James L. Prange Sentenced in Securities Fraud Scheme

A self-described financing consultant to small and emerging companies was sentenced for his role in a kickback scheme.

James L. Prange, 63, of Greenbush, Wisconsin, was sentenced by United States District Court Judge Nathaniel M. Gorton to 30 months in prison, two years of supervised release, a $15,250, fine and forfeiture. In May 2013, Prange was convicted by a jury of conspiracy to commit securities fraud, wire fraud, and mail fraud.

Prange was sentenced for his role in a scheme to pay secret kickbacks to an investment fund representative who had agreed to use the fund’s money to buy stock in three companies that had hired Prange’s firm, Northern Equity, to help them raise capital. The kickbacks were concealed through the use of sham consulting agreements and other fraudulent documents. Prange and the company executives were unaware that the purported investment fund representative was actually an undercover agent with the Federal Bureau of Investigation.

The conviction and sentence followed a year-long investigation focusing on preventing fraud in the micro-cap stock markets. Microcap companies are small, publicly traded companies whose stock often trades at pennies a share. Fraud in the microcap markets is of increasing concern to regulators as such markets have proven to be fertile grounds for fraud and abuse. This is, in part, because accurate information about microcap stocks may be difficult for the average investor to find, since many microcap companies do not file financial reports with the Securities Exchange Commission.

Executives of three publicly traded companies who were also charged as part of the undercover operation were sentenced in the last two months. In August, Karen L. Person, 62, of Las Vegas, Nevada, the chief executive officer of SBCO, Inc., and John C. Jordan, 62, of Cameron Park, California, the chief executive officer of Vida Life International Ltd., were each sentenced to 30 months in prison for their roles in the scheme. Person pleaded guilty to conspiracy to commit securities fraud and Jordan was convicted after trial on multiple counts of conspiracy to commit securities fraud and wire fraud. In July, Steven Berman, 50, of Ohio, the former chief executive officer of China Wi-Max Communications Inc., and Richard Kranitz, 69, a Wisconsin securities attorney who served as an adviser and a member of the board of directors of China Wi-Max, were each sentenced to 18 months after pleading guilty to conspiracy to commit securities fraud.

The Securities and Exchange Commission, which conducted a parallel civil investigation alongside the FBI undercover operation, cooperated with criminal authorities in bringing these charges and charges against 10 other defendants who participated in the kickback scheme. Eight of those defendants have already pleaded guilty to charges arising out of their involvement in the scheme.

United States Attorney Carmen M. Ortiz and Vincent B. Lisi, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division, made the announcement. The case was prosecuted by Assistant U.S. Attorneys Sarah E. Walters, Stephen E. Frank and Vassili Thomadakis of Ortiz’s Economic Crimes Unit.

This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch and, with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information about the task force visit www.stopfraud.gov.

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Details on Nine Alleged Members of Hobos Street Gang Indicted in RICO Conspiracy for Murders and Other Violent, Drug-Related Crimes

Nine defendants who allegedly directed or participated in a violent, drug trafficking street gang known as the Hobos were charged in a federal racketeering conspiracy (RICO) indictment with engaging in murders, attempted murders, robberies, and narcotics distribution. The five-count indictment returned by a federal grand jury alleges five murders, solicitation of a sixth murder, four attempted murders, three robberies, and the operation of “drug spots” and “drug lines” on the city’s south side among a pattern of criminal activity between 2004 and 2009.

Four of the defendants are charged with personally shooting to death five victims between 2006 and 2009, including one victim who was allegedly killed because he was cooperating with law enforcement.

The indictment charges that the Hobos Enterprise allegedly used violence to enrich its members and their associates; to promote and enhance the criminal enterprise; to preserve and protect its power, territory, operations, and proceeds; to keep victims and witnesses in fear; and to prevent law enforcement from detecting its crimes.

“The indictment portrays a gang with virtually no restraint on its ruthless use of violence to further its goals,” said Gary S. Shapiro, United States Attorney for the Northern District of Illinois. “The gang’s alleged murders, robberies, and drug dealing invited our employing the federal racketeering laws to prosecute the full scope of their crimes, some extending beyond the normal statute of limitations; and, if convicted, to bring the most severe federal sentences to bear for the terror that plagued the blocks and street corners they allegedly controlled.” The investigation is continuing, Mr. Shapiro added.

“This RICO indictment is the result of a long-term commitment we share with our law enforcement partners to address the dangerous threats facing our communities today. This investigation targeted an exceptionally violent group that used murder, threats, and intimidation to further their agenda. The charges demonstrate our focus and determination to strike at gang-related criminal enterprises and to eliminate the terror these groups inflict on our neighborhoods,” said Robert J. Shields, Jr., Acting Special Agent in Charge of the Chicago Office of the Federal Bureau of Investigation.

“Through the work of Chicago Police officers and our gang investigators, in close partnership with the FBI, IRS, and the U.S. Attorney’s Office, we are able to announce federal RICO charges against nine dangerous members of the Hobos gang,” said Chicago Police Superintendent Garry F. McCarthy. “Today’s announcement should serve as a warning―we do not and we will not accept violence in our communities or in our neighborhoods. And we will do everything in our power to hold dangerous criminals accountable for the crimes they commit,” he added.

“Today’s indictment sends a loud message that we are committed to our law enforcement partners and the communities in which we live,” said James C. Lee, Special Agent in Charge of the Internal Revenue Service-Criminal Investigation Division in Chicago. “Gang activity and criminal enterprises thrive on financial gain and perpetuate criminal violence on our streets. IRS-Criminal Investigation brings its financial expertise to an investigation, and we are privileged to be working with the Chicago Police Department and other federal law enforcement partners to keep our communities safe.”

The Illinois Department of Corrections also participated in the investigation. The Chicago Police Department initiated the investigation, which the federal agencies joined later under the umbrella of the Organized Crime Drug Enforcement Task Force (OCDETF) and the Chicago High Intensity Drug Task Force (HIDTA). The case is part of a sustained, coordinated effort by federal law enforcement agencies, working together with the Chicago Police and other state and local departments, to disrupt Chicago’s sophisticated, often violent, drug trafficking organizations.

Law enforcement has identified the Hobos as a tight-knit, violent crew that originated in the former Robert Taylor Homes and banded together from factions of the much larger Gangster Disciples and Black Disciples street gangs. They allegedly targeted drug dealers and high-value targets to rob and relied upon each other to protect their drug territory, retaliate against rival gangs, and prevent witnesses from cooperating with law enforcement.

All nine defendants were charged with racketeering conspiracy and are currently in state or federal custody. They, all of Chicago, are

•     Gregory Chester, also known as “Bowlegs,” “Big Homie,” “Pops,” and “Desjuar Anderson,” 36, of Richton Park, identified as the leader of the Hobos
•     Arnold Council, aka “Armstrong” and “Hobo,” 37
•     Paris Poe, aka “Poleroski,” 33
•     Gabriel Bush, aka “Louie,” 34
•     Stanley Vaughn, aka “Smiley,” 36
•     William Ford, aka “Joe Buck,” 33
•     Gary Chester, aka “Chee,” 35 (Gregory Chester’s cousin)
•     Byron Brown, aka “B-Rupt,” 28. Byron Brown’s deceased twin brother, Brandon Brown, is named as an unindicted co-conspirator.
•     Rodney Jones, aka “Milk,” 26

Poe, Council, Bush, and Byron Brown were each charged with one count of murder in aid of racketeering, and council was charged with brandishing a firearm during a clothing store robbery. The indictment also seeks forfeiture of an unspecified amount of illegal proceeds.

All nine defendants will be arraigned on later dates in U.S. District Court.

According to the indictment, the murders committed by members and associates of the Hobos Enterprise included

•     Wilbert Moore, who was killed because he was cooperating with law enforcement, by Council and Poe on January 19, 2006
•     Terrance Anderson by Bush and others on September 1, 2007
•     Eddie Moss by Byron Brown and others on December 14, 2007
•     Larry Tucker by Bush, the Brown brothers, and others on January 20, 2008
•     Kenneth Mosby by Byron Brown and others on May 12, 2008.

Gregory Chester allegedly solicited the murder of Antonio Bluitt, which occurred on September 2, 2007.

The attempted murders included

•     Victim 1 by Council and Poe on June 11, 2006
•     Victims 2 and 3 by Bush and Ford on June 5, 2007
•     Victim 4 by Bush and Vaughn on June 27, 2007
•     Victim 5 by Jones on November 5, 2007

The robberies included

•     Victim 1 by Council and Poe on June 11, 2006
•     the Collections Clothing Store by Council and others on November 8, 2008
•     Victims 6 and 7 by Poe, Gary Chester, and others on March 25, 2009

The RICO conspiracy count further alleges that the Hobos and their associates operated drug spots and drug lines where they distributed user quantities of narcotics, at times using nicknames to identify their products. These locations included

•     the building and area located at 4429 South Federal, within the former Robert Taylor Homes, which was controlled and managed by Gregory Chester and Council and drugs were sold under the nicknames “Green Monster” and “Pink Panther"
•     the area around 47th Street and Vincennes Avenue, which was controlled by Bush and Vaughn and operated by Ford
•     the area around 51st Street and Calumet Avenue, which was managed by the Brown brothers and Jones
•     the area around 51st Street and Martin Luther King Drive, which was controlled by Bush

As part of the racketeering conspiracy, the defendants allegedly

•     used gang-related terminology, symbols, and gestures, including the slogan “Hobo or Nothing” and a hand sign known as the “Hobo Horns”
•     shared the proceeds of robberies and the trafficking of narcotics
•     obtained, used, brandished, and discharged firearms in connection with the enterprise’s illegal activities
•     managed the procurement, transfer, use, concealment, and disposal of firearms and dangerous weapons within the enterprise to protect their interests and further their goals
•     monitored law enforcement radio frequencies and acquired radio equipment to detect and avoid law enforcement inquiry into their illegal activities
•     had nominees obtain rental vehicles to conceal their use while committing illegal activities
•     identified victims from whom they could obtain distribution quantities of controlled substances or large sums of money by robbing them
•     conducted surveillance of intended murder and robbery victims, a practice referred to as “lamping” and “doing homework"
•     restrained and murdered victims and witnesses to prevent their escapes and to prevent identification of themselves and their associates.

The RICO conspiracy count carries a maximum sentence of 20 years in prison, or life for the four defendants charged with committing murders. Those four defendants―Poe, Council, Bush, and Byron Brown―also face a mandatory life sentence, or death, if convicted of murder in aid of racketeering. Only the Attorney General of the United States may decide later whether to seek the death penalty. The charge of brandishing a firearm against Council carries a mandatory consecutive sentence of seven years and a maximum of life in prison. If convicted, the court must determine a reasonable sentence to impose under federal statutes and the advisory United States Sentencing Guidelines.

The government is being represented by Assistant U.S. Attorneys Patrick Otlewski, Erika Csicsila, and Derek Owens.

An indictment contains only charges and is not evidence of guilt. The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.

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4 Arrested by @Chicago_Police in Gang-Related Mass Shooting

Four people have been charged in the gang-related Chicago shooting involving an assault-style rifle that injured 13 people in a city park, including a 3-year old boy, police announced today.

"As of right now we have four offenders charged in this shooting, including the man who fired that military grade weapon and the man who supplied that military grade weapon," police superintendent Garry McCarthy told a press conference.



Tabari Young, 22, Bryon Champ, 21, Brad Jett, 22, and Kewane Gatewood, 20, were all charged with three counts of attempted murder and aggravated battery with a firearm, McCarthy said.

Young, police said, was the main shooter in last Thursday's incident in the Back of the Yards neighborhood on the city's South Side. Champ, who police said also fired a gun, is a documented gang member who was convicted of a felony - unlawful use of a weapon by a felon - last year, but was only sentenced to boot camp, according to police. Gatewood, authorities said, supplied the military grade weapon and Jett participated as a lookout, McCarthy said.

McCarthy said that Champ was the "main player" in the incident, citing that Champ suffered a graze wound to his leg in a shooting earlier in the day that led to the retaliatory shooting at the basketball court in the Back of the Yards.

"If Bryon Champ is not on the street - as he shouldn't have been - this incident likely does not occur," McCarthy said. "If Champ is not on the street, there's no retaliation because there's no incident," he added. "This individual was the victim of gun violence and then became the offender of it."

Among the wounded was 3-year old Deonta Howard, who suffered a gunshot wound to his ear. Howard has undergone plastic surgery and is expected to recover.

Thursday's incident was only the latest in a string of tragic shootings in the city. Earlier this year 15-year old Hadiya Pendleton was shot and killed only days after performing at President Obama's inauguration.

McCarthy today reiterated his calls for stricter gun laws to help crack down on the city's gun violence problems. "Illegal guns and weapons designed for war do not belong on the streets of Chicago," he said.

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