated serial numbers to make the transducers appear to be new.

Then, through his Thermagen company, Youabian fraudulently marketed and sold – for many times more than he paid for them – the remanufactured transducers to health care providers and customers as “new” transducers with 2,400 remaining treatments. To conceal his connection to Thermagen, Youabian used names of fabricated Thermagen employees on correspondences with victim providers and used out-of-state commercial mailboxes for Thermagen’s return of address on shipments, which he sent through the U.S mail.

For example, in February 2020, Youabian, through Thermagen’s website, sold a device falsely advertised as “new” and “containing 2,400 lines” – and with a retail price of $1,695 – to a buyer. Youabian then shipped the device – which contained a fake serial number – from Los Angeles to Florida via the United States Postal Service.

Youabian also shipped counterfeit PAC keys, medical devices used to operate laser machines designed to reduce fat on patients, through the mail.

He then transferred his ill-gotten gains to bank account his controlled, including accounts he opened in the names of MSY Technologies, himself, and his au pair.

In June 2022, law enforcement executed search warrants at Youabian’s home and the GES-Thermagen office in West Los Angeles. In the GES-Thermagen office, law enforcement seized 75 transducers in various states of refurbishment, a manufacturing workstation containing tools and transducer parts, and detailed records of GES and Thermagen’s expenses.

Youabian unlawfully sold thousands of medical devices, including transducers and PAC keys, and receiving at least $5,821,474 in fraudulent proceeds that should have been paid to the companies that are the sole U.S. distributors for these devices. Youabian also caused reputational harm to the device manufacturers and distributors of these medical devices.

The U.S. Food and Drug Administration Office of Criminal Investigations and the United States Postal Inspection Service investigated this matter.

Assistant United States Attorney Daniel G. Boyle of the Environmental Crimes and Consumer Protection Section prosecuted this case.

WASHINGTON – The U.S. Department of Justice, the FBI, the U.S. Postal Inspection Service, and six other federal law enforcement agencies announced the completion of the third annual Money Mule Initiative, a coordinated operation to disrupt the networks through which transnational fraudsters move the proceeds of their crimes.  Money mules are individuals who assist fraudsters by receiving money from victims of fraud and forwarding it to the fraud organizers, many of whom are located abroad.  Some money mules know they are assisting fraudsters, but others are unaware that their actions enable fraudsters’ efforts to swindle money from consumers, businesses, and government unemployment funds.  Europol announced a simultaneous effort, the European Money Mule Action (EMMA) today.

Over the last two months, U.S. law enforcement agencies took action against over 2,300 money mules, far surpassing last year’s effort, which acted against over 600 money mules.  This year, actions occurred in every state in the country.  The initiative announced today targeted money mules involved in a wide range of schemes including lottery fraud, romance scams, government imposter fraud, technical support fraud, business email compromise or CEO fraud, and unemployment insurance fraud.  Many of these schemes target elderly or vulnerable members of society.

“Money mules fuel fraud against some of America’s most vulnerable populations. Without the help of these money mules, many foreign fraud enterprises find it difficult to profit off of U.S. victims,” said Attorney General William P. Barr. “As this initiative demonstrates, the Department of Justice is committed to disrupting money mule networks, taking actions against more money mules this year than ever before, in an effort to cut off the flow of funds from American consumers and businesses to transnational criminal organizations.”

Eight federal law enforcement agencies participated in this year’s effort. Led by the Department of Justice’s Consumer Protection Branch, the FBI, and the U.S. Postal Inspection Service, the participating agencies include the Department of Labor Office of Inspector General, Federal Deposit Insurance Corporation Office of Inspector General, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI), Social Security Administration Office of Inspector General, U.S. Secret Service, and U.S. Treasury Inspector General for Tax Administration.

Some highlights from this year’s efforts are:

•            Actions were taken to halt the conduct of approximately 2,300 money mules, spanning 92 federal districts.

•            Law enforcement served approximately 2,000 money mules with letters warning the money mules that they were facilitating fraud and could face civil or criminal consequences for continuing their actions. Agents conducted over 450 interviews. The U.S. Department of Labor Office of Inspector General in Puerto Rico served one warning letter to a senior citizen who may have knowingly acted as a money mule in an unemployment insurance fraud scheme.

•            On approximately 30 instances, agents seized assets or facilitated the return of victim funds. Among the asset seizures was a 2019 Lamborghini, which was seized as part of an investigation into a business email compromise scheme.

•            The U.S. Postal Inspection Service filed 14 administrative actions requiring money mules to cease facilitating fraud.

•           U. S. Attorney’s Offices and the Consumer Protection Branch filed 17 civil injunctive actions seeking court orders requiring money mules to stop facilitating fraudulent activity. Districts filing those actions include the Western District of Washington, District of South Carolina, Middle District of Florida, Southern District of Florida, Central District of California, Northern District of New York, and District of Colorado.

Additionally, more than 35 individuals were criminally charged or arrested for their roles in receiving victim payments and forwarding the fraud proceeds to accomplices or laundering fraud proceeds. Cases include:

•            The U.S. Attorney’s Office for the Central District of California indicted three individuals for collecting parcels containing victim proceeds in a government imposter scheme.

•            The U.S. Attorney’s Office for the District of Maryland indicted three individuals for opening bank accounts using falsified documents for the purposes of facilitating a business email compromise scam.

•            The U.S. Attorney’s Office for the Western District of Texas indicted an individual for facilitating a lottery fraud scheme. The indictment also seeks to forfeit over $1.2 million.

•            The U.S. Attorney’s Office for the Northern District of Ohio indicted two money mules who facilitated a grandparents scam.

•            The U.S. Attorney’s Office for the Eastern District of Virginia charged a money mule who laundered gift cards purchased by fraud victims.

Additional criminal charges were brought by U.S. Attorney’s Offices in Southern District of Florida, Western District of Pennsylvania, Western District of North Carolina, Southern District of Texas, the Southern District of Mississippi, and the District of New Jersey.

The above charges are merely allegations, and the defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

“The success of the Money Mule Initiative is the culmination of the hard work by and coordination between the FBI and our federal, state, local, and international partners,” said FBI Director Christopher Wray.  “This campaign has resulted in hundreds of criminal arrests worldwide and justice for countless victims.  Today’s announcement should send a clear message to those engaged in this type of criminal activity: they are not outside the reach of law enforcement, and the FBI and its partners will relentlessly pursue them in order to protect the American people.”

“The Postal Inspection Service has zero tolerance for fraudsters who use the U.S. Mail to transport funds from scammed victims,” said Chief Postal Inspector Gary Barksdale.  “Postal Inspectors use cutting-edge technology to build strong cases and campaigns like those announced today, which make significant progress towards disrupting money mule networks.  Postal Inspectors and our law enforcement partners will be relentless in the pursuit of criminal organizations that perpetrate these schemes.”

The agencies participating in the Money Mule Initiative and community partners are undertaking an outreach campaign to increase awareness of how fraudsters use and recruit money mules. U.S. Attorney’s Offices across the country, through their Elder Justice Coordinators, will be reaching out to their communities to educate the public about money mules.  AmeriCorp Seniors (formerly Senior Corps) will be working to increase awareness of how money mules facilitate fraud and how consumers can avoid unwittingly assisting fraud schemes.

Additionally, the American Bankers Association will be engaging with its members on money mules and the role of financial institutions in addressing the problem.  The Department of Justice will also be distributing resources for state and local law enforcement on identifying, disrupting, investigating, and prosecuting money mules.

To find public education materials, as well as information about how fraudsters use and recruit money mules, please visit www.justice.gov/civil/consumer-protection-branch/money-mule-initiative.

Since President Trump signed the bipartisan Elder Abuse Prevention and Prosecution Act (EAPPA) into law, the Department of Justice has participated in hundreds of enforcement actions in criminal and civil cases that targeted or disproportionately affected seniors.  In January 2020, the department designated “Preventing and Disrupting Transnational Elder Fraud” as an Agency Priority Goal, one of its top four priorities.  In March 2020, the department announced the largest elder fraud enforcement action in American history, charging more than 400 defendants in a nationwide elder fraud sweep.  The department has also conducted hundreds of trainings and outreach sessions across the country since the passage of the Act.

The department’s extensive efforts to combat elder fraud seek to halt the billions of dollars seniors lose each year to fraud schemes, including those perpetrated by transnational criminal organizations.  The best method for prevention, however, is sharing information about the various types of elder fraud schemes with relatives, friends, neighbors, and other seniors who can use that information to protect themselves.

If you or someone you know is age 60 or older and has been a victim of financial fraud, help is standing by at the National Elder Fraud Hotline: 1-833-FRAUD-11 (1-833-372-8311).  This U.S. Department of Justice hotline, managed by the Office for Victims of Crime, is staffed by experienced professionals who provide personalized support to callers by assessing the needs of the victim, and identifying relevant next steps.  Case managers will identify appropriate reporting agencies, provide information to callers to assist them in reporting, connect callers directly with appropriate agencies, and provide resources and referrals, on a case-by-case basis.  Reporting is the first step.  Reporting can help authorities identify those who commit fraud and reporting certain financial losses due to fraud as soon as possible can increase the likelihood of recovering losses.  The hotline is staffed seven days a week from 6:00 a.m. to 11:00 p.m. eastern time. English, Spanish and other languages are available.

###

 

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

AG

20-1301

Do not reply to this message.  If you have questions, please use the contacts in the message or call the Office of Public Affairs at 202-514-2007.

Damian Williams, the United States Attorney for the Southern District of New York, announced the guilty pleas today of LOUIS LLUBERES and MOISES LLUBERES for their roles in orchestrating a years-long scheme to fraudulently boost the revenues of their staffing company (“Company-1”).  The scheme allowed Company-1 to fraudulently obtain hundreds of millions of dollars on its line of credit from a U.S. bank (“Bank-1”) and supported the sale of Company-1 to a group of investors (the “Investor Group”) at a grossly inflated price.  LOUIS LLUBERES and MOISES LLUBERES pled guilty today to conspiracy commit bank fraud and conspiracy to commit wire fraud before U.S. District Judge Vernon S. Broderick.



U.S. Attorney Damian Williams said: “For many years, the defendants perpetrated a massive accounting fraud scheme in order to deceive their lenders and investors.  In addition to causing more than $70 million in losses to victims, the defendants’ fraud jeopardized the livelihoods of hundreds of their employees.  The defendants used accounting tricks, thinking their fraud would go undetected.  They were wrong.  Thanks to the tireless work of the FBI and the career prosecutors from my Office, the fraud was halted, the defendants’ assets were seized, and the defendants will face tough consequences for their criminal conduct.” 



According to the charging documents and other filings and statements made in court:

LOUIS LLUBERES founded Company-1 in 1995 and served as Company-1’s Chief Executive Officer until March 2020.  Company-1 served as a staffing company, supplying other businesses with temporary and permanent labor.  MOISES LLUBERES, LOUIS LLUBERES’s brother, served as Company-1’s Chief Financial Officer. 

Company-1 had established a revolving line of credit with Bank-1.  Under the terms of the line of credit, Company-1 could only borrow up to a designated ratio of Company-1’s eligible accounts receivable (the “Borrowing Base”).  By its terms, invoices that had gone more than 90 or 120 days without being paid were no longer eligible to be considered as part of Company-1’s Borrowing Base.  Officials at Company-1 were required to submit weekly financial reports to Bank-1, which included information on Company-1’s sales and collections, among other items, that allowed Bank-1 representatives to calculate Company-1’s Borrowing Base.

Beginning in or about 2017, after losing significant business from major clients, the defendants began creating fraudulent invoices (the “Fictitious Receivables”).  The Fictitious Receivables, which were recorded on Company-1’s books, created the appearance that Company-1 was engaged in more business and would be receiving more client payments than Company-1 did in reality.  All told, the defendants created more than 2,000 such fraudulent invoices. 

By inflating Company-1’s Borrowing Base through the creation of Fictitious Receivables, Company-1 and the defendants were able to borrow more than $500 million from Bank-1 through a revolving line of credit.  Had Company-1 not deceived Bank-1 with the Fictitious Receivables, Company-1 would not have been entitled to borrow these funds under the terms of the line of credit.

In order to perpetuate their fraud, the defendants utilized two shell to disguise the loan proceeds before transferring those funds back to Company-1 and mischaracterizing the funds as client collection payments. 

Once the misappropriated funds had been returned to Company-1’s collections account, they were applied to aging accounts receivable, including the Fictitious Receivables.  This allowed Company-1 to maintain its Borrowing Base and continue borrowing from Bank-1 while artificially inflating Company-1’s revenues. 

Beginning in or about 2017, the Investor Group initiated negotiations to acquire Company‑1, and the Investor Group executed an agreement to purchase Company-1 in May 2018.  During those negotiations, LOUIS LLUBERES and MOISES LLUBERES actively concealed the fraud scheme, knowing that the fraud grossly inflated the value of Company-1. 

LOUIS LLUBERES was paid approximately $11.3 million on the day the Investor Group acquired Company-1.  LOUIS LLUBERES also received an additional approximately $6.2 million based, in part, on fraudulent representations to the Investor Group and Company-1.  In total, LOUIS LLUBERES made at least $17.5 million from the sale of Company-1, and he transferred approximately $716,000 of those funds to MOISES LLUBERES.

*                *                *

LOUIS LLUBERES, 61, of Windermere, Florida, and MOISES LLUBERES, 60, of Winter Grove, Florida, each pled guilty to one count of conspiracy to commit bank fraud, which carries a maximum sentence of five years in prison, and one count of conspiracy to commit wire fraud, which carries a maximum sentence of five years in prison.  Both defendants agreed to pay restitution jointly and severally in the amount of $75,460,611.  LOUIS LLUBERES was further ordered to forfeit $75,460,611, and MOISES LLUBERES was ordered to forfeit $1,063,342.45.  In addition, the defendants were ordered to forfeit properties in the U.S. and abroad.

The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by a judge. 

Mr. Williams praised the outstanding work of the Federal Bureau of Investigation. 

The case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorneys Nicholas W. Chiuchiolo, Daniel G. Nessim, Rushmi Bhaskaran, and Kevin Mead are in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, and Michael J. Driscoll, Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced the unsealing of a twelve-count Indictment charging HO WAN KWOK, a/k/a “Miles Guo,” a/k/a “Miles Kwok,” a/k/a “Guo Wengui,” a/k/a “Brother Seven,” a/k/a “The Principal,” and KIN MING JE, a/k/a “William Je,” with various wire fraud, securities fraud, bank fraud, and money laundering charges.  JE, who is KWOK’s financier, is also charged with obstruction of justice.  The charges in the Indictment arise from an alleged sprawling and complex scheme by the defendants, and others, to solicit investments in various entities and programs through false statements and representations to hundreds of thousands of KWOK’s online followers.  As alleged, KWOK and JE misappropriated hundreds of millions of dollars in fraudulently obtained funds during the course of their conspiracy.  KWOK was arrested this morning in New York, New York, and will be presented this afternoon.  JE is currently at large. 

In addition, Mr. Williams announced that between September 2022 and March 2023, the U.S. Government seized approximately $634 million from 21 different bank accounts.  The $634 million constitutes proceeds of KWOK’s alleged fraud, which the Government will seek to forfeit.  Today, law enforcement also seized assets that were purchased with proceeds of KWOK’s alleged fraud, including a Lamborghini Aventador SVJ Roads.   

U.S. Attorney Damian Williams said: “As alleged, Ho Wan Kwok, known to many as “Miles Guo,” led a complex conspiracy to defraud thousands of his online followers out of over $1 billion dollars.  Kwok is charged with lining his pockets with the money he stole, including buying himself, and his close relatives, a 50,000 square foot mansion, a $3.5 million Ferrari, and even two $36,000 mattresses, and financing a $37 million luxury yacht. 

As alleged, Kwok lied to his victims and promised them outsized returns if they invested, or provided money to, GTV, his so-called Himalaya Farm Alliance, G|CLUBS, and the Himalaya Exchange. 

Kwok is further charged with laundering hundreds of millions of stolen funds to conceal the conspiracy’s illegal activities and continue the fraud’s operations.  My office and our law enforcement partners will continue to do all that we can to protect the community from the devastating consequences of pernicious fraud schemes.  If you believe you are a victim of Kwok and Je’s fraud, please contact USANYS.GuoVictims@usdoj.gov or https://forms.fbi.gov/NY_GTV.  My Office and the FBI are here to help those who were harmed by this malicious fraud.”

FBI Assistant Director Michael J. Driscoll said: “The indictment today alleges the defendants were behind an elaborate scheme that defrauded thousands of individuals of over one billion dollars.  Fraudulent investment scams make victims out of innocent people, ultimately harming the public’s confidence in the integrity of financial systems.  The FBI continues to make investigating complex financial crimes a top priority, and anyone attempting these crimes will be made to face the consequences in the criminal justice system.”   

As alleged in the Indictment unsealed in Manhattan federal court and court filings:[1]

From at least in or about 2018 through at least in or about March 2023, KWOK, JE, and others, conspired to defraud thousands of victims of more than approximately $1 billion.  KWOK was the leader of this complex conspiracy. 

KWOK is an exiled Chinese businessman who has resided in the United States since in or about 2015 and garnered a substantial online following.  In or about 2018, KWOK founded two purported nonprofit organizations, namely, the Rule of Law Foundation and the Rule of Law Society.  KWOK used the nonprofit organizations to amass followers who were aligned with his purported policy objectives in China and who were also inclined to believe KWOK’s statements regarding investment and money-making opportunities. 

JE is a dual citizen of Hong Kong and the United Kingdom who principally resided in the United Kingdom.  JE owned and operated numerous companies and investment vehicles central to the scheme and served as its financial architect and key money launderer.

KWOK and JE’s fraud relied on at least four interrelated parts:  the GTV Media Group, Inc. (“GTV”) Private Placement, the Farm Loan Program, G Club Operations, LLC (“G|CLUBS”), and the Himalaya Exchange. 

GTV Private Placement

On or about April 21, 2020, KWOK posted a video on social media announcing the unregistered offering of GTV Media Group, Inc. (“GTV”) common stock via a private placement.  GTV was touted as a wide-ranging media company.  In that video, KWOK described, in substance and in part, the investment terms for the GTV Private Placement, and directed people to contact him, via a mobile messaging application, with any questions about the GTV Private Placement.  The video and GTV Private Placement materials included a written “Confidential Information Memorandum” (the “PPM”).  The PPM stated on the cover “Everything Is Just the Beginning!,” provided information about GTV, and contained false representations regarding how the money raised from the GTV Private Placement would be used.

Between on or about April 20, 2020 and on or about June 2, 2020, approximately $452 million worth of GTV common stock was purportedly sold to more than 5,500 investors.  Investors participated in the GTV Private Placement based, in part, on the belief that their money would be invested into GTV to develop and grow that business, as the PPM promised.  In early June 2020, just days after the GTV Private Placement closed, KWOK and JE directed that $100 million of funds raised from the GTV Private Placement be invested in a high-risk hedge fund for the benefit of GTV’s parent company and its ultimate beneficial owner who was a close family relative of KWOK.

Farm Loan Program

KWOK, JE, and their co-conspirators fraudulently obtained more than approximately $150 million in victim funds through the “Himalaya Farm Alliance.”  The Himalaya Farm Alliance, which KWOK organized and promoted, was a collective of informal groups (each known as a “Farm”) located in various cities around the world.  KWOK, JE, and others working on their behalf and at their direction, obtained these funds by making further misrepresentations to the investors in the GTV Private Placement and fraudulently soliciting further investments, this time in the form of “loans” to a Farm, and promising that such loans would be convertible into GTV common stock at a conversion rate of one share per dollar loaned.  On or about July 22, 2020, in a video distributed via social media, KWOK promoted the Farm Loan Program.  After launching the Farm Loan Program, KWOK continued to promote GTV and to falsely represent the value of GTV.  For example, on or about August 2, 2020, in a video distributed via social media, KWOK falsely stated, in substance and part, “How much is GTV? . . . a market value of 2 billion US dollars.”   In truth and in fact, and as KWOK well knew, GTV’s market value was far less. 

KWOK and JE misappropriated funds that were raised through the Farm Loan Program.  For example:  (i) approximately $2.3 million was used to cover maintenance expenses associated with an approximately 145-foot luxury yacht worth approximately $37 million, nominally owned by close family relative of KWOK and used by KWOK, which is pictured below; and (ii) approximately $10 million was transferred to personal bank accounts in the name of JE and/or JE’s spouse.











 

G|CLUBS

KWOK, JE and others known and unknown, fraudulently induced KWOK’s followers to transfer additional funds to a purported online membership club called G|CLUBS.  From at least in or about October 2020 through at least in or about March 2023, KWOK, JE, and others fraudulently obtained more than approximately $250 million in victim funds through G|CLUBS.  G|CLUBS claimed, on its website, to be “an exclusive, high-end membership program offering a full spectrum of services” and “a gateway to carefully curated world-class products, services and experiences.” 

In truth and in fact, and as KWOK and JE well knew, G|CLUBS provided nothing close to “a full spectrum of services” and “experiences” to its members.  Indeed, most of the money G|CLUBS members paid did not fund the business of G|CLUBS.  Rather, the defendants misappropriated a substantial portion of the victim funds using, among other things, a complex web of entities and bank accounts to do so.  For example,  G|CLUBS funds were used by KWOK and JE:  (i) toward the purchase of KWOK’s 50,000 square foot New Jersey mansion (pictured below); (ii) to purchase various furniture and decorative items including, among other items, Chinese and Persian rugs worth approximately $978,000, a $62,000 television, and a $53,000 fireplace log cradle holder; and (iii) to purchase a custom-built Bugatti sports car for approximately $4.4 million (pictured below):











 











 











Himalaya Exchange

KWOK, JE, and others known and unknown, fraudulently obtained more than approximately $262 million in victim funds through the Himalaya Exchange, a purported cryptocurrency “ecosystem” accessible on the Internet.  The Himalaya Exchange included a purported stablecoin called the Himalaya Dollar (“HDO” or “H Dollar”) and a trading coin called Himalaya Coin (“HCN” or “H Coin”).  In videos distributed via social media, KWOK trumpeted the prospects and valuation of the Himalaya Exchange and both HCN and HDO, which he publicly described as cryptocurrencies.  For example, in a video posted on the Internet on or about October 20, 2021, KWOK falsely stated:  “If the H Coin is worthless, [the issuer of H coin] can sell all 20% of the gold, exchange it to you, and become your money.  Or take all the value of 20% gold and ask everyone to unify it and make it yours;” and “If anyone loses money, I can say that I will compensate 100%.  I give you 100%.  Whoever loses money, I will bear it.”  The initial coin offering of HCN and HDO occurred on or about November 1, 2021.  HCN began trading at 10 cents and, within approximately two weeks, the Himalaya Exchange website claimed that each HCN purportedly was worth approximately 27 HDO (i.e., $27), which represented a 26,900% increase in value and a total value of approximately $27 billion.  JE also falsely claimed to media outlets that a €3.5 million Ferrari was purchased via the Himalaya Exchange.  In truth, a Himalaya Exchange employee sent the Ferrari broker an international bank wire to cover the cost of the Ferrari, while also processing a corresponding “transaction” on the Himalaya Exchange to create the false appearance that the purchase had taken place using HDO in order to show HDO was easily tradeable and to promote the Himalaya Exchange.  The buyer of the Ferrari was a close relative of KWOK.

U.S. Government Seizures

On or about September 20, 2022 and September 21, 2022, U.S. authorities served judicially-authorized seizure warrants on several domestic banks, and subsequently seized approximately $335 million of proceeds from bank accounts held in the names of Himalaya Exchange entities and other entities associated with KWOK and JE.  Within approximately two days of the first judicially authorized seizures of Himalaya Exchange-related funds, on or about September 22, 2022, JE contacted the management of a domestic bank that held Himalaya Exchange bank accounts.  JE sought to implement a wire transfer, which he and a Himalaya Exchange executive claimed to the domestic bank was needed to effectuate a “redemption” from HDO to U.S. dollars for an unnamed “VIP” (i.e., very important client of the Himalaya Exchange).  In subsequent communications with the domestic bank, JE revealed that the VIP was, in fact, JE himself.  JE provided the domestic bank with documents reflecting two purported HCN sales by JE on or about September 22, 2022—totaling 46 million HDO, which JE was attempting to “convert” into $46 million.  JE twice emphasized to the domestic bank’s management, in substance and in part, that the $46 million transfer needed to happen “today or it is meaningless.”

U.S. Authorities subsequently seized additional funds from KWOK and JE-associated entities in October 2022 and March 2023.  In total, U.S. Authorities seized more than approximately $634 million of fraud proceeds, including approximately $278 million from bank accounts held in the names of the Himalaya Exchange entities.

Today, pursuant to judicially-authorized warrants, U.S. Authorities are seizing additional items from KWOK-associated properties, which KWOK and JE allegedly purchased with fraud proceeds.

*          *          *

HO WAN KWOK, a/k/a “Miles Guo,” a/k/a “Miles Kwok,” a/k/a “Guo Wengui,” a/k/a “Brother Seven,” a/k/a “The Principal,” 52, of New York, New York, and KIN MING JE, a/k/a “William Je,” 56, of London, England, are charged in an Indictment with the following offenses:





Count





Charge





Defendant





Maximum Penalty





1





Conspiracy to Commit Wire Fraud, Bank Fraud, Securities Fraud and Money Laundering





KWOK and JE





5 years in prison





2





Wire Fraud (GTV Private Placement)





KWOK and JE





20 years in prison





3





Securities Fraud (GTV Private Placement)





KWOK and JE





20 years in prison





4





Wire Fraud (Farm Loan Program)





KWOK and JE





20 years in prison





5





Securities Fraud (Farm Loan Program)





KWOK and JE





20 years in prison





6





Wire Fraud (G|CLUBS)





KWOK and JE





20 years in prison





7





Securities Fraud (G|CLUBS)





KWOK and JE





20 years in prison





8





Wire Fraud (Himalaya Exchange)





KWOK and JE





20 years in prison





9





International Promotional Money Laundering





KWOK and JE





20 years in prison





10





International Concealment Money Laundering





KWOK and JE





20 years in prison





11





Unlawful Monetary Transactions





KWOK and JE





10 years in prison





12





Obstruction of Justice





JE





20 years in prison





 

The statutory maximum sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge. 

Mr. Williams praised the investigative work of the FBI.  Mr. Williams further thanked the U.S. Securities and Exchange Commission, which today filed a parallel civil action against KWOK and JE, for its assistance and cooperation in this investigation.  Mr. Williams also expressed appreciation for the assistance of the United States Marshals Service, the Justice Department’s Office of International Affairs, and the U.K. Metropolitan Police.

If you believe you are a victim of KWOK and JE’s fraud, please find more information here: https://www.justice.gov/usao-sdny/united-states-v-ho-wan-kwok-aka-miles-guo-and-kin-ming-je-aka-william-je 

The case is being handled by the Complex Frauds and Cybercrime Unit of the Office’s Criminal Division.  Assistant U.S. Attorneys Ryan B. Finkel, Juliana N. Murray, and Micah F. Fergenson are in charge of the prosecution.

The allegations in the Indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

 



[1] As the introductory phrase signifies, the entirety of the text of the Indictment, and the description of the Indictment set forth herein, constitute only allegations, and every fact described should be treated as an allegation.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced today that FABIO PORFIRIO LOBO was sentenced to 288 months in prison for conspiring to import cocaine into the United States.  LOBO pled guilty on May 16, 2016, before U.S. District Judge Lorna G. Schofield, who imposed today’s sentence.  LOBO’s father, Porfirio Lobo, served as president of Honduras between 2010 and 2014.

Acting Manhattan U.S. Attorney Joon H. Kim said:  “By his own admission, Fabio Lobo conspired to import huge quantities of cocaine into the U.S.  To assist traffickers and enrich himself, Lobo used his father’s position and his own connections to bring drug traffickers together with corrupt police and government officials.  Now, Fabio Lobo has been sentenced to the substantial prison term his crimes merit.”

According to the Indictment, other court filings, evidence presented during a sentencing hearing held on March 6 and 16, 2017, and statements made during other court proceedings: 

Before and while LOBO’s father was president of Honduras, LOBO used his and his father’s reputation and political network to broker corrupt connections between large-scale Honduran drug traffickers and individuals within the Honduran government, including high-level officials such as sitting Honduran congressmen as well as customs, military, and law enforcement personnel.  By managing security and what LOBO described during a recorded meeting as “logistics” for these criminals, LOBO facilitated and participated in extensive cocaine trafficking with strong support from multiple elements of the Honduran government. 

LOBO’s participation in drug trafficking began as early as 2009.  During that year, while LOBO’s father was running for president of Honduras, LOBO’s father began receiving bribes from members of a drug-trafficking organization known as the Cachiros, which was a prolific and violent criminal syndicate that relied on connections to politicians, military personnel, and law enforcement to transport cocaine to, within, and from Honduras.  The leaders of the Cachiros paid Porfirio Lobo over approximately $500,000 in exchange for, among other things, political protection from law enforcement investigations, prevention of extradition to the United States, and awards of contracts by Honduran government agencies to money-laundering front companies controlled by the Cachiros. 

LOBO was introduced to the Cachiros initially as an individual who was willing to facilitate the award of Honduran government contracts to the Cachiros’ front companies, which were used to increase the appearance of their legitimacy and to launder drug proceeds.  LOBO soon began protecting and supporting the Cachiros by acting as a conduit to Honduran officials capable of preventing interference with their drug trafficking operations.  Between five and eight times, the Cachiros provided LOBO with advance notice of incoming drug loads so that LOBO would be available in the event of any interference with the shipments. 

In 2012, LOBO participated more directly in the violent drug trafficking of the Cachiros.  LOBO proposed to the Cachiros receiving cocaine-laden aircraft at locations in the Olancho Department of Honduras, and he personally helped escort two loads of drugs with an aggregate quantity of approximately 1.4 metric tons of cocaine.  In connection with the transportation of those cocaine shipments, LOBO brought members of the Honduran military, who were armed with an AR-15 machine gun as well as pistols, for security, and LOBO personally rode with one of the leaders of the Cachiros so that LOBO would be able to place calls to Honduran officials in the event of any law enforcement interference.  For his participation, LOBO received, among other things, approximately $70,000 in cash, an armored vehicle, and an AR-15 machine gun.   

LOBO also assisted drug traffickers other than the Cachiros.  In approximately 2012, LOBO assisted a maritime drug trafficking venture at Puerto Cortes, a large commercial port on the north coast of Honduras near the Honduras-Guatemala border, involving Fredy Renan Najera Montoya (a Honduran congressman), a Honduran customs official, a high-ranking member of Mexico’s Sinaloa Cartel, Carlos Lobo (another Honduran drug trafficker who is not related to LOBO), and others.  LOBO made at least approximately $50,000 for participating in meetings regarding the shipments.  LOBO also used his political access to protect and assist Carlos Lobo by helping him try to recover seized assets in exchange for approximately $100,000.   

Beginning in or about 2013, the Drug Enforcement Administration (“DEA”) captured some of LOBO’s drug trafficking activities on tape after the leaders of the Cachiros started to covertly provide information and assistance to the United States government.  Following public financial sanctions and asset seizures targeting the Cachiros in September 2013, LOBO stepped in to help coordinate on behalf of the Cachiros the receipt, protection, and transportation of a multi-ton load of cocaine for purported representatives of now-detained alleged Mexican kingpin Joaquin Archivaldo Guzman Loera, a/k/a “El Chapo.”  Expecting to make millions of dollars for a shipment of approximately 3,000 kilograms of cocaine, LOBO met with confidential sources acting at the direction of the DEA (the “CSes”), agreed to provide military and “logistics” support to these purported drug traffickers, and facilitated introductions to at least two Honduran military officials. 

LOBO also introduced the CSes to Honduran police officials who agreed to participate in the cocaine transaction by providing security and logistical support for the transportation of the cocaine through Honduras (the “Honduran National Police Defendants”).  In June 2014, LOBO, the CSes, and six of the Honduran National Police Defendants participated in a recorded meeting in Honduras.  During the meeting, the Honduran National Police Defendants placed a map of Honduras on a table and described to LOBO and the CSes the Honduran law enforcement presence along potential shipment routes for the cocaine.  In exchange for their assistance, the Honduran National Police Defendants requested new phones for communications, vehicles to use, a pool of $200,000 for bribes to other officials, and bribes of $100,000 per person for themselves.  Later in 2015, in consensually recorded calls and emails between LOBO and one of the Cachiros, LOBO agreed to travel to Haiti for the purpose of receiving payment from the proceeds of the cocaine transaction with the CSes.  LOBO subsequently traveled to Haiti in May 2015 and was arrested.

Seven of the Honduran National Police Defendants, including, among others, MARIO GUILLERMO MEJIA VARGAS (“VARGAS”), CARLOS JOSE ZAVALA VELASQUEZ (“VELASQUEZ”), and VICTOR OSWALDO LOPEZ FLORES (“FLORES”), were subsequently indicted by a grand jury in the Southern District of New York for firearms and/or drug trafficking offenses.  On July 11, 2016, Vargas, Velasquez, and Flores waived extradition in Honduras and surrendered voluntarily in Manhattan.  FLORES, VELASQUEZ, and VARGAS have since pled guilty in federal court to conspiring to import cocaine into the United States, and they await sentencing by Judge Schofield.   

*                *                *

In addition to the prison term, LOBO, 46, was ordered to pay a $50,000 fine and to forfeit $266,667, which represents the proceeds he received from his drug trafficking offense.         

Mr. Kim praised the outstanding efforts of the Special Operations Division of the DEA Bilateral Investigations Unit, New York Strike Force, and Tegucigalpa Country Office.  Mr. Kim also thanked the DEA’s Port-au-Prince Country Office, the Government of the Republic of Haiti and its Bureau de Lutte Contre le Trafic Illicite de Stupefiants, and the U.S. Department of Justice’s Office of International Affairs for their ongoing assistance. 

This case is being handled by the Office’s Terrorism and International Narcotics Unit.  Assistant U.S. Attorneys Emil J. Bove III and Matthew J. Laroche are in charge of the prosecution.

The charges against Honduran National Police defendants Ludwig Criss Zelaya Romero, Juan Manuel Avila Meza, and Carlos Alberto Valladares Zuniga are merely accusations, and these defendants are presumed innocent unless and until proven guilty.

ST. LOUIS – Nathaniel Hill, 39, of St. Louis, Missouri, pleaded guilty to conspiracy to distribute methamphetamine. Hill appeared, today, before United States District Court Judge Audrey G. Fleissig.

In November 2017 the Federal Bureau of Investigation (FBI) and the United States Postal Inspectors Service (USPIS) initiated an investigation into methamphetamine trafficking led by Hill and involving nine co-defendants. Beginning in or about May 2017, Hill and a co-defendant purchased kilogram quantities of methamphetamine from a San Diego source of supply. Initially, Hill arranged for packages of methamphetamine to be sent to St. Louis through the mail. Two of those packages were intercepted by law enforcement: one containing 1.336 kilograms on August 7, 2017; and, one containing 4.4 kilograms on April 9, 2018.  

Investigators also applied for and received authorization to wiretap Hill’s cellular telephone. On the wiretap, investigators heard Hill talk to co-conspirators regarding methamphetamine shipments, proceeds, and methods of transportation. The conspirators traveled between San Diego and St. Louis and used hotel rooms and rental cars to facilitate and hide their activities from law enforcement.

During the investigation, a confidential source made several controlled purchases of methamphetamine directly from Hill including 450 grams on December 12, 2017, 223 grams on January 18, 2018, and 224 grams on February 28, 2018.

On June 13, 2018, Hill was present at his residence in the 11000 block of Cadigan expecting a large shipment of methamphetamine. Agents executed a search warrant where they seized 25.064 kilograms of methamphetamine. Investigators also seized multiple firearms, $29,850 in cash, multiple items of jewelry and a BMW sedan, all of which were either derived from proceeds of the sale of methamphetamine or possessed in furtherance of the drug activity.

Based on the intercepted packages, the controlled purchases, the seizures on June 13, 2013, the intercepted calls and other evidence gathered by law enforcement, Hill admitted being responsible for at least 45 kilograms of methamphetamine and consented to the forfeiture of various assets seized by agents.

Judge Fleissig has set sentencing for June 29, 2021.

The St. Louis County Police Department, Federal Bureau of Investigation and United States Postal Inspection Service investigated the case.

#####

St. Louis, MO - Paul Creager, 39, of St Louis County, Missouri was sentenced to 60 months imprisonment for defrauding two investors in his failed construction business during 2016.  Creager pleaded guilty to two counts of wire fraud on December 21, 2017 and appeared before Chief Judge Rodney W. Sippel in St. Louis today for sentencing.

According to court records, Creager solicited $724,000 from two investors in exchange for equity interests in his construction firm.  Creager admitted that during his negotiations with the victims, he presented false financial records which omitted a massive debt owed by his company to a hard money lender which lender possessed a secured interest in virtually all of Creager’s business and personal assets.  Soon after receiving victims’ investments, Creager’s business was not able to meet its financial obligations and stopped operating.  By mid-2017, Creager’s primary lender foreclosed on virtually all of his assets rendering the investors’ equity stakes in his business worthless.  While Creager’s business was failing and his subcontractors and vendors went unpaid, Creager maintained a luxurious lifestyle which included homes in Wildwood and the Lake of the Ozarks as well as a host of vehicles including a Bentley automobile and a 52-foot yacht.

"When you invest in a business, you are entitled to an honest representation of the financial health of the business, and to know how your money will be spent," said Special Agent in Charge Richard Quinn of the FBI St. Louis Division.  "Paul Creager knowingly defrauded his investors so he could use their money to live a lavish lifestyle."

In addition to the term of imprisonment, Creager will serve three years of supervised release after release from imprisonment.  The Court also ordered Creager to repay the victims $724,024.14 pursuant to the Mandatory Victims Restitution Act.  The U.S. Attorney’s office has seized numerous items of Creager’s personal property and will seek to liquidate the seized assets to help pay restitution to the victims.

Creager faces a second fraud Indictment which was filed in 2018 alleging fraud in the solicitation of another investor of more than $2,000,000 as well as fraud upon a title agency in connection with the closing of one of his properties.  Creager has pleaded not guilty to those charges which have yet to be resolved. 

William Glaser, a former financial advisor and an associate of Creager, is accused in a third case of wire fraud for defrauding his clients in the course of raising more than $1,000,000 in capital for Creager’s business.  Glaser is not implicated in either of the criminal cases against Creager nor is Creager implicated in the criminal case against Glaser.  Glaser has pleaded not guilty to the criminal charges against him.

As is always the case, charges set forth in an indictment are merely accusations and do not constitute proof of guilt.  Every defendant is presumed to be innocent unless and until proven guilty.                         

The St. Louis division of the FBI investigated this case.  Tom Albus handled the case for the U.S. Attorney’s office.

PHILADELPHIA – United States Attorney William M. McSwain announced that the internet sports betting company, 5D Holdings Ltd. (operating under the unincorporated brand name, “5Dimes”) and Laura Varela, have agreed to forfeit more than $46.8 million in gambling proceeds as part of a settlement agreement in a criminal investigation into 5Dimes’ sports betting operation based in Costa Rica that allowed American gamblers to place bets, primarily through its website www.5Dimes.eu, in violation of U.S. law. Beginning in at least 2011, 5Dimes accepted wagers from and made payouts to U.S. bettors, and transferred more than $46.8 million in proceeds earned from its illegal gambling activities in such a manner as to attempt to hide the nature, location, source, and control of the funds.

5Dimes was previously owned and operated by Varela’s husband, William Sean Creighton, a U.S. citizen who moved to Costa Rica, where he created and operated 5Dimes in violation of U.S. law. From at least 2011 until approximately September 24, 2018, Creighton exercised full and exclusive control over 5Dimes, although he hid his control over the company by utilizing an alias and operating the business through several shell companies. In September 2018, Creighton was kidnapped and subsequently murdered. Over a year later, Creighton’s remains were discovered and positively identified in Costa Rica; Creighton’s death has been ruled a homicide by Costa Rican authorities.   

Beginning in approximately May 2016, the United States Attorney’s Office for the Eastern District of Pennsylvania, in conjunction with the Department of Homeland Security Investigations (“HSI”), began investigating Creighton and 5Dimes for possible violations of federal criminal laws including, but not limited to, illegal gambling, money laundering, wire fraud, and other related offenses. During Creighton’s lifetime, Varela, a Costa Rican citizen, was never employed as a manager at 5Dimes, nor did she exercise any control over the operations of 5Dimes. Following Creighton’s death, Varela assumed responsibility for 5Dimes assets, but did not exercise day-to-day authority over the operations of 5Dimes. Varela subsequently took control of 5Dimes and sought to resolve the federal investigation and change the operations of the company in a manner that complies with U.S. law. In order to resolve the federal investigation of 5Dimes (which continued after Creighton’s kidnapping), Varela and 5Dimes have entered into a settlement agreement with the EDPA in which they have agreed to forfeit more than $46.8 million and acknowledged that those funds are the proceeds of various unlawful gambling-related offenses.

Creighton’s operation of 5Dimes in violation of U.S. law involved the use of third-party payment processors (or “TPPPs”) to accept payments from the U.S.-based bettors. These TPPPs processed credit card transactions for 5Dimes, and charged the customers’ credit cards on behalf of 5Dimes, thereby concealing the true nature of the charges from the credit card companies that otherwise would not have processed the payments had 5Dimes attempted to process the charges directly. Once the TPPPs received the betting funds from the U.S. customers’ credit cards, the funds were transferred to bank accounts in the names of shell companies controlled and operated by Creighton until his disappearance and death. Creighton also laundered 5Dimes’ unlawful gambling proceeds in various additional ways, including through bulk cash transportation and the purchase of gold bars, gold coins, and expensive collectible sports cards.

During the investigation, HSI seized approximately $3,376,189 in cash and other assets belonging to Creighton, including a 1948 George Mikan rookie basketball card, which Creighton purchased for over $400,000 (which at the time was the most expensive basketball card ever sold, and which now resides at the Smithsonian Institute), and a 1970 Pete Maravich rookie basketball card, as well as over $715,000 worth of rare coins. As part of the settlement agreement, 5Dimes and Varela have agreed to forfeit these seized assets, and have agreed to help in the collection and forfeiture of additional assets totaling more than $26,000,000. Further, 5Dimes and Varela have agreed to forfeit approximately $2,000,000 that was seized in Costa Rica by Costa Rican law enforcement, and to pay and consent to the forfeiture of an additional $15,000,000 of the proceeds of the criminal conduct.

All told, pursuant to the terms of the settlement agreement, 5Dimes and Varela have agreed to forfeit a total of $46,817,880.60, which they agree constitutes proceeds that are traceable to transactions in violation of Title 18, United States Code, Sections 1343 (wire fraud), 1084 (illegal transmission of gambling information), 371 (conspiracy to commit wire fraud), and were involved in transactions in violation of Title 18, United States Code, Section 1956 (money laundering). Varela has fully cooperated with the investigation and has worked with EDPA to identify criminal assets associated with 5Dimes, has overseen the implementation of compliance procedures, and has reorganized the corporate structure of the company into a streamlined, transparent corporate structure, and caused 5Dimes to cease violating U.S. law.

Pursuant to the terms of the settlement agreement, the United States Attorney’s Office for the Eastern District of Pennsylvania has agreed to not criminally prosecute 5Dimes or Varela for any crimes committed prior to September 30, 2020 (except for criminal tax violations, if any, as to which EDPA does not make any agreement), and will not file a civil action relating to the conduct described in the settlement agreement.

“The settlement agreement announced today is a victory for the United States in ceasing the illegal activity of a company that was being investigated for a multitude of crimes, including a sophisticated money laundering operation,” said U.S. Attorney McSwain. “It is also a testament to the dedication of the investigators and prosecutors who doggedly pursued this case even after the primary target was kidnapped and murdered. As the Office has done with a variety of criminal and civil matters, we will use every tool at our disposal to hold individuals and businesses accountable and ensure their compliance with federal law.”

“Through our 5Dimes investigation, Homeland Security Investigations illuminated a massive global network of criminals whose profession was to launder proceeds for drug cartels, kleptocratic regimes, illegal mining operations, and fraudsters,” said Brian A. Michael, Special Agent in Charge, HSI Philadelphia.  “Today’s announcement of the global settlement agreement and significant monetary seizures demonstrates HSI’s commitment with our partners to deny criminal organizations the financial proceeds of their illicit activities.”

“Transnational Criminal Organizations are concerned with one priority: making and hiding money. This investigation demonstrates the sophisticated efforts of the actors to secrete their ill-gotten gains, in this case, from gambling. The scheme is just as viable for laundering drug proceeds, those from weapons or human trafficking, or other illegal activities,” said Jeremiah A. Daley, Executive Director of the Liberty Mid-Atlantic High Intensity Drug Trafficking Area (HIDTA).  “We are proud to support HSI in pursuing all forms of money laundering from any source.”

The case was investigated by the Department of Homeland Security, Homeland Security Investigations with support from the Liberty Mid-Atlantic HIDTA, the Philadelphia Police Department, and the Pennsylvania State Police. The criminal investigation and settlement was handled for the Eastern District of Pennsylvania by Assistant United States Attorneys Michael S. Lowe and Maria M. Carrillo.

DETROIT, MI - U.S. Attorney Dawn N. Ison announced today that the Eastern District of Michigan collected $68,224,759.35 in criminal and civil actions in Fiscal Year 2023. Of this amount, $45,879,094.11 was collected in criminal actions and $22,345,665.24 was collected in civil actions.

The U.S. Attorneys’ Offices, along with the department’s litigating divisions, are responsible for enforcing and collecting civil and criminal debts owed to the U.S. and criminal debts owed to federal crime victims. The law requires defendants to pay restitution to victims of certain federal crimes who have suffered a physical injury or financial loss. While restitution is paid to the victim, criminal fines and felony assessments are paid to the department’s Crime Victims’ Fund, which distributes the funds to state victim compensation and victim assistance programs. The largest collection came from a fine imposed in a securities fraud case against Sterling Bancorp, Inc.

The largest civil collections were from affirmative civil enforcement cases, in which the United States recovered government money lost to fraud or other misconduct or collected fines imposed on individuals and/or corporations for violation of federal health, safety, civil rights or environmental laws. The office also resolved several parallel cases that involved significant civil and criminal penalties related to health care fraud.

In addition to collection of outstanding obligations, the Eastern District of Michigan seized assets valued at more than $67 million dollars and finalized the forfeiture of assets valued at approximately $34 million dollars. Forfeited assets deposited into the Department of Justice Asset Forfeiture Fund may be used to restore funds to crime victims and for a variety of law enforcement purposes.

“Through the hard work and commitment of our team of dedicated attorneys and support professionals, we recovered more than $68 million dollars in Fiscal Year 2023.  Due to the tireless efforts of these extraordinary public servants, crime victims and taxpayers will recover funds owed to them as a result of criminal and civil violations perpetrated in this district. Our staff is a tireless advocate for victims of crime. We take actions to recover assets that have been transferred to third parties, as well negotiate for the liquidation of assets obtained by a defendant because of his or her involvement in criminal activity.”

DETROIT - A grand jury returned a superseding indictment yesterday charging Wansa Nabih Makki, her husband, Hossam Tanana, and her brother, Mahmoud Makki with multiple health care fraud and money laundering offenses, U.S. Attorney Matthew Schneider announced today.

Schneider was joined in the announcement by Special Agent in Charge Steven M. D’Antuono of the FBI’s Detroit Division and Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Chicago Regional Office.

Charged in the indictment and criminal complaints are:

Wansa Nabih Makki, 42, of Dearborn

Mahmoud Makki., 37, of Dearborn

Hossam Tanana, 54 of Dearborn

According to the superseding indictment, between January 2010 and January 2018, Wansa Makki owned and oversaw the operations of two local pharmacies, LifeCare Pharmacy in Livonia and LifeCare of Michigan in Farmington Hills.  Both pharmacies were “closed door” pharmacies, meaning that they were not open to the public and only filled prescriptions for individuals associated with various care facilities.

The superseding indictment alleges that during the course of the conspiracy, Wansa Makki, Hossam Tanana, and Mahmoud Makki engaged in a scheme to bill Medicare, Medicaid and Blue Cross Blue Shield of Michigan for approximately $9.2 million dollars for medications that were never dispensed.  The fraud scheme was detected by Medicare, in part, because of a huge deficit between each pharmacy’s recorded inventories and the claims that each submitted for insurance reimbursement.   As part of the scheme to defraud, the defendants billed insurance companies for allegedly submitting claims for delivering over 500 medications to people who had died prior to the claimed date of delivery. The grand jury also charged Wansa Makki with making a false statement to the IRS when she falsely claimed to be a Pharmacist in her 2015 tax return.  

According to the indictment, proceeds of the fraud scheme were laundered by overpaying consulting and delivery companies owned by Hossam Tanana and Mahmoud Makki.  For instance, Hossam Tanana was previously convicted for diverting controlled substances such as oxycodone, hydrocodone (Vicodin) and alprazolam (Xanax) while being licensed as a pharmacist.  Two days after being released from federal custody in April of 2012, Tanana incorporated a pharmacy consulting company.  Between the date of incorporation and December of 2013, Tanana’s consulting company received over $400,000 from the LifeCare Pharmacy.  LifeCare Pharmacy also paid over one million dollars to a delivery service opened by Wansa Makki’s brother, Mahmoud Makki, in a 14-month period beginning in December of 2013.

According to the Indictment, Wansa Makki used the proceeds to make a $21,500 payment for a Mercedes G63 AMG while Hossam Tanana used fraud proceeds to purchase a $545,000 Waterford Lakehouse. The indictment further alleged that Wansa Makki spent more than $3,000 in dock repairs to the Waterford Lakehouse.   

During the investigation, the FBI and United States Attorney’s Office deployed the full arsenal of financial investigation tools to seize assets, which will be returned to the victim taxpayers in the event of a conviction.  Seized assets include the following:

Over $2 million in liquid assets seized from accounts controlled by members of the conspiracy;

 

Eight King George Gold Coins valued at over $3,000, One Queen Elizabeth II Gold Coin valued at $378, One Tiffany Diamond Ring Valued at $60,000, six Troy once Suisse gold bars valued at approximately $8,000, and 27 designer handbags – including Hermes Birkin™ and Coco Chanel™ valued at approximately $78,000.

 

According to court records, upon conviction, the United States Attorney’s Office will seek the forfeiture of the additional following property, the 5,700 square foot residence of Wansa Makki and Hossam Tanana in Dearborn. Further, upon conviction, the United States will seek the forfeiture of  $113,000 in proceeds from the sale of a Waterford lake house purchased by Hossam Tanana for $545,000 while he was on federal supervised release following his 2010 distribution of controlled substance conviction.

According to court records, a member of the same conspiracy, Mohamad Ali Makki pleaded guilty and is awaiting sentencing. As part of his plea agreement, Mohamad Ali Makki, agreed to forfeit approximately $2.6 million in liquid assets seized from accounts he controlled. He additionally agreed to the imposition of a $2.3 million forfeiture judgment. The United States is authorized to forfeit any and assets Mohamad Ali Makki owns to satisfy the forfeiture judgment. In addition to the forfeiture judgment, the district court will also impose a restitution judgment of approximately $9.8 million based on the pecuniary losses to Medicare, Medicaid, and Blue Cross Blue Shield of Michigan.

An indictment is only a charge and is not evidence of guilt. Each 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 of a health care fraud charge, the defendants face a maximum sentence of imprisonment of ten years, and a maximum fine of $250,000.  If convicted of the money laundering charges, the defendants face up to twenty years’ imprisonment. Upon conviction, the court would be required to impose both forfeiture and restitution judgments.  

The case was investigated by Special Agents of the HHS and FBI, with cooperation and assistance from the Michigan Department of Health and Human Services - Office of Inspector General.

The case is being prosecuted by Assistant U.S. Attorneys, Philip Ross and Mitra Jafary-Hariri. Fraud Section Trial Attorney Shankar Ramamurthy previously prosecuted the Asset Forfeiture aspects of this case before transferring to his current position.

KANSAS CITY, Mo. – U.S. Attorney Teresa Moore announced today that the Western District of Missouri collected $5,814,684 in criminal and civil actions in Fiscal Year 2023. Of this amount, $4,453,163 was collected in criminal actions and $1,361,521 was collected in civil actions.

Additionally, the U.S. Attorney’s office in the Western District of Missouri, working with partner agencies and divisions, collected $5,678,378 in asset forfeiture actions in Fiscal Year 2023. Forfeited assets deposited into the Department of Justice Assets Forfeiture Fund are used to restore funds to crime victims and for a variety of law enforcement purposes.

“In 2023, the attorneys and support staff in our Monetary Penalties Unit worked diligently to collect nearly $11.5 million on behalf of taxpayers and victims of crime,” Moore said.

“Our job doesn’t end when a defendant is sentenced or a civil case is settled,” Moore added. “I’m proud to say that over the past year, victims of fraud, sex trafficking, and other crimes have received much needed restitution for what they lost at the hands of criminal defendants. Our team seized assets and collected money judgments from criminals who attempted to profit from their illegal activities. And those who owed a debt to the United States were held accountable to pay what they owed.”

Additionally, the Western District of Missouri worked with other U.S. Attorney’s Offices and components of the Department of Justice to collect an additional $5,298,876 in cases pursued jointly by these offices. Of this amount, $37,515 was collected in criminal actions and $5,261,361 was collected in civil actions.

The U.S. Attorneys’ Offices, along with the department’s litigating divisions, are responsible for enforcing and collecting civil and criminal debts owed to the U.S. and criminal debts owed to federal crime victims. The law requires defendants to pay restitution to victims of certain federal crimes who have suffered a physical injury or financial loss. While restitution is paid to the victim, criminal fines and felony assessments are paid to the department’s Crime Victims Fund, which distributes the funds collected to federal and state victim compensation and victim assistance programs.

The U.S. Department of Justice, the FBI, the U.S. Postal Inspection Service, and six other federal law enforcement agencies announced the completion of the third annual Money Mule Initiative, a coordinated operation to disrupt the networks through which transnational fraudsters move the proceeds of their crimes.

Money mules are individuals who assist fraudsters by receiving money from victims of fraud and forwarding it to the organizers, many of whom are located abroad. Some money mules know they are assisting fraudsters, but others are unaware that their actions enable fraudsters’ efforts to swindle money from consumers, businesses, and government unemployment funds.

Over the last two months, U.S. law enforcement agencies took action against over 2,300 money mules, far surpassing last year’s total of over 600. This year, actions occurred in every state in the country and targeted money mules involved in a wide range of schemes, including lottery fraud, romance scams, government imposter fraud, technical support fraud, business email compromise or CEO fraud, and unemployment insurance fraud. Many of these schemes target elderly or vulnerable members of society.

“Money mules fuel fraud against some of America’s most vulnerable populations. Without the help of these money mules, many foreign fraud enterprises find it difficult to profit off of U.S. victims,” said Attorney General William P. Barr. “As this initiative demonstrates, the Department of Justice is committed to disrupting money mule networks, taking actions against more money mules this year than ever before, in an effort to cut off the flow of funds from American consumers and businesses to transnational criminal organizations.”

“This year in the Northern District, we have seen more than $1 million in losses and prosecuted 11 defendants for elder fraud offenses,” said U.S. Attorney Justin Herdman. “Many of us are all too aware of instances involving a loved one or elderly relative who was financially exploited by a fraudster or scammer. We will continue to seek out and prosecute these criminals as long as they continue to prey on our most vulnerable.”

Additionally, more than 35 individuals were criminally charged or arrested for their roles in receiving victim payments and either laundering the proceeds or forwarding them to accomplices. This includes two men in the Northern District of Ohio who were indicted for facilitating a grandparent scheme in the area.

Eight federal law enforcement agencies participated in this year’s effort. Led by the Department of Justice’s Consumer Protection Branch, the FBI, and the U.S. Postal Inspection Service, the participating agencies include the Department of Labor Office of Inspector General, Federal Deposit Insurance Corporation Office of Inspector General, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, Social Security Administration Office of Inspector General, U.S. Secret Service, and U.S. Treasury Inspector General for Tax Administration.

Some highlights from this year’s efforts are:

Actions were taken to halt the conduct of approximately 2,300 money mules, spanning 92 federal districts.

 

Law enforcement served approximately 2,000 money mules with letters warning the money mules that they were facilitating fraud and could face civil or criminal consequences for continuing their actions. Agents conducted over 450 interviews. .

 

On approximately 30 instances, agents seized assets or facilitated the return of victim funds. Among the asset seizures was a 2019 Lamborghini, which was seized as part of an investigation into a business email compromise scheme.

To find public education materials, as well as information about how fraudsters use and recruit money mules, please visit www.justice.gov/civil/consumer-protection-branch/money-mule-initiative.

Since President Trump signed the bipartisan Elder Abuse Prevention and Prosecution Act (EAPPA) into law, the Department of Justice has participated in hundreds of enforcement actions in criminal and civil cases that targeted or disproportionately affected seniors. In January 2020, the department designated “Preventing and Disrupting Transnational Elder Fraud” as an Agency Priority Goal, one of its top four priorities. In March 2020, the department announced the largest elder fraud enforcement action in American history, charging more than 400 defendants in a nationwide elder fraud sweep. The department has also conducted hundreds of trainings and outreach sessions across the country since the passage of the Act.

The department’s extensive efforts to combat elder fraud seek to halt the billions of dollars seniors lose each year to fraud schemes, including those perpetrated by transnational criminal organizations. The best method for prevention, however, is sharing information about the various types of elder fraud schemes with relatives, friends, neighbors, and other seniors who can use that information to protect themselves.

If you or someone you know is age 60 or older and has been a victim of financial fraud, help is standing by at the National Elder Fraud Hotline: 1-833-FRAUD-11 (1-833-372-8311). This U.S. Department of Justice hotline, managed by the Office for Victims of Crime, is staffed by experienced professionals who provide personalized support to callers by assessing the needs of the victim, and identifying relevant next steps. Case managers will identify appropriate reporting agencies, provide information to callers to assist them in reporting, connect callers directly with appropriate agencies, and provide resources and referrals, on a case-by-case basis. Reporting is the first step. Reporting can help authorities identify those who commit fraud and reporting certain financial losses due to fraud as soon as possible can increase the likelihood of recovering losses.

The hotline is staffed seven days a week from 6:00 a.m. to 11:00 p.m. eastern time. English, Spanish and other languages are available.

SAN FRANCISCO – Anthony Francis Faulk was sentenced to serve 36 months in prison and ordered to pay nearly $3 million in restitution for his role in a conspiracy to defraud more than a dozen cryptocurrency owners, announced United States Attorney Ismail J. Ramsey and FBI Special Agent in Charge Robert K. Tripp. The sentence was handed down by the Honorable William H. Orrick, United States District Judge. The Court also ordered forfeiture of numerous assets constituting or derived from proceeds obtained by Faulk’s crime.

Faulk, 26, of Latrobe, Penn., acknowledged his role in the conspiracy in a written plea agreement filed on March 2, 2023. According to his plea agreement, from October 2016 through May 2018, Faulk, using the alias “shade,” conspired with Matthew Ditman, aka “lord crump,” and Ahmad Hared, aka “special547” aka “winblo,” to defraud and extort cryptocurrency owners. The scheme involved “SIM swapping”—duping cellphone companies into giving Faulk and his co-conspirators control of victims’ cellphone numbers, using that access to hack into email and other victim accounts, and ultimately stealing the victims’ cryptocurrency or digital assets.

SIM stands for Subscriber Identity Module or Subscriber Identification Module. A SIM card is a technology used to identify and authenticate subscribers on mobile phone devices. According to his plea agreement, Faulk admitted that he used fraud, deception, and social engineering techniques to induce representatives of cellphone service providers to transfer or port cellphone numbers from SIM cards in the devices possessed by victims to SIM cards in devices possessed by members of the conspiracy. Once in possession of the illegally obtained information, members of the conspiracy reset passwords of their victims’ email, electronic storage, and other accounts. The co-conspirators then were able to control the accounts, access cryptocurrency accounts, and transfer cryptocurrencies from accounts owned by the victims to accounts or wallets controlled by Faulk and his co-conspirators.

Faulk also admitted that, in addition to transferring cryptocurrencies, the co-conspirators contacted some of their victims by telephone and threatened to compromise further accounts unless the victims paid additional money to the fraudsters.

Faulk was ordered to pay $2,816,433 in restitution to 11 victims of the scheme. (After the indictment in this matter, Faulk was charged in separate criminal case, pleaded guilty to one count of conspiracy to commit money laundering, and was ordered to pay restitution to two additional victims.) The court also ordered forfeiture of numerous assets, seized by the government, constituting or derived from proceeds traceable to the conspiracy. Those assets include a nearly $1 million home in Latrobe, Pennsylvania; three J.P. Morgan Chase accounts totaling approximately $12,525,592, $6,242,919, and $18,118, respectively; a 2018 Mercedes-Benz GTS; a 2018 Nissan Rouge; a 2019 Chevrolet Silverado K1500; diamond jewelry; a Rolex; Tiffany earrings; and a Louis Vuitton handbag and wallet.

On December 10, 2019, a federal grand jury indicted Faulk, charging him with one count of conspiracy to commit wire fraud, in violation of 18 U.S. C. § 1349, and one count of interstate communications with intent to extort, in violation of 18 U.S.C. § 875(d). Pursuant to his plea agreement, Faulk pleaded guilty to the conspiracy count. On the government’s motion, Judge Orrick dismissed the extortion count at the sentencing hearing.

Hared and Ditman were separately charged. Hared’s sentencing is set for August 31, 2023, and Ditman’s for October 12, 2023.

The case is being prosecuted by the Corporate and Securities Fraud Section of the U.S. Attorney’s Office. Assistant United States Attorney Robert Leach is prosecuting the case, with assistance from Mimi Lam and Megan Pagaduan. This case is the result of an investigation from FBI.

CHARLOTTE, N.C. – The U.S. Attorney’s Office for the Western District of North Carolina joined the U.S. Department of Justice, the FBI, the U.S. Postal Inspection Service, and six other federal law enforcement agencies in announcing the completion of the third annual Money Mule Initiative, a coordinated operation to disrupt the networks through which transnational fraudsters move the proceeds of their crimes. Money mules are individuals who assist fraudsters by receiving money from victims of fraud and forwarding it to the fraud organizers, many of whom are located abroad. Some money mules know they are assisting fraudsters, but others are unaware that their actions enable fraudsters’ efforts to swindle money from consumers, businesses, and government unemployment funds. Europol announced a simultaneous effort, the European Money Mule Action (EMMA) today.

Over the last two months, U.S. law enforcement agencies took action against over 2,300 money mules, far surpassing last year’s effort, which acted against over 600 money mules. This year, actions occurred in every state in the country. The initiative announced today targeted money mules involved in a wide range of schemes including lottery fraud, romance scams, government imposter fraud, technical support fraud, business email compromise or CEO fraud, and unemployment insurance fraud. Many of these schemes target elderly or vulnerable members of society.

“Money mules fuel fraud against some of America’s most vulnerable populations.

Without the help of these money mules, many foreign fraud enterprises find it difficult to profit off of U.S. victims,” said Attorney General William P. Barr. “As this initiative demonstrates, the Department of Justice is committed to disrupting money mule networks, taking actions against more money mules this year than ever before, in an effort to cut off the flow of funds from American consumers and businesses to transnational criminal organizations.”

“Criminals enterprises that perpetrate financial fraud are increasingly relying on money mules to launder ill-gotten gains and conduct financial transactions using illegal proceeds. Be it under the guise of a new romantic relationship or the promise of a new job, scammers employ many tactics that can dupe unsuspecting victims into carrying out these illegal money operations. Today’s initiative serves as a lesson and a warning: don’t let  scammers fool you into doing their dirty work,” said Andrew Murray, U.S. Attorney for the Western District of North Carolina.

Eight federal law enforcement agencies participated in this year’s effort. Led by the Department of Justice’s Consumer Protection Branch, the FBI, and the U.S. Postal Inspection Service, the participating agencies include the Department of Labor Office of Inspector General, Federal Deposit Insurance Corporation Office of Inspector General, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, Social Security Administration Office of Inspector General, U.S. Secret Service, and U.S. Treasury Inspector General for Tax Administration.

Some highlights from this year’s efforts are:

Actions were taken to halt the conduct of approximately 2,300 money mules, spanning 92 federal districts.

Law enforcement served approximately 2,000 money mules with letters warning the money mules that they were facilitating fraud and could face civil or criminal consequences for continuing their actions. Agents conducted over 450 interviews.

On approximately 30 instances, agents seized assets or facilitated the return of victim funds. Among the asset seizures was a 2019 Lamborghini, which was seized as part of an investigation into a business email compromise scheme.

The U.S. Postal Inspection Service filed 14 administrative actions requiring money mules to cease facilitating fraud.

U.S. Attorney’s Offices and the Consumer Protection Branch filed 17 civil injunctive actions seeking court orders requiring money mules to stop facilitating fraudulent activity. Districts filing those actions include the Western District of Washington, District of South Carolina, Middle District of Florida, Southern District of Florida, Central District of California, Northern District of New York, and District of Colorado.

 

Additionally, more than 35 individuals were criminally charged or arrested for their roles in receiving victim payments and forwarding the fraud proceeds to accomplices or laundering fraud proceeds. Cases include:

The U.S. Attorney’s Office for the Western District of North Carolina has indicted four individuals operating as money mules in two separate business email compromise schemes.

The U.S. Attorney’s Office for the Central District of California indicted three individuals for collecting parcels containing victim proceeds in a government imposter scheme.

The U.S. Attorney’s Office for the District of Maryland indicted three individuals for opening bank accounts using falsified documents for the purposes of facilitating a business email compromise scam.

The U.S. Attorney’s Office for the Western District of Texas indicted an individual for facilitating a lottery fraud scheme. The indictment also seeks to forfeit over $1.2 million.

The U.S. Attorney’s Office for the Northern District of Ohio indicted two money mules who facilitated a grandparents scam.

The U.S. Attorney’s Office for the Eastern District of Virginia charged a money mule who laundered gift cards purchased by fraud victims.

 

Additional criminal charges were brought by U.S. Attorney’s Offices in Southern District of Florida, Western District of Pennsylvania, Southern District of Texas, the Southern District of Mississippi, and the District of New Jersey.

The above charges are merely allegations, and the defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

“The success of the Money Mule Initiative is the culmination of the hard work by and coordination between the FBI and our federal, state, local, and international partners,” said FBI Director Christopher Wray. “This campaign has resulted in hundreds of criminal arrests worldwide and justice for countless victims. Today’s announcement should send a clear message to those engaged in this type of criminal activity: they are not outside the reach of law enforcement, and the FBI and its partners will relentlessly pursue them in order to protect the American people.”

“The Postal Inspection Service has zero tolerance for fraudsters who use the U.S. Mail to transport funds from scammed victims,” said Chief Postal Inspector Gary Barksdale. “Postal

Inspectors use cutting-edge technology to build strong cases and campaigns like those announced today, which make significant progress towards disrupting money mule networks. Postal Inspectors and our law enforcement partners will be relentless in the pursuit of criminal organizations that perpetrate these schemes.”

The agencies participating in the Money Mule Initiative and community partners are undertaking an outreach campaign to increase awareness of how fraudsters use and recruit money mules. U.S. Attorney’s Offices across the country, through their Elder Justice Coordinators, will be reaching out to their communities to educate the public about money mules. AmeriCorp Seniors (formerly Senior Corps) will be working to increase awareness of how money mules facilitate fraud and how consumers can avoid unwittingly assisting fraud schemes.

Additionally, the American Bankers Association will be engaging with its members on money mules and the role of financial institutions in addressing the problem. The Department of Justice will also be distributing resources for state and local law enforcement on identifying, disrupting, investigating, and prosecuting money mules.

To find public education materials, as well as information about how fraudsters use and recruit money mules, please visit www.justice.gov/civil/consumer-protection-branch/money- mule-initiative.

Since President Trump signed the bipartisan Elder Abuse Prevention and Prosecution Act (EAPPA) into law, the Department of Justice has participated in hundreds of enforcement actions in criminal and civil cases that targeted or disproportionately affected seniors. In January 2020, the department designated “Preventing and Disrupting Transnational Elder Fraud” as an Agency Priority Goal, one of its top four priorities. In March 2020, the department announced the largest elder fraud enforcement action in American history, charging more than 400 defendants in a nationwide elder fraud sweep. The department has also conducted hundreds of trainings and outreach sessions across the country since the passage of the Act.

The department’s extensive efforts to combat elder fraud seek to halt the billions of dollars seniors lose each year to fraud schemes, including those perpetrated by transnational criminal organizations. The best method for prevention, however, is sharing information about the various types of elder fraud schemes with relatives, friends, neighbors, and other seniors who can use that information to protect themselves.

If you or someone you know is age 60 or older and has been a victim of financial fraud, help is standing by at the National Elder Fraud Hotline: 1-833-FRAUD-11 (1-833-372-8311). This U.S. Department of Justice hotline, managed by the Office for Victims of Crime, is staffed by experienced professionals who provide personalized support to callers by assessing the needs of the victim, and identifying relevant next steps. Case managers will identify appropriate reporting agencies, provide information to callers to assist them in reporting, connect callers directly with appropriate agencies, and provide resources and referrals, on a case-by-case basis.  Reporting is the first step.  Reporting can help authorities identify those who commit fraud and reporting certain financial losses due to fraud as soon as possible can increase the likelihood of recovering losses. The hotline is staffed seven days a week from 6:00 a.m. to 11:00 p.m. eastern time. English, Spanish and other languages are available.

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

 

Earlier today, U.S. District Judge Joanna Seybert entered an order forfeiting more than $143 million in assets that had been seized from David H. Brooks, the now-deceased founder and former Chief Executive Officer of DHB Industries, Inc. (DHB), a supplier of body armor to the U.S. military and law enforcement agencies.  In 2010, following an eight-month trial, Brooks was convicted of mail and wire fraud, securities fraud and obstruction of justice.  He subsequently pleaded guilty to filing false tax returns.  The Court had ordered the seized assets to be used to pay forfeiture and victim restitution as part of Brooks’s sentence.  Brooks appealed his fraud convictions and sentence, but died in prison while that appeal was pending.  As a result, his fraud convictions and sentence were vacated.  The seized assets, however, remained restrained in a parallel civil forfeiture action previously filed by the government.  Pursuant to a global settlement agreement reached in the civil forfeiture action, the forfeited assets will be made available to compensate close to 90 percent of the approved losses suffered by thousands of investor victims and by DHB’s successor, SS Body Armor I, Inc. (SSBA), through the remission process administered by the Department of Justice (DOJ). 

Richard P. Donoghue, United States Attorney for the Eastern District of New York, and William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), announced the forfeiture.

“This case demonstrates the critical role that civil forfeiture plays in depriving criminals of their ill-gotten gains and putting those funds back in the hands of victims,” stated United States Attorney Donoghue.  “Brooks’s sentence – which justly included criminal forfeiture and victim restitution – was frustrated for reasons having nothing to do with his well-established guilt.  While justice may have been delayed, it will not be denied.  Our Office remains dedicated to vindicating the rights of victims and insuring that crime does not pay.”  Mr. Donoghue thanked the Internal Revenue Service (IRS) and the U.S. Marshals Service for their assistance in this case. 

“Brooks was rightfully sentenced to a lengthy prison term and ordered to pay more than $90 million in victim restitution following his conviction, but, due to circumstances out of the government’s control, the restitution order was abated,” stated FBI Assistant Director-in-Charge Sweeney.  “Today’s civil forfeiture order effectively reinstates the financial sanctions imposed on Brooks and will allow the government to compensate Brooks’s victims for the bulk of their losses.  Through these type of civil forfeiture actions, the FBI will continue to seek justice for victims and remind criminals that their misdeeds will not be rewarded.”  

As proven at his criminal trial, Brooks committed a series of fraud schemes that were varied and pervasive.  Brooks, along with his co-conspirators, manipulated DHB’s books and records and then lied to auditors in an effort to cover-up the schemes.  In late 2004, by which time the accounting fraud had inflated the price of DHB stock to over $20 per share, Brooks began selling millions of DHB shares, netting him over $185 million.  After these insider sales, the price of DHB stock fell to pennies on the dollar and the stock was de-listed from the American Stock Exchange.  In another scheme, Brooks looted DHB by using corporate funds to finance his family’s lavish lifestyle, including a multi-million-dollar bat mitzvah party for his daughter, vacations in exotic locations and cosmetic surgery. 

In August 2013, Brooks was sentenced to 17 years in prison.  As part of his sentence, the Court ordered Brooks to: forfeit approximately $65 million; pay an $8.7 million fine; pay approximately $2.9 million in restitution to the IRS; and pay approximately $91.5 million in restitution to thousands of investor victims and to SSBA, which sought bankruptcy protection in the wake of Brooks’s fraud.  The forfeiture and restitution were to be satisfied from the assets that the government seized from Brooks, including funds in accounts at a number of financial institutions, foreign currency, gold Krugerrands, luxury cars, jewelry and a commissioned replica of the famous Wall Street “Charging Bull” statue. 

Brooks died in prison in October 2016.  In September 2017, the Second Circuit Court of Appeals ruled that Brooks’s obligation to pay approximately $91.5 million in victim restitution abated because he died before the completion of his appeal.  With the abatement of the restitution order, along with the fraud convictions, forfeiture and fine, Brooks’s death effectively erased more than $165 million in criminal penalties and victim restitution.  Brooks’s tax convictions and tax restitution order, however, survived his death as they were based on his guilty plea to separate tax charges.

Following Brooks’s death, the government prosecuted its civil forfeiture action, which was not abated, against the seized assets.  The civil forfeiture action proceeded on many of the same fraud allegations presented in the criminal case as well as on allegations that Brooks and his family laundered the fraud proceeds through a web of trusts, tax shelters and shell companies that Brooks created and placed in his family members’ names.  The global settlement resolves the civil forfeiture action as well as other litigation involving Brooks’s victims and the Securities and Exchange Commission. 

The forfeiture of more than $143 million represents the largest civil forfeiture recovery by the U.S. Attorney’s Office for the Eastern District of New York.  Pursuant to the remission process, the DOJ has exercised its discretion to use the forfeited assets to compensate victims.  It is expected that the funds to be remitted to investors and SSBA will reimburse these victims for approximately 90 percent of their DOJ-approved losses.  The settlement further provides for the full payment of the approximately $2.9 million tax restitution order to the IRS.

The government’s case was prosecuted by Assistant United States Attorneys Laura D. Mantell, Tanya Y. Hill, Karin Orenstein and Artemis Lekakis. 

E.D.N.Y. Docket No. 10-CV-4750

CENTRAL ISLIP, NY – Earlier today, Aventura Technologies, Inc. (Aventura) pleaded guilty to committing mail and wire fraud conspiracy and illegal importation in federal court in Central Islip.  The guilty plea reflects Aventura’s long-running, lucrative scheme to purchase Chinese-made security equipment (such as networked surveillance cameras) and resell it as U.S.-made, including to multiple agencies of the U.S. government, branches of the military and to customers overseas in the public and private sectors.  The scheme began in 2006, ending in 2019 when charges were brought in this case.  Aventura made more than $112 million in sales during that time.  Today’s proceeding was held before United States Magistrate Judge Arlene R. Lindsay.

In connection with its guilty plea, the company agreed to dissolve itself and to forfeit more than $3 million in seized assets, including Aventura’s headquarters and a seventy-foot yacht partially owned by the defendants, as well as more than 7,000 seized items of merchandise.   All seven individuals charged in this case have pleaded guilty, including Aventura’s nominal president Frances Cabasso and its true chief executive, her husband Jack Cabasso.

In addition to Aventura’s fraudulent resale of Chinese-made goods, the company defrauded customers by falsely claiming that Frances Cabasso was in charge of Aventura in order to obtain access to valuable government contracts reserved for women-owned businesses.  Frances Cabasso pled guilty to wire fraud conspiracy in connection with that scheme.

The individual defendants who pled guilty in the case were Frances Cabasso, Jack Cabasso, and senior executives Jonathan Lasker, Christine Lavonne Lazarus and Eduard Matulik, as well as employees Wayne Marino and Alan Schwartz. 

The charges were announced by Breon Peace, United States Attorney for the Eastern District of New York; James Smith, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI); Robert C. Erickson, Jr., Deputy Inspector General, General Services Administration Office of Inspector General (GSA OIG); Brian J. Solecki, Acting Special Agent in Charge, Defense Criminal Investigative Service, Northeast Field Office (DCIS); Thomas Fattorusso, Special Agent-in-Charge, Internal Revenue Service-Criminal Investigation (IRS-CI); Francis J. Russo, Director, Customs and Border Protection, New York Field Office (CBP); William W. Richards, Special Agent in Charge, Air Force Office of Special Investigations, Office of Procurement Fraud Investigations (AFOSI); Heather Hill, Acting Inspector General, Treasury Inspector General for Tax Administration (TIGTA); Greg Gross, Special Agent in Charge, Naval Criminal Investigative Service, Economic Crimes Field Office (NCIS); Keith K. Kelly, Special Agent-in-Charge, Army Criminal Investigation Division’s Fraud Field Office (Army CID); and Teri L. Donaldson, Inspector General for the Department of Energy (DOE IG).

“For years, the defendants, while pretending to be a women-owned business, intentionally corrupted the U.S. military supply chain by passing off Chinese-made networked electronics with known vulnerabilities as American-made,” stated United States Attorney Peace.  “This case highlights the importance of national and international inter-agency cooperation in securing our cyber supply chain and protecting our military readiness.  We will spare no effort in holding accountable those who undermine and threaten the national security of the United States.” 

“This GSA contractor lied about its surveillance and security equipment being made in the United States when it was actually being made in China,” stated GSA Deputy Inspector General Erickson.  “Company executives also misrepresented to GSA that the company was woman-owned to gain access to government contracts they otherwise would not have been eligible to receive. We remain committed to investigating contract fraud such as this and holding criminals accountable.”

“The introduction of misbranded parts and materials into the DoD’s supply chain poses a significant risk to America’s military readiness and our national security,” stated DCIS Acting Special Agent-in-Charge Solecki.  “We remain committed to working with our law enforcement partners and the Department of Justice, to ensure that individuals and companies who engage in fraudulent activity, at the expense of our nation’s military members, are investigated and prosecuted.”

“Executives of Aventura Technologies have already pled guilty, detailing how the company fronted illegal importations and wire fraud by the sale of thousands of goods that entered the U.S. under fraudulent circumstances to federal entities,” stated IRS-CI Special Agent-in-Charge Fattorusso.  “Their scheme went further to purport that Aventura was a woman-owned business simply to win additional government contracts.  It is not common to see both the executives and the company face prosecution, but in this case, today’s guilty plea is proof of the significant amount of evidence present in this case.”

“U.S. Customs and Border Protection provided the critical link to an ongoing investigation that resulted in the takedown of an elaborate criminal enterprise,” stated CBP Director Russo.  “This case serves as a great example of collaborative law enforcement efforts to uncover and dismantle criminal enterprises that seek to defraud the United States government for personal gain while jeopardizing our national defense and causing economic harm to their competitors.”  

“This outcome demonstrates the Office of Procurement Fraud’s commitment to identify and hold accountable those who engage in fraudulent behavior that places our warfighters at risk,” stated AFOSI Special Agent-in-Charge Richards.   “AFOSI, alongside our joint investigative and prosecutorial partners, will work tirelessly to combat fraud threatening the Department of the Air Force.”

“The Treasury Inspector General for Tax Administration (TIGTA) is the nation’s tax watchdog agency committed to ensuring the integrity of the IRS contracting and procurement process,” stated TIGTA’s Acting Inspector General Hill. “We are aggressively investigating individuals who attempt to defraud the IRS, like the individuals in this case. Companies working with the IRS and the Department of Treasury must conduct themselves with integrity and honesty. Thank you to the U.S. Attorney’s Office and law enforcement partners for their support in this investigation.”

“Falsely misrepresenting the country of origin for equipment sold to the U.S. Government that is directly used in support of the safety and readiness of our warfighters is a serious crime,” said NCIS Special Agent-in-Charge Gross.  “NCIS is committed to protecting the integrity of the Department of the Navy’s procurement and acquisitions process.”

“Today's plea is a fitting end for those who conspire to defraud the government,” stated Army CID Special Agent-in-Charge Kelly.  “We are proud to work alongside our federal law enforcement partners to protect the United States Government from those who seek to misrepresent themselves and their product, thereby threatening the readiness of the U.S. Army and potentially risking the lives of countless soldiers.”

“The installation of the material provided by Aventura in a Department of Energy facility would have provided a possible pathway for the PRC to gather information on the personnel who work at one of the Nation’s most advanced research facilities,” said DOE Inspector General Donaldson.  “I thank our law enforcement partners who supported our Special Agents to ensure this equipment didn’t make its way into the lab, and the US Attorney’s Office in the Eastern District of New York for holding the company who put our national security at risk, accountable for its actions.”

The Country of Origin Fraud and Unlawful Importation Scheme

As admitted in court, Aventura lied for over a decade to its customers, including the U.S. military, the federal government, numerous private customers in the United States, and public and private sector customers abroad.  Between 2008 and November 2019, Aventura made upwards of $112 million, including over $20 million in federal government contracts, while claiming that it was manufacturing its products at its headquarters in Commack, New York.  In fact, since at least 2006, Aventura imported goods, primarily from the People’s Republic of China (PRC), then resold them as American-made or manufactured in a small number of other countries. 

The company’s marketing relied heavily on U.S. flags and “American-made” branding, and its sales force routinely asserted that Aventura was the sole U.S. manufacturer of security equipment.  As described below, Jack Cabasso went to extreme lengths to conceal the Chinese origin of his products, while at the same time writing to U.S. government procurement officials to accuse his competitors of reselling Chinese-made goods.  Visitors to Aventura’s corporate headquarters were shown a fictitious “lab,” and were told that a separate building was reserved for classified government work and was off-limits to visitors.  In fact, Aventura did not own or occupy the building in question.

In the course of its investigation, the government intercepted and covertly marked numerous shipments from PRC sources to Aventura’s Commack, New York headquarters.  In some cases, cameras shipped from the PRC were pre-marked with Aventura’s logo and the phrase “Made in USA,” accompanied by an American flag.  In many instances, the items were later resold to government agencies to whom the defendants falsely represented that the products were American-made.  Examples include:



In March 2019, the U.S. Navy ordered from Aventura a $13,500 laser night vision camera that was specified as American-made on Aventura’s U.S. General Services Administration (GSA) price list.  In April 2019 at a shipping facility in Jamaica, Queens, a team led by Customs and Border Protection (CBP) officers intercepted a shipment from a PRC manufacturer to Aventura that contained a camera matching the Navy’s order, and surreptitiously marked it for later identification.  Two weeks later, that same camera was delivered to Naval Submarine Base New London in Groton, Connecticut. 





In September 2018, the Department of Energy (DOE) ordered approximately $156,000 worth of supposed American-made networked automated turnstiles from Aventura, to be installed at a facility in Tennessee.  In January 2019, turnstiles matching DOE’s order were intercepted in a shipment from a PRC manufacturer and marked by CBP; one month later, they arrived at the DOE facility in Tennessee.  The crates shipped by Aventura to the DOE appeared identical to those that the CBP-led team had inspected, except that the shipping labels from the PRC directing the crates to Aventura had been peeled off, leaving behind visible traces of paper and glue.  A special agent with the Department of Energy Office of Inspector General placed a call to Lazarus regarding the turnstile shipment in May 2019.  During the call, Lazarus falsely stated that the turnstiles were “U.S. made [in] New York.” 





In 2018, Aventura sold the U.S. Air Force 25 body cameras.  Aventura was contractually required to provide goods from a limited set of countries that did not include the PRC.  In August 2018, however, an Air Force service member observed Chinese characters on the built-in screen of one of the body cameras.  The body camera was sent for analysis to a specialist, who downloaded its firmware and found numerous indications that the camera was manufactured in the PRC.  The camera contained multiple preloaded images that were apparently designed to display on the built-in screen—including the U.S. Air Force logo, the logo of the PRC Ministry of Public Security, and the logo of a PRC manufacturer of security equipment.  All three logos had been saved to the camera’s firmware using the same software, on a computer that was set to a time zone in the PRC—indicating that the camera’s manufacturer in the PRC had been aware that the U.S. Air Force was a likely end user of the camera.



Coverup of the Country of Origin Fraud and Unlawful Importation Scheme

The defendants, working with counterparts in the PRC, went to extraordinary lengths to conceal this scheme.  For example: 



In November 2018, Jack Cabasso exchanged emails with an employee of a PRC manufacturer of surveillance equipment (PRC Manufacturer-2), identifying the need to “hide” the name of PRC Manufacturer-2 from Aventura’s customers.  One week later, Cabasso stressed the need to take steps so that “they cannot trace” the product to PRC Manufacturer-2.  Cabasso added that “the biggest problem” was that PRC Manufacturer-2’s initials were marked on its circuit boards, and said that he had “lost several potential customers” because of similar practices by another PRC manufacturer (PRC Manufacturer-1).  The employee responded that the company’s initials would be removed from all circuit boards shipped to Aventura. 





Similarly, in December 2018, Aventura executives exchanged emails with employees of another PRC-based digital video equipment manufacturer (PRC Manufacturer-4).  They complained to the employees that “communication from the server to the client contains [PRC Manufacturer-4’s name] visible in clear text.  This should be changed.”  When one of the employees wrote that this could not be changed, Jack Cabasso responded: “WE CANNOT HAVE CUSTOMERS ABLE TO SEE [PRC Manufacturer-4’s name]”, later adding: “we also sent a sample to a customer and he found [PRC Manufacturer-4] … branding in the [operating system] which is a problem.” 



On or about November 23, 2016, Jack Cabasso sent an email to a GSA representative accusing 12 other GSA contractors of selling products to the U.S. Government that were manufactured by a PRC manufacturer of surveillance equipment (PRC Manufacturer-1).  Cabasso asserted that this was a “big problem” and “doesn’t get any worse,” because PRC Manufacturer-1 was “actually the Communist Chinese Government and ha[d] ‘significant’ cybersecurity issues aside from” compliance with U.S. laws specifying country-of-origin requirements for government purchases.   Cabasso stated that PRC Manufacturer-1 “will acknowledge they manufacture no products outside of China,” and appended an article about the removal of cameras manufactured by PRC Manufacturer-1 from the U.S. Embassy in Afghanistan.

Notably, Aventura was importing security equipment from PRC Manufacturer-1 while Jack Cabasso was complaining to GSA about other contractors’ supposed dealings with the company.  For example, bank records show that Aventura wired funds to PRC Manufacturer-1 in the PRC on or about October 31, 2016 and November 29, 2016, and law enforcement records show that on or about December 13, 2016, Aventura imported from PRC Manufacturer-1 in PRC an approximately 1,800-pound shipment of goods manifested as “digital video.”

In November 2018, Aventura executives communicated with a potential distributor in Qatar who asked for assurance that Aventura’s cameras were American made.  Cabasso responded: “I believe Ed [Matulik] confirmed that they are made in the Aventura factory here in New York and [anyone] may visit at any time.”  Cabasso attached what purported to be a photograph of Aventura’s assembly line, depicting a row of seated individuals in blue lab coats and protective hairnets working at laboratory benches—a photograph that also appeared on Aventura’s website.  In reality, this photograph first appeared in a trade publication article recounting a reporter’s visit to PRC Manufacturer-1’s manufacturing facility in Hangzhou, PRC, and it depicts PRC Manufacturer-1’s assembly line—not Aventura’s.

The Scheme to Misrepresent Aventura as a Woman-Owned Small Business

In a parallel scheme, Jack and Frances Cabasso, along with other Aventura executives, falsely represented on numerous occasions that Frances Cabasso was the chief executive of Aventura.  In fact, Frances Cabasso was in charge only on paper; the true chief executive officer of Aventura was Jack Cabasso, and Frances Cabasso played a minimal role at the company.  This misrepresentation gave Aventura access to government contracts that were set aside for women-owned small businesses, a category that is legally defined to include only businesses owned by women where management and daily operations are also controlled by one or more women. 

Aventura’s website and its GSA webpage identify Aventura as a woman-owned business, and the defendants repeatedly certified to the GSA and stated to government procurement officers that Aventura is a woman-owned business.  For example, on or about January 13, 2014, a GSA employee emailed Frances Cabasso to “verify if Aventura Technologies, Inc. is a Woman-Owned business.”  She replied: “Yes we are still a certified women-owned business.”  Aventura won multiple contracts from the federal government on the strength of its status as a woman-owned business.

In fact, real control at Aventura was exercised by Jack Cabasso.  Frances Cabasso worked as a bookkeeper at a nearby business and was rarely present at Aventura’s offices.  At times, emails sent to Frances Cabasso’s email address were auto-forwarded to Jack Cabasso, who sometimes signed his responses in Frances’s name.  The defendants openly joked about the fact that Frances Cabasso did not work at Aventura.  For example, in an instant message exchange on December 5, 2016 between Jack Cabasso and Lazarus, both defendants discussed moving another employee into “Fran’s office”--the office of the purported owner of the company—putting the word “Fran’s” in quotation marks.

* * * *

The government’s case is being handled by the Office’s National Security and Cybercrime Section.  Assistant United States Attorneys Alexander Mindlin, Kayla Bensing and Claire Kedeshian are in charge of the prosecution.  Significant contributions were made by former Assistant United States Attorney Ian Richardson, now Chief Counsel for Corporate Enforcement within the Department’s National Security Division.

The Defendant:



AVENTURA TECHNOLOGIES, INC.

Commack, New York

E.D.N.Y. Docket No. 19-CR-582 (JMA)

Anatoly Legkodymov, a Russian national also known as “Anatolii Legkodymov,” “Gandalf” and “Tolik,” pleaded guilty today in federal court in Brooklyn to operating a money transmitting business that transported and transmitted illicit funds.  The charges stem from Legkodymov’s majority ownership of Bitzlato Ltd., a cryptocurrency exchange that served as a primary conduit for dark market purchasers and sellers, as well as a safe haven for ransomware criminals.  As part of his plea agreement, Legkodymov agreed to dissolve Bitzlato and to release any claim over approximately $23 million in seized assets of Bitzlato. The proceeding was held before United States District Judge Eric N. Vitaliano.

Breon Peace, United States Attorney for the Eastern District of New York, Lisa O. Monaco, United States Deputy Attorney General, Nicole M. Argentieri, Acting Assistant Attorney General for the Justice Department’s Criminal Division, and James Smith, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), announced the guilty plea.

“Legkodymov’s guilty plea today confirms that he was well aware that Bitzlato, his cryptocurrency exchange, was being used like an open turnstile by criminals eager to take advantage of his lax controls over illicit money transactions,” stated United States Attorney Peace.  “The defendant may have thought he was operating from a safe haven overseas for his ‘No Questions Asked’ clearinghouse, but this prosecution and conviction demonstrate otherwise.”

“As alleged, Bitzlato advertised a safe haven for fraudsters, thieves, and other criminals to launder illicit proceeds—but their business model didn’t account for federal law enforcement,” said Deputy Attorney General Lisa O. Monaco. “We are dismantling and disrupting the cryptocrime ecosystem using all tools available—including criminal prosecution.  In January, the Department and our partners took down Bitzlato’s infrastructure and seized its cryptocurrency.  Today’s conviction of Bitzlato’s founder is the latest product of our efforts.”

“Legkodymov operated a cryptocurrency exchange that was open for business to money launderers and other criminals,” stated Acting Assistant Attorney General Argentieri.  “He profited from catering to criminals, and now he must pay the price.  Transacting in cryptocurrency does not put you beyond the reach of the law. Legkdoymov’s plea demonstrates the consequences for those who would offer a safe haven for criminals and their ill-gotten gains.”

As alleged in public filings, Legkodymov is a senior executive and the majority shareholder of Bitzlato Ltd. (Bitzlato), a Hong Kong-registered cryptocurrency exchange that operated globally.  Bitzlato marketed itself as requiring minimal identification from its users, specifying that “neither selfies nor passports [are] required.”   On occasions when Bitzlato did direct users to submit identifying information, it repeatedly allowed them to openly provide information belonging to “straw man” registrants.

As a result of these deficient know-your-customer (KYC) procedures, Bitzlato became a haven for criminal proceeds and funds intended for use in criminal activity.  Bitzlato’s largest counterparty in cryptocurrency transactions was Hydra Market, an online marketplace for narcotics, stolen financial information, fraudulent identification documents, and money laundering services that was the largest and longest running darknet market in the world.  Hydra Market users exchanged more than 700 million dollars’ worth of cryptocurrency with Bitzlato, either directly or through intermediaries, until Hydra Market was shut down because of seizures made by U.S. and German law enforcement in April 2022. Bitzlato also received millions of dollars’ worth of ransomware proceeds.  The defendant was repeatedly advised that cryptocurrency routed through Bitzlato represented the proceeds of crime and/or was intended for use in illicit transactions.

The investigation was jointly prosecuted by the United States Attorney’s Office for the Eastern District of New York and the National Cryptocurrency Enforcement Team (NCET), which was established to combat the growing illicit use of cryptocurrencies and digital assets.  Within the Criminal Division’s Computer Crime and Intellectual Property Section, the NCET conducts and supports investigations into individuals and entities that are enabling the use of digital assets to commit and facilitate a variety of crimes, with a particular focus on virtual currency exchanges, mixing and tumbling services, and infrastructure providers.  The NCET also works to set strategic priorities regarding digital asset technologies, identify areas for increased investigative and prosecutorial focus, and lead the Department’s efforts to collaborate with domestic and foreign government agencies as well as the private sector to aggressively investigate and prosecute crimes involving cryptocurrency and digital assets. 

The Justice Department’s Office of International Affairs and the FBI’s Legal Attaché in France provided critical assistance in the case, with support from the department’s Cyber Operations International Liaison. The department also thanks the Cyber Division of the Paris Prosecution Office and to France’s Gendarmerie Nationale Cyberspace Command (Cyber Crime Investigation Unit/ C3N).

The government’s case is being prosecuted by CCIPS/NCET Trial Attorney and EDNY Assistant U.S. Attorney Alexander Mindlin, CCIPS/NCET Trial Attorney Sarah Wolfe, and EDNY Assistant U.S. Attorney Artie McConnell are prosecuting the case, with substantial assistance from former NCET Trial Attorneys Scott Meisler and Matthew Blackwood.

The Defendant:

ANATOLY LEGKODYMOV (also known as “Gandalf” and “Tolik”)

Age:  41

Shenzhen, People’s Republic of China

E.D.N.Y. Docket No. 23-CR-496 (ENV)

The Department of Justice announced today a further distribution of approximately $92 million in compensation for losses suffered by FIFA, the world organizing body of soccer; CONCACAF, the confederation responsible for soccer governance in North and Central America, among other jurisdictions; CONMEBOL, the confederation responsible for soccer governance in South America; and various constituent national soccer federations (collectively, the “Victims”).  The funds, which were remitted following the department’s recognition of losses and grant of remission up to a total of $201 million in August 2021, were forfeited to the United States in the Eastern District of New York as part of the government’s long-running investigation and prosecution of corruption in international soccer.  To date, the prosecutions have resulted in charges against more than 50 individual and corporate defendants from more than 20 countries, primarily in connection with the offer and receipt of bribes and kickbacks paid by sports marketing companies to soccer officials in exchange for the media and marketing rights to various soccer tournaments and events and the laundering of those payments. 

Breon Peace, United States Attorney for the Eastern District of New York, Kenneth A. Polite, Jr., Assistant Attorney General of the Justice Department’s Criminal Division, Michael J. Driscoll, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and Ryan L. Korner, Special Agent-in-Charge, Internal Revenue Service-Criminal Investigation, Los Angeles (IRS-CI), made the announcement.

“Today’s distribution of approximately $92 million underscores our commitment to returning money obtained through the corruption and fraud prosecuted in this case to the victims, where it will be used to benefit the sport,” stated United States Attorney Peace.  “Over much of the past decade, this investigation and prosecution has concentrated on bringing wrongdoers to justice and recovering ill-gotten gains.  Our Office, working in collaboration with our law enforcement partners and colleagues in the Department of Justice, will continue our work to compensate victims of crime.”

“From the beginning of the FIFA investigation and prosecutions, one of the department’s primary goals has been to make the victims whole,” stated Assistant Attorney General Polite. “The department has used every tool at its disposal to make this a reality, while depriving the perpetrators of the proceeds of their crimes. This distribution of approximately $92 million as compensation for losses suffered highlights the importance of asset forfeiture as a critical tool in this endeavor.”

“There was an extraordinary amount of money flowing between corrupt officials and businesses in this massive scheme,” stated FBI Assistant Director-in-Charge Driscoll.  “It is gratifying to know assets seized from the criminals involved will be distributed to groups in need of the money, one specifically focused on educating and safeguarding football for women and girls. The silver lining is that some good will come from the rampant greed uncovered in this investigation.”

“As the distributions to victims have demonstrated, IRS-CI and our law enforcement partners will leave no stones unturned when it comes to conducting investigations involving financial crimes,” stated IRS-CI Special Agent-in-Charge Korner.  “Not only have dozens of individuals been brought to justice through the course of the investigation, but the additional $92 million will be returned in full to the victims to help compensate them for the injuries caused by this corruption.”

On May 27, 2015, an indictment was unsealed charging 14 FIFA officials and sports marketing executives with racketeering, honest services wire fraud and money laundering offenses, among others.  On December 3, 2015, a superseding indictment was unsealed charging an additional 16 FIFA officials with similar crimes.  During the course of the prosecutions, 27 individual defendants have pleaded guilty to their roles in the charged crimes.  In December 2017, two former FIFA officials, Juan Ángel Napout and Jose Maria Marin, were convicted after trial of racketeering conspiracy and related offenses.  Four corporate entities have pleaded guilty and others, including banks, have acknowledged their roles in criminal conduct through deferred prosecution or non-prosecution agreements.

As part of these proceedings, many of the defendants were ordered to forfeit assets obtained through their criminal activity. Under federal law, the Department of Justice has the authority to distribute the proceeds of forfeited assets through the remission process to victims of crimes, including to the soccer organizations that employed and were defrauded by the corrupt soccer executives.

FIFA, CONCACAF, and CONMEBOL have committed to distributing funds received through the remission process, including $32.3 million previously remitted in August 2021, to and through a newly created World Football Remission Fund (the “Fund”) focused on women’s/girl’s football, education, safeguarding, youth programs, community outreach and humanitarian needs.  The fund has been established under the FIFA Foundation, an independent foundation that uses soccer, and sport in general, as a tool for social development. The terms of the Fund provide for oversight and independent audit measures to ensure remitted funds are distributed appropriately. 

Assistant U.S. Attorneys Samuel P. Nitze, M. Kristin Mace, Brian D. Morris, Kaitlin T. Farrell, and Victor A. Zapana are in charge of the prosecution and the petition, solicitation, and providing recommendations on the victims’ petitions. Assistant U.S. Attorney Lauren H. Elbert and Trial Attorney Christian Nauvel and former Trial Attorney Michael Grady of the Money Laundering and Asset Recovery Section joined in the investigation and prosecution of the banks.

The Justice Department, through the Asset Forfeiture Program, works diligently to restore lost funds to victims of crime.  The victim compensation payments in the FIFA case would not have been possible without the extraordinary efforts of the U.S. Department of Justice Criminal Division’s Money Laundering and Asset Recovery Section, which reviewed and approved the victims’ petition for remission; the FBI’s New York Field Office; and the Internal Revenue Service-Criminal Investigation.

GREENSBORO, NC – Acting United States Attorney Randall S. Galyon announced today that the Middle District of North Carolina (MDNC) collected $11,766,028.87 in criminal and civil actions in Fiscal Year 2024. Of this amount, $10,606,536.43 was collected in criminal actions and $1,159,492.44 was collected in civil actions.  The MDNC also worked with other U.S. Attorney’s Offices and Department of Justice components to collect $550.00 in criminal cases pursued jointly by these offices. “Collecting restitution and other criminal and civil debts is a vital part of our mission,” said Acting U.S. Attorney Galyon. “We will continue to prioritize collections in order to hold criminals accountable, collect debts owed to the government, and recover compensation for victims of crime.”In January 2024, the Middle District of North Carolina recovered $611,845.17 in restitution after garnishing the defendant’s retirement accounts in the case of USA v. Mouzon, 1:22CR200. On October, 2022, the defendant pled guilty to one count of wire fraud and was ordered to pay a special assessment of $100, restitution of $2,038,285.66 and a fine of $5,000.00. To date, a total of $805,305.28 has been recovered for the victim, including $193,610.82 from disposal of administratively forfeited assets. A request is pending to allow proceeds from the disposal of judicially forfeited assets to be applied to restitution.The U.S. Attorneys’ Offices, along with the department’s litigating divisions, are responsible for enforcing and collecting civil and criminal debts owed to the U.S. and criminal debts owed to federal crime victims. The law requires defendants to pay restitution to victims of certain federal crimes who have suffered a physical injury or financial loss. While restitution is paid to the victim, criminal fines and felony assessments are paid to the department’s Crime Victims Fund, which distributes the funds collected to federal and state victim compensation and victim assistance programs.Additionally, the U.S. Attorney’s office in the MDNC, working with partner agencies and divisions, collected $1,549,150 in asset forfeiture actions in FY 2024. Forfeited assets deposited into the Department of Justice Assets Forfeiture Fund and Department of Treasury Seized Assets Fund are used to restore funds to crime victims and for a variety of law enforcement purposes.###

James Burkhart’s conspiracy reaped nearly $19.4 million in fraud and kickbacks, funding

private jets, vacation homes, diamond jewelry, and gold bars

PRESS RELEASE

INDIANAPOLIS B United States Attorney Josh J. Minkler today announced the sentencing of the former CEO of American Senior Communities (ASC) in a massive fraud, kickback, and money laundering conspiracy. James Burkhart, 53, of Carmel, was sentenced to 114 months imprisonment by U.S. District Court Judge Tanya Walton Pratt.

“In spite of receiving a salary of over $1 million, Burkhart abused his official position of trust to steal tax payer dollars intended to benefit this community’s sick, elderly and mentally challenged,” said Minkler. “Because this thief was motivated by nothing other than corruption and greed, we sought a justifiably harsh sentence. Hopefully, the sound of the prison door slamming shut on this 9.5 year sentence will deter other officials from the culture of corruption and greed we see in this district.”

Today’s sentencing caps a three-year federal investigation and prosecution of Burkhart, who was charged with ASC Chief Operating Officer Daniel Benson, Burkhart friend and associate Steven Ganote, and Burkhart’s younger brother, Joshua Burkhart. In September 2015, federal agents executed search warrants at Burkhart’s residence and ASC office, among other locations. By October 2016, a federal grand jury indicted Burkhart and his co-defendants. And by January 2018, all of the defendants had pleaded guilty to federal felony charges.

For his part, Burkhart pleaded guilty to three federal felony offenses: conspiracy to commit fraud, conspiracy to violate the health care anti-kickback statute, and money laundering. All told, he and his co-conspirators funneled nearly $19.4 million in fraud and kickbacks to themselves through a web of shell companies. The majority of the money they stole came from the Health & Hospital Corporation of Marion County, part of Indiana’s public health system and the operator of health care facilities like Eskenazi Hospital. 

Burkhart’s fraud and kickback schemes, which spanned nearly six years, exploited numerous aspects of ASC’s operations. ASC is Indiana’s largest nursing home chain. It manages approximately 70 senior care facilities throughout the state, and to run those nursing homes, ASC purchases a wide variety of goods and services provided by outside vendors. The bulk of the money to pay those vendors’ bills comes from Health & Hospital. 

Burkhart used his position as ASC’s CEO to cut secret side deals with over a dozen of ASC’s vendors. He dangled the golden carrot of the purchasing power of the State’s largest nursing home chain. All they had to do was pay something back. 

In some cases, Burkhart had vendors inflate their bills to ASC, which Burkhart would pay with Health & Hospital’s money, and the vendor would kick the overage back to Burkhart and his co-conspirators. In other cases, he formed shell companies that would inflate vendors’ bills and submit them to ASC as if the shell companies were the real vendor. In still other cases, he caused vendors or shell companies to submit completely false bills for fictitious services that were never provided. And finally, in some cases, he simply demanded vendors to pay him kickbacks in exchange for him allowing them to service ASC’s large number of facilities. 

This last category included home health and hospice care, where Burkhart received a kickback for each patient ASC referred to Burkhart’s chosen home health or hospice company.

Landscaping, electrical generators, employee uniforms, patient gifts, American flags, furniture, heating and air conditioning, wound care creams, medical supplies, air fresheners, speech therapy, pharmacy services, food services, home health care, and hospice care – Burkhart concocted secret side deals involving all of those aspects of ASC’s operations.   

His motive was pure greed. He was caught on tape telling an informant, in reference to one of his schemes that netted him over $600,000 per year, “I ain’t givin’ that up. . . . It doesn’t sound like much money, but it’s money.” Over the six years, Burkhart use the money he stole to buy lakefront real estate on Lake Wawasee, golf vacations, trips to Las Vegas, political contributions, diamond jewelry, gold coins and gold bars. In addition, Burkhart spent over $1.5 million of other peoples’ money on over 150 flights on private jets.  

As Burkhart told the informant, “I’ll get mine, I always told ya, I’ll get mine one way or another.” That was true until 2015, when a vendor Burkhart tried to ensnare went to the FBI.  Burkhart and his co-conspirators had asked the vendor to inflate his bills by 30% and pay the overage to a shell company. The vendor thought that did not sound right or ethical, so he reported it to law enforcement. What followed was an extensive investigation involving multiple undercover informants, search warrants, and a detailed analysis of numerous shell companies and nearly 100 bank accounts – all of which culminated in the indictments, guilty pleas, and ultimately, today’s sentencing of Burkhart to 114 months in federal prison.

This case was jointly investigated by the Federal Bureau of Investigation (FBI), the Internal Revenue Service-Criminal Investigation Division (IRS-CID), and the Department of Health and Human Services, Office of Inspector General (HHS-OIG).

 "This defendant was paid a large salary and viewed as an industry leader, but he chose to abuse his power and position out of pure greed,” said Grant Mendenhall, Special Agent in Charge of the FBI’s Indianapolis Division. “The FBI works diligently with partner agencies to uncover and investigate corporate executives who enrich themselves through kickbacks and theft. We applaud the concerned citizen who brought this fraud to our attention, and we encourage anyone else who wants to bring these types of fraudulent behavior to light to contact us.”

David Talcott, Acting Special Agent in Charge of IRS Criminal Investigation's Chicago Field Office said, "Burkhart’s theft from the most vulnerable citizens of our communities is sickening. Taxpayers deserve honesty and integrity from business leaders. IRS-CI's thoroughness of the financial investigation represents our commitment to protect the taxpayers of this community."

“Health Care Fraud is fueled by greed and is perpetrated by criminals with the intent of concealing their acts and securing financial riches at the expense of taxpayers”, said Lamont Pugh III, Special Agent in Charge, U.S. Department of Health & Human Services, Office of Inspector General. “Mr. Burkhart spun a web of deceit through side deals, inflated invoices and shell companies in order to pilfer funds from Medicare and Medicaid which ultimately led him to the doorstep of law enforcement and prosecutorial authorities. The OIG will continue to work with our federal, state and local law enforcement partners to uncover these schemes and hold those who execute them accountable.”

“I am eager to collaborate with other public offices and agencies to stop fraudsters from stealing money from Medicaid,” said Attorney General Curtis Hill. “This is a program intended to help people who truly need it. We will stay vigilant in holding accountable all those who seek to bilk taxpayers by misappropriating funds.”

According to Assistant U.S. Attorneys Nick Linder and Cindy Cho, who prosecuted the case, the gold bars, gold coins, and other assets seized from Burkhart will be criminally forfeited.  In addition, Burkhart must pay full restitution and serve three years of supervised release following his sentence.

Burkhart’s co-defendants will be sentenced on the following dates and times:

Daniel Benson on July 6 at 9:00 a.m.

Steven Ganote on July 9 at 9:00 a.m.

Joshua Burkhart on July 9 at 2:00 p.m.

David Mazanowski on July 10 at 2:00 p.m.

 

In October 2017, United States Attorney Josh J. Minkler announced a Strategic Plan designed to shape and strengthen the District’s response to its most significant public safety challenges. This prosecution demonstrates the Office’s firm commitment to prosecuting complex, large-scale fraud schemes, particularly those that exploit positions of trust. See United States Attorney’s Office, Southern District of Indiana Strategic Plan 5.1

BEAUMONT, Texas – The U.S. Department of Justice, the FBI, the U.S. Postal Inspection Service, and six other federal law enforcement agencies announced the completion of the third annual Money Mule Initiative, a coordinated operation to disrupt the networks through which transnational fraudsters move the proceeds of their crimes.  Money mules are individuals who assist fraudsters by receiving money from victims of fraud and forwarding it to the fraud organizers, many of whom are located abroad.  Some money mules know they are assisting fraudsters, but others are unaware that their actions enable fraudsters’ efforts to swindle money from consumers, businesses, and government unemployment funds. Europol announced a simultaneous effort, the European Money Mule Action (EMMA) today.

            Over the last two months, U.S. law enforcement agencies took action against over 2,300 money mules, far surpassing last year’s effort, which acted against over 600 money mules. This year, actions occurred in every state in the country.  The initiative announced today targeted money mules involved in a wide range of schemes including lottery fraud, romance scams, government imposter fraud, technical support fraud, business email compromise or CEO fraud, and unemployment insurance fraud.  Many of these schemes target elderly or vulnerable members of society.

            “Money mules fuel fraud against some of America’s most vulnerable populations.

            Without the help of these money mules, many foreign fraud enterprises find it difficult to profit off of U.S. victims,” said Attorney General William P. Barr. “As this initiative demonstrates, the Department of Justice is committed to disrupting money mule networks, taking actions against more money mules this year than ever before, in an effort to cut off the flow of funds from

            American consumers and businesses to transnational criminal organizations.”

            “These money mules are an essential link in these foreign-based criminal schemes,” said Stephen J. Cox, U.S. Attorney for the Eastern District of Texas.  “The assistance of these money mules – both witting and unwitting alike – makes it easy for overseas criminal organizations to move money from victims’ wallets into their own.”

              Eight federal law enforcement agencies participated in this year’s effort.  Led by the Department of Justice’s Consumer Protection Branch, the FBI, and the U.S. Postal Inspection Service, the participating agencies include the Department of Labor Office of Inspector General, Federal Deposit Insurance Corporation Office of Inspector General, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, Social Security Administration Office of Inspector General, U.S. Secret Service, and U.S. Treasury Inspector General for Tax Administration.

Some highlights from this year’s efforts are:

Actions were taken to halt the conduct of approximately 2,300 money mules, spanning 92 federal districts.

 

Law enforcement served approximately 2,000 money mules with letters warning the money mules that they were facilitating fraud and could face civil or criminal consequences for continuing their actions. Agents conducted over 450 interviews.

 

On approximately 30 instances, agents seized assets or facilitated the return of victim funds. Among the asset seizures was a 2019 Lamborghini, which was seized as part of an investigation into a business email compromise scheme.

 

The U.S. Postal Inspection Service filed 14 administrative actions requiring money mules to cease facilitating fraud.

 

The U.S. Attorney’s Office for the Eastern District of Texas (EDTX), along with the U.S. Secret Service, dismantled a phony Amazon Alexa tech support fraud ring, seizing six websites in the process.  In other cases, EDTX obtained four asset seizures leading to the recovery of nearly $150,000 in ill-gotten proceeds.  Additionally, with the assistance of the FBI and IRS, EDTX identified and disrupted at least 13 money mules through interviews, warning letters, and criminal charges.

 

            The above charges are merely allegations, and the defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

            “The success of the Money Mule Initiative is the culmination of the hard work by and coordination between the FBI and our federal, state, local, and international partners,” said FBI Director Christopher Wray. “This campaign has resulted in hundreds of criminal arrests worldwide and justice for countless victims. Today’s announcement should send a clear message to those engaged in this type of criminal activity: they are not outside the reach of law enforcement, and the FBI and its partners will relentlessly pursue them in order to protect the American people.”

            “The Postal Inspection Service has zero tolerance for fraudsters who use the U.S. Mail to transport funds from scammed victims,” said Chief Postal Inspector Gary Barksdale. “Postal Inspectors use cutting-edge technology to build strong cases and campaigns like those announced today, which make significant progress towards disrupting money mule networks. Postal Inspectors and our law enforcement partners will be relentless in the pursuit of criminal organizations that perpetrate these schemes.”

            The agencies participating in the Money Mule Initiative and community partners are undertaking an outreach campaign to increase awareness of how fraudsters use and recruit money mules. U.S. Attorney’s Offices across the country, through their Elder Justice Coordinators, will be reaching out to their communities to educate the public about money mules. AmeriCorp Seniors (formerly Senior Corps) will be working to increase awareness of how money mules facilitate fraud and how consumers can avoid unwittingly assisting fraud schemes.

            Additionally, the American Bankers Association will be engaging with its members on money mules and the role of financial institutions in addressing the problem. The Department of Justice will also be distributing resources for state and local law enforcement on identifying, disrupting, investigating, and prosecuting money mules.

            To find public education materials, as well as information about how fraudsters use and recruit money mules, please visit www.justice.gov/civil/consumer-protection-branch/money- mule-initiative.

            Since President Trump signed the bipartisan Elder Abuse Prevention and Prosecution Act (EAPPA) into law, the Department of Justice has participated in hundreds of enforcement actions in criminal and civil cases that targeted or disproportionately affected seniors. In January 2020, the department designated “Preventing and Disrupting Transnational Elder Fraud” as an Agency Priority Goal, one of its top four priorities. In March 2020, the department announced the largest elder fraud enforcement action in American history, charging more than 400 defendants in a nationwide elder fraud sweep. The department has also conducted hundreds of trainings and outreach sessions across the country since the passage of the Act.

            The Department’s extensive efforts to combat elder fraud seek to halt the billions of dollars seniors lose each year to fraud schemes, including those perpetrated by transnational criminal organizations. The best method for prevention, however, is sharing information about the various types of elder fraud schemes with relatives, friends, neighbors, and other seniors who can use that information to protect themselves.

            If you or someone you know is age 60 or older and has been a victim of financial fraud, help is standing by at the National Elder Fraud Hotline: 1-833-FRAUD-11 (1-833-372-8311). This U.S. Department of Justice hotline, managed by the Office for Victims of Crime, is staffed by experienced professionals who provide personalized support to callers by assessing the needs of the victim, and identifying relevant next steps. Case managers will identify appropriate reporting agencies, provide information to callers to assist them in reporting, connect callers directly with appropriate agencies, and provide resources and referrals, on a case-by-case basis. Reporting is the first step. Reporting can help authorities identify those who commit fraud and reporting certain financial losses due to fraud as soon as possible can increase the likelihood of recovering losses. The hotline is staffed seven days a week from 6:00 a.m. to 11:00 p.m. eastern time. English, Spanish and other languages are available.

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

WASHINGTON – Yesterday, the U.S. Attorney for the Northern District of Texas announced the indictment of a darknet drug dealer who has been indicted for leveraging Bitcoin’s apparent anonymity to sell fentanyl online. The charges against him are the result of the first nationwide undercover operation targeting darknet vendors that the Justice Department announced in June 2018.  

Sean Shaughnessy, 51, of the Dallas Fort Worth, Texas area, was charged by federal grand jury with conspiracy to possess with intent to distribute controlled substances, distribution of a controlled substance, distribution of a controlled substance analogue and eight counts of money laundering.

According to the indictment, which was unsealed on May 24 following the defendant’s initial appearance, Mr. Shaughnessy allegedly sold fentanyl and fentanyl analogues over the dark web, an unindexed portion of the internet accessible only via specialized software that allows users to conduct transactions with relative anonymity. His buyers purchased the fentanyl and fentanyl analogues, which was shipped to their addresses, using cryptocurrencies like Bitcoin, the indictment alleges. One user, who allegedly purchased a fentanyl analogue from Mr. Shaughnessy, overdosed on the substance and died. Mr. Shaughnessy allegedly transferred his Bitcoin proceeds to other cryptocurrency wallets in exchange for regular fiat currency, which was shipped to his home in Dallas. Unbeknownst to Mr. Shaughnessy, he sent more than $120,000 bitcoin to wallet addresses controlled by federal agents. Yesterday, he was ordered to remain in federal custody. The charges in the indictment are merely allegations, and the defendant is presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

The investigation into Sean Shaughnessy was part of Operation Dark Gold, a year-long, coordinated national operation that used the first nationwide undercover action to target vendors of illicit goods on the darknet. Special agents of the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) New York Field Office posed as a money launderer on dark net market sites, exchanging U.S. currency for virtual currency. Through this operation, HSI New York was able to identify numerous vendors of illicit goods, leading to the opening of more than 90 active cases around the country, including the investigation into Mr. Shaughnessy in the Northern District of Texas.

The Money Laundering and Asset Recovery Section (MLARS) of the Department of Justice’s Criminal Division, coordinated with law enforcement and federal prosecutors from more than 50 U.S. Attorney’s Offices to investigate 65 targets identified by the undercover operation, which led to the arrest and impending prosecution of more than 30 darknet vendors.

One year after 70 search warrants were executed in May 2018, numerous opioid and narcotics distributors have been charged and convicted around the country. Those include:

Brian Gutierrez-Villasenor, 27, of San Francisco, California, was sentenced recently to serve 120 months in prison for possessing with the intent to distribute methamphetamine and transporting funds to promote unlawful activity. Gutierrez-Villasenor was charged by the U.S. Attorney’s Office for the Northern District of California. According to his guilty plea, between 2014 and May of 2018, Gutierrez-Villasenor distributed cocaine and methamphetamine for a darknet vendor site called “JetSetLife.” In addition to the prison term, Gutierrez-Villasenor was ordered to pay a $40,000 fine and to serve an additional five-year term of supervised release to begin after his prison term. Gutierrez-Villasenor has been in custody since his arrest on May 17, 2018, and is serving his prison sentence.

John Edward Monette, 50, of Sioux Falls, South Dakota, was sentenced to serve five years in prison, followed by three years of supervised release. Monette was convicted of conspiracy to distribute a controlled substance on Nov. 15, 2018. On April 25, 2018, a federal search warrant was executed on Monette’s residence as part of Operation Dark Gold. Law enforcement officers seized approximately 838 grams of MDMA, numerous ecstasy pills, approximately 69 grams of cocaine, drug packaging, scales, shipping materials, computers, cell phones and a rifle. Also seized were 3.3882104 bitcoin (approximate value $32,464.38) from a Mycelium wallet on Monette’s cell phone. Monette had been buying MDMA and other controlled substances from sellers in Europe and elsewhere via the dark web. He used Bitcoin to pay his suppliers, and received the drugs via mail. He also used the mail to deliver drugs to his customers.

Ryan Farace, 34, of Reisterstown, Maryland, and Robert Swain, 34, of Freeland, Maryland, were charged by the U.S Attorney’s Office for the District of Maryland. Farace was sentenced to serve 57 months in prison, followed by three years of supervised release, for drug distribution and money laundering conspiracies. The charges arose from a scheme to manufacture and distribute Alprazolam, or “Xanax,” through sales on the dark net in exchange for Bitcoin. Farace and his co-conspirator, Robert Swain, laundered the drug proceeds through financial transactions designed to conceal the source and ownership of the illegal funds. Farace was ordered to forfeit a money judgment equal to $5,665,000 and 4,000 bitcoin (currently worth approximately $3.2 million). Farace was also ordered to forfeit assets seized by law enforcement during the execution of search warrants in 2018, at locations associated with the conspiracies, including approximately $1.5 million in cash, 1.100 bitcoin and approximately $2.5 million in computer equipment. Robert Swain previously pleaded guilty to the money laundering conspiracy and faces a maximum statutory sentence of 20 years in prison at his sentencing on June 18.

Tyler Lee Ward, 35, of Moody, Alabama, and Henry Long Nguyen, 33, of Birmingham, Alabama, pleaded guilty in the Northern District of Alabama to three counts including conspiracy to manufacture, distribute, and possess with intent to distribute Alprazolam; maintaining a drug-involved premises; and conspiracy to commit money laundering. Ward was sentenced to serve 24 months in prison and Nguyen was sentenced to serve 30 months in prison. Both Ward and Nguyen were ordered to forfeit numerous assets, including more than $200,000 in cryptocurrency. Joseph William Davis 26, of Madison, Alabama, pleaded guilty to conspiracy to distribute Alprazolam and was sentenced to serve 126 months in prison.

Sam Bent, 32, of St. Johnsbury, Vermont (and formerly of East Burke, Vermont), and his cousin, Djeneba Bent, 26, also of St. Johnsbury (and formerly East Burke) were both charged by the U.S. Attorney’s Office for the District of Vermont. They both pleaded guilty to conspiracy to distribute controlled substances. Sam Bent also pleaded guilty to three counts of money laundering and agreed to a forfeiture money judgment. As part of his plea agreement, Sam Bent admitted that he set up accounts on dark web marketplaces, established online identities, accepted Bitcoin in exchange for sales over the dark web, and mailed controlled substances from several different post offices in Northeastern Vermont and Northwestern New Hampshire in an effort to avoid detection. Their sentencings are currently scheduled for July 2019.

Kyle Lindemann, 31, of Birmingham, Michigan, was charged by the U.S. Attorney’s Office for the Eastern District of Michigan, and pleaded guilty to one count of possession with intent to distribute MDMA. As part of his plea, Lindemann admitted that he had managed a vendor account on the darknet marketplace known as “Dream Market,” on which he sold Alprazolam (Xanax), Adderall, Ecstasy (MDMA), and GHB. Lindemann also agreed to the forfeiture of 4.430550289998 Monero and 39.17488 MilliBitcoin that were seized during Operation Dark Gold, in May 2018.

The investigations are pending.

SIOUX FALLS - The United States Attorney’s Office for the District of South Dakota, under the leadership of U.S. Attorney Alison J. Ramsdell, has reported the collection of $1,937,264.31 in criminal fines, restitution, loan defaults, bankruptcy, forfeiture, and affirmative civil enforcement efforts in FY 2023. Of the total collections, $1.5 million was derived from criminal cases. A significant portion of this, precisely $1,100,870.12, was returned to victims of crime, underscoring the Office’s commitment to ensuring justice and support for those victimized by crime. The remainder has been deposited into the Crime Victims Fund, a crucial federal resource that provides financial assistance to crime victims across the United States. This fund aids victims in covering various costs such as medical expenses, lost wages, mental health counseling, and funeral expenses.

“Our mission extends beyond the mere prosecution of criminal offenders,” said U.S. Attorney Ramsdell. “It’s about healing wounds and restoring dignity to those wronged through our dedication to facilitating the financial recovery for victims to the fullest extent possible. Seeing the tangible benefits of these collections for the victims is not just satisfying—it’s a profound reminder of the impact our office can have on the lives of victims seeking justice.”

Additionally, the fiscal year saw substantial collections from civil actions related to delinquent government loans, including those related to education, small businesses, agricultural services, and housing. The enforcement of healthcare fraud and False Claims Act litigation also contributed to these achievements. Notably, in a case of wool subsidy fraud, defendant Howard Aleff was mandated to sell Iowa farmland to satisfy a $1.3 million debt. Meanwhile, the discovery of valuable religious artifacts in a storage unit belonging to former priest Marcin Garbacz led to a unique online auction, recovering over $18,000 for the church he victimized.

These results were achieved through the concerted efforts of the entire team at the U.S. Attorney’s Office, from attorneys who secure criminal restitution and civil judgments to the financial litigation unit responsible for enforcing payment. The use of various enforcement mechanisms, including voluntary payment plans, garnishments, and the sale of seized assets, has been instrumental in these achievements.

The U.S. Attorney’s Office for the District of South Dakota remains committed to upholding the principles of justice and integrity, as demonstrated by the FY 2023 collections. These efforts not only highlight the dedication of the office to its prosecutorial and enforcement responsibilities, but also its unwavering support for the victims whose lives are impacted by violent and financial crimes.

 

NASHVILLE – Dr. Samson K. Orusa, 61, of Clarksville, Tennessee, was sentenced yesterday to 84 months in federal prison after being convicted of over a dozen felony health care fraud charges, announced United States Attorney Henry C. Leventis for the Middle District of Tennessee.

The defendant, through his medical clinic in Clarksville, billed federal health insurance programs for hundreds of medically unnecessary services, including unnecessary office visits and steroid injections. The evidence at trial showed that he required Medicare beneficiaries and other patients to visit his clinic as many as six times each month and to undergo unnecessary steroid injections in order to obtain their prescriptions. The evidence also showed that the defendant altered progress visit notes in his patients’ medical records to justify higher billing rates.

“Combating health care fraud is a top priority for this office,” said United States Attorney Leventis. “As a result of the excellent work done in this case by our prosecutors and law enforcement partners, this physician will now be serving 7 years in federal prison for defrauding the Medicare program.”

The defendant was charged in 2018 with 45 criminal violations, including 13 counts of health care fraud. He was convicted at trial of all charges except for nine counts of illegal distribution of oxycodone. Yesterday’s sentencing concerned only the health care fraud crimes charged in the indictment.

In addition to the 84-month prison sentence, the defendant was ordered to pay over $1 million in restitution and serve three years of supervised release.  He was also fined $195,000 and must forfeit previously seized assets worth approximately $900,000.

This case was investigated by the U.S. Department of Health & Human Services Office of Inspector General; the U.S. Drug Enforcement Administration; the Internal Revenue Service Criminal Investigation, the Tennessee Bureau of Investigation; the Clarksville Police Department; and the 19th Judicial District Drug Task Force.

Assistant U.S. Attorneys Stephanie N. Toussaint and Miller A. Bushong prosecuted this case. 

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PORTLAND, Ore.—A Mexican National who jointly operated Tienda Mexicana González Bros., a small convenience store and market in Southeast Portland, was sentenced to federal prison today for using the business and its money transmission licenses to launder millions of dollars in drug proceeds on behalf of a Mexico-based drug trafficking organization operating in the Portland Metropolitan Area.

Jesus González Vazquez, 37, of Jalisco, Mexico, was sentenced to 132 months in federal prison and three years’ supervised release.

“Money launderers who help drug trafficking organizations transfer their illegal proceeds are equally culpable for the path of destruction caused by illegal drugs. While drug trafficking organizations can quickly replace low-level couriers and dealers when they are arrested by law enforcement, it’s much harder for these organizations to quickly replace savvy, large volume money launderers like Mr. González Vazquez and his brother Mr. Romo. Mr. González Vazquez’s prosecution and lengthy prison sentence will challenge this organization’s ability to profit from their crimes and sends a strong message that money laundering is a serious crime with significant consequences,” said Scott Erik Asphaug, Acting U.S. Attorney for the District of Oregon.

“Drug cartels thrive on their lust for money and power,” said Special Agent in Charge Robert Hammer, who oversees HSI operations in the Pacific Northwest. “Operating under the guise of a small convenience store, Vazquez funneled millions of drug profits back to Mexico. This sentence is a successful step towards removing the ability of the cartels to collect their profits from the poison they inject into our communities.”

“This case highlights the importance of teaming with our federal and local partners in order to address these and other related large-scale issues,” said Interim Chief Claudio Grandjean of the Gresham Police Department. “The opioid crisis is ravaging so many in our communities across the region and across the country. I’m proud of the part the Gresham Police Department was able to play in holding those accountable who seek to profit from others’ misery.”

According to court documents, beginning in 2018, two men, Samuel Diaz and Faustino Monroy, organized, led, and ran a drug trafficking organization, based in Mexico, responsible for trafficking hundreds of pounds of methamphetamine and heroin into Oregon for distribution. Diaz and Monroy worked closely with two associates, Edgar Omar Quiroz and Gerson Fernando Martinez-Cruz, who ran a Portland distribution cell. At its peak, Quiroz and Martinez-Cruz’s cell was responsible for distributing as much as 77 pounds of methamphetamine and 55 pounds of heroin weekly in and around Portland.

The organization’s numerous sources of supply would import large quantities of illegal drugs that were taken to stash houses throughout the metro area where they were processed and prepared for sale. A large network of local drug dealers would then distribute user quantities of each drug. The organization would routinely change stash locations, rotate vehicles and phones, and pay individual couriers to take time off to avoid detection by law enforcement.

In approximately 2011, González Vazquez moved to Oregon and began working with his co-defendant and brother, Juan Antonio Romo, 46, also of Jalisco, at the González Bros. market. During this time, the market was an authorized agent for Sigue Corporation; Servicio UniTeller, Inc.; and Continental Exchange Solutions/Ria Financial, three large money services businesses known primarily for international money wires. Between January 2015 and October 2019, the majority of money transfers initiated at the market were conducted by González Vazquez and Romo.

On a continuing basis, González Vazquez and Romo would receive the proceeds of the Diaz-Monroy organization’s illegal drug sales in the form of bulk cash delivered by couriers to the González Bros. market. González Vazquez and Romo would wire the money to various DTO contacts throughout Mexico, structuring the transfers into multiple smaller transactions to avoid detection by the money services businesses or financial regulators. According to the government’s evidence, between January 2015 and October 2019, González Vazquez and Romo laundered at least $19 million dollars in drug proceeds from the market.

In addition to laundering the DTO’s proceeds, González Vazquez also performed other illegal functions for the organization, including facilitating the purchase of weapons in the U.S. to smuggle to Mexico, facilitating large drug transactions, assisting the escape of a fugitive to Mexico, assisting various drug dealers obtain false driver’s licenses, and helping DTO associates illegally enter the U.S.

In October 2019, González Vazquez and many of his co-defendants were arrested as part of a coordinated, multi-agency law enforcement operation. Investigators executed federal search warrants at more than a dozen locations throughout the Portland area, seizing 22 pounds of methamphetamine, quantities of heroin and cocaine, and seven firearms. González Vazquez and his co-defendants arrested as part of the takedown joined several others already in state custody on related charges. In total, law enforcement seized 51 firearms, including assault rifles, shotguns, and handguns, from defendants affiliated with the Diaz-Monroy drug trafficking organization.

On October 24, 2019, a federal grand jury in Portland returned a 61-count superseding indictment charging González Vazquez and 41 others for their roles in the drug trafficking and money laundering conspiracy.

On March 24, 2021, González Vazquez pleaded guilty to conspiring to commit money laundering.

During his sentencing, U.S. District Court Judge Michael H. Simon ordered González Vazquez to forfeit all assets seized by law enforcement during the investigation, including body armor, firearms, magazines, several dozen cell phones, and more than $250,000 in criminally-derived proceeds seized by law enforcement.

González Vazquez is the twentieth defendant sentenced for his role in the conspiracy. Defendants have been sentenced to as much as 235 months in prison. 24 defendants are awaiting sentencing and one is pending trial. Diaz, Monroy, and several other defendants are fugitives believed to be in Mexico.

Acting U.S. Attorney Asphaug, Special Agent in Charge Hammer, and Interim Chief Grandjean made the announcement.

This case was investigated by HSI Portland and the Gresham Police Department with assistance from the FBI; U.S. Drug Enforcement Administration; Oregon State Police; Portland Police Bureau; and the Multnomah, Clackamas, and Clark County Sheriff’s Offices. The U.S. Attorney’s Office for the District of Oregon prosecuted the case.

This case was brought as part of the Justice Department’s Organized Crime and Drug Enforcement Task Force (OCDETF) program, the centerpiece of the department’s strategy for reducing the availability of drugs in the U.S. OCDETF was established in 1982 to mount a comprehensive attack on drug trafficking by disrupting and dismantling major drug trafficking and money laundering organizations. Today, OCDETF combines the resources and expertise of its member federal agencies in coordination with state and local law enforcement.

            WASHINGTON – The Justice Department announced the disruption of an ongoing terrorist financing scheme through the seizure of approximately $201,400 (based on current value) in cryptocurrency held in wallets and accounts intended to benefit Harakat al-Muqawama al-Islamiyya (Hamas). The seized funds were traced from Hamas fundraising addresses, purportedly controlled by Hamas, that were used to launder more than $1.5 million in virtual currency since October 2024.           The action was announced by U.S. Attorney Edward R. Martin, Jr., Sue J. Bai head of the Justice Department’s National Security Division, and FBI Special Agent in Charge Raul Bujanda of the Albuquerque Field Office.            As alleged in court documents, a group chat claiming association with Hamas on an encrypted communications platform provided Hamas supporters, worldwide, with a changing set of at least 17 cryptocurrency addresses. Supporters were encouraged to donate money to those addresses. Those funds were sent into an operational wallet and laundered through a series of virtual currency exchanges and transactions by leveraging suspected financiers and over-the-counter brokers. More than a million dollars were raised and laundered using the laundering system and the virtual currency accounts described in the affidavit.           “Hamas is responsible for the deaths of many U.S. and Israeli nationals, and we will use every legal tool at our disposal to stop their campaign of terror and murder,” said U.S. Attorney Martin. “These seizures are but one illustration of the determination of this office and the Department of Justice to shut off the flow of funds to this group, and to locate every cent intended to support their activities, no matter what form it takes.”            “At Attorney General Pam Bondi’s direction, the Department of Justice is committed to dismantling Hamas using every tool at our disposal,” said Sue J. Bai, head of the Justice Department’s National Security Division.              “Countering terrorism remains the FBI’s number one priority. By successfully disrupting access to these funds, we have weakened their ability to function,” said FBI Special Agent in Charge Bujanda, of the Albuquerque Field Office. “This success demonstrates that financial warfare is a critical component to fight terrorism. We will continue to do everything in our power to protect the American people and pursue justice by depriving terrorist organizations of the resources they need to continue their illicit activity.”           Included among the assets seized were cryptocurrency addresses valued at approximately $89,900, and three additional accounts containing cryptocurrency valued at approximately $111,500. These accounts were registered in the names of Palestinian individuals living in Turkey and elsewhere.           This case was investigated by the Federal Bureau of Investigation (FBI) Albuquerque Field Office in coordination with the FBI Counterterrorism Division (CTD) and Cyber Division (CyD). It is being prosecuted by Assistant U.S. Attorney Tejpal Chawla for the District of Columbia, Trial Attorney Jacques Singer-Emery for the National Security Division’s National Security Cyber Section, and Trial Attorney Jessica Joyce for the National Security Division’s Counterterrorism Section.



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PITTSBURGH, Pa. – A resident of Pittsburgh, Pennsylvania, was sentenced in federal court today for one count of conspiracy to pay unlawful kickbacks, Acting United States Attorney Stephen R. Kaufman announced.

United States District Judge David S. Cercone sentenced William Hughes, 74, to sixty days’ incarceration, followed by twelve months of home detention. Hughes was also ordered to pay a $5,000 fine, forfeit more than $750,000 in previously seized assets, and make restitution totaling $1,670,469.77 to the Kentucky Medicaid Program.

During the defendant’s plea hearing on June 18, 2020, Hughes admitted that he owned and operated Universal Oral Fluid Labs (UOFL), a clinical drug testing laboratory located in Greensburg, Pennsylvania. From October 2011 to August 2013, Hughes further admitted that he entered into an unlawful kickbacks-for-referrals arrangement, through UOFL, with his co-defendant, Dr. Varanise Booker, a physician practicing in Kentucky. Pursuant to this arrangement, Hughes agreed to pay Booker to refer patients to UOFL—including patients who were covered under the Kentucky Medicaid Program—for drug testing services in exchange for cash payments. Between September 2012 and August 2013, UOFL obtained $1,670,469.77 from the Kentucky Medicaid Program based on these illegal referrals. In turn, Hughes, through UOFL, caused Booker to be paid a total of $843,242.31 in kickbacks for her drug testing referrals.

Booker has pleaded not guilty, and her case remains pending before Judge Cercone.

The Federal Bureau of Investigation, Health and Human Services Office of Inspector General, Internal Revenue Service - Criminal Investigation, and Pennsylvania Office of Attorney General Medicaid Fraud Control Unit conducted the investigation that led to the prosecution of Hughes.

JOHNSTOWN, Pa. - A resident of Louisville, Kentucky, was sentenced in federal court today for one count of conspiracy to solicit and receive unlawful kickbacks, United States Attorney Cindy K. Chung announced.

United States District Judge Kim R. Gibson sentenced John Baird, 55, a physician, to five years of probation, including two years of home detention.  Baird was also ordered to pay restitution totaling $567,609.36 to Medicare.

During the defendant’s plea hearing on July 16, 2018, Baird admitted that while practicing as a licensed physician specializing in physical medicine, rehabilitation, and pain treatment, he entered into an illegal kickbacks-for-referrals conspiracy with Williams Hughes, the owner and operator of Universal Oral Fluid Labs (“UOFL”), a clinical drug-testing laboratory in Greensburg, Pennsylvania.  Pursuant to their arrangement, Baird received cash payments from UOFL in exchange for referring patients—including patients covered under Medicare—to the lab for drug testing services.  Hughes, through UOFL, then submitted to, and received reimbursements from, Medicare for drug testing services for patients referred to the lab by Baird.  As enrolled Medicare providers, Baird and UOFL were required to certify that they would comply with all applicable state and federal laws and regulations, including the federal anti-kickback prohibition.  Baird further admitted that between May 2012 and July 2013, he received $567,609.36 in kickbacks from UOFL for his drug testing referrals.

Hughes separately pleaded guilty for conspiring to offer and pay kickbacks in connection with Medicaid referrals made by another Kentucky physician.  On July 13, 2021, United States District Judge David S. Cercone sentenced Hughes to sixty days’ incarceration, followed by twelve months of home detention.  Hughes was also ordered to pay a $5,000 fine, forfeit more than $750,000 in previously seized assets, and make restitution totaling $1,670,469.77 to the Kentucky Medicaid Program.

Assistant United States Attorney Eric G. Olshan is prosecuting this case on behalf of the government.  The Federal Bureau of Investigation, Health and Human Services Office of Inspector General, Internal Revenue Service - Criminal Investigation, and Pennsylvania Office of Attorney General Medicaid Fraud Control Unit conducted the investigation that led to the prosecution of Baird.

Spokane, Washington - U.S. Attorney Vanessa Waldref announced today the Eastern District of Washington collected $17,718,306.41 in criminal and civil actions in Fiscal Year 2024. Of this amount, $16,087,963.29 was collected in criminal actions and $1,630,343.12 was collected in civil actions.Additionally, the U.S. Attorney’s Office in the Eastern District of Washington worked with other U.S. Attorney’s Offices and components of the Department of Justice to collect an additional $937,600 in civil cases pursued jointly by these offices.“Thanks to the excellent work by our office’s Financial Litigation Unit and Affirmative Civil Enforcement team more than $17 million was recovered in 2024,” said U.S. Attorney Vanessa Waldref. “Recovering criminal restitution owed to crime victims and civil debts owed to the United States is a vital part of our mission. The $16 million in criminal restitution collections will assist victims in their recovery process and hold criminals accountable for their crimes.”The types of cases for which the United States often is able to collect include criminal and civil actions such as:More than $11.7 million in criminal restitution collected in United States v. Easterday, which is known as the “Ghost Cattle” case involving the fraudulent invoicing of non-existent cattle in the amount of $244 million (https://www.justice.gov/usao-edwa/pr/tri-cities-rancher-sentenced-eleven-years-federal-prison-and-ordered-pay-244-million);More than $2.1 million in criminal restitution collected in United States v. Mize et al, which represents the proceeds from cash, real properties, cars, boats, and other assets seized from several defendants in a far-reaching insurance fraud scheme (https://www.justice.gov/usao-edwa/pr/fraud-ringleader-and-former-fugitive-william-mize-sentenced-12-years-federal-prison);$478,935 in criminal restitution collected in United States v. Anwar, in which Sami Anwar received a 28 year prison sentence for falsifying human clinical research trials in connection with a fraud scheme (https://www.justice.gov/usao-edwa/pr/richland-business-owner-sentenced-more-28-years-federal-prison-falsifying-human);$341,480 in criminal restitution collected in United States v. Jason Jordan, which involved the fraudulent sale of counterfeit airbags on eBay (https://www.justice.gov/usao-edwa/pr/moxee-man-sentenced-31-months-federal-prison-selling-counterfiet-airbags-e-bay);$887,600 in civil collections in United States v. Multistar Inc., which involved penalties for illegally storing hazardous chemicals and violating federal environmental laws (https://www.epa.gov/newsreleases/court-orders-washington-company-comply-regulations-pay-850k-illegally-storing);  $700,000 in civil collections from physician Edward William Salko, D.O., and Jackson & Coker LocumTenens, LLC, which involved allegations that they participated in a kick-back scheme to bill Medicare for medically unnecessary durable medical equipment and diagnostic laboratory testing (https://www.justice.gov/usao-edwa/pr/richland-physician-health-care-staffing-company-agree-pay-700000-resolve-false-claims);$329,196 in civil collections in United States v. All Star Property Management LLC, which involved claims they falsely and fraudulently claimed hundreds of thousands of dollars in rent assistance intended to benefit struggling renters during the COVID-19 pandemic (https://www.justice.gov/usao-edwa/pr/spokane-property-management-company-agrees-pay-more-300000-fraudulently-claiming);$224,620 in civil collections from Justin Leland, which involved allegations he participated in a kick-back scheme to bill Medicare for medically unnecessary durable medical equipment (https://www.justice.gov/usao-edwa/pr/owner-spokane-valley-medical-supply-company-agrees-pay-224620-resolve-allegations).The U.S. Attorneys’ Offices, along with the department’s litigating divisions, are responsible for enforcing and collecting civil and criminal debts owed to the U.S. and criminal debts owed to federal crime victims. The law requires defendants to pay restitution to victims of certain federal crimes who have suffered a physical injury or financial loss. While restitution is paid to the victim, criminal fines and felony assessments are paid to the department’s Crime Victims Fund, which distributes the funds collected to federal and state victim compensation and victim assistance programs.

CHARLESTON, W.Va. – Sean Patrick Boyd Jr., 26, of Dunbar, was sentenced today to five years of federal probation for receipt of stolen money. Boyd was also ordered to pay $23,817.79 in restitution, and owes $17,227.79 of that amount after turning over $6,590 in seized assets. Boyd admitted to a scheme to defraud the Paycheck Protection Program (PPP) of $20,832 in COVID-19 relief loans guaranteed by the Small Business Administration (SBA) under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).

According to court documents and statements made in court, on April 18, 2021, Boyd applied for a PPP loan on behalf of his purported business, “Sean Boyd.” Boyd falsely stated in his application that “Sean Boyd” was in operation on February 15, 2020, which was a requirement to qualify for a PPP loan. Boyd admitted that “Sean Boyd” was fictitious and was not a registered business entity in West Virginia at the time he applied for the loan. Businesses applying for PPP loans were also required to provide documentation showing their prior gross income from either 2019 or 2020. Boyd admitted that he submitted a false IRS Form 1040, Schedule C, stating that “Sean Boyd” had earned $99,996 in gross income during 2019.

Boyd submitted the loan application electronically from West Virginia and it was uploaded to servers in Nebraska for processing. Boyd’s loan application was approved and $20,832 was electronically transferred to his personal bank account in West Virginia. Boyd admitted that before he received the fraudulent loan, his bank account balance was $12.47. On May 24, 2021, Boyd withdrew $10,000 of the fraudulent loan proceeds from his bank’s branch in Nitro.

United States Attorney Will Thompson made the announcement and commended the investigative work of the United States Secret Service, the West Virginia State Police – Bureau of Criminal Investigation (BCI), and the West Virginia State Auditor’s Office (WVSAO) Public Integrity and Fraud Unit (PIFU).

Senior United States District Judge John T. Copenhaver, Jr. imposed the sentence. Assistant United States Attorney Jonathan T. Storage prosecuted the case.

The CARES Act, enacted in March 2020, offered emergency financial assistance to Americans suffering from the economic effects caused by the COVID-19 pandemic. This assistance included forgivable loans to small businesses for job retention and certain other expenses through the PPP.

On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the Department’s response to the pandemic, please visit https://www.justice.gov/coronavirus.

Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.

A copy of this press release is located on the website of the U.S. Attorney’s Office for the Southern District of West Virginia. Related court documents and information can be found on PACER by searching for Case No. 2:23-cr-123.

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ALBANY, NEW YORK - A painting looted by the Nazis in 1933 from a Jewish family in Berlin, Germany, was returned to the family’s heirs, represented by the Mosse Foundation, on October 15, 2020, announced Acting United States Attorney Antoinette T. Bacon and Thomas F. Relford, Special Agent in Charge of the Albany Field Office of the Federal Bureau of Investigation (FBI). 

Rudolf Mosse was a prominent publisher and philanthropist in the early twentieth century in Berlin, Germany.  He and his family published newspapers including the Berliner Tageblatt, which criticized the Nazi party.  When the Nazis came to power in 1933, the Mosse family, who were Jewish, became subject to Aryanization measures, which sought to remove them from the German economy. When the Mosses fled Germany, the Nazis seized their assets, including an extensive art collection.

The Mosse art collection included a painting known as “Winter,” by American artist Gari Melchers (a photograph of the painting is attached).  After the Nazis seized “Winter,” it went through a series of intermediaries, ultimately purchased by Bartlett Arkell, co-founder and president of Imperial Packing Company, which became Beech-Nut Packing Company.  Bartlett Arkell’s art collection is now housed at the Arkell Museum in Canajoharie, New York.  In September 2019, the FBI recovered “Winter” from the Arkell Museum on the basis that it is stolen property that travelled in interstate commerce.  There is no evidence suggesting that Bartlett Arkell knew that “Winter” had been unlawfully taken and the Arkell Museum has relinquished all rights to the painting.  “Winter” was returned to the Mosse Foundation, which operates internationally to recover works of art expropriated from the Mosse family by the Nazi regime, and represents the lawful heirs’ interest in “Winter.”

“We can never ease the horrors of Nazi Germany from history, but we can, and should, take every opportunity to deliver any justice we can including the return of property to rightful heirs,” said Acting U.S. Attorney Antoinette T. Bacon.  “The Department of Justice will continue to do just that.”

FBI Special Agent in Charge Thomas F. Relford stated: “While it’s believed there were hundreds of thousands of pieces of art stolen by the Nazis, our office is immensely proud to help right even just one wrong done during this evil period of world history. We may have played a small role in a massive effort, but we will forever recognize the magnitude of this work and we’re truly honored to be able to return this painting to its rightful owners.”

The FBI transferred the painting to the heirs’ representatives at the FBI’s Field Office in Albany, with remarks from the United States Attorney’s Office, the FBI, the Mosse Foundation, and the Arkell Museum.  A media outlet interested in a video recording of the event may contact FBI Public Affairs Specialist Sarah Ruane at scruane@fbi.gov.

Countless pieces of artwork stolen by the Nazi regime remain at large.  Anyone with information regarding stolen artwork can reach the FBI’s art crime team at: NYArtCrime@fbi.gov.

This case was handled by Assistant U.S. Attorney Christopher R. Moran. 











 

WASHINGTON – An Indian national was sentenced on November 30, 2020 to 20 years in prison followed by three years of supervised release in the Southern District of Texas for his role in operating and funding India-based call centers that defrauded U.S. victims out of millions of dollars between 2013 and 2016.

Hitesh Madhubhai Patel, aka Hitesh Hinglaj, 44, of Ahmedabad, India, was sentenced by U.S. District Judge David Hittner for the charges of wire fraud conspiracy and general conspiracy to commit identification fraud, access device fraud, money laundering, and impersonation of a federal officer or employee.  Patel was also ordered to pay restitution of $8, 970,396 to identified victims of his crimes.

“The defendant defrauded vulnerable U.S. victims out of tens of millions of dollars by spearheading a conspiracy whose members boldly impersonated federal government officials and preyed on victims’ fears of adverse government action,” said Acting Attorney General Brian C. Rabbitt of the Justice Department’s Criminal Division.  “Today’s sentence demonstrates the department’s commitment to prosecuting high-level perpetrators of such nefarious schemes.  Even fraudsters operating scams from beyond our borders are not beyond the reach of the U.S. judicial system.”

“The long arm of federal law enforcement was key to bringing this con artist to justice,” said U.S. Attorney Ryan K. Patrick of the Southern District of Texas.  “Transnational call center scams are complex cases to investigate and prosecute but our agencies are up to the task.  Many of these fraudsters prey on the most vulnerable from the perceived safety of foreign lands so there is no sorry in seeing him head to prison.  His access to a phone is now greatly diminished. Across the globe, U.S. law enforcement is chasing and dismantling these schemes.”

“For years, this individual preyed on the fears of his victims to perpetuate a global scheme to manipulate U.S. institutions and taxpayers,” said Special Agent in Charge Mark B. Dawson of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) Houston. “Working with our law enforcement partners around the globe we have successfully executed the first ever large-scale, multi-jurisdictional investigation and prosecution targeting the India call center scam industry to hold him accountable for his illegal acts and deter similar scams in the future.”

 “Since 2013, American taxpayers have been subjected to unprecedented attempts to fraudulently obtain money by individuals utilizing Indian call centers to impersonate IRS employees and scam American taxpayers,” said J. Russell George, the Treasury Inspector General for Tax Administration (TIGTA).  “We appreciate the support of our law enforcement partners.”

“The sentence imposed today provides a clear deterrent to those who would seek to enrich themselves by extorting the most vulnerable in our society through these types of scams,” said Special Agent in Charge David Green of the Department of Homeland Security Office of Inspector General (DHS-OIG).  “These foreign call center operators and their U.S. based affiliates should know that their actions carry real life consequences, both for their victims and for themselves, and that there are dedicated agents and prosecutors who will work tirelessly to identify them, find them and hold them accountable for their crimes.”

According to admissions in his plea agreement, Patel and his co-conspirators perpetrated a complex scheme in which employees from call centers in Ahmedabad, India, impersonated officials from the IRS and U.S. Citizenship and Immigration Services (USCIS), and engaged in other telephone call scams designed to defraud victims throughout the United States.  U.S. victims were threatened with arrest, imprisonment, fines or deportation if they did not pay alleged monies owed to the government.  Those who fell victim were instructed how to provide payment, including by purchasing general purpose reloadable (GPR) cards or wiring money.  Upon payment, the call centers would immediately turn to a network of “runners” based in the United States to liquidate and launder the fraudulently obtained funds.

In his plea, Patel admitted to operating and funding several India-based call centers from which the fraud schemes were perpetrated, including the call center HGLOBAL.  Patel corresponded by email and WhatsApp messaging frequently with his co-defendants to exchange credit card numbers, telephone scam scripts, and call center operations instructions.  The scripts included IRS impersonation, USCIS impersonation, Canada Revenue Agency impersonation, Australian Tax Office impersonation, payday loan fraud, U.S. Government grant fraud, and debt collection fraud.

A co-defendant described Patel as “the top person in India and the boss for whom most of the other defendants worked,” and the owner of multiple call centers.  Another co-defendant stated that Patel was arrested in India in 2016, but then paid a bribe and was released.  Additionally, Patel admitted that a reasonably foreseeable loss of more than $25 million but less than $65 million was attributable to him, based on the government’s evidence against him.  

Patel was prosecuted in the United States after being extradited from Singapore in April 2019 to face charges in this large-scale telefraud and money laundering scheme.  Singapore authorities apprehended Patel at the request of the United States pursuant to a provisional arrest warrant in September 2018, after Patel flew there from India.

The indictment in this case, which was unsealed in October 2016, charged Patel and 60 other individuals and entities with general conspiracy, wire fraud conspiracy and money laundering conspiracy.  A total of 24 domestic defendants associated with this transnational criminal scheme were previously convicted and sentenced to terms of imprisonment of up to 20 years in the Southern District of Texas, District of Arizona and Northern District of Georgia.  The defendants were also ordered to pay millions of dollars in victim restitution and money judgments and to forfeit seized assets. Some defendants were ordered to be deported based on their illegal immigration status, with another defendant having his U.S. citizenship revoked due to a separate conviction for immigration fraud.  Charges remain pending for other India-based defendants.  They are presumed innocent unless and until convicted through due process of law.  

HSI, DHS-OIG and TIGTA led the investigation of this case.  The Justice Department’s Office of International Affairs and HSI Singapore provided significant support in securing and coordinating Patel’s arrest and extradition, working in concert with their counterparts at the Singapore Attorney General’s-Chambers and the Singapore Police Force.

Also providing significant support during the course of the investigation and prosecutions related to this scheme were: the Ft. Bend, Texas, County Sheriff’s Department; the Hoffman Estates, Illinois, Police Department; the Leonia, New Jersey, Police Department; the Naperville, Illinois, Police Department; the San Diego County District Attorney’s Office Family Protection/Elder Abuse Unit; the U.S. Secret Service; U.S. Small Business Administration Office of Inspector General; IOC-2; INTERPOL Washington; USCIS; U.S. State Department’s Diplomatic Security Service; and the U.S. Attorney’s Offices of the Northern District of Alabama, District of Arizona, Central District of California, Northern District of California, District of Colorado, Northern District of Florida, Middle District of Florida, Northern District of Georgia, Northern District of Illinois, Northern District of Indiana, Eastern District of Louisiana, District of Nevada, and the District of New Jersey.  The Federal Communications Commission’s Enforcement Bureau provided assistance in TIGTA’s investigation.  Additionally, the Executive Office for U.S. Attorneys, Legal and Victim Programs, provided significant support to the prosecution. 

Trial Attorney Mona Sahaf of the Criminal Division’s Human Rights and Special Prosecutions Section (HRSP), former Trial Attorney Amanda S. Wick of the Criminal Division’s Money Laundering and Asset Recovery Section, and Assistant U.S. Attorneys Mark McIntyre and Craig Feazel of the Southern District of Texas prosecuted the case.  Kaitlin Gonzalez of HRSP was the paralegal for this case.       

A Department of Justice website has been established to provide information about the case to already identified and potential victims, and the public.  Anyone who believes they may be a victim of fraud or identity theft in relation to this investigation or other telefraud scam phone calls may contact the FTC via this website.

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

 

 

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On Feb. 21, Texas pharmacist Dehshid “David” Nourian, 62, of Plano, was sentenced to 17 years and six months in prison and ordered to pay over $115 million in restitution for his role in a $145 million scheme to defraud the Department of Labor through the submission of fraudulent claims for prescription compound creams. On March 6, the court also forfeited $405 million in assets tied to Nourian’s fraud and money laundering schemes.According to court documents and evidence presented at trial, Nourian and others conspired to pay doctors to prescribe medically unnecessary compound creams to injured federal workers. Nourian and others owned and operated three pharmacies located in Fort Worth and Arlington, Texas. Over the course of the scheme, they paid doctors millions of dollars in illegal bribes and kickbacks for referring expensive compound medications to be filled by those pharmacies. Evidence at trial showed these compounds were being mixed in the back rooms of the pharmacies by untrained teenagers at a cost to the defendants of around $15 per prescription and then billed to the Department of Labor’s Office of Workers’ Compensation Programs (DOL-OWCP) for as much as $16,000 per prescription. Patients who received the creams testified at trial to the creams’ ineffectiveness and, in some instances, that using the creams resulted in painful, irritating skin rashes.“Protecting victims and safeguarding the public fisc are two of the Criminal Division’s highest priorities,” said Matthew R. Galeotti, head of the Justice Department’s Criminal Division. “This 17-year sentence sends a clear message that our prosecutors, working shoulder-to-shoulder with our investigative partners, will identify, investigate, and prosecute even the most sophisticated fraud schemes that target taxpayer money and endanger patients. As a result of our tireless efforts, this defendant was tried, convicted, and ordered to forfeit more than $400 million – the highest forfeiture ever obtained in a health care fraud case in the Department’s history – and now his ill-gotten proceeds will be returned to the taxpayers and programs designed to care for our most vulnerable citizens.”“This sentence sends a strong message to those who would defraud our federal health care programs for personal gain,” said Inspector General Tammy Hull of the U.S. Postal Service. “The outstanding work by the legal and investigative teams stopped a multi-year health care fraud scheme responsible for tens of millions of dollars in fraudulent billing to government agencies. Along with the Department of Justice and our federal law enforcement partners, the USPS Office of Inspector General will remain committed to investigating those who would engage in this type of fraud and abuse.”“Dehshid Nourian defrauded the U.S. Department of Labor’s (DOL) Office of Workers’ Compensation Programs (OWCP) by submitting false claims for medically unnecessary services. His actions placed illegal profits above patient safety,” said Special Agent in Charge Casey Howard of the U.S. Department of Labor Office of Inspector General (DOL-OIG) Central Region. “We will continue to work with our law enforcement partners and OWCP to protect the integrity of DOL’s worker compensation programs.”In less than three years, between May 2014 and March 2017, the pharmacies billed the DOL-OWCP and Blue Cross Blue Shield more than $145 million and were paid more than $90 million for unnecessary prescriptions referred by medical providers in exchange for the illegal bribes and kickbacks. Nourian and others then attempted to conceal their ill-gotten gains by laundering the money through purported holding companies and attempted to evade paying $24 million in federal income taxes on the illicit proceeds.In November 2023, a federal jury in the Northern District of Texas convicted Nourian of one count of conspiracy to commit health care fraud, eight counts of health care fraud, one count of conspiracy to launder money, five counts of money laundering, and one count of conspiracy to defraud the United States by failing to report and attempting to evade the collection of taxes owed to the IRS.In an order issued following Nourian’s sentencing, the court also ruled that Nourian will forfeit $405 million in seized assets tied to his crimes. Evidence at trial demonstrated that Nourian and his co-conspirators used a complex web of bank accounts and shell companies to launder their fraud proceeds, ultimately depositing tens of millions of dollars into Nourian’s and other family members’ bank and investment accounts. The forfeiture order returned that money to the taxpayers and included the forfeiture of $395 million in brokerage accounts, over $2 million in bank accounts, real estate in Dallas and Austin worth $8 million, and a BMW luxury vehicle.Supervisory Official Matthew R. Galeotti of the Justice Department’s Criminal Division; Acting U.S. Attorney Chad E. Meacham for the Northern District of Texas; Inspector General Tammy Hull of the U.S. Postal Service; Special Agent in Charge Casey Howard of the DOL-OIG Central Region; Special Agent in Charge Kris Raper of the Department of Veteran’s Affairs Office of Inspector General (VA-OIG), South Central Field Office; and Acting Special Agent in Charge Lucy Tan of the IRS Criminal Investigation (IRS-CI) Houston Field Office made the announcement.The U.S. Postal Service Office of Inspector General, DOL-OIG, VA-OIG, and IRS-CI investigated the case.Trial Attorney Ethan Womble and Senior Litigation Counsel Catherine Wagner of the Criminal Division’s Fraud Section prosecuted the case. Assistant U.S. Attorney Dimitri Rocha for the Northern District of Texas handled the criminal forfeiture for the case.The Fraud Section leads the Criminal Division’s efforts to combat health care fraud through the Health Care Fraud Strike Force Program. Since March 2007, this program, currently comprised of nine strike forces operating in 27 federal districts, has charged more than 5,800 defendants who collectively have billed federal health care programs and private insurers more than $30 billion. In addition, the Centers for Medicare & Medicaid Services, working in conjunction with the Office of the Inspector General for the Department of Health and Human Services, are taking steps to hold providers accountable for their involvement in health care fraud schemes. More information can be found at www.justice.gov/criminal-fraud/health-care-fraud-unit.

FORT SMITH — On August 6, 2024, the U.S. District Court for the Western District of Arkansas ordered $180,886 in cash seized from three Nashville men to be forfeited to the United States, upholding a civil complaint by the U.S. Attorney’s Office. The complaint, filed on Jan. 31, 2024, alleged that the funds, seized in an Arkansas State Police traffic stop, should be forfeited because they were the proceeds of or were involved in drug crimes.

According to court documents, this case began the afternoon of Jan. 17, 2023, when an Arkansas State Police trooper stopped a gray Nissan Armada for a traffic violation as it traveled westbound on I-40 in Crawford County, close to the Oklahoma state line. During the stop, the Nissan’s three occupants were visibly nervous and made inconsistent and contradictory statements about where they were going and what they planned to do. All three denied having any drugs or large amounts of cash in the vehicle. 

However, 13 minutes after the initial stop certified police canine “Beau” arrived on the scene, and in an “open air sniff” alerted on the vehicle—indicating the odor of illegal drugs. During the subsequent probable cause search, Arkansas troopers found two semi-automatic handguns, one of which had been reported stolen, personal-use quantities of illegal drugs and $180,886 in cash—most of it bundled for ease of counting. The driver, Shapour Saberi, and his two passengers, Redeer Ali Haji and Aryan Rasul Ibrahim, were arrested by the troopers and interviewed by agents of the U.S. Drug Enforcement Administration. The guns, drugs and cash, along with seven cell phones, were seized from them as evidence.

Further investigation by the DEA revealed that Saberi, Haji and Ibrahim operated a thriving mail-order drug business in which they solicited customers to order high-grade marijuana and marijuana “edibles” through Snapchat, Instagram, and other social media platforms. Customers placed their orders and paid for the orders in advance. Once a customer’s payment was received, often another co-conspirator in California would send that customer’s order by way of a common carrier such as UPS or FedEx, or via the U.S. Postal Service. On other occasions, the three transported the high-grade marijuana and edibles from California to Tennessee using common carriers and, on at least one occasion, a rented cargo van filled with trash bags full of marijuana.

The three individuals also memorialized many aspects of their illegal enterprise on their cell phones which contained pictures of internet advertisements for known strains of high-grade marijuana, close-ups displaying the marijuana, pictures of price lists for known strains of high-grade marijuana and marijuana edibles, photos of packages and mailing labels, records of conversations with customers and suppliers, photos of drug ledgers, text exchanges with co-conspirators that included arguments over business matters and selfies taken by all three subjects.

Significantly, one of Ibrahim’s phones had photos of drug ledgers that included one dated “1/15.” In this photograph, the total profit shown on the drug ledger was $178,450—only $2,436 less than the amount seized from Saberi, Haji and Ibrahim on their Jan. 17, 2023, road trip.

According to court papers, Saberi, Haji and Ibrahim filed administrative claims with the DEA seeking the return of their seized funds, alleging “ownership of the assets were obtained legally without felonious conduct,” and claiming most of the cash came from car sales rather than drug distribution. However, once the U.S. Attorney’s Office filed a formal complaint for civil forfeiture of the funds, complete with pictures of evidence gathered in the investigation, none of the subjects chose to challenge the forfeiture in court. Under the Department of Justice Asset Forfeiture Program, the funds—now in the custody of the U.S. Marshals Service—will be used to compensate crime victims, support law enforcement efforts, and support communities.

U.S. Attorney David Clay Fowlkes of the Western District of Arkansas made the announcement.

The U.S. Drug Enforcement Administration and Arkansas State Police investigated the case. The U.S. Marshals Service manages the Department of Justice Asset Forfeiture Program.

Assistant U.S. Attorney Steven Mohlhenrich civilly prosecuted the case for the United States.

The Department of Justice Asset Forfeiture Program

The Asset Forfeiture Program was created in 1984 when Congress passed the Comprehensive Crime Control Act, which provided federal prosecutors and agents the legal and regulatory tools necessary to keep up with, and ahead of, those who commit crime for economic benefit. The U.S. Marshals Service plays a critical role in identifying and evaluating assets that represent the proceeds of crime as well as efficiently managing and selling assets seized and forfeited by Department of Justice.

The Marshals manage a wide array of assets including real estate, commercial businesses, cash, financial instruments, vehicles, jewelry, art, antiques, collectibles, vessels and aircraft. Proceeds generated from asset sales are used to operate the program, compensate victims and support various law enforcement efforts.  The Marshals manage the distribution of proceeds and payments to victims of crime and other innocent third parties, all of which helps to mitigate the financial damage inflicted by criminal activity. The agency employs best practices from private industry to ensure that assets are managed and sold in an efficient and cost-effective manner.

The Asset Forfeiture Program also supports communities by transferring certain types of forfeited assets to state, local and nonprofit organizations. Through the Operation Goodwill program, forfeited real or personal property of marginal value can be transferred to state or local governments in support of drug abuse treatment, drug crime prevention and education, housing, job skills and other community-based public health and safety programs.

Related court documents may be found on the Public Access to Electronic Records website at www.pacer.gov.

From Aug. 28 to Aug. 31, the leadership of Ukraine’s three anti-corruption bodies met with Justice Department officials in Washington, D.C. Their visit was sponsored by the U.S. Department of State’s Bureau of International Narcotics and Law Enforcement Affairs (INL). Separately, Department officials met with a delegation from the Victim and Witness Coordination Centre of the Ukrainian’s Prosecutor General’s Office, in a visit that was also funded by INL.

On Wednesday, Attorney General Merrick B. Garland welcomed to the Justice Department the anti-corruption delegation, which was led by the National Anti-Corruption Bureau (NABU) Director Semen Kryvonos, Specialized Anti-Corruption Prosecutor’s Office (SAPO) Chief Prosecutor Oleksandr Klymenko, and High Anti-Corruption Court (HACC) Chief Justice Vira Mykhailenko. They were accompanied by the Department’s Office of Overseas Prosecutorial Development, Assistance and Training (OPDAT) Resident Legal Advisor at U.S. Embassy Kyiv Jared Kimball, who is providing guidance, case-based mentoring, and capacity building to SAPO and NABU.  







AG Garland with (l to r) DAAG and Counselor to AG for International Affairs Bruce Swartz; SAPO Chief Prosecutor Oleksandr Klymenko, NABU Director Semen Kryvonos, HACC Chief Justice Vira Mykhailenko and Resident Legal Advisor Jared Kimball. 

The anti-corruption delegation met with Criminal Division leadership including Deputy Assistant Attorney General and Counselor for International Affairs Bruce C. Swartz, OPDAT leadership, the Justice Department’s Office of International Affairs (OIA), the Criminal Division’s Money Laundering and Asset Recovery Section (MLARS), and Task Force KleptoCapture leadership. They also met with FBI Director Christopher Wray and the FBI’s Criminal Investigative Division.

The meetings provided an opportunity to demonstrate the United States’ unwavering support and confidence in their critical work in targeting high-level corruption, strengthening cooperation on financial investigations, and understanding what challenges they are facing and how the Department can help. The partnership includes facilitating communication with Ukrainian agencies on U.S. and Ukrainian cases involving corrupt actors and seized assets and working with OIA to improve the Mutual Legal Assistance process for both parties.

The Department reaffirmed its full commitment to support the independence of these anti-corruption institutions through technical support and capacity building provided by the Resident Legal Advisor in Kyiv and other Department expertise.

On Tuesday, Criminal Division Deputy Assistant Attorney General Anjali Chaturvedi and representatives of the Department’s War Crimes Accountability Team, based in the Criminal Division’s Human Rights and Special Prosecutions Section, and representatives of the Justice Department’s Office of Victims of Crime, Office on Violence Against Women, National Security Division’s Office of Justice for Victims of Overseas Terrorism, and U.S. Attorney’s Office for the District of Columbia met at the Department with a delegation from the Victim and Witness Coordination Centre that was recently created in the Office of the Prosecutor General of Ukraine. Attorney General Garland welcomed the delegation and focused on the importance of supporting Ukrainian victims. The head of the Centre, Dr. Veronika Plotnikova, led discussions for the delegation. Following the meeting, the delegation visited the U.S. Attorney’s Office for the District of Columbia to learn more about how the Department supports crime victims and witnesses. The delegation also met with representatives of the FBI’s Victim Services Division.







AG Garland with Dr. Veronika Plotnikova and other members of DOJ, INL the Ukraine Prosecutor General’s Office, and Ukrainian Embassy. 

Earlier this year, Attorney General Garland met Prosecutor General (PG) Andriy Kostin and discussed the matter of supporting victims and witnesses of crime. In February, PG Kostin met with some of the Justice Department’s top victim witness support experts. The Centre was subsequently created by PG Kostin on April 11.

Department officials offered expertise and support to enhance the implementation of mechanisms in Ukraine to assist victims and witnesses during the criminal justice process as Ukraine investigates and prosecutes Russian war crimes and other atrocities.

The Department of Justice is proud to stand by our Ukrainian law enforcement partners in their courageous and crucial work and looks forward to continuing to assist in any way we can.

Jeffery Lynn Gentry, 40, of White County, Tenn., pleaded guilty today in U.S. District Court, to wire fraud and money laundering, announced Jack Smith, Acting U.S. Attorney for the Middle District of Tennessee. Gentry was charged on July 5, 2017, with operating a $43 million investment scheme in which he bilked investors out of more than $10 million.

 

According to court documents, Gentry owned and operated Gentry Brothers Tractor Supply and Gentry Auto, both located in Sparta, Tenn. Beginning in 2012 and continuing to mid-December of 2016, Gentry devised and executed a scheme to defraud and obtain money and property from investors, promising high rates of return on investments, purportedly used to purchase farm-related equipment to satisfy state contracts and producing significant profits.

 

Gentry falsely represented to investors, including customers, friends, acquaintances, and family members, many of whom lived in White County, Tennessee, that he was bidding on and winning contracts from various states, including Tennessee, to supply equipment, including tractors, lawn mowers, and other farm-related equipment through his tractor supply company.

 

Through this scheme, Gentry convinced more than 50 individuals to invest funds totaling approximately $43 million and caused financial loss to investors of more than $10 million.

 

Despite his assurances to investors of significant returns, Gentry admitted that he never intended to invest the funds as promised but instead, used the money to subsidize his lifestyle, amassing assets worth a substantial amount of money, including numerous tracts of real estate and vehicles.

 

In March 2016, Gentry also used investor funds to start up and support a new business venture, Gentry Auto, a used car lot, transferring more than $365,000 of investor funds from the Gentry Brothers Tractor Supply Company to the Gentry Auto business between March 24, 2016 and December 6, 2016.

 

The Government also seeks a monetary judgement of at least $10 million to recover losses suffered by the victims in this case.

 

During this investigation, the Asset Forfeiture Unit of the U.S. Attorney’s Office and the U.S. Marshals’ Service seized the assets of Gentry, including his businesses, vehicles, farm equipment and livestock, houses, tracts of land and approximately $300,000 cash. On August 26, 2017, the U.S. Marshals’ Service will liquidate these assets at auction in Sparta, Tenn. Details of the auction are available at www.txAuction.com.

 

Gentry faces up to 20 years in prison on each count and monetary fines when he is sentenced by Judge AletaTrauger later this year.

 

This case was investigated by the FBI, the IRS-Criminal Investigation and the U.S. Marshal’s Service. The case is being prosecuted by Assistant U.S. Attorney Kathryn Risinger and Assistant U.S. Attorney Debra Phillips is handling the asset forfeiture.

Jeffery Lynn Gentry, 40, of White County, Tennessee, was sentenced today in U.S. District Court to 36 months in prison, followed by three years of supervised release, for wire fraud and money laundering, announced U.S. Attorney Don Cochran for the Middle District of Tennessee.  U.S. District Court Judge Aleta A. Trauger also ordered Gentry to pay $10, 410,672.74 in restitution.

Gentry was charged on July 5, 2017, with operating a $43 million investment scheme in which he bilked investors out of more than $10 million.  He pleaded guilty on August 10, 2017.

According to court documents, Gentry owned and operated Gentry Brothers Tractor Supply and Gentry Auto, both located in Sparta, Tennessee.  Beginning in 2012 and continuing to mid-December of 2016, Gentry devised and executed a scheme to defraud and obtain money and property from investors, promising high rates of return on investments, purportedly used to purchase farm-related equipment to satisfy state contracts and producing significant profits.

Gentry falsely represented to investors, including customers, friends, acquaintances, and family members, many of whom lived in White County, Tennessee, that he was bidding on and winning contracts from various states, including Tennessee, to supply equipment, including tractors, lawn mowers, and other farm-related equipment through his tractor supply company.

Through this scheme, Gentry convinced more than 50 individuals to invest funds totaling approximately $43 million and caused financial loss to investors of more than $10 million. 

Despite his assurances to investors of significant returns, Gentry admitted that he never intended to invest the funds as promised but instead, used the money to subsidize his lifestyle, amassing assets worth a substantial amount of money, including numerous tracts of real estate and vehicles. 

In March 2016, Gentry also used investor funds to start up and support a new business venture, Gentry Auto, a used car lot, transferring more than $365,000 of investor funds from the Gentry Brothers Tractor Supply Company to the Gentry Auto business between March 24, 2016 and December 6, 2016.

During this investigation, the Asset Forfeiture Unit of the U.S. Attorney’s Office and the U.S. Marshals’ Service seized the assets of Gentry, including his businesses, vehicles, farm equipment and livestock, houses, tracts of land and approximately $300,000 cash.  These assets were liquidated on August 26, 2017, by the U.S. Marshals’ Service at an auction in Sparta, Tennessee.  This auction and other liquidation proceedings generated more than $1.3 million for victim restoration. 

This case was investigated by the FBI, the IRS-Criminal Investigation and the U.S. Marshal’s Service.  The case is being prosecuted by Assistant U.S. Attorney Kathryn Risinger and Assistant U.S. Attorney Debra Phillips handled the forfeiture of Gentry’s assets.