A 15—count indictment was unsealed this morning in federal court in the Eastern District of New York charging seven defendants with narcotics trafficking, money laundering, and firearms offenses based, in part, on their participation in a transnational heroin and cocaine trafficking conspiracy involving the ‘Ndrangheta, one of Italy’s most powerful organized crime syndicates. The defendants—‘Ndrangheta member Raffaele Valente, also known as “Lello”; Gambino associate Franco Lupoi; Bonanno associate Charles Centaro, also known as “Charlie Pepsi”; Dominic Ali; Alexander Chan; Christos Fasarakis; and Jose Alfredo Garcia, also known as “Freddy”—were arrested earlier today. In a coordinated operation, Italian law enforcement authorities arrested 17 members and associates of the ‘Ndrangheta in Calabria, Italy, who were involved in the narcotics trafficking conspiracy, among other crimes.
The seven defendants arrested in the United States were scheduled to be arraigned this afternoon before Chief United States Magistrate Judge Steven M. Gold, at the United States Courthouse at 225 Cadman Plaza East in Brooklyn, New York. The case has been assigned to United States District Judge Sterling Johnson, Jr.
The charges were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and George Venizelos, Assistant Director in Charge, Federal Bureau of Investigation, New York Field Office (FBI).
“The ‘Ndrangheta is an exceptionally dangerous, sophisticated, and insidious criminal organization with tentacles stretching from Italy to countries around the world,” stated United States Attorney Lynch. “The defendant Lupoi sought to use his connections with both ‘Ndrangheta and the Gambino crime family to extend his own criminal reach literally around the globe. Today, thanks to the vigilance and sustained cooperation of the Department of Justice and its law enforcement partners in Italy, the ‘Ndrangheta’s efforts to gain a foothold in New York have been dealt a lasting blow.” Ms. Lynch praised the outstanding investigative efforts of the Federal Bureau of Investigation and expressed her thanks to law enforcement partners in Italy, including the Prosecutor of the Republic of Reggio Calabria; the Italian National Police (INP), in particular, the Squadra Mobile of Reggio Calabria and the Servizio Centrale Operativo; the Direzione Centrale per i Servizi Antidroga; and the Direzione Nazionale Antimafia. Ms. Lynch also expressed gratitude to the U.S. Department of Justice Attaché and the the FBI Legal Attaché at the U.S. Embassy in Rome, who coordinated extensive evidence-sharing and undercover operations.
“As alleged, ‘Ndrangheta’s clan members conspired with members of the Gambino organized crime family in New York in an attempt to infiltrate our area with their illegal activities. Under the auspices of legitimate shipping businesses, the two criminal groups worked together to establish a plan of moving cocaine and heroin between the United States and Italy. Little did they know, there was an ongoing collaboration between the FBI and the Italian National Police to investigate and identify their scheme. This international cooperation between our great law enforcement agencies is one that was established at the beginning of our investigation, and it remains in place today. With every arrest made, both here and in Italy, FBI agents and Italian National Police officers closely coordinated their operations and share the success of this operation,” said FBI Assistant Director in Charge Venizelos.
As detailed in the indictment and detention letter filed today, defendant Franco Lupoi, a Brooklyn resident who has lived in Calabria, used his close criminal ties to both the Gambino organized crime family and the ‘Ndrangheta, an Italian criminal organization akin to the Mafia in Sicily and the Camorra in Naples, to pursue criminal activity that stretched across the globe. The Italian charges unsealed today reveal how the ‘Ndrangheta has operated for decades in Calabria in localized clans—known as ‘ndrine—based primarily on close family ties. In this case, Lupoi’s father-in-law, Italian defendant Nicola Antonio Simonetta, is a member of the Ursino clan of the ‘Ndrangheta. In 2012, Simonetta traveled to Brooklyn and met with Lupoi and an undercover FBI agent, who recorded Simonetta and Lupoi discussing plans to ship narcotics between the U.S. and Italy via the port of Gioia Tauro in Calabria, an infamous hub of ‘Ndrangheta activity. Simonetta revealed that his ‘Ndrangheta associates at the port would guarantee the safe arrival of container ships containing contraband.
As alleged in court documents, Lupoi exploited these underworld connections to link his criminal associates in New York with those in Calabria, forming conspiracies to traffic heroin and cocaine. On the Italian side, he allegedly engaged Italian defendant and ‘Ndrangheta leader Francesco Ursino and others as suppliers of heroin and buyers of cocaine. During two joint FBI-INP operations in Italy, Lupoi and Ursino sold more than 1.3 kilograms of heroin to an FBI undercover agent for what they believed was eventual distribution in the United States. In New York, Lupoi, Chan, and Garcia sold the undercover agent more than a kilogram of heroin.
As alleged, Lupoi also set into motion a plot to transport 500 kilograms of cocaine, concealed in frozen food, in shipping containers from Guyana to Calabria. In the course of these conspiracies, Lupoi assured his confederates of his relationship with a corrupt port official in Gioia Tauro, indicating that in return for €200,000, the official could guarantee passage of unlimited containers of contraband. In New York, Lupoi joined forces with defendants Alexander Chan and Garcia to orchestrate the Guyana-Italy cocaine conspiracy. In conversations recorded by the undercover agent, the conspirators discussed their connections to Mexican drug cartels operating in Guyana, South America, and plotted to transport 500 kilograms of cocaine internationally, hidden in shipments of frozen fish or pineapples. On the Italian side, Ursino and his co-conspirators planned to use a fish importation company to receive the shipment. As set forth in Italian court documents, the conspiracy slowed when shipping containers originating from the same Guyanese shipping company were seized in Malaysia and found to contain more than $7 million in cocaine hidden in pineapples and coconut milk.
As set forth in court documents, Lupoi also worked closely with U.S. defendant and ‘Ndrangheta member Raffaele Valente, who sold an illegal silencer and sawed-off shotgun to the FBI undercover agent at the Royal Crown Bakery in Brooklyn. In conversations intercepted on Italian wiretaps, Valente revealed that he had assembled a group of well-armed men in New York and that their base of operations was as secure as Fort Knox. Valente also discussed his devotion to St. Michael the Archangel as the purported “patron saint” of the ‘Ndrangheta and exhorted Italian defendant Andrea Memmolo to wear a special ring as a sign of pride and mutual recognition. Valente and Lupoi are charged with conspiracy to transfer a firearm, and Valente is charged with two counts of illegal possession of a silencer. Valente is also charged in Italy with the crime of mafia association based on his role in establishing an ‘Ndrangheta cell in New York.
As alleged, Lupoi further maintained a network of money laundering associates in New York. He and his co-defendants Dominic Ali, Charles “Charlie Pepsi” Centaro, and Christos Fasarakis, an employee of Alma Bank in Brooklyn, laundered more than $500,000 in funds that they believed were the proceeds of narcotics and illegal weapons trafficking. Centaro was recorded describing his access to bank accounts with millions of dollars through which he could launder and conceal criminal proceeds.
If convicted, Lupoi, Chan, and Garcia face a maximum sentence of life imprisonment; Ali, Centaro, and Fasarakis face a maximum sentence of 20 years’ imprisonment on each money laundering charge; and Valente faces a maximum sentence of 10 years’ imprisonment on each firearms charge.
The government’s case is being prosecuted by Assistant United States Attorneys Cristina Posa, Kristin Mace, and Kevin Trowel.
The charges contained in the indictment and complaint are merely allegations, and the defendants are presumed innocent unless and until proven guilty.
Defendants
Franco Lupoi
Age: 44
Brooklyn, New York
Dominic Ali
Age: 55
Brooklyn, New York
Charles Centaro, a.k.a. “Charlie Pepsi”
Age: 50
Brooklyn, New York
Alexander Chan
Age: 46
New York, New York
Christos Fasarakis
Age: 42
Brooklyn, New York
Raffaele Valente, a.k.a. “Lello”
Age: 42
Brooklyn, New York
Jose Alfredo Garcia, a.k.a. “Freddy”
Age: 47
New York, New York
Tuesday, February 11, 2014
Monday, February 10, 2014
Phillip D. Murphy, Former Bank of America Executive, Pleads Guilty to Role in Conspiracy and Fraud Involving Investment Contracts for Municipal Bonds Proceeds
A former Bank of America executive pleaded guilty today to his participation in a conspiracy and scheme to defraud related to bidding for contracts for the investment of municipal bond proceeds and other municipal finance contracts, the Department of Justice announced.
Phillip D. Murphy, the former managing director of Bank of America’s municipal derivatives products desk from 1998 to 2002, pleaded guilty today before U.S. District Judge Max O. Cogburn, Jr. in the U.S. District Court for the Western District of North Carolina to participating in a fraud conspiracy and wire fraud scheme with employees of Rubin/Chambers, Dunhill Insurance Services Inc., also known as CDR Financial Products, a broker of municipal finance contracts, and others. Murphy also pleaded guilty to conspiring with others to make false entries in the reports and statements originating from his desk, which were sent to bank management.
Murphy was indicted by a grand jury on July 19, 2012. According to the indictment, Murphy participated in a wire fraud scheme and separate fraud conspiracies that began as early as 1998 and continued until 2006.
“By manipulating what was intended to be a competitive bidding process, the conspirators defrauded municipalities, public entities, and taxpayers across the country,” said Brent Snyder, Deputy Assistant Attorney General of the Antitrust Division’s Criminal Enforcement Program. “Today’s guilty plea reaffirms the Antitrust Division’s continued efforts to hold accountable those who corrupt and subvert the competitive process in our financial markets.”
Public entities seek to invest money from a variety of sources, primarily the proceeds of municipal bonds that they issue, to raise money for, among other things, public projects. Public entities typically hire a broker to conduct a competitive bidding process for the award of the investment agreements and often for other municipal finance contracts.
According to the charges, Murphy conspired with CDR and others to increase the number and profitability of investment agreements and other municipal finance contracts awarded to Bank of America. Murphy won investment agreements through CDR’s manipulation of the bidding process in obtaining losing bids from other providers, which is explicitly prohibited by U.S. Treasury regulations. As a result of the information, various providers won investment agreements and other municipal finance contracts at artificially determined prices. In exchange for this information, Murphy submitted intentionally losing bids for certain investment agreements and other contracts when requested and, on occasion, agreed to pay or arranged for kickbacks to be paid to CDR and other co-conspirator brokers.
Murphy and his co-conspirators misrepresented to municipal issuers that the bidding process was competitive and in compliance with U.S. Treasury regulations. This caused the municipal issuers to award investment agreements and other municipal finance contracts to providers that otherwise would not have been awarded the contracts if the issuers had true and accurate information regarding the bidding process. Such conduct placed the tax-exempt status of the underlying bonds in jeopardy.
“Mr. Murphy’s actions undermined the public’s trust when he conspired to manipulate a competitive bidding process,” said Richard Weber, Chief, IRS-Criminal Investigation (IRS-CI). “IRS-CI has experienced great success in unraveling significant and complex financial frauds as we work in close collaboration with our law enforcement partners.”
“Mr. Murphy ripped off hard working American taxpayers and cash-strapped municipalities all in pursuit of his own lucre,” said George Venizelos, Assistant Director in Charge of the FBI’s New York Field Office. “Let this serve as a reminder to others who are entrusted to act in the public’s best interest; your lack of candor won’t go without notice.”
Murphy pleaded guilty to two counts of conspiracy and one count of wire fraud. The fraud conspiracy carries a maximum penalty of five years in prison and a $250,000 fine. The wire fraud charge carries a maximum penalty of 30 years in prison and a $1 million fine. The false bank records conspiracy carries a maximum penalty of five years in prison and a $250,000 fine. The maximum fines for each of these offenses may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
Including Murphy, a total of 17 individuals have been convicted or pleaded guilty. Additionally, one company has pleaded guilty.
The prosecution is being handled by Steven Tugander, Richard Powers, Eric Hoffmann, Patricia Jannaco, and Stephanie Raney of the Antitrust Division. Assistant U.S. Attorneys Kurt Meyers, Michael Savage, and Mark Odulio of the U.S. Attorney’s Office for the Western District of North Carolina have also provided valuable assistance in this matter. The guilty plea announced today resulted from a wide-ranging investigation conducted by the Antitrust Division’s New York office, the FBI, and the IRS-CI. The division coordinated its investigation with the U.S. Securities and Exchange Commission, the Office of the Comptroller of the Currency, and the Federal Reserve Bank of New York.
Phillip D. Murphy, the former managing director of Bank of America’s municipal derivatives products desk from 1998 to 2002, pleaded guilty today before U.S. District Judge Max O. Cogburn, Jr. in the U.S. District Court for the Western District of North Carolina to participating in a fraud conspiracy and wire fraud scheme with employees of Rubin/Chambers, Dunhill Insurance Services Inc., also known as CDR Financial Products, a broker of municipal finance contracts, and others. Murphy also pleaded guilty to conspiring with others to make false entries in the reports and statements originating from his desk, which were sent to bank management.
Murphy was indicted by a grand jury on July 19, 2012. According to the indictment, Murphy participated in a wire fraud scheme and separate fraud conspiracies that began as early as 1998 and continued until 2006.
“By manipulating what was intended to be a competitive bidding process, the conspirators defrauded municipalities, public entities, and taxpayers across the country,” said Brent Snyder, Deputy Assistant Attorney General of the Antitrust Division’s Criminal Enforcement Program. “Today’s guilty plea reaffirms the Antitrust Division’s continued efforts to hold accountable those who corrupt and subvert the competitive process in our financial markets.”
Public entities seek to invest money from a variety of sources, primarily the proceeds of municipal bonds that they issue, to raise money for, among other things, public projects. Public entities typically hire a broker to conduct a competitive bidding process for the award of the investment agreements and often for other municipal finance contracts.
According to the charges, Murphy conspired with CDR and others to increase the number and profitability of investment agreements and other municipal finance contracts awarded to Bank of America. Murphy won investment agreements through CDR’s manipulation of the bidding process in obtaining losing bids from other providers, which is explicitly prohibited by U.S. Treasury regulations. As a result of the information, various providers won investment agreements and other municipal finance contracts at artificially determined prices. In exchange for this information, Murphy submitted intentionally losing bids for certain investment agreements and other contracts when requested and, on occasion, agreed to pay or arranged for kickbacks to be paid to CDR and other co-conspirator brokers.
Murphy and his co-conspirators misrepresented to municipal issuers that the bidding process was competitive and in compliance with U.S. Treasury regulations. This caused the municipal issuers to award investment agreements and other municipal finance contracts to providers that otherwise would not have been awarded the contracts if the issuers had true and accurate information regarding the bidding process. Such conduct placed the tax-exempt status of the underlying bonds in jeopardy.
“Mr. Murphy’s actions undermined the public’s trust when he conspired to manipulate a competitive bidding process,” said Richard Weber, Chief, IRS-Criminal Investigation (IRS-CI). “IRS-CI has experienced great success in unraveling significant and complex financial frauds as we work in close collaboration with our law enforcement partners.”
“Mr. Murphy ripped off hard working American taxpayers and cash-strapped municipalities all in pursuit of his own lucre,” said George Venizelos, Assistant Director in Charge of the FBI’s New York Field Office. “Let this serve as a reminder to others who are entrusted to act in the public’s best interest; your lack of candor won’t go without notice.”
Murphy pleaded guilty to two counts of conspiracy and one count of wire fraud. The fraud conspiracy carries a maximum penalty of five years in prison and a $250,000 fine. The wire fraud charge carries a maximum penalty of 30 years in prison and a $1 million fine. The false bank records conspiracy carries a maximum penalty of five years in prison and a $250,000 fine. The maximum fines for each of these offenses may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
Including Murphy, a total of 17 individuals have been convicted or pleaded guilty. Additionally, one company has pleaded guilty.
The prosecution is being handled by Steven Tugander, Richard Powers, Eric Hoffmann, Patricia Jannaco, and Stephanie Raney of the Antitrust Division. Assistant U.S. Attorneys Kurt Meyers, Michael Savage, and Mark Odulio of the U.S. Attorney’s Office for the Western District of North Carolina have also provided valuable assistance in this matter. The guilty plea announced today resulted from a wide-ranging investigation conducted by the Antitrust Division’s New York office, the FBI, and the IRS-CI. The division coordinated its investigation with the U.S. Securities and Exchange Commission, the Office of the Comptroller of the Currency, and the Federal Reserve Bank of New York.
Seven Arts Entertainment CEO Indicted in Fraudulent Film Tax Credit Scheme
Peter M. Hoffman, age 63, of Los Angeles, California, and Michael P. Arata, age 47, of New Orleans, Louisiana, were charged in a six count indictment by a federal grand jury with conspiracy and wire fraud, announced United States Attorney Kenneth Allen Polite, Jr.
According to the indictment, the Louisiana Motion Picture Incentive Act (LMPIA) was enacted to provide incentives for and encourage the filming of motion pictures and television programs in Louisiana. Under the LMPIA, companies making motion pictures were eligible to receive tax credits that were calculated as a percentage of the companies’ qualified expenditures in Louisiana. Qualified expenditures upon which companies could receive tax credits included expenditures on infrastructure. Infrastructure expenditures only included the purchase, construction, and use of facilities that were directly related to and utilized for motion picture production in Louisiana. In order to qualify for infrastructure tax credits, all funds had to be actually expended, and such expenditures had to be verified by an independent Louisiana Certified Public Accountant. Businesses that applied to the state for infrastructure tax credits were entitled to receive an amount equal to 40 percent of their qualified and audited infrastructure expenditures. Once this amount was certified by the state of Louisiana, the applicants could then sell the certification to local businesses and individuals. Such sale of tax credits provided for a significant source of cash for film projects.
The defendant, Peter M. Hoffman, was the chief executive officer of Seven Arts Entertainment Inc., a company that was primarily involved in the motion picture and entertainment industry in California. As chief executive officer of Seven Arts Entertainment Inc., his duties included the selection and production of major motion pictures, strategic planning, business development, operations, financial administration, and accounting. Hoffman was also an attorney and participated as a lawyer and executive in numerous financial and tax-preferred financings over a period of more than 25 years. Hoffman also owned, operated, and controlled numerous companies related to and affiliated with Seven Arts Entertainment Inc.
The co-defendant, Michael P. Arata, was a Louisiana attorney and businessman who also owned and operated companies involved in the movie and entertainment industry. Through their respective companies, Hoffman and Arata were partners in different movie-industry business ventures.
Through their respective companies, Hoffman and Arata purchased property located at 807 Esplanade in New Orleans, Louisiana. 807 Esplanade was an old mansion located in the Faubourg Marigny neighborhood on the edge of the French Quarter that had fallen into a severe state of disrepair over many years. The proposed reason for purchasing the property was to renovate the mansion and turn it into a film post-production facility.
After purchasing the property, Hoffman and Arata submitted an application and supporting documents to the state of Louisiana in order to receive film infrastructure tax credits for money the defendants fraudulently claimed had been spent on 807 Esplanade. On or about June 19, 2009, the state of Louisiana issued approximately $1,132,480.80 in tax credits to the 807 Esplanade partnership.
The Indictment charges that Hoffman and Arata fraudulently submitted materially false and misleading documents and information regarding 807 Esplanade expenditures to the auditors and to the state of Louisiana in order to receive infrastructure tax credits.
“The United States Attorney’s Office, the FBI. and the Louisiana Office of the Inspector General stand committed to protecting the economic interests of the United States and the state of Louisiana,” stated U.S. Attorney Polite. “The state of Louisiana has provided significant incentives to the film and entertainment industry in order to develop business and employment in Louisiana. Such an important effort will not be criminally exploited.”
“Those who brazenly steal from the taxpayers and abuse tax credit programs should know that we will relentlessly pursue and hold them criminally accountable wherever possible,” stated Louisiana Inspector General Stephen Street. “We remain committed to working with the FBI and United States Attorney to root out this sort of corruption wherever it may exist.”
Hoffman and Arata face a maximum term of imprisonment of five years with respect to count one and 20 years with respect to each of counts two through six. The defendants also face a maximum fine of $250,000 with respect to each count and supervised release of three years.
According to the indictment, the Louisiana Motion Picture Incentive Act (LMPIA) was enacted to provide incentives for and encourage the filming of motion pictures and television programs in Louisiana. Under the LMPIA, companies making motion pictures were eligible to receive tax credits that were calculated as a percentage of the companies’ qualified expenditures in Louisiana. Qualified expenditures upon which companies could receive tax credits included expenditures on infrastructure. Infrastructure expenditures only included the purchase, construction, and use of facilities that were directly related to and utilized for motion picture production in Louisiana. In order to qualify for infrastructure tax credits, all funds had to be actually expended, and such expenditures had to be verified by an independent Louisiana Certified Public Accountant. Businesses that applied to the state for infrastructure tax credits were entitled to receive an amount equal to 40 percent of their qualified and audited infrastructure expenditures. Once this amount was certified by the state of Louisiana, the applicants could then sell the certification to local businesses and individuals. Such sale of tax credits provided for a significant source of cash for film projects.
The defendant, Peter M. Hoffman, was the chief executive officer of Seven Arts Entertainment Inc., a company that was primarily involved in the motion picture and entertainment industry in California. As chief executive officer of Seven Arts Entertainment Inc., his duties included the selection and production of major motion pictures, strategic planning, business development, operations, financial administration, and accounting. Hoffman was also an attorney and participated as a lawyer and executive in numerous financial and tax-preferred financings over a period of more than 25 years. Hoffman also owned, operated, and controlled numerous companies related to and affiliated with Seven Arts Entertainment Inc.
The co-defendant, Michael P. Arata, was a Louisiana attorney and businessman who also owned and operated companies involved in the movie and entertainment industry. Through their respective companies, Hoffman and Arata were partners in different movie-industry business ventures.
Through their respective companies, Hoffman and Arata purchased property located at 807 Esplanade in New Orleans, Louisiana. 807 Esplanade was an old mansion located in the Faubourg Marigny neighborhood on the edge of the French Quarter that had fallen into a severe state of disrepair over many years. The proposed reason for purchasing the property was to renovate the mansion and turn it into a film post-production facility.
After purchasing the property, Hoffman and Arata submitted an application and supporting documents to the state of Louisiana in order to receive film infrastructure tax credits for money the defendants fraudulently claimed had been spent on 807 Esplanade. On or about June 19, 2009, the state of Louisiana issued approximately $1,132,480.80 in tax credits to the 807 Esplanade partnership.
The Indictment charges that Hoffman and Arata fraudulently submitted materially false and misleading documents and information regarding 807 Esplanade expenditures to the auditors and to the state of Louisiana in order to receive infrastructure tax credits.
“The United States Attorney’s Office, the FBI. and the Louisiana Office of the Inspector General stand committed to protecting the economic interests of the United States and the state of Louisiana,” stated U.S. Attorney Polite. “The state of Louisiana has provided significant incentives to the film and entertainment industry in order to develop business and employment in Louisiana. Such an important effort will not be criminally exploited.”
“Those who brazenly steal from the taxpayers and abuse tax credit programs should know that we will relentlessly pursue and hold them criminally accountable wherever possible,” stated Louisiana Inspector General Stephen Street. “We remain committed to working with the FBI and United States Attorney to root out this sort of corruption wherever it may exist.”
Hoffman and Arata face a maximum term of imprisonment of five years with respect to count one and 20 years with respect to each of counts two through six. The defendants also face a maximum fine of $250,000 with respect to each count and supervised release of three years.
Details Released on Trenton Mayor's Conviction on Federal Extortion, Bribery, and Mail and Wire Fraud Charges
A federal jury found Trenton Mayor Tony F. Mack guilty on all six federal extortion, bribery, and mail and wire fraud charges against him, U.S. Attorney Paul J. Fishman announced.
Mack’s brother, Ralphiel Mack, was also convicted on three of the charges but found not guilty on three mail and wire fraud counts, following a five-week trial before U.S. District Judge Michael A. Shipp in Trenton federal court. The Macks were charged in connection with a scheme to accept $119,000 in bribes in exchange for Mayor Mack’s official actions and influence in assisting cooperating witnesses in the development of an automated parking garage on city-owned land.
“The jury’s verdict solidly affirms what we first charged more than a year ago—that Tony Mack, with the helping hands of his brother and their cohorts, sold the mayor’s office and sold out the people of Trenton,” U.S. Attorney Fishman said. “We are very grateful to the members of the jury for their service.”
Tony F. Mack, 48, and Ralphiel Mack, 41, both of Trenton, originally were charged by complaint on September 10, 2012, with one count of conspiracy to obstruct commerce by extortion under color of official right related to the $119,000 extortion scheme. Also charged at that time was Joseph A. Giorgianni, 64, of Ewing, New Jersey. An indictment returned in December 2012 added charges against all three defendants.
Giorgianni pleaded guilty on December 13, 2013, to one count of conspiring with the Macks and others to obstruct interstate commerce by extorting individuals under color of official right, in addition to a separate extortion scheme, a narcotics charge, and illegal weapons possession, all charges unrelated to the Macks.
Mayor Mack was convicted of the six counts charged in the indictment:
Ralphiel Mack was convicted on the same first three counts and found not guilty of the mail and wire fraud charges. The jury members deliberated for seven hours before returning their verdicts.
According to documents filed in this case and the evidence presented at trial:
Mayor Mack, Giorgianni, and Ralphiel Mack conspired to accept approximately $119,000 in cash and other valuables, of which $54,000 was accepted and another $65,000 that the defendants planned to accept, from two cooperating witnesses (CW-1 and CW-2). In exchange for the payments, Mayor Mack agreed to and did assist CW-1 and CW-2 in their efforts to acquire a city-owned lot (the East State Street lot) to develop an automated parking garage (the parking garage project). The scheme included a plan to divert $100,000 of the purchase amount that CW-2 had indicated a willingness to pay to the city of Trenton for the lot as a bribe and kickback payment to Giorgianni and Mayor Mack. The mayor authorized and directed a Trenton official responsible for disposition of city-owned land to offer the East State Street lot to CW-2 for $100,000, significantly less than the amount originally proposed by CW-2.
The defendants went to great lengths to conceal their corrupt activity and keep Mayor Mack “safe” from law enforcement. For example, Giorgianni and Ralphiel Mack acted as intermediaries, or “buffers,” who accepted cash payments for Mayor Mack’s benefit. Mayor Mack also used another city of Trenton employee involved in the scheme, Charles Hall, III, 49, of Trenton, to contact other Trenton officials to facilitate the parking garage project and to inform the mayor when Giorgianni had received corrupt cash payments. Hall pleaded guilty before Judge Shipp in February 2013 to an information charging him with one count of conspiracy to obstruct commerce by extortion under color of official right and one count of conspiring to distribute narcotics with others, including Giorgianni.
To conceal the corrupt arrangement, the defendants avoided discussing matters related to the scheme over the telephone. When those matters were discussed, they used code words and aliases. One such code word was “Uncle Remus,” which both Giorgianni and Hall regularly used to communicate to Mayor Mack that a corrupt payment had been received. For example, on October 29, 2011, Giorgianni telephoned Hall and informed him that Giorgianni had to “see” Mayor Mack and that “I got Uncle Remus for him,” meaning a corrupt cash payment that Giorgianni had received from CW-1 two days earlier. Giorgianni directed Hall to bring Mayor Mack to a meeting location controlled by Giorgianni (Giorgianni’s Clubhouse), stating “we gotta talk” because “I got something that might be good for him” and that “they’ve already come with Uncle Remus,” meaning a corrupt cash payment. On June 13, 2012, Giorgianni telephoned Mayor Mack and informed him that “Uncle Remus,” meaning a corrupt cash payment, “was there.” Mayor Mack replied, “I’ll call you, J. Okay?” In text messages to Mayor Mack related to the scheme, Giorgianni would refer to himself as “Mr. Baker.”
The defendants also concealed their activities by holding meetings concerning the corrupt activity away from Trenton City Hall, including at Giorgianni’s residence, an eatery maintained by Giorgianni known as JoJo’s Steakhouse, Giorgianni’s Clubhouse, and Atlantic City restaurants. At one Atlantic City meeting among Mayor Mack, Giorgianni, Hall, and CW-2, Mayor Mack instructed Giorgianni to ensure that no photographs were taken in order to conceal the corrupt arrangement.
The extortion conspiracy and attempted extortion charges are each punishable by a maximum potential penalty of 20 years in prison. The bribery charge is punishable by a maximum potential penalty of 10 years in prison. The mail and wire fraud charges are each punishable by a maximum potential penalty of 20 years in prison. All the counts also carry a potential fine of $250,000 or twice the gain or loss from the offense. Sentencing is scheduled for May 14, 2014
Mack’s brother, Ralphiel Mack, was also convicted on three of the charges but found not guilty on three mail and wire fraud counts, following a five-week trial before U.S. District Judge Michael A. Shipp in Trenton federal court. The Macks were charged in connection with a scheme to accept $119,000 in bribes in exchange for Mayor Mack’s official actions and influence in assisting cooperating witnesses in the development of an automated parking garage on city-owned land.
“The jury’s verdict solidly affirms what we first charged more than a year ago—that Tony Mack, with the helping hands of his brother and their cohorts, sold the mayor’s office and sold out the people of Trenton,” U.S. Attorney Fishman said. “We are very grateful to the members of the jury for their service.”
Tony F. Mack, 48, and Ralphiel Mack, 41, both of Trenton, originally were charged by complaint on September 10, 2012, with one count of conspiracy to obstruct commerce by extortion under color of official right related to the $119,000 extortion scheme. Also charged at that time was Joseph A. Giorgianni, 64, of Ewing, New Jersey. An indictment returned in December 2012 added charges against all three defendants.
Giorgianni pleaded guilty on December 13, 2013, to one count of conspiring with the Macks and others to obstruct interstate commerce by extorting individuals under color of official right, in addition to a separate extortion scheme, a narcotics charge, and illegal weapons possession, all charges unrelated to the Macks.
Mayor Mack was convicted of the six counts charged in the indictment:
- Conspiracy to obstruct and affect interstate commerce by extorition under color of official right
- Attempted obstruction of commerce by extortion under the color of official right
- Accepting and agreeing to accept bribes
- Two counts of wire fraud
- Mail fraud
Ralphiel Mack was convicted on the same first three counts and found not guilty of the mail and wire fraud charges. The jury members deliberated for seven hours before returning their verdicts.
According to documents filed in this case and the evidence presented at trial:
Mayor Mack, Giorgianni, and Ralphiel Mack conspired to accept approximately $119,000 in cash and other valuables, of which $54,000 was accepted and another $65,000 that the defendants planned to accept, from two cooperating witnesses (CW-1 and CW-2). In exchange for the payments, Mayor Mack agreed to and did assist CW-1 and CW-2 in their efforts to acquire a city-owned lot (the East State Street lot) to develop an automated parking garage (the parking garage project). The scheme included a plan to divert $100,000 of the purchase amount that CW-2 had indicated a willingness to pay to the city of Trenton for the lot as a bribe and kickback payment to Giorgianni and Mayor Mack. The mayor authorized and directed a Trenton official responsible for disposition of city-owned land to offer the East State Street lot to CW-2 for $100,000, significantly less than the amount originally proposed by CW-2.
The defendants went to great lengths to conceal their corrupt activity and keep Mayor Mack “safe” from law enforcement. For example, Giorgianni and Ralphiel Mack acted as intermediaries, or “buffers,” who accepted cash payments for Mayor Mack’s benefit. Mayor Mack also used another city of Trenton employee involved in the scheme, Charles Hall, III, 49, of Trenton, to contact other Trenton officials to facilitate the parking garage project and to inform the mayor when Giorgianni had received corrupt cash payments. Hall pleaded guilty before Judge Shipp in February 2013 to an information charging him with one count of conspiracy to obstruct commerce by extortion under color of official right and one count of conspiring to distribute narcotics with others, including Giorgianni.
To conceal the corrupt arrangement, the defendants avoided discussing matters related to the scheme over the telephone. When those matters were discussed, they used code words and aliases. One such code word was “Uncle Remus,” which both Giorgianni and Hall regularly used to communicate to Mayor Mack that a corrupt payment had been received. For example, on October 29, 2011, Giorgianni telephoned Hall and informed him that Giorgianni had to “see” Mayor Mack and that “I got Uncle Remus for him,” meaning a corrupt cash payment that Giorgianni had received from CW-1 two days earlier. Giorgianni directed Hall to bring Mayor Mack to a meeting location controlled by Giorgianni (Giorgianni’s Clubhouse), stating “we gotta talk” because “I got something that might be good for him” and that “they’ve already come with Uncle Remus,” meaning a corrupt cash payment. On June 13, 2012, Giorgianni telephoned Mayor Mack and informed him that “Uncle Remus,” meaning a corrupt cash payment, “was there.” Mayor Mack replied, “I’ll call you, J. Okay?” In text messages to Mayor Mack related to the scheme, Giorgianni would refer to himself as “Mr. Baker.”
The defendants also concealed their activities by holding meetings concerning the corrupt activity away from Trenton City Hall, including at Giorgianni’s residence, an eatery maintained by Giorgianni known as JoJo’s Steakhouse, Giorgianni’s Clubhouse, and Atlantic City restaurants. At one Atlantic City meeting among Mayor Mack, Giorgianni, Hall, and CW-2, Mayor Mack instructed Giorgianni to ensure that no photographs were taken in order to conceal the corrupt arrangement.
The extortion conspiracy and attempted extortion charges are each punishable by a maximum potential penalty of 20 years in prison. The bribery charge is punishable by a maximum potential penalty of 10 years in prison. The mail and wire fraud charges are each punishable by a maximum potential penalty of 20 years in prison. All the counts also carry a potential fine of $250,000 or twice the gain or loss from the offense. Sentencing is scheduled for May 14, 2014
Sunday, February 09, 2014
Code Name: Johnny Walker The Extraordinary Story of the Iraqi Who Risked Everything to Fight with the U.S. Navy SEALs
This is the unforgettable story of how an ordinary Iraqi became a hero to America's elite warriors—and how that debt was repaid with the gift of freedom.
He was the seals' most trusted interpreter . . . and more
Night after night, while his homeland was being destroyed around him, he guided the U.S. Navy SEALs through Iraq's most dangerous regions. Operating under the code name "Johnny Walker," he risked his life on more than a thousand missions and became a legend in the U.S. special-ops community, many of whose members credit him with saving their lives. But in the eyes of Iraq's terrorists and insurgents, he and his family were marked for death because he worked with the Americans. . . . Then the SEALs stood up to protect the man who had watched their backs through the entire war.
Over the course of eight years, the Iraqi native traveled around the country with nearly every SEAL and special-operations unit deployed there. Using his wits to outthink the insurgency, Johnny Walker unmasked countless terrorists and helped foil an untold number of plots against Americans and their allies. He went on hundreds of missions, saved dozens of American lives—both SEAL and civilian—and risked his own life daily. He and his family lived in constant jeopardy, surviving multiple assassination attempts and a host of threats in Mosul, until a desperate escape through the desert late in the war took them to the relative safety of Baghdad.
Fearing for Johnny's long-term safety after the war, the SEALs—now as close as brothers to Johnny—took it upon themselves to bring him to the United States, where today he and his family live their version of the American Dream. He remains in the fight by helping train the next generation of American special-operations warriors.
For the first time ever, a "terp" tells what it was like in Iraq during the American invasion and the brutal insurgency that followed. With inside details on SEAL operations and a humane understanding of the tragic price paid by ordinary Iraqis, Code Name: Johnny Walker reveals a side of the war that has never been told before.
He was the seals' most trusted interpreter . . . and more
Night after night, while his homeland was being destroyed around him, he guided the U.S. Navy SEALs through Iraq's most dangerous regions. Operating under the code name "Johnny Walker," he risked his life on more than a thousand missions and became a legend in the U.S. special-ops community, many of whose members credit him with saving their lives. But in the eyes of Iraq's terrorists and insurgents, he and his family were marked for death because he worked with the Americans. . . . Then the SEALs stood up to protect the man who had watched their backs through the entire war.
Over the course of eight years, the Iraqi native traveled around the country with nearly every SEAL and special-operations unit deployed there. Using his wits to outthink the insurgency, Johnny Walker unmasked countless terrorists and helped foil an untold number of plots against Americans and their allies. He went on hundreds of missions, saved dozens of American lives—both SEAL and civilian—and risked his own life daily. He and his family lived in constant jeopardy, surviving multiple assassination attempts and a host of threats in Mosul, until a desperate escape through the desert late in the war took them to the relative safety of Baghdad.
Fearing for Johnny's long-term safety after the war, the SEALs—now as close as brothers to Johnny—took it upon themselves to bring him to the United States, where today he and his family live their version of the American Dream. He remains in the fight by helping train the next generation of American special-operations warriors.
For the first time ever, a "terp" tells what it was like in Iraq during the American invasion and the brutal insurgency that followed. With inside details on SEAL operations and a humane understanding of the tragic price paid by ordinary Iraqis, Code Name: Johnny Walker reveals a side of the war that has never been told before.
Friday, February 07, 2014
Seven Defendants Indicted in Six Armed Robberies of Cell Phone Stores
Seven defendants were indicted on federal charges for their alleged roles in a series of at least six armed robberies of cellular telephone stores last year that extended from suburban Chicago to Indiana and downstate Illinois. Two defendants, Eric Rogers and Eric Curtis, who allegedly directed a robbery conspiracy, were arrested on federal charges in December following the robbery of a cell phone store in suburban Woodridge. The other five defendants, all of whom are in state custody, were charged federally for the first time in this district in a nine-count indictment returned by a federal grand jury yesterday and announced today.
Rogers, 39, of Hazel Crest, and Curtis, 29, of Park Forest, allegedly selected the stores that were robbed, recruited their co-defendants to participate in the robberies, provided them with firearms and other equipment, and paid them to commit armed robbery at their direction. They were each charged with one count of robbery conspiracy, three counts of robbery, and two counts of brandishing firearms; Curtis alone was charged with being a felon-in-possession of a firearm. Both remain in federal custody without bond.
Also indicted were: Marcus Harris, 20, of Chicago; Daniel Wright, 28, of Chicago; Andre Wadlington-Anthony, 27, of Harvey; Tony Johnson, 20, of Harvey; and Lavell Hughes, 41, of Gary, Indiana. Four of the five were charged with one count each of robbery and brandishing a firearm, while Wadlington-Anthony was charged with two counts of each of those crimes.
All seven will be arraigned on dates yet to be determined in U.S. District Court.
According to the indictment, the defendants in various combinations, committed the following armed robberies in 2013:
The indictment alleges that Rogers and Curtis also conspired with Rogers’ deceased cousin, Ryan Rogers, who, following the March 19 Norridge robbery, drove toward a Chicago police officer attempting to stop his vehicle and was shot and killed.
Each count of robbery carries a maximum penalty of 20 years in prison and a $250,000 fine, and each count of brandishing a firearm carries a consecutive, mandatory minimum of seven years in prison and a maximum of life. Curtis also faces a maximum 10-years sentence on the felon-in-possession charge. If convicted, the court must impose a reasonable sentence under federal sentencing statutes and the advisory United States Sentencing Guidelines.
The indictment was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Robert J. Holley, Special Agent in Charge of the Chicago Office of the Federal Bureau of Investigation. The case was investigated by the FBI’s Safe Streets Task Force, which is composed of the FBI and the Chicago Police Department. The police departments in Addison, Deerfield, Homewood, Norridge, Woodridge, LaPorte, Indiana, and East Peoria, Ilinois, also assisted in the investigation.
The government is being represented by Assistant U.S. Attorney Christopher Parente.
The public is reminded that 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.
Rogers, 39, of Hazel Crest, and Curtis, 29, of Park Forest, allegedly selected the stores that were robbed, recruited their co-defendants to participate in the robberies, provided them with firearms and other equipment, and paid them to commit armed robbery at their direction. They were each charged with one count of robbery conspiracy, three counts of robbery, and two counts of brandishing firearms; Curtis alone was charged with being a felon-in-possession of a firearm. Both remain in federal custody without bond.
Also indicted were: Marcus Harris, 20, of Chicago; Daniel Wright, 28, of Chicago; Andre Wadlington-Anthony, 27, of Harvey; Tony Johnson, 20, of Harvey; and Lavell Hughes, 41, of Gary, Indiana. Four of the five were charged with one count each of robbery and brandishing a firearm, while Wadlington-Anthony was charged with two counts of each of those crimes.
All seven will be arraigned on dates yet to be determined in U.S. District Court.
According to the indictment, the defendants in various combinations, committed the following armed robberies in 2013:
- January 31—Sprint store, 1323 West Lake St., Addison
- February 4—AT&T store, LaPorte, Indiana
- March 19—AT&T store, 41551⁄2 North Harlem, Norridge. Court documents allege the loss of approximately 100 phones and tablet computers valued at approximately $54,000 in this robbery
- April 4—Sprint store, East Peoria, Illinois
- April 8—T-Mobile, 110 South Waukegan Rd., Deerfield
- December 14—T-Mobile, 1001 West 75th St., Woodridge.
The indictment alleges that Rogers and Curtis also conspired with Rogers’ deceased cousin, Ryan Rogers, who, following the March 19 Norridge robbery, drove toward a Chicago police officer attempting to stop his vehicle and was shot and killed.
Each count of robbery carries a maximum penalty of 20 years in prison and a $250,000 fine, and each count of brandishing a firearm carries a consecutive, mandatory minimum of seven years in prison and a maximum of life. Curtis also faces a maximum 10-years sentence on the felon-in-possession charge. If convicted, the court must impose a reasonable sentence under federal sentencing statutes and the advisory United States Sentencing Guidelines.
The indictment was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Robert J. Holley, Special Agent in Charge of the Chicago Office of the Federal Bureau of Investigation. The case was investigated by the FBI’s Safe Streets Task Force, which is composed of the FBI and the Chicago Police Department. The police departments in Addison, Deerfield, Homewood, Norridge, Woodridge, LaPorte, Indiana, and East Peoria, Ilinois, also assisted in the investigation.
The government is being represented by Assistant U.S. Attorney Christopher Parente.
The public is reminded that 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.
The King of Chicago announced for iOS and Android
Legendary game developer, Cinemaware, takes center stage on the gaming landscape once again, announcing that the classic Mob game from 1986 returns on your Android and iOS mobile devices soon!
One of Cinemaware’s original and most popular titles, “ The King of Chicago – Emulated Amiga Edition” puts you in the war for Al Capone’s throne when it comes to iOS and Android devices in the upcoming weeks. Set in the 1930s, deep within the prohibition era, “ The King of Chicago” is the original gangster myth game.
You’ll be performing drive-by shootings with your Tommy gun, bribing corrupt officials, assassinating rivals and carving your way to the top of Chicago’s Mob in order to be included in the formation of a New York crime syndicate. As if that weren't enough, the player also has to stay one step ahead of the law and keep his girlfriend satisfied by catering to her crazy whims and desires – or risk losing her! With force or words, it is your call…but be nice to your gang, or they will send you down the river!
“Lissen up, when youse action and story combine just poifect, somethin' snazzy happens on the screen,” said Pinky Callahan, mouthpiece for Cinemaware. “Cinemaware pulled the trigger on that stuff back in the 1980s; and it ain't no different now. People are always yappin' at us to bring back our games, as we obliged last year with Rocket Ranger – Emulated Amiga Version. We's in the process of releasin' several classic and new titles in 2014, like Wings: Remastered Edition. And just a tip between us wiseguys...download the game or youse gonna be wearing a pair of concrete shoes. If youse catch my drift.”
The King of Chicago – Emulated Amiga Edition features the original game, complete with all of the original missions, story and gameplay sequences. The game also features a customized mobile control interface and the original game manual.
The Android version will be available at the end of January, followed by the Apple iOS version in early February. The game will be available on Google’s Play store and Apple’s iTunes, as well as Amazon's appstore and Samsung-Chillingos' 100% Indie appstore.
One of Cinemaware’s original and most popular titles, “ The King of Chicago – Emulated Amiga Edition” puts you in the war for Al Capone’s throne when it comes to iOS and Android devices in the upcoming weeks. Set in the 1930s, deep within the prohibition era, “ The King of Chicago” is the original gangster myth game.
You’ll be performing drive-by shootings with your Tommy gun, bribing corrupt officials, assassinating rivals and carving your way to the top of Chicago’s Mob in order to be included in the formation of a New York crime syndicate. As if that weren't enough, the player also has to stay one step ahead of the law and keep his girlfriend satisfied by catering to her crazy whims and desires – or risk losing her! With force or words, it is your call…but be nice to your gang, or they will send you down the river!
“Lissen up, when youse action and story combine just poifect, somethin' snazzy happens on the screen,” said Pinky Callahan, mouthpiece for Cinemaware. “Cinemaware pulled the trigger on that stuff back in the 1980s; and it ain't no different now. People are always yappin' at us to bring back our games, as we obliged last year with Rocket Ranger – Emulated Amiga Version. We's in the process of releasin' several classic and new titles in 2014, like Wings: Remastered Edition. And just a tip between us wiseguys...download the game or youse gonna be wearing a pair of concrete shoes. If youse catch my drift.”
The King of Chicago – Emulated Amiga Edition features the original game, complete with all of the original missions, story and gameplay sequences. The game also features a customized mobile control interface and the original game manual.
The Android version will be available at the end of January, followed by the Apple iOS version in early February. The game will be available on Google’s Play store and Apple’s iTunes, as well as Amazon's appstore and Samsung-Chillingos' 100% Indie appstore.
Four #MS13 Gang leaders sentenced for conspiring to commit senseless acts of murder, attempted murder, and armed robbery
For nearly four years, four leaders of various Mara Salvatrucha, or MS-13, factions operating in the Atlanta metro area terrorized the community through their flagrant disregard for life—conspiring to commit senseless acts of murder, attempted murder, and armed robbery. But a multi-year, multi-agency law enforcement effort recently took down this criminal enterprise, eradicating a deadly threat from the streets of Atlanta. Ernesto Escobar, Miguel Alvarado-Linares, and Dimas Alfaro-Granados will be spending the rest of their lives in prison, while Jairo Reyna-Ozuna will be behind bars for more than a decade.
The MS-13 gang is composed primarily of immigrants and/or their descendants from El Salvador, Guatemala, and Honduras. In the U.S., this extremely violent criminal organization got its start in Los Angeles and then spread out to a number of states around the country, including Georgia.
In Atlanta, as in other areas, members are usually organized into groups called “cliques” that operate under the larger MS-13 umbrella. Each clique has a leader who conducts regular meetings to plan and discuss crimes against rival gangs. In this case, we saw clique leaders reporting back to MS-13 leaders in their home countries about MS-13 activities in the Atlanta area.
The four defendants in this case, who reportedly lived by the credo “rape, kill, control,” perpetrated their crimes for seemingly minor reasons—to enhance their reputations among fellow gang members, to protect their turf from rival gangs, or to exact revenge for a real or perceived slight. The robberies were usually committed to obtain funding to support the criminal enterprise, providing money and weapons to gang members—including incarcerated individuals in the U.S and elsewhere.
Some of the heinous crimes the defendants were charged with included:
The case was investigated by the Atlanta Safe Streets Task Force, made up of investigators from local, state, and federal agencies, including the FBI. Another key partner was the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations Directorate.
Federal participation in this case allowed a number of effective tools to be brought to the table—perhaps most importantly the RICO (Racketeer Influenced and Corrupt Organizations) and the VICAR (Violent Crimes in Aid of Racketeering) statutes with their tougher penalties. Investigators also made use of physical and court-authorized electronic surveillances and confidential informants.
The charges against the four subjects in this case were part of a broader multi-agency investigation of MS-13 in Atlanta, concluded in 2010, which resulted in arrests of, charges against, and/or deportation of 75 members.
Proof positive that dedicated, cooperative efforts among law enforcement agencies can and do win out over dangerous criminal conspiracies.
The MS-13 gang is composed primarily of immigrants and/or their descendants from El Salvador, Guatemala, and Honduras. In the U.S., this extremely violent criminal organization got its start in Los Angeles and then spread out to a number of states around the country, including Georgia.
In Atlanta, as in other areas, members are usually organized into groups called “cliques” that operate under the larger MS-13 umbrella. Each clique has a leader who conducts regular meetings to plan and discuss crimes against rival gangs. In this case, we saw clique leaders reporting back to MS-13 leaders in their home countries about MS-13 activities in the Atlanta area.
The four defendants in this case, who reportedly lived by the credo “rape, kill, control,” perpetrated their crimes for seemingly minor reasons—to enhance their reputations among fellow gang members, to protect their turf from rival gangs, or to exact revenge for a real or perceived slight. The robberies were usually committed to obtain funding to support the criminal enterprise, providing money and weapons to gang members—including incarcerated individuals in the U.S and elsewhere.
Some of the heinous crimes the defendants were charged with included:
- Murdering a fellow MS-13 member who was thought to be cooperating with police;
- Ordering an MS-13 member who wanted to leave the gang to first commit an act of violence, leading the departing member to shoot into a car believed to be carrying rival gang members—killing the passenger and wounding the driver;
- Returning to a nightclub following a fight with a suspected rival gang member and fatally shooting a man walking through the club’s parking lot;
- Going back to a gas station after a scuffle with two teenagers who worked there and fatally shooting one of them as he painted lines in the parking lot;
- Murdering a 15-year-old boy—a suspected 18th Street gang member—with a shotgun.
The case was investigated by the Atlanta Safe Streets Task Force, made up of investigators from local, state, and federal agencies, including the FBI. Another key partner was the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations Directorate.
Federal participation in this case allowed a number of effective tools to be brought to the table—perhaps most importantly the RICO (Racketeer Influenced and Corrupt Organizations) and the VICAR (Violent Crimes in Aid of Racketeering) statutes with their tougher penalties. Investigators also made use of physical and court-authorized electronic surveillances and confidential informants.
The charges against the four subjects in this case were part of a broader multi-agency investigation of MS-13 in Atlanta, concluded in 2010, which resulted in arrests of, charges against, and/or deportation of 75 members.
Proof positive that dedicated, cooperative efforts among law enforcement agencies can and do win out over dangerous criminal conspiracies.
Thursday, February 06, 2014
License to Pawn: Deals, Steals, and My Life at @GoldSilverPawn
In Las Vegas
, there's a family-owned business called the Gold & Silver Pawn Shop, run by three generations of the Harrison family: Rick; his son, Big Hoss; and Rick's dad, the Old Man. Now License to Pawn: Deals, Steals, and My Life at the Gold & Silver takes readers behind the scenes of the hit History show Pawn Stars and shares the fascinating life story of its star, Rick Harrison, and the equally intriguing story behind the shop, the customers, and the items for sale.
Rick hasn't had it easy. He was a math whiz at an early age, but developed a similarly uncanny ability to find ever-deepening trouble that nearly ruined his life. With the birth of his son, he sobered up, reconnected with his dad, and they started their booming business together.
License to Pawn: Deals, Steals, and My Life at the Gold & Silver also offers an entertaining walk through the pawn shop's history. It's a captivating look into how the Gold & Silver works, with incredible stories about the crazy customers and the one-of-a-kind items that the shop sells. Rick isn't only a businessman; he's also a historian and keen observer of human nature. For instance, did you know that pimps wear lots of jewelry for a reason? It's because if they're arrested, jewelry doesn't get confiscated like cash does, and ready money will be available for bail. Or that WWII bomber jackets and Zippo lighters can sell for a freakishly high price in Japan? Have you ever heard that the makers of Ormolu clocks, which Rick sells for as much as $15,000 apiece, frequently died before forty thanks to the mercury in the paint?
Rick also reveals the items he loves so much he'll never sell. The shop has three Olympic bronze medals, a Patriots Super Bowl ring, a Samurai sword from 1490, and an original Iwo Jima battle plan. Each object has an incredible story behind it, of course. Rick shares them all, and so much more--there's an irresistible treasure trove of history behind both the Gold & Silver Pawn Shop and the life of Rick Harrison.
, there's a family-owned business called the Gold & Silver Pawn Shop, run by three generations of the Harrison family: Rick; his son, Big Hoss; and Rick's dad, the Old Man. Now License to Pawn: Deals, Steals, and My Life at the Gold & Silver takes readers behind the scenes of the hit History show Pawn Stars and shares the fascinating life story of its star, Rick Harrison, and the equally intriguing story behind the shop, the customers, and the items for sale.Rick hasn't had it easy. He was a math whiz at an early age, but developed a similarly uncanny ability to find ever-deepening trouble that nearly ruined his life. With the birth of his son, he sobered up, reconnected with his dad, and they started their booming business together.
License to Pawn: Deals, Steals, and My Life at the Gold & Silver also offers an entertaining walk through the pawn shop's history. It's a captivating look into how the Gold & Silver works, with incredible stories about the crazy customers and the one-of-a-kind items that the shop sells. Rick isn't only a businessman; he's also a historian and keen observer of human nature. For instance, did you know that pimps wear lots of jewelry for a reason? It's because if they're arrested, jewelry doesn't get confiscated like cash does, and ready money will be available for bail. Or that WWII bomber jackets and Zippo lighters can sell for a freakishly high price in Japan? Have you ever heard that the makers of Ormolu clocks, which Rick sells for as much as $15,000 apiece, frequently died before forty thanks to the mercury in the paint?
Rick also reveals the items he loves so much he'll never sell. The shop has three Olympic bronze medals, a Patriots Super Bowl ring, a Samurai sword from 1490, and an original Iwo Jima battle plan. Each object has an incredible story behind it, of course. Rick shares them all, and so much more--there's an irresistible treasure trove of history behind both the Gold & Silver Pawn Shop and the life of Rick Harrison.
Wednesday, February 05, 2014
Two Ñetas Gang Members and a Gang Associate Plead Guilty in Connection with the Murders of Two Rival Gang Members
Two members of the Ñetas street gang, Alvaro Cabral, also known as “Boobi,” and Jason Cabral, also known as “J-Live,” pleaded guilty to the 2004 murders of Anthony Marcano and Fabian Mestres. Stephanie DiCarlo-Cabral, an associate of the gang and at the time the girlfriend of Alvaro Cabral, pleaded guilty to robbery and using a firearm in connection with the robbery of Marcano and Mestres. Today’s pleas took place before United States District Judge Joanna Seybert. When sentenced, the defendants face life in prison.
The pleas were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; George Venizelos, Assistant Director in Charge, Federal Bureau of Investigation, New York Field Office (FBI); and William J. Bratton, Commissioner, New York City Police Department (NYPD).
“These were brutal, senseless gang murders. The defendants stuffed the victims into the trunk of a car in the dog days of August and then drove them to their execution,” stated United States Attorney Lynch. “We hope the victims’ families can take some measure of solace in knowing that the individuals who are responsible for their sons’ murders have been brought to justice.” Ms. Lynch expressed her grateful appreciation to the Suffolk County Police Department, the Tampa Division of the FBI, and United States Attorney’s Office, Middle District of Florida, for their cooperation and assistance in the investigation.
The defendants targeted one of the victims, Anthony Marcano, because of his affiliation with a rival gang, the Latin Kings. On August 10, 2004, at the direction of Jason Cabral, the leader of gang, the defendants devised a plan to rob and kill 17-year-old Marcano. As part of the plan, the defendants lured Marcano to a house in Brentwood. Marcano arrived with 17-year-old Fabian Mestres, a fellow “Pee Wee” member of the Latin Kings street gang. Once inside the house, Marcano and Mestres were restrained with duct tape, and their drugs, money, and jewelry were stolen. The victims were stuffed into the trunk of a car and driven to a warehouse in Queens where Luis Benitez (Luis Benitez pleaded guilty to the murders of Marcano and Mestres on November 7, 2013), with the assistance of Alvaro Cabral, shot them with a shotgun. Mestres was shot once in the head, and Marcano was shot once in the head and once in the back of the neck. Marcano’s and Mestres’s bodies were found behind a warehouse in Queens the following day.
The government’s case is being prosecuted by Assistant United States Attorneys Nicole Boeckmann and Christopher C. Caffarone.
The pleas were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; George Venizelos, Assistant Director in Charge, Federal Bureau of Investigation, New York Field Office (FBI); and William J. Bratton, Commissioner, New York City Police Department (NYPD).
“These were brutal, senseless gang murders. The defendants stuffed the victims into the trunk of a car in the dog days of August and then drove them to their execution,” stated United States Attorney Lynch. “We hope the victims’ families can take some measure of solace in knowing that the individuals who are responsible for their sons’ murders have been brought to justice.” Ms. Lynch expressed her grateful appreciation to the Suffolk County Police Department, the Tampa Division of the FBI, and United States Attorney’s Office, Middle District of Florida, for their cooperation and assistance in the investigation.
The defendants targeted one of the victims, Anthony Marcano, because of his affiliation with a rival gang, the Latin Kings. On August 10, 2004, at the direction of Jason Cabral, the leader of gang, the defendants devised a plan to rob and kill 17-year-old Marcano. As part of the plan, the defendants lured Marcano to a house in Brentwood. Marcano arrived with 17-year-old Fabian Mestres, a fellow “Pee Wee” member of the Latin Kings street gang. Once inside the house, Marcano and Mestres were restrained with duct tape, and their drugs, money, and jewelry were stolen. The victims were stuffed into the trunk of a car and driven to a warehouse in Queens where Luis Benitez (Luis Benitez pleaded guilty to the murders of Marcano and Mestres on November 7, 2013), with the assistance of Alvaro Cabral, shot them with a shotgun. Mestres was shot once in the head, and Marcano was shot once in the head and once in the back of the neck. Marcano’s and Mestres’s bodies were found behind a warehouse in Queens the following day.
The government’s case is being prosecuted by Assistant United States Attorneys Nicole Boeckmann and Christopher C. Caffarone.
Monday, February 03, 2014
Dr. Hoi Yat Kam Sentenced for His Role in $15 Million Medicare Fraud Scheme
A Queens, New York medical doctor was sentenced to serve 12 months and a day in prison for his role in a scheme that fraudulently billed Medicare more than $15 million for, among other things, physical therapy and lesion removal services that were medically unnecessary and never provided.
Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Loretta E. Lynch of the Eastern District of New York, Assistant Director in Charge George Venizelos of the FBI’s New York Field Office, and Special Agent in Charge Thomas O’Donnell of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) made the announcement.
Hoi Yat Kam, 59, was sentenced by U.S. District Judge Edward R. Korman in the Eastern District of New York. In addition to his prison term, Kam was sentenced to serve three years of supervised release and to pay $2,217,656 in restitution.
Kam pleaded guilty on January 9, 2013, to conspiracy to commit health care fraud. According to court documents, Kam conspired with others to execute a fraudulent scheme in which he and others provided a variety of spa services, such as massages and facials, as well as free meals and social activities to Medicare beneficiaries at URI Medical Service PC and Sarang Medical PC to induce those beneficiaries to allow their Medicare numbers to be billed for medical services that were never provided and were not medically necessary. URI and Sarang were two clinics in Queens that purportedly provided physical therapy and lesion removals. In total, Kam and his co-conspirators submitted approximately $15.1 million in false and fraudulent claims to Medicare.
The case was investigated by HHS-OIG and the FBI and brought as part of the Medicare Fraud Strike Force, under the supervision by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of New York. The case was prosecuted by Senior Trial Attorney Nicholas Acker and Trial Attorney Bryan D. Fields of the Fraud Section. Trial Attorney Katherine Houston formerly prosecuted the case.
Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Loretta E. Lynch of the Eastern District of New York, Assistant Director in Charge George Venizelos of the FBI’s New York Field Office, and Special Agent in Charge Thomas O’Donnell of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) made the announcement.
Hoi Yat Kam, 59, was sentenced by U.S. District Judge Edward R. Korman in the Eastern District of New York. In addition to his prison term, Kam was sentenced to serve three years of supervised release and to pay $2,217,656 in restitution.
Kam pleaded guilty on January 9, 2013, to conspiracy to commit health care fraud. According to court documents, Kam conspired with others to execute a fraudulent scheme in which he and others provided a variety of spa services, such as massages and facials, as well as free meals and social activities to Medicare beneficiaries at URI Medical Service PC and Sarang Medical PC to induce those beneficiaries to allow their Medicare numbers to be billed for medical services that were never provided and were not medically necessary. URI and Sarang were two clinics in Queens that purportedly provided physical therapy and lesion removals. In total, Kam and his co-conspirators submitted approximately $15.1 million in false and fraudulent claims to Medicare.
The case was investigated by HHS-OIG and the FBI and brought as part of the Medicare Fraud Strike Force, under the supervision by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of New York. The case was prosecuted by Senior Trial Attorney Nicholas Acker and Trial Attorney Bryan D. Fields of the Fraud Section. Trial Attorney Katherine Houston formerly prosecuted the case.
Thursday, January 30, 2014
Sterling Rivers #LittleReal #ViceLords Leader Sentenced to 28 Years in Prison
Sterling Rivers, a/k/a “Little Real,” 26, of Lebanon, Tennessee, was sentenced in U.S. District Court to 28 years in prison for conspiring to distribute large quantities of crack cocaine and cocaine, as part of his involvement in a criminal street gang called the Unknown Vice Lords, announced David Rivera, U. S. Attorney for the Middle District of Tennessee.
Rivers was indicted with 16 other individuals in September 2011 following a nearly two-year investigation into a national street gang, the Vice Lords, operating in Wilson and Putnam County, Tennessee, and beyond. Rivers fled following his indictment and was arrested in October 2011 as a fugitive in Texas. Rivers was convicted following a trial in September 2013 in which he represented himself.
“This sentence reaffirms that drug trafficking and organized crime will result in significant prison sentences,” said U.S. Attorney David Rivera. “This and other recent sentences of gang members should send a clear and convincing message that violent gang activity in this district will be vigorously pursued by the U.S. Attorney’s Office and our law enforcement partners.”
The convictions in this case followed a two-week trial, during which Rivers represented himself. Proof at trial established that Rivers was engaged in organizing the Vice Lords Gang throughout the state of Tennessee and had been involved in an array of violent crime, including the robbery of another drug dealer and the shooting of another individual.
Sixteen other defendants were also charged in connection with this investigation, and all have been convicted.
This investigation was conducted by the FBI; the Lebanon Police Department; the Bureau of Alcohol, Tobacco, Firearms, and Explosives; the Tennessee Bureau of Investigation; and the Tennessee Highway Patrol. This case was prosecuted by Assistant United States Attorneys Braden H. Boucek and Brent Hannafan.
Rivers was indicted with 16 other individuals in September 2011 following a nearly two-year investigation into a national street gang, the Vice Lords, operating in Wilson and Putnam County, Tennessee, and beyond. Rivers fled following his indictment and was arrested in October 2011 as a fugitive in Texas. Rivers was convicted following a trial in September 2013 in which he represented himself.
“This sentence reaffirms that drug trafficking and organized crime will result in significant prison sentences,” said U.S. Attorney David Rivera. “This and other recent sentences of gang members should send a clear and convincing message that violent gang activity in this district will be vigorously pursued by the U.S. Attorney’s Office and our law enforcement partners.”
The convictions in this case followed a two-week trial, during which Rivers represented himself. Proof at trial established that Rivers was engaged in organizing the Vice Lords Gang throughout the state of Tennessee and had been involved in an array of violent crime, including the robbery of another drug dealer and the shooting of another individual.
Sixteen other defendants were also charged in connection with this investigation, and all have been convicted.
This investigation was conducted by the FBI; the Lebanon Police Department; the Bureau of Alcohol, Tobacco, Firearms, and Explosives; the Tennessee Bureau of Investigation; and the Tennessee Highway Patrol. This case was prosecuted by Assistant United States Attorneys Braden H. Boucek and Brent Hannafan.
Wednesday, January 29, 2014
Steven M. Dombrowski, formerly with @Allscripts #Healthcare Solutions, Indicted on Securities Fraud Charges for Allegedly Profiting $286,000 from Insider Trading
A certified public accountant who was involved in the auditing process at a publicly traded company based in Chicago was indicted on federal fraud charges for allegedly engaging in insider trading of the company’s securities that made him an illegal profit of more than $286,000 in 2012. The defendant, Steven M. Dombrowski, who was the director of corporate audit for Allscripts Healthcare Solutions Inc., was charged with 16 counts of securities fraud in an indictment that was returned by a federal grand jury yesterday and announced today.
At the same time, the U.S. Securities and Exchange Commission announced that it filed a civil enforcement action involving the insider trading allegations against Dombrowski yesterday in U.S. District Court in Chicago. Dombrowski, 49, of Chicago, will be arraigned on the criminal charges on a date yet to be determined in Federal Court.
According to the indictment, Dombrowski misused material, non-public information he knew about Allscripts’ performance for the first quarter of 2012 and purchased put options and engaged in short sales of stock through a trading account in his wife’s maiden name that he controlled, which resulted in illegal profits of approximately $286,211. The indictment seeks forfeiture of that amount from Dombrowski.
Dombrowski and the employees he supervised were responsible for auditing and testing the processes and procedures Allscripts used to compute and report its financial performance. Allscripts provides information technology solutions to the health care industry, and its common stock is traded on the NASDAQ stock market under the symbol MDRX.
Between April 10 and April 28, 2012, a quarterly blackout period was in effect at Allscripts. The blackout prohibited certain employees, including Dombrowski, who were given written notice and who had access to material, non-public information, from engaging in insider trading 15 days before the end of a quarter and ending after the second full business day following the company’s quarterly earnings announcement.
Dombrowski allegedly learned in April 2012 through his employment that Allscripts’ first quarter financial results were going to be less favorable than market expectations when they were publicly announced on April 26, 2012. Throughout April, Dombrowski conducted securities transactions that he designed to be profitable if the price of Allscripts stock declined, including purchasing put options and short selling stock, which he knew was prohibited, the indictment alleges. Allscripts’ stock, in fact, declined when its 2012 first quarter announcement revealed lower sales, less revenue, and lower earnings per share than the first quarter of 2011.
After Allscripts stock declined on and after April 26, 2012, Dombrowski allegedly offset his Allscripts securities positions and profited approximately $286,211 from insider trading, the charges allege.
The indictment was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Robert J. Holley, Special Agent in Charge of the Chicago Office of the Federal Bureau of Investigation. The SEC cooperated in the investigation.
The government is being represented by Assistant U.S. Attorneys Clifford C. Histed and Paul H. Tzur.
Each count of securities fraud carries a maximum penalty of 20 years in prison and a $5 million fine, and restitution is mandatory. If convicted, the court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.
The public is reminded that an indictment is not evidence of guilt. The defendant is presumed innocent and is entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
At the same time, the U.S. Securities and Exchange Commission announced that it filed a civil enforcement action involving the insider trading allegations against Dombrowski yesterday in U.S. District Court in Chicago. Dombrowski, 49, of Chicago, will be arraigned on the criminal charges on a date yet to be determined in Federal Court.
According to the indictment, Dombrowski misused material, non-public information he knew about Allscripts’ performance for the first quarter of 2012 and purchased put options and engaged in short sales of stock through a trading account in his wife’s maiden name that he controlled, which resulted in illegal profits of approximately $286,211. The indictment seeks forfeiture of that amount from Dombrowski.
Dombrowski and the employees he supervised were responsible for auditing and testing the processes and procedures Allscripts used to compute and report its financial performance. Allscripts provides information technology solutions to the health care industry, and its common stock is traded on the NASDAQ stock market under the symbol MDRX.
Between April 10 and April 28, 2012, a quarterly blackout period was in effect at Allscripts. The blackout prohibited certain employees, including Dombrowski, who were given written notice and who had access to material, non-public information, from engaging in insider trading 15 days before the end of a quarter and ending after the second full business day following the company’s quarterly earnings announcement.
Dombrowski allegedly learned in April 2012 through his employment that Allscripts’ first quarter financial results were going to be less favorable than market expectations when they were publicly announced on April 26, 2012. Throughout April, Dombrowski conducted securities transactions that he designed to be profitable if the price of Allscripts stock declined, including purchasing put options and short selling stock, which he knew was prohibited, the indictment alleges. Allscripts’ stock, in fact, declined when its 2012 first quarter announcement revealed lower sales, less revenue, and lower earnings per share than the first quarter of 2011.
After Allscripts stock declined on and after April 26, 2012, Dombrowski allegedly offset his Allscripts securities positions and profited approximately $286,211 from insider trading, the charges allege.
The indictment was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Robert J. Holley, Special Agent in Charge of the Chicago Office of the Federal Bureau of Investigation. The SEC cooperated in the investigation.
The government is being represented by Assistant U.S. Attorneys Clifford C. Histed and Paul H. Tzur.
Each count of securities fraud carries a maximum penalty of 20 years in prison and a $5 million fine, and restitution is mandatory. If convicted, the court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.
The public is reminded that an indictment is not evidence of guilt. The defendant is presumed innocent and is entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
How to Protect Yourself from #IdentityTheft
Tobechi Onwuhara led a multi-million-dollar home equity line of credit fraud scheme that involved hundreds of victims in the U.S. Often times, people didn’t even realize they had been victimized until they got calls from their financial institutions about a late payment on a home equity line of credit loan, until they applied for another kind of loan and were turned down, or until they checked their credit report.
Fortunately,
these victims—because their financial institutions were insured—were reimbursed for their financial losses. But for all victims of identity theft, there are long-term challenges to face, including credit rating damage, the time and effort to repair damaged credit, and financial hardship. Here are a few tips to help you protect yourself and your loved ones from identity thieves:
Fortunately,
these victims—because their financial institutions were insured—were reimbursed for their financial losses. But for all victims of identity theft, there are long-term challenges to face, including credit rating damage, the time and effort to repair damaged credit, and financial hardship. Here are a few tips to help you protect yourself and your loved ones from identity thieves:- Review your credit report at least once a year.
- Monitor your bank accounts and credit card accounts routinely and report any unauthorized or suspicious activity to your financial institution immediately.
- Use strong passwords for your online financial accounts.
- Make sure you have up-to-date security software on your computer and other devices.
- Limit sharing of personal information on social networking sites.
Tuesday, January 28, 2014
Fugitive Identity Thief Tobechi Onwuhara Led Global Criminal Enterprise #ScamOnTheRun
He made a living stealing other people’s identities…and then their money. And what a living it was—more than enough to bankroll luxury homes, fancy cars, expensive clothes and jewelry, and nights spent in clubs and casinos. When law enforcement was about to swoop in and arrest the thief, he managed to flee the country and continue his extravagant lifestyle abroad for about four years.
Eventually, thanks to investigators who wouldn’t give up and international partners who provided vital support, this man was found and returned to the U.S. to face justice.
Last month, Tobechi Onwuhara, of Dallas, Texas—the ringleader of a multi-million-dollar fraud scheme and a former FBI wanted cyber fugitive—was sentenced to federal prison. Seven additional co-conspirators have either pled guilty or been convicted.
There’s no shortage of schemes that identity thieves perpetrate to line their own pockets—from stealing credit card numbers and fraudulently applying for loans and refunds to breaking into online bank accounts. Onwuhara’s specialty? He targeted home equity line of credit accounts, a form of revolving credit in which your home serves as collateral.
How the scheme worked: Onwuhara and his co-conspirators identified potential victims—people who had home equity line of credit accounts with large balances—by accessing certain fee-based websites often used in the real estate for customer leads (one of Onwuhara’s associates was a real estate agent). After collecting bits of personally identifiable information from those websites—like names, addresses, dates of birth, and Social Security numbers—and then using other online sites to obtain personal information to help with passwords and security questions, they were able to access victims’ credit reports online, which contained loan balances and other financial and personal information.
Armed with this information, Onwuhara would either call a customer service representative at a victim’s financial institution while impersonating the victim—or gain access to the victim’s online account—and request a transfer of funds from the home equity line of credit account into the victim’s checking or savings account. From those accounts, he’d request that the money be wired to another bank account—usually overseas and always one that he controlled.
To help with the impersonation, Onwuhara would use caller ID spoofing services to display the customer’s legitimate phone number. And in case the financial institution needed to call the customer back for some reason before the money was wired, Onwuhara—again impersonating the victim—would call the victim’s telephone company and request call forwarding to another phone (which of course belonged to a member of his criminal group).
Once the money was transferred, Onwuhara paid money mules in several different countries to withdraw the money and get it back to Onwuhara’s criminal enterprise.
The FBI's investigation of Onwuhara’s scheme—which involved hundreds of victims nationwide, attempts to steal more than $38 million, and losses of $13 million—began in late 2007 after they received a complaint from a victim in the Washington, D.C. area. They were ultimately able to identify and gather evidence against Onwuhara and his crew, and federal charges were handed down in August 2008. After he fled the U.S., ongoing international law enforcement efforts continued until December 2012, when he was located in Sydney, arrested by the Australian National Police, and returned to this country.
Eventually, thanks to investigators who wouldn’t give up and international partners who provided vital support, this man was found and returned to the U.S. to face justice.
Last month, Tobechi Onwuhara, of Dallas, Texas—the ringleader of a multi-million-dollar fraud scheme and a former FBI wanted cyber fugitive—was sentenced to federal prison. Seven additional co-conspirators have either pled guilty or been convicted.There’s no shortage of schemes that identity thieves perpetrate to line their own pockets—from stealing credit card numbers and fraudulently applying for loans and refunds to breaking into online bank accounts. Onwuhara’s specialty? He targeted home equity line of credit accounts, a form of revolving credit in which your home serves as collateral.
How the scheme worked: Onwuhara and his co-conspirators identified potential victims—people who had home equity line of credit accounts with large balances—by accessing certain fee-based websites often used in the real estate for customer leads (one of Onwuhara’s associates was a real estate agent). After collecting bits of personally identifiable information from those websites—like names, addresses, dates of birth, and Social Security numbers—and then using other online sites to obtain personal information to help with passwords and security questions, they were able to access victims’ credit reports online, which contained loan balances and other financial and personal information.
Armed with this information, Onwuhara would either call a customer service representative at a victim’s financial institution while impersonating the victim—or gain access to the victim’s online account—and request a transfer of funds from the home equity line of credit account into the victim’s checking or savings account. From those accounts, he’d request that the money be wired to another bank account—usually overseas and always one that he controlled.
To help with the impersonation, Onwuhara would use caller ID spoofing services to display the customer’s legitimate phone number. And in case the financial institution needed to call the customer back for some reason before the money was wired, Onwuhara—again impersonating the victim—would call the victim’s telephone company and request call forwarding to another phone (which of course belonged to a member of his criminal group).
Once the money was transferred, Onwuhara paid money mules in several different countries to withdraw the money and get it back to Onwuhara’s criminal enterprise.
The FBI's investigation of Onwuhara’s scheme—which involved hundreds of victims nationwide, attempts to steal more than $38 million, and losses of $13 million—began in late 2007 after they received a complaint from a victim in the Washington, D.C. area. They were ultimately able to identify and gather evidence against Onwuhara and his crew, and federal charges were handed down in August 2008. After he fled the U.S., ongoing international law enforcement efforts continued until December 2012, when he was located in Sydney, arrested by the Australian National Police, and returned to this country.
Joseph "Uncle Joe" Ligambi Has Feds Dismiss Case After He Beats Gambling and Racketeering Charges Twice
Federal prosecutors abandoned their pursuit of a reputed Philadelphia mob boss on Monday after he twice beat charges in a gambling and racketeering case.
Joseph "Uncle Joe" Ligambi could have faced a third trial after jurors acquitted him last week of witness tampering while deadlocking on three other charges. But prosecutors filed a motion seeking to dismiss the remaining counts — a rare setback in their decades-long campaign against the Philadelphia mob.
Ligambi's attorney, Ed Jacobs, praised the decision and said he expects his client to be released from a federal detention center Tuesday. A judge still has to sign off. "They have properly exercised their discretion," Jacobs said. "They have failed twice in their efforts to convict Joe, and I don't think they think the third time's the charm."
A spokeswoman for U.S. Attorney Zane Memeger declined comment.
The Ligambi case largely involved the collection of small gambling debts and loans, and the operation of video poker machines at neighborhood bars.
Prosecutors won convictions against Ligambi's reputed underboss and enforcer — who were sentenced to 15 years and 11 years in prison respectively — and several associates. But two juries deadlocked on the main racketeering charge against Ligambi, 74, and he was acquitted of six of nine counts overall.
Authorities say Ligambi took over a weakened La Cosa Nostra after his predecessor, Joseph "Skinny Joey" Merlino, was convicted and sent to prison in 2001.
An indictment unsealed in 2011 said Ligambi and other reputed mobsters remained dangerous, using threats to kill or harm people who hadn't paid their debts to the Mafia.
Ligambi has spent nearly three years in prison following his arrest.
Jacobs, who has called the case a witch hunt, said Monday the government should "put all this time and effort and money to better use chasing somebody else."
Joseph "Uncle Joe" Ligambi could have faced a third trial after jurors acquitted him last week of witness tampering while deadlocking on three other charges. But prosecutors filed a motion seeking to dismiss the remaining counts — a rare setback in their decades-long campaign against the Philadelphia mob.
Ligambi's attorney, Ed Jacobs, praised the decision and said he expects his client to be released from a federal detention center Tuesday. A judge still has to sign off. "They have properly exercised their discretion," Jacobs said. "They have failed twice in their efforts to convict Joe, and I don't think they think the third time's the charm."
A spokeswoman for U.S. Attorney Zane Memeger declined comment.
The Ligambi case largely involved the collection of small gambling debts and loans, and the operation of video poker machines at neighborhood bars.
Prosecutors won convictions against Ligambi's reputed underboss and enforcer — who were sentenced to 15 years and 11 years in prison respectively — and several associates. But two juries deadlocked on the main racketeering charge against Ligambi, 74, and he was acquitted of six of nine counts overall.
Authorities say Ligambi took over a weakened La Cosa Nostra after his predecessor, Joseph "Skinny Joey" Merlino, was convicted and sent to prison in 2001.
An indictment unsealed in 2011 said Ligambi and other reputed mobsters remained dangerous, using threats to kill or harm people who hadn't paid their debts to the Mafia.
Ligambi has spent nearly three years in prison following his arrest.
Jacobs, who has called the case a witch hunt, said Monday the government should "put all this time and effort and money to better use chasing somebody else."
Monday, January 27, 2014
Adam Christopher Vega Arrested, Charged with Meth and Marijuana Trafficking Conspiracy
Adam Christopher Vega, 30, of Bakersfield, was arrested in Bakersfield after being charged in a seven-count federal indictment alleging that he and four co-conspirators trafficked in methamphetamine and marijuana, Drug Enforcement Administration Special Agent in Charge Jay Fitzpatrick and United States Attorney Benjamin B. Wagner announced.
The superseding indictment, returned by a federal grand jury in Fresno on January 16, 2014, charges Vega and co-defendants Baltazar Castaneda Garcia, 23; Jesus Manuel Peraza Ruiz, 54; and Robert Anthony Canchola, 26, all of Bakersfield, with conspiring to distribute methamphetamine. Those four persons and Eduardo Ortega Chavez, 32, of Oakland, are also charged with conspiring to manufacture and distribute marijuana.
According to court documents, Vega was the owner of the California’s Best Cooperative Inc., a medical marijuana dispensary in Bakersfield during the time he was allegedly trafficking in methamphetamine and marijuana. Court documents indicate that the defendants trafficked in marijuana and other controlled substances between Kern County and Oakland where defendant Chavez maintained a marijuana grow operation. In October 2013, Ruiz was stopped in Bakersfield with approximately six pounds of methamphetamine concealed in his vehicle as he was returning from Southern California. Garcia and Canchola are also charged with possession of methamphetamine and manufacturing marijuana in connection with substances that were seized during searches at three residences in Bakersfield on January 8, 2014, including two that contained indoor marijuana grow operations.
This case is the product of an investigation by the Drug Enforcement Administration, U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), Bakersfield Police Department, Kern County Sheriff’s Office, and Kern County Probation Department. Assistant United States Attorney Laurel J. Montoya is prosecuting the case.
Vega will make his initial appearance before a U.S. Magistrate Judge in Bakersfield. Defendant Ruiz was previously ordered detained in this case. Defendants Garcia and Canchola are temporarily detained pending a detention hearing. An arrest warrant has been issued for defendant Chavez.
If convicted, Vega, Garcia, Ruiz and Canchola face a maximum statutory penalty of 10 years to life in prison and a $10 million fine. If convicted, Chavez faces a maximum statutory penalty of five to 40 years in prison and a $5 million fine. Any sentence, however, would be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.
The superseding indictment, returned by a federal grand jury in Fresno on January 16, 2014, charges Vega and co-defendants Baltazar Castaneda Garcia, 23; Jesus Manuel Peraza Ruiz, 54; and Robert Anthony Canchola, 26, all of Bakersfield, with conspiring to distribute methamphetamine. Those four persons and Eduardo Ortega Chavez, 32, of Oakland, are also charged with conspiring to manufacture and distribute marijuana.
According to court documents, Vega was the owner of the California’s Best Cooperative Inc., a medical marijuana dispensary in Bakersfield during the time he was allegedly trafficking in methamphetamine and marijuana. Court documents indicate that the defendants trafficked in marijuana and other controlled substances between Kern County and Oakland where defendant Chavez maintained a marijuana grow operation. In October 2013, Ruiz was stopped in Bakersfield with approximately six pounds of methamphetamine concealed in his vehicle as he was returning from Southern California. Garcia and Canchola are also charged with possession of methamphetamine and manufacturing marijuana in connection with substances that were seized during searches at three residences in Bakersfield on January 8, 2014, including two that contained indoor marijuana grow operations.
This case is the product of an investigation by the Drug Enforcement Administration, U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), Bakersfield Police Department, Kern County Sheriff’s Office, and Kern County Probation Department. Assistant United States Attorney Laurel J. Montoya is prosecuting the case.
Vega will make his initial appearance before a U.S. Magistrate Judge in Bakersfield. Defendant Ruiz was previously ordered detained in this case. Defendants Garcia and Canchola are temporarily detained pending a detention hearing. An arrest warrant has been issued for defendant Chavez.
If convicted, Vega, Garcia, Ruiz and Canchola face a maximum statutory penalty of 10 years to life in prison and a $10 million fine. If convicted, Chavez faces a maximum statutory penalty of five to 40 years in prison and a $5 million fine. Any sentence, however, would be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.
Leonard "Juice" Coker, Wilkinsburg Shooting Suspect, Captured by US Marshals Fugitive Task Force
The U.S. Marshals Western Pennsylvania Fugitive Task Force (WPAFTF) arrested fugitive Leonard “Juice” Coker at approximately 12:30 pm this afternoon at a residence in Penn Hills. Coker, age 22, was charged by the Allegheny County Police on December 24, 2013 with Criminal Attempt - Criminal Homicide, Carrying a Firearm without a License, Aggravated Assault and Recklessly Endangering another Person. These charges arose out of an incident occurring at a Wilkinsburg barber shop on October 31, 2013. Coker is alleged to have entered the barber shop and shot the male victim multiple times as he sat in a chair getting his hair cut.
Coker was also wanted by the Penn Hills Police Department based on a December 19, 2013 arrest warrant charging him with Carrying a Firearm without a License, Carrying a Loaded Weapon, Resisting Arrest and Escape. Additionally, Coker was also wanted pursuant to an Allegheny County Court of Common Please probation violation arrest warrant issued December 19, 2013 for the underlying offense of Firearms not to be Carried without a License
.
Coker was last known to reside in the New Kensington area and was known to frequent the Penn Hills, New Kensington and Arnold areas. WPAFTF members arrested Coker this afternoon without incident in the first floor of a residence in the 100 block of Marose Drive, Penn Hills. Following his arrest, Coker was turned him over to the custody of Allegheny County Police Homicide Detectives.
The U.S. Marshals Fugitive Task Force is comprised of officers from the Pennsylvania State Police, Pennsylvania Board of Probation and Parole, Pittsburgh Bureau of Police, Allegheny County Sheriffs, and Westmoreland County Sheriff’s. These agencies, along with the United States Attorney’s Office, are participating members of the U.S. Marshals Western Pennsylvania Fugitive Task Force (WPAFTF.
Coker was also wanted by the Penn Hills Police Department based on a December 19, 2013 arrest warrant charging him with Carrying a Firearm without a License, Carrying a Loaded Weapon, Resisting Arrest and Escape. Additionally, Coker was also wanted pursuant to an Allegheny County Court of Common Please probation violation arrest warrant issued December 19, 2013 for the underlying offense of Firearms not to be Carried without a License
.
Coker was last known to reside in the New Kensington area and was known to frequent the Penn Hills, New Kensington and Arnold areas. WPAFTF members arrested Coker this afternoon without incident in the first floor of a residence in the 100 block of Marose Drive, Penn Hills. Following his arrest, Coker was turned him over to the custody of Allegheny County Police Homicide Detectives.
The U.S. Marshals Fugitive Task Force is comprised of officers from the Pennsylvania State Police, Pennsylvania Board of Probation and Parole, Pittsburgh Bureau of Police, Allegheny County Sheriffs, and Westmoreland County Sheriff’s. These agencies, along with the United States Attorney’s Office, are participating members of the U.S. Marshals Western Pennsylvania Fugitive Task Force (WPAFTF.
Jeffrey Leonard Wanted in Connection With Two Armed Robberies Arrested by U.S. Marshals Fugitive Task Force in New Hampshire
Members of the U.S. Marshals Fugitive Task Force from both New Hampshire and Massachusetts arrested fugitive Jeffrey Leonard, age 29. Leonard was being sought in connection with two armed robberies in MA.
Earlier this month, the U.S. Marshals Fugitive Task Force in Massachusetts had been requested to assist in the location and arrest of Jeffrey Leonard. Leonard was wanted by both the Yarmouth and Dennis, Massachusetts Police Departments on outstanding arrest warrants for armed robbery while masked with a firearm. Information developed by the Marshals Task Force in Massachusetts, led investigators to NH, where Leonard was originally from and had a previous conviction for another armed robbery.
Investigators narrowed their search to a residence in the 900 block of Union Street in Manchester, NH. After a period of surveillance, it was determined that Leonard was likely inside the residence. Officers initially checked the apartment that Leonard was believed to be in without finding him. A further search of the residence led investigators to the basement where Leonard was found hiding, and he was arrested without any further incident.
The Hillsborough County Sheriff’s Office has charged Leonard as a fugitive from justice on the two outstanding Massachusetts arrest warrants.
These arrests were made by members of the task force, including; Rockingham, Hillsborough, & Belknap County Deputy Sheriffs, deputy U.S. Marshals from MA and NH.
Since the inception of the New Hampshire Joint Fugitive Task Force in 2002, these partnerships have resulted in over 5,523 arrests. These arrests have ranged in seriousness from murder, assault, unregistered sex offenders, probation and parole violations and numerous other serious offenses.
Nationally the United States Marshals Service fugitive programs are carried out with local law enforcement in 94 district offices, 85 local fugitive task forces, 7 regional task forces, as well as a growing network of offices in foreign countries.
Earlier this month, the U.S. Marshals Fugitive Task Force in Massachusetts had been requested to assist in the location and arrest of Jeffrey Leonard. Leonard was wanted by both the Yarmouth and Dennis, Massachusetts Police Departments on outstanding arrest warrants for armed robbery while masked with a firearm. Information developed by the Marshals Task Force in Massachusetts, led investigators to NH, where Leonard was originally from and had a previous conviction for another armed robbery.
Investigators narrowed their search to a residence in the 900 block of Union Street in Manchester, NH. After a period of surveillance, it was determined that Leonard was likely inside the residence. Officers initially checked the apartment that Leonard was believed to be in without finding him. A further search of the residence led investigators to the basement where Leonard was found hiding, and he was arrested without any further incident.
The Hillsborough County Sheriff’s Office has charged Leonard as a fugitive from justice on the two outstanding Massachusetts arrest warrants.
These arrests were made by members of the task force, including; Rockingham, Hillsborough, & Belknap County Deputy Sheriffs, deputy U.S. Marshals from MA and NH.
Since the inception of the New Hampshire Joint Fugitive Task Force in 2002, these partnerships have resulted in over 5,523 arrests. These arrests have ranged in seriousness from murder, assault, unregistered sex offenders, probation and parole violations and numerous other serious offenses.
Nationally the United States Marshals Service fugitive programs are carried out with local law enforcement in 94 district offices, 85 local fugitive task forces, 7 regional task forces, as well as a growing network of offices in foreign countries.
Dr. Charles DeHaan of Housecall Physicians Group, Arrested on Charge of Health Care Fraud
A local physician whose license was suspended this month was arrested on a federal complaint alleging health care fraud. Charles S. DeHaan, 59, of Belvidere, Illinois, was charged with engaging in a scheme to defraud Medicare. The complaint alleges that as a part of the scheme, DeHaan operated Housecall Physicians Group of Rockford, S.C., located in Rockford. The charge alleges that DeHaan submitted false claims to Medicare in December 2013.
In support of the charge, the complaint alleges that between 2010 and 2013, DeHaan billed Medicare for medical services that he did not provide to at least five patients. Instead, DeHaan engaged in sexual misconduct with four of these patients, all women, and offered or provided prescriptions for controlled medications, according to the complaint affidavit.
DeHaan appeared before United States Magistrate Judge Iain D. Johnston, who ordered that he be held in custody until a detention hearing is conducted.
The charge of health care fraud carries a maximum potential penalty of up to 10 years in prison, a fine of up to $250,000, and full restitution.
The charges were announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Robert J. Holley, Special Agent in Charge of the Chicago Office of Federal Bureau of Investigation; and Lamont Pugh, III, Special Agent in Charge of the Chicago Regional Office of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG)
The federal case was investigated by the FBI and HHS-OIG, with the assistance of the Illinois State Police Medicaid Fraud Control Unit. The government was represented in federal court by Assistant U.S. Attorney Jolm G. McKenzie.
The public is reminded that a complaint is only a charge and is not evidence of guilt. The defendant is presumed innocent and is entitled to indictment by a federal grand jury and, if indicted, to a fair trial at which the government has the burden of proving his guilt beyond a reasonable doubt.
In support of the charge, the complaint alleges that between 2010 and 2013, DeHaan billed Medicare for medical services that he did not provide to at least five patients. Instead, DeHaan engaged in sexual misconduct with four of these patients, all women, and offered or provided prescriptions for controlled medications, according to the complaint affidavit.
DeHaan appeared before United States Magistrate Judge Iain D. Johnston, who ordered that he be held in custody until a detention hearing is conducted.
The charge of health care fraud carries a maximum potential penalty of up to 10 years in prison, a fine of up to $250,000, and full restitution.
The charges were announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Robert J. Holley, Special Agent in Charge of the Chicago Office of Federal Bureau of Investigation; and Lamont Pugh, III, Special Agent in Charge of the Chicago Regional Office of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG)
The federal case was investigated by the FBI and HHS-OIG, with the assistance of the Illinois State Police Medicaid Fraud Control Unit. The government was represented in federal court by Assistant U.S. Attorney Jolm G. McKenzie.
The public is reminded that a complaint is only a charge and is not evidence of guilt. The defendant is presumed innocent and is entitled to indictment by a federal grand jury and, if indicted, to a fair trial at which the government has the burden of proving his guilt beyond a reasonable doubt.
Waldyr Prado and Igor Cornelsen Charged with Insider Trading on @BurgerKing Stock
Preet Bharara, the United States Attorney for the Southern District of New York, and George Venizelos, the Assistant Director in Charge of the New York Office of the Federal Bureau of Investigation (FBI), announced today the unsealing of a criminal complaint in Manhattan federal court charging Waldyr Prado, a former financial adviser at a large U.S. brokerage firm, and Igor Cornelsen, a director of a British Virgin Islands Investment Company that he owns and operates, with using inside information to trade on Burger King securities in advance of Burger King’s September 2010 acquisition by 3G Capital Partners (3G), a New York and Brazil based private equity firm. Prado and Cornelsen are nationals and residents of Brazil, and they have not yet been arrested on these charges.
Manhattan U.S. Attorney Preet Bharara said, “As alleged, when Waldyr Prado and Igor Cornelsen traded around a ‘sandwich deal,’ the defendants knew they were committing insider trading. They were illegally profiting from material non-public information to which they were not entitled.”
Assistant Director in Charge George Venizelos said, “Trading on inside information negatively impacts individual investors, puts companies at risk and threatens the public’s faith in our financial markets. As alleged, Mr. Prado and Mr. Cornelsen put their faith in a ‘sandwich deal’ and bit off more than they could chew. The FBI will continue to investigate this type of illegal conduct and prosecute those who violate our laws.”
According to the complaint unsealed today in Manhattan federal court:
In about February 2010, 3G initiated discussions with Burger King about a potential acquisition. As part of these discussions, Burger King and 3G executed a confidentiality agreement in April 2010, pursuant to which all aspects of their negotiations and due diligence were non-public.
In about early March 2010, a principal of 3G (3G Principal-1) contacted an investor of the firm (Client-1) and advised that 3G was in negotiations to acquire Burger King. Client-1, who was also a brokerage client of Prado’s, signed a confidentiality agreement with 3G relating to the potential Burger King acquisition. This agreement permitted Client-1 to share information concerning the potential acquisition with Client-1’s financial adviser, i.e. Prado, in order to facilitate Client-1’s decision to invest in the specific 3G fund that would acquire Burger King (the 3G Fund).
From about March 2010 through the September 2, 2010 announcement that 3G would purchase Burger King for $4 billion in stock and the assumption of debt (the September 2 announcement), Client-1 received periodic updates about the general progress of the deal from 3G’s principals. During this period, Client-1 evaluated whether to liquidate personal holdings for a $50 million commitment to the 3G Fund or to obtain separate financing. Client-1 discussed this issue with Prado and, in so doing, confided that the financing was for a commitment to a 3G fund seeking to acquire Burger King. Based on their professional relationship, Client-1 believed that Prado would maintain the confidentiality of this information. Over the next several months, Client-1 and Client-1’s assistant spoke with Prado about the progress of the Burger King transaction.
Notwithstanding the duties of trust and confidence owed to his brokerage firm employer and Client-1, Prado misappropriated information learned from Client-1 for his own benefit and to purchase Burger King stock and options. For example, on May 17, 2010, after Prado met with Client-1 in Brazil and learned of the potential 3G-Burger King acquisition, Prado sent an e-mail to an acquaintance in the financial industry (Witness-1) stating that Prado was “in Brazil with information that cannot be sent by e-mail. You can’t miss it.” After sending this e-mail, Prado and Witness-1 spoke by telephone, and Prado told Witness-1 that 3G was going to acquire Burger King. From May 17, 2010 through September 1, 2010, Prado purchased Burger King stock and call options. On September 2, 2010, following the announcement of 3G’s acquisition, Prado sold his Burger King holdings for a total profit of over approximately $175,000.
On May 17, 2010, and minutes after Prado sent the e-mail to Witness-1 referenced above, Prado sent a similar e-mail to Cornelsen. The e-mail stated that Prado had “some info that I cannot say over the phone....You have to hear this.” Within minutes, and after the market closed, Cornelsen called Prado. The next day, Cornelsen began trading out-of-the-money Burger King call options. From May 18, 2010 through late August 2010, Cornelsen purchased short-expiration call options and had frequent contact with Prado. For example, on August 18, 2010, Cornelsen sent Prado an e-mail asking if “the sandwich deal going to happen,” to which Prado replied, “it’s going to happen.” On the same day, Cornelsen sent Prado another e-mail asking again whether the “sandwich deal” was going to happen, and Prado responded that it was a “sure thing.” After the September 2 announcement, Cornelsen sold his options for a total profit of approximately $1.68 million and a net profit (including expired July 2010 options) of approximately $1.4 million.
In July 2012, in connection with an insider trading investigation, the Securities and Exchange Commission (SEC) deposed Prado. In his deposition, Prado denied any advance knowledge of the Burger King acquisition. Approximately one month after his deposition, Prado fled to Brazil, from where he told his U.S.-based supervisor that he would not be returning to the United States because he believed that he was going to be charged with perjury and because Brazil did not have “an extradition policy.”
Prado, 43, of Porto Seguro, Brazil, and Cornelsen, 65, of São Paolo, Brazil, have been charged in the complaint with conspiracy to commit securities fraud and fraud in connection with a tender offer (count one), securities fraud (count two), and fraud in connection with a tender offer (count three). The securities fraud and fraud in connection with a tender offer charges each carry a maximum term of 20 years in prison, and the conspiracy charge carries a maximum term of five years in prison.
Mr. Bharara praised the investigative work of the FBI and also thanked the Securities and Exchange Commission, which has brought civil actions against the defendants.
This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force, on which Mr. Bharara serves as a co-chair of the Securities and Commodities Fraud Working Group. The task force was established to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory, and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state, and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions, and other organizations. Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For more information on the task force, please visit www.stopfraud.gov.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys David I. Miller and Jason Cowley are in charge of the prosecution.
Manhattan U.S. Attorney Preet Bharara said, “As alleged, when Waldyr Prado and Igor Cornelsen traded around a ‘sandwich deal,’ the defendants knew they were committing insider trading. They were illegally profiting from material non-public information to which they were not entitled.”
Assistant Director in Charge George Venizelos said, “Trading on inside information negatively impacts individual investors, puts companies at risk and threatens the public’s faith in our financial markets. As alleged, Mr. Prado and Mr. Cornelsen put their faith in a ‘sandwich deal’ and bit off more than they could chew. The FBI will continue to investigate this type of illegal conduct and prosecute those who violate our laws.”
According to the complaint unsealed today in Manhattan federal court:
In about February 2010, 3G initiated discussions with Burger King about a potential acquisition. As part of these discussions, Burger King and 3G executed a confidentiality agreement in April 2010, pursuant to which all aspects of their negotiations and due diligence were non-public.
In about early March 2010, a principal of 3G (3G Principal-1) contacted an investor of the firm (Client-1) and advised that 3G was in negotiations to acquire Burger King. Client-1, who was also a brokerage client of Prado’s, signed a confidentiality agreement with 3G relating to the potential Burger King acquisition. This agreement permitted Client-1 to share information concerning the potential acquisition with Client-1’s financial adviser, i.e. Prado, in order to facilitate Client-1’s decision to invest in the specific 3G fund that would acquire Burger King (the 3G Fund).
From about March 2010 through the September 2, 2010 announcement that 3G would purchase Burger King for $4 billion in stock and the assumption of debt (the September 2 announcement), Client-1 received periodic updates about the general progress of the deal from 3G’s principals. During this period, Client-1 evaluated whether to liquidate personal holdings for a $50 million commitment to the 3G Fund or to obtain separate financing. Client-1 discussed this issue with Prado and, in so doing, confided that the financing was for a commitment to a 3G fund seeking to acquire Burger King. Based on their professional relationship, Client-1 believed that Prado would maintain the confidentiality of this information. Over the next several months, Client-1 and Client-1’s assistant spoke with Prado about the progress of the Burger King transaction.
Notwithstanding the duties of trust and confidence owed to his brokerage firm employer and Client-1, Prado misappropriated information learned from Client-1 for his own benefit and to purchase Burger King stock and options. For example, on May 17, 2010, after Prado met with Client-1 in Brazil and learned of the potential 3G-Burger King acquisition, Prado sent an e-mail to an acquaintance in the financial industry (Witness-1) stating that Prado was “in Brazil with information that cannot be sent by e-mail. You can’t miss it.” After sending this e-mail, Prado and Witness-1 spoke by telephone, and Prado told Witness-1 that 3G was going to acquire Burger King. From May 17, 2010 through September 1, 2010, Prado purchased Burger King stock and call options. On September 2, 2010, following the announcement of 3G’s acquisition, Prado sold his Burger King holdings for a total profit of over approximately $175,000.
On May 17, 2010, and minutes after Prado sent the e-mail to Witness-1 referenced above, Prado sent a similar e-mail to Cornelsen. The e-mail stated that Prado had “some info that I cannot say over the phone....You have to hear this.” Within minutes, and after the market closed, Cornelsen called Prado. The next day, Cornelsen began trading out-of-the-money Burger King call options. From May 18, 2010 through late August 2010, Cornelsen purchased short-expiration call options and had frequent contact with Prado. For example, on August 18, 2010, Cornelsen sent Prado an e-mail asking if “the sandwich deal going to happen,” to which Prado replied, “it’s going to happen.” On the same day, Cornelsen sent Prado another e-mail asking again whether the “sandwich deal” was going to happen, and Prado responded that it was a “sure thing.” After the September 2 announcement, Cornelsen sold his options for a total profit of approximately $1.68 million and a net profit (including expired July 2010 options) of approximately $1.4 million.
In July 2012, in connection with an insider trading investigation, the Securities and Exchange Commission (SEC) deposed Prado. In his deposition, Prado denied any advance knowledge of the Burger King acquisition. Approximately one month after his deposition, Prado fled to Brazil, from where he told his U.S.-based supervisor that he would not be returning to the United States because he believed that he was going to be charged with perjury and because Brazil did not have “an extradition policy.”
Prado, 43, of Porto Seguro, Brazil, and Cornelsen, 65, of São Paolo, Brazil, have been charged in the complaint with conspiracy to commit securities fraud and fraud in connection with a tender offer (count one), securities fraud (count two), and fraud in connection with a tender offer (count three). The securities fraud and fraud in connection with a tender offer charges each carry a maximum term of 20 years in prison, and the conspiracy charge carries a maximum term of five years in prison.
Mr. Bharara praised the investigative work of the FBI and also thanked the Securities and Exchange Commission, which has brought civil actions against the defendants.
This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force, on which Mr. Bharara serves as a co-chair of the Securities and Commodities Fraud Working Group. The task force was established to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory, and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state, and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions, and other organizations. Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For more information on the task force, please visit www.stopfraud.gov.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys David I. Miller and Jason Cowley are in charge of the prosecution.
DEA Charges Bitcoin Exchange Companies for Laundering #SilkRoad Drug Money
The DEA and other federal law enforcement partners today Bitcoin exchangers, including a CEO, were charged with money laundering related to drug proceeds from users of the Silk Road website. James J. Hunt, the DEA Acting Special Agent in Charge of the New York Field Division of the Drug Enforcement Administration (“DEA”), Preet Bharara, the United States Attorney for the Southern District of New York, and Toni Weirauch, the Special Agent-in-Charge of the New York Field Office of the Internal Revenue Service, Criminal Investigation (“IRS-CI”), announced the unsealing of criminal charges in Manhattan federal court.
Charges are against ROBERT M. FAIELLA, a/k/a “BTCKing,” an underground Bitcoin exchanger, and CHARLIE SHREM, the Chief Executive Officer and Compliance Officer of a Bitcoin exchange company, for engaging in a scheme to sell over $1 million in Bitcoins to users of “Silk Road,” the underground website that enabled its users to buy and sell illegal drugs anonymously and beyond the reach of law enforcement. Each defendant is charged with conspiring to commit money laundering, and operating an unlicensed money transmitting business. SHREM is also charged with willfully failing to file any suspicious activity report regarding FAIELLA’s illegal transactions through the Company, in violation of the Bank Secrecy Act. SCHREM was arrested yesterday at John F. Kennedy International Airport in New York, and is expected to be presented in Manhattan federal court later today before U.S. Magistrate Judge Henry Pitman. FAIELLA was arrested today at his residence in Cape Coral, Florida, and is expected to be presented in federal court in the Middle District of Florida.
DEA Acting Special-Agent-in-Charge James J. Hunt said: “The charges announced today depict law enforcement's commitment to identifying those who promote the sale of illegal drugs throughout the world. Hiding behind their computers, both defendants are charged with knowingly contributing to and facilitating anonymous drug sales, earning substantial profits along the way. Drug law enforcement’s job is to investigate and identify those who abet the illicit drug trade at all levels of production and distribution including those lining their own pockets by feigning ignorance of any wrong doing and turning a blind eye.”
Manhattan U.S. Attorney Preet Bharara said: “As alleged, Robert Faiella and Charlie Shrem schemed to sell over $1 million in Bitcoins to criminals bent on trafficking narcotics on the dark web drug site, Silk Road. Truly innovative business models don’t need to resort to old-fashioned law-breaking, and when Bitcoins, like any traditional currency, are laundered and used to fuel criminal activity, law enforcement has no choice but to act. We will aggressively pursue those who would coopt new forms of currency for illicit purposes.”
IRS Special-Agent-in-Charge Toni Weirauch said: “The government has been successful in swiftly identifying those responsible for the design and operation of the ‘Silk Road’ website, as well as those who helped ‘Silk Road’ customers conduct their illegal transactions by facilitating the conversion of their dollars into Bitcoins. This is yet another example of the New York Organized Crime Drug Enforcement Strike Force’s proficiency in applying financial investigative resources to the fight against illegal drugs.”
According to the allegations contained in the Criminal Complaint unsealed today in Manhattan federal court:
From about December 2011 to October 2013, FAIELLA ran an underground Bitcoin exchange on the Silk Road website, a website that served as a sprawling and anonymous black market bazaar where illegal drugs of virtually every variety were bought and sold regularly by the site’s users. Operating under the username “BTCKing,” FAIELLA sold Bitcoins – the only form of payment accepted on Silk Road – to users seeking to buy illegal drugs on the site. Upon receiving orders for Bitcoins from Silk Road users, he filled the orders through a company based in New York, New York (the “Company”). The Company was designed to enable customers to exchange cash for Bitcoins anonymously, that is, without providing any personal identifying information, and it charged a fee for its service. FAIELLA obtained Bitcoins with the Company’s assistance, and then sold the Bitcoins to Silk Road users at a markup.
SHREM is the Chief Executive Officer of the Company, and from about August 2011 until about July 2013, when the Company ceased operating, he was also its Compliance Officer, in charge of ensuring the Company’s compliance with federal and other anti-money laundering (“AML”) laws. SHREM is also the Vice Chairman of a foundation dedicated to promoting the Bitcoin virtual currency system.
SHREM, who personally bought drugs on Silk Road, was fully aware that Silk Road was a drug-trafficking website, and through his communications with FAIELLA, SHREM also knew that FAIELLA was operating a Bitcoin exchange service for Silk Road users. Nevertheless, SHREM knowingly facilitated FAIELLA’s business with the Company in order to maintain FAIELLA’s business as a lucrative source of Company revenue. SHREM knowingly allowed FAIELLA to use the Company’s services to buy Bitcoins for his Silk Road customers; personally processed FAIELLA’s orders; gave FAIELLA discounts on his high-volume transactions; failed to file a single suspicious activity report with the United States Treasury Department about FAIELLA’s illicit activity, as he was otherwise required to do in his role as the Company’s Compliance Officer; and deliberately helped FAIELLA circumvent the Company’s AML restrictions, even though it was SHREM’s job to enforce them and even though the Company had registered with the Treasury Department as a money services business.
Working together, SHREM and FAIELLA exchanged over $1 million in cash for Bitcoins for the benefit of Silk Road users, so that the users could, in turn, make illegal purchases on Silk Road.
In late 2012, when the Company stopped accepting cash payments, FAIELLA ceased doing business with the Company and temporarily shut down his illegal Bitcoin exchange service on Silk Road. FAIELLA resumed operating on Silk Road in April 2013 without the Company’s assistance, and continued to exchange tens of thousands of dollars a week in Bitcoins until the Silk Road website was shut down by law enforcement in October 2013.
FAIELLA, 52, of Cape Coral, Florida, and SHREM, 24, of New York, New York, are each charged with one count of conspiracy to commit money laundering, which carries a maximum sentence of 20 years in prison, and one count of operating an unlicensed money transmitting business, which carries a maximum sentence of five years in prison. SHREM is also charged with one count of willful failure to file a suspicious activity report, which carries a maximum sentence of five years in prison.
Mr. Bharara praised the outstanding investigative work of the DEA’s New York Organized Crime Drug Enforcement Strike Force, which is comprised of agents and officers of the U. S. Drug Enforcement Administration, the New York City Police Department, Immigration and Customs Enforcement - Homeland Security Investigations, the New York State Police, the U. S. Internal Revenue Service Criminal Investigation Division, the Federal Bureau of Investigation, the Bureau of Alcohol, Tobacco, Firearms and Explosives, U.S. Secret Service, the U.S. Marshal Service, New York National Guard, Office of Foreign Assets Control and the New York Department of Taxation and Finance. Mr. Bharara also thanked the FBI’s New York Field Office. Mr. Bharara also noted that the investigation remains ongoing.
The prosecution of this case is being handled by the Office’s Complex Frauds Unit. Assistant United States Attorney Serrin Turner is in charge of the prosecution, and Assistant United States Attorney Andrew Adams of the Asset Forfeiture Unit is in charge of the forfeiture aspects of the case.
The charges contained in the Complaint are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
Charges are against ROBERT M. FAIELLA, a/k/a “BTCKing,” an underground Bitcoin exchanger, and CHARLIE SHREM, the Chief Executive Officer and Compliance Officer of a Bitcoin exchange company, for engaging in a scheme to sell over $1 million in Bitcoins to users of “Silk Road,” the underground website that enabled its users to buy and sell illegal drugs anonymously and beyond the reach of law enforcement. Each defendant is charged with conspiring to commit money laundering, and operating an unlicensed money transmitting business. SHREM is also charged with willfully failing to file any suspicious activity report regarding FAIELLA’s illegal transactions through the Company, in violation of the Bank Secrecy Act. SCHREM was arrested yesterday at John F. Kennedy International Airport in New York, and is expected to be presented in Manhattan federal court later today before U.S. Magistrate Judge Henry Pitman. FAIELLA was arrested today at his residence in Cape Coral, Florida, and is expected to be presented in federal court in the Middle District of Florida.
DEA Acting Special-Agent-in-Charge James J. Hunt said: “The charges announced today depict law enforcement's commitment to identifying those who promote the sale of illegal drugs throughout the world. Hiding behind their computers, both defendants are charged with knowingly contributing to and facilitating anonymous drug sales, earning substantial profits along the way. Drug law enforcement’s job is to investigate and identify those who abet the illicit drug trade at all levels of production and distribution including those lining their own pockets by feigning ignorance of any wrong doing and turning a blind eye.”
Manhattan U.S. Attorney Preet Bharara said: “As alleged, Robert Faiella and Charlie Shrem schemed to sell over $1 million in Bitcoins to criminals bent on trafficking narcotics on the dark web drug site, Silk Road. Truly innovative business models don’t need to resort to old-fashioned law-breaking, and when Bitcoins, like any traditional currency, are laundered and used to fuel criminal activity, law enforcement has no choice but to act. We will aggressively pursue those who would coopt new forms of currency for illicit purposes.”
IRS Special-Agent-in-Charge Toni Weirauch said: “The government has been successful in swiftly identifying those responsible for the design and operation of the ‘Silk Road’ website, as well as those who helped ‘Silk Road’ customers conduct their illegal transactions by facilitating the conversion of their dollars into Bitcoins. This is yet another example of the New York Organized Crime Drug Enforcement Strike Force’s proficiency in applying financial investigative resources to the fight against illegal drugs.”
According to the allegations contained in the Criminal Complaint unsealed today in Manhattan federal court:
From about December 2011 to October 2013, FAIELLA ran an underground Bitcoin exchange on the Silk Road website, a website that served as a sprawling and anonymous black market bazaar where illegal drugs of virtually every variety were bought and sold regularly by the site’s users. Operating under the username “BTCKing,” FAIELLA sold Bitcoins – the only form of payment accepted on Silk Road – to users seeking to buy illegal drugs on the site. Upon receiving orders for Bitcoins from Silk Road users, he filled the orders through a company based in New York, New York (the “Company”). The Company was designed to enable customers to exchange cash for Bitcoins anonymously, that is, without providing any personal identifying information, and it charged a fee for its service. FAIELLA obtained Bitcoins with the Company’s assistance, and then sold the Bitcoins to Silk Road users at a markup.
SHREM is the Chief Executive Officer of the Company, and from about August 2011 until about July 2013, when the Company ceased operating, he was also its Compliance Officer, in charge of ensuring the Company’s compliance with federal and other anti-money laundering (“AML”) laws. SHREM is also the Vice Chairman of a foundation dedicated to promoting the Bitcoin virtual currency system.
SHREM, who personally bought drugs on Silk Road, was fully aware that Silk Road was a drug-trafficking website, and through his communications with FAIELLA, SHREM also knew that FAIELLA was operating a Bitcoin exchange service for Silk Road users. Nevertheless, SHREM knowingly facilitated FAIELLA’s business with the Company in order to maintain FAIELLA’s business as a lucrative source of Company revenue. SHREM knowingly allowed FAIELLA to use the Company’s services to buy Bitcoins for his Silk Road customers; personally processed FAIELLA’s orders; gave FAIELLA discounts on his high-volume transactions; failed to file a single suspicious activity report with the United States Treasury Department about FAIELLA’s illicit activity, as he was otherwise required to do in his role as the Company’s Compliance Officer; and deliberately helped FAIELLA circumvent the Company’s AML restrictions, even though it was SHREM’s job to enforce them and even though the Company had registered with the Treasury Department as a money services business.
Working together, SHREM and FAIELLA exchanged over $1 million in cash for Bitcoins for the benefit of Silk Road users, so that the users could, in turn, make illegal purchases on Silk Road.
In late 2012, when the Company stopped accepting cash payments, FAIELLA ceased doing business with the Company and temporarily shut down his illegal Bitcoin exchange service on Silk Road. FAIELLA resumed operating on Silk Road in April 2013 without the Company’s assistance, and continued to exchange tens of thousands of dollars a week in Bitcoins until the Silk Road website was shut down by law enforcement in October 2013.
FAIELLA, 52, of Cape Coral, Florida, and SHREM, 24, of New York, New York, are each charged with one count of conspiracy to commit money laundering, which carries a maximum sentence of 20 years in prison, and one count of operating an unlicensed money transmitting business, which carries a maximum sentence of five years in prison. SHREM is also charged with one count of willful failure to file a suspicious activity report, which carries a maximum sentence of five years in prison.
Mr. Bharara praised the outstanding investigative work of the DEA’s New York Organized Crime Drug Enforcement Strike Force, which is comprised of agents and officers of the U. S. Drug Enforcement Administration, the New York City Police Department, Immigration and Customs Enforcement - Homeland Security Investigations, the New York State Police, the U. S. Internal Revenue Service Criminal Investigation Division, the Federal Bureau of Investigation, the Bureau of Alcohol, Tobacco, Firearms and Explosives, U.S. Secret Service, the U.S. Marshal Service, New York National Guard, Office of Foreign Assets Control and the New York Department of Taxation and Finance. Mr. Bharara also thanked the FBI’s New York Field Office. Mr. Bharara also noted that the investigation remains ongoing.
The prosecution of this case is being handled by the Office’s Complex Frauds Unit. Assistant United States Attorney Serrin Turner is in charge of the prosecution, and Assistant United States Attorney Andrew Adams of the Asset Forfeiture Unit is in charge of the forfeiture aspects of the case.
The charges contained in the Complaint are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
Seth Gillman Charged with Federal Health Care Fraud for Allegedly Falsely Elevating Level of Patients’ Care
An owner of an Illinois hospice company was charged with federal health care fraud for allegedly engaging in an extensive scheme to obtain higher Medicare and Medicaid payments by fraudulently elevating the level of hospice care for patients, many of whom resided at nursing homes he also controlled across the state. In many instances, the level of hospice care allegedly exceeded what was medically necessary or actually provided, including for some patients who did not have terminal illnesses or who were enrolled far longer―sometimes for several years―than the required life expectancy of six months or less.
The defendant, Seth Gillman, 46, of Lincolnwood, was charged with one count each of health care fraud and obstructing a federal audit in a criminal complaint that was filed late Friday in U.S. District Court. He is scheduled to appear at 3 p.m. today before Magistrate Judge Geraldine Soat Brown in federal court.
Gillman, an attorney, is the corporate agent, administrator, and one-fourth owner of Passages Hospice LLC, based in west suburban Lisle, and is also the agent and secretary of Asta Healthcare Company Inc., which operates Asta Care Center nursing homes in Bloomington, Colfax, Elgin, Ford County, Pontiac, Rockford, and Toluca, Illinois. Passages did not have its own inpatient facility but instead deployed nurses to visit hospice patients in nursing homes and private residences. As Passages grew, it divided its operations into geographic regions covering Chicago and the western suburbs, Rockford, Bloomington, and Belleville, with different nurses, nursing directors, and medical directors for each region.
The charges allege that between August 2008 and January 2012, Gillman trained and caused to be trained Passages nurses to look for signs that allegedly would qualify a hospice patient for general inpatient care (GIP), resulting in higher payments per day, compared to routine care. Gillman allegedly knew that many of Passages’ patients were improperly being placed on GIP, in part as a result of a 2009 review of patient files, a 2009 report by an outside consultant, and a 2010 internal audit. Gillman also knew that some patients were placed on GIP without a medical director’s approval.
In fiscal year 2012, Medicare’s daily reimbursement for GIP was $671.84, while the daily payment for routine care was $151.23. According to claims data, from January 2006 to late 2011, Passages submitted claims for approximately 4,769 patients to Medicare and/or Medicaid and was paid approximately $95 million from Medicare and approximately $30 million from Medicaid. Between July 2008 and late 2011, Passages was paid approximately $23 million by Medicare for claimed GIP services, in addition to Medicaid payments for claimed GIP services submitted on behalf of more than 200 patients.
According to a 69-page affidavit in support of the charges, federal agents have interviewed patients, family members, and more than 30 former and current employees of Passages, including several who reported allegedly fraudulent billing and marketing practices to Medicare and/or law enforcement before they were contacted by agents. Investigators have also reviewed e-mails, documents, and patient files that were obtained in response to a 2011 civil investigative demand, a January 2012 search warrant, and subpoenas issued in 2013, as well as claims data from Medicare and Medicaid.
Medicare claims data revealed that approximately 22 percent of Passages’ patients between 2006 and late 2011 had more than six months of hospice care, with 28 patients receiving more than 1,000 days of hospice care in that period. By contrast, according to the National Hospice and Palliative Care Organization, only 11.8 percent of all hospice patients in 2009 were on hospice care for longer than six months.
For example, the complaint affidavit cites Patient JW, who was admitted to an Asta nursing home in 2003 following a major stroke, and Passages billed for more than 2,000 days of hospice services. In another example, Passages submitted bills for 1,443 days of hospice care for Patient LJ, who was admitted to an Asta nursing home in 2001. Patient LJ’s son told investigators that his mother appeared in no danger of dying until the last month of her life.
The charges also cite Medicare claims data showing that Passages’ billing for GIP services grew significantly. In 2010, Passages billed approximately 1,161 GIP patient days to Medicare monthly, and the figure rose to 1,430 GIP patient days a month through the first nine months of 2011. The average GIP payments that Passages received per month was $4,437 in the period from mid-2006 to mid-2008, and the monthly payments increased to $946,743 in 2011.
A hospice physician retained by the government reviewed files for 13 Passages patients, 10 of whose admissions exceed six months and extended to as many as 1,598 days over two admission periods. The government’s expert found that nine of the 13 patients were not eligible for Medicare hospice benefits for part or all of their admission and that all the 503 days of GIP submitted for those patients were improper and excessive.
A woman, identified as Individual E in the affidavit, who helped Gillman and his father start Passages and served as its clinical director for several years until she was fired told agents that Gillman said if a patient was under Passages’ care, they were sick enough to warrant GIP care. When Individual E confronted Gillman over the GIP eligibility of Patient DB, Gillman allegedly told her to mind her own business because he needed the money, the affidavit states.
The charges further allege that in the fall of 2008, Gillman began paying bonuses, sometimes well in excess of their salary, to Passages’ directors overseeing nurses and certified nursing assistants based on the amount of GIP under their supervision. Gillman also authorized large bonuses to himself and a co-administrator, Individual A, based on the number of patients per day at certain nursing homes in the Belleville region, including $833,375 to himself between March 2009 and April 2011. The bonuses increased as the number of patients on GIP increased and as the number of facilities counted for the bonuses increased, according to the affidavit.
Passages also allegedly had arrangements with approximately eight nursing homes in 2010 in which it paid the nursing homes $250 for every patient who was on GIP per day.
The obstructing a federal audit count alleges that in August and September 2009, Gillman, Individual A, and others oversaw and conducted an effort to alter patient files that had been requested by TrustSolutions, which contracted with the Centers for Medicare and Medicaid Services to audit providers for fraud and abuse. Several former Passages employees have admitted to agents their involvement in the altering of patient files in the summer of 2009 as well as in another session in 2010, the affidavit states.
The charges were announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Lamont Pugh, III, Special Agent in Charge of the Chicago Regional Office of the HHS-OIG; and Robert J. Holley, Special Agent in Charge of the Chicago Office of the Federal Bureau of Investigation. The Illinois Attorney General’s Office is also participating in the investigation.
The government is being represented by Assistant U.S. Attorney Stephen C. Lee.
Health care fraud carries a maximum penalty of 10 years in prison and a $250,000 fine, and obstructing a federal audit carries a maximum of five years in prison and a $250,000 fine, and restitution is mandatory. If convicted, the court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.
The public is reminded that a complaint is not evidence of guilt. The defendant is presumed innocent and is entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
The defendant, Seth Gillman, 46, of Lincolnwood, was charged with one count each of health care fraud and obstructing a federal audit in a criminal complaint that was filed late Friday in U.S. District Court. He is scheduled to appear at 3 p.m. today before Magistrate Judge Geraldine Soat Brown in federal court.
Gillman, an attorney, is the corporate agent, administrator, and one-fourth owner of Passages Hospice LLC, based in west suburban Lisle, and is also the agent and secretary of Asta Healthcare Company Inc., which operates Asta Care Center nursing homes in Bloomington, Colfax, Elgin, Ford County, Pontiac, Rockford, and Toluca, Illinois. Passages did not have its own inpatient facility but instead deployed nurses to visit hospice patients in nursing homes and private residences. As Passages grew, it divided its operations into geographic regions covering Chicago and the western suburbs, Rockford, Bloomington, and Belleville, with different nurses, nursing directors, and medical directors for each region.
The charges allege that between August 2008 and January 2012, Gillman trained and caused to be trained Passages nurses to look for signs that allegedly would qualify a hospice patient for general inpatient care (GIP), resulting in higher payments per day, compared to routine care. Gillman allegedly knew that many of Passages’ patients were improperly being placed on GIP, in part as a result of a 2009 review of patient files, a 2009 report by an outside consultant, and a 2010 internal audit. Gillman also knew that some patients were placed on GIP without a medical director’s approval.
In fiscal year 2012, Medicare’s daily reimbursement for GIP was $671.84, while the daily payment for routine care was $151.23. According to claims data, from January 2006 to late 2011, Passages submitted claims for approximately 4,769 patients to Medicare and/or Medicaid and was paid approximately $95 million from Medicare and approximately $30 million from Medicaid. Between July 2008 and late 2011, Passages was paid approximately $23 million by Medicare for claimed GIP services, in addition to Medicaid payments for claimed GIP services submitted on behalf of more than 200 patients.
According to a 69-page affidavit in support of the charges, federal agents have interviewed patients, family members, and more than 30 former and current employees of Passages, including several who reported allegedly fraudulent billing and marketing practices to Medicare and/or law enforcement before they were contacted by agents. Investigators have also reviewed e-mails, documents, and patient files that were obtained in response to a 2011 civil investigative demand, a January 2012 search warrant, and subpoenas issued in 2013, as well as claims data from Medicare and Medicaid.
Medicare claims data revealed that approximately 22 percent of Passages’ patients between 2006 and late 2011 had more than six months of hospice care, with 28 patients receiving more than 1,000 days of hospice care in that period. By contrast, according to the National Hospice and Palliative Care Organization, only 11.8 percent of all hospice patients in 2009 were on hospice care for longer than six months.
For example, the complaint affidavit cites Patient JW, who was admitted to an Asta nursing home in 2003 following a major stroke, and Passages billed for more than 2,000 days of hospice services. In another example, Passages submitted bills for 1,443 days of hospice care for Patient LJ, who was admitted to an Asta nursing home in 2001. Patient LJ’s son told investigators that his mother appeared in no danger of dying until the last month of her life.
The charges also cite Medicare claims data showing that Passages’ billing for GIP services grew significantly. In 2010, Passages billed approximately 1,161 GIP patient days to Medicare monthly, and the figure rose to 1,430 GIP patient days a month through the first nine months of 2011. The average GIP payments that Passages received per month was $4,437 in the period from mid-2006 to mid-2008, and the monthly payments increased to $946,743 in 2011.
A hospice physician retained by the government reviewed files for 13 Passages patients, 10 of whose admissions exceed six months and extended to as many as 1,598 days over two admission periods. The government’s expert found that nine of the 13 patients were not eligible for Medicare hospice benefits for part or all of their admission and that all the 503 days of GIP submitted for those patients were improper and excessive.
A woman, identified as Individual E in the affidavit, who helped Gillman and his father start Passages and served as its clinical director for several years until she was fired told agents that Gillman said if a patient was under Passages’ care, they were sick enough to warrant GIP care. When Individual E confronted Gillman over the GIP eligibility of Patient DB, Gillman allegedly told her to mind her own business because he needed the money, the affidavit states.
The charges further allege that in the fall of 2008, Gillman began paying bonuses, sometimes well in excess of their salary, to Passages’ directors overseeing nurses and certified nursing assistants based on the amount of GIP under their supervision. Gillman also authorized large bonuses to himself and a co-administrator, Individual A, based on the number of patients per day at certain nursing homes in the Belleville region, including $833,375 to himself between March 2009 and April 2011. The bonuses increased as the number of patients on GIP increased and as the number of facilities counted for the bonuses increased, according to the affidavit.
Passages also allegedly had arrangements with approximately eight nursing homes in 2010 in which it paid the nursing homes $250 for every patient who was on GIP per day.
The obstructing a federal audit count alleges that in August and September 2009, Gillman, Individual A, and others oversaw and conducted an effort to alter patient files that had been requested by TrustSolutions, which contracted with the Centers for Medicare and Medicaid Services to audit providers for fraud and abuse. Several former Passages employees have admitted to agents their involvement in the altering of patient files in the summer of 2009 as well as in another session in 2010, the affidavit states.
The charges were announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Lamont Pugh, III, Special Agent in Charge of the Chicago Regional Office of the HHS-OIG; and Robert J. Holley, Special Agent in Charge of the Chicago Office of the Federal Bureau of Investigation. The Illinois Attorney General’s Office is also participating in the investigation.
The government is being represented by Assistant U.S. Attorney Stephen C. Lee.
Health care fraud carries a maximum penalty of 10 years in prison and a $250,000 fine, and obstructing a federal audit carries a maximum of five years in prison and a $250,000 fine, and restitution is mandatory. If convicted, the court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.
The public is reminded that a complaint is not evidence of guilt. The defendant is presumed innocent and is entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
Angelo Turner Sentenced to 57 Months in Federal Prison on Drug Charges
A Rockford, Illinois man was sentenced in federal court before U.S. District Judge Frederick J. Kapala as the last of seven defendants to be sentenced on related drug trafficking charges. Angelo Turner, 30, was sentenced to 57 months in prison without parole, to be followed by three years of supervised release, for conspiracy to possess with intent to distribute and distribution of cocaine. Turner pleaded guilty to the charge on October 25, 2013, admitting that as early as May 2012 through December 20, 2012, he conspired with others to distribute cocaine in the Rockford area.
Also charged were Angelo Turner’s brother, John Turner, 32, and Marquice Fields, 28, both of Rockford. John Turner pleaded guilty to the conspiracy and was sentenced on October 24, 2013, to 51 months’ imprisonment, to be followed by three years’ supervised release. Fields pleaded guilty to using a mobile telephone to facilitate the drug conspiracy and was sentenced on January 13, 2014, to three years’ probation.
In a related case, Nicholas Clark, 32; Richard Clark, 40; Steven Keenan, 26; and Richard Rill, 48, all of Rockford, were charged and pleaded guilty to conspiracy to possess with intent to distribute and distribution of cocaine from early 2012 through December 2012. Nicholas Clark was sentenced on August 14, 2013, to 120 months’ imprisonment, to be followed by eight years’ supervised release. Richard Clark was sentenced on November 14, 2013, to 60 months’ imprisonment, to be followed by four years’ supervised release. Keenan was sentenced on September 10, 2013, to 60 months’ imprisonment, to be followed by four years’ supervised release. Rill was sentenced on August 14, 2013, to 60 months’ imprisonment, to be followed by five years’ supervised release. None of the defendants will be eligible for parole.
Also charged were Angelo Turner’s brother, John Turner, 32, and Marquice Fields, 28, both of Rockford. John Turner pleaded guilty to the conspiracy and was sentenced on October 24, 2013, to 51 months’ imprisonment, to be followed by three years’ supervised release. Fields pleaded guilty to using a mobile telephone to facilitate the drug conspiracy and was sentenced on January 13, 2014, to three years’ probation.
In a related case, Nicholas Clark, 32; Richard Clark, 40; Steven Keenan, 26; and Richard Rill, 48, all of Rockford, were charged and pleaded guilty to conspiracy to possess with intent to distribute and distribution of cocaine from early 2012 through December 2012. Nicholas Clark was sentenced on August 14, 2013, to 120 months’ imprisonment, to be followed by eight years’ supervised release. Richard Clark was sentenced on November 14, 2013, to 60 months’ imprisonment, to be followed by four years’ supervised release. Keenan was sentenced on September 10, 2013, to 60 months’ imprisonment, to be followed by four years’ supervised release. Rill was sentenced on August 14, 2013, to 60 months’ imprisonment, to be followed by five years’ supervised release. None of the defendants will be eligible for parole.
Joseph Romano Convicted of Conspiring to Murder Federal Judge and Federal Prosecutor
U.S. Attorney William J. Hochul, Jr. announced that a federal jury convicted Joseph Romano, 51, of Levittown, New York, of conspiring to murder the Assistant United States Attorney who prosecuted him for engaging in an eight-year, multi-million-dollar fraud involving the telemarketing of coins. The jury also convicted the defendant of conspiring to murder the United States District Judge who sentenced him to 15 years in prison for that fraud. The defendant faces a maximum penalty of life in prison, a fine of $250,000, or both, in addition to forfeiture of more than $200,000 when he is sentenced in March.
“A threat against a member of the criminal justice system, such as a Judge or an attorney, is nothing less than an attempt to subvert the system, and as such will not be tolerated,” said U.S. Attorney Hochul.
According to the government’s trial evidence, the defendant agreed to pay $40,000 to an undercover police officer, whom he thought was a hitman, to kill the federal judge and prosecutor. The defendant also requested that the hitman cut off their heads in exchange for a “bonus.” Law enforcement authorities learned of the plot in August 2012 from another inmate at the Nassau County Correctional Center where Romano was being held. During the subsequent investigation, two undercover law enforcement officers, posing as hitmen, met with Romano and co-conspirator Dejvid Mirkovic numerous times at locations on Long Island, including the Correctional Center.
At the first meeting, Romano offered to pay one of the undercover officers $3,000 to assault an individual with whom he had a financial dispute. Co-conspirator Mirkovic then met with one of the undercover officers and paid him $1,500 as a down payment for the assault. After one of the undercover officers showed proof of the purported assault of the intended victim—in fact, a staged photograph and an identification card—Mirkovic paid the undercover officer the $1,500 balance.
Later that same day, Mirkovic again met with the undercover officer, relayed Romano’s instructions to murder the federal judge and prosecutor, and offered $40,000 for the commission of the two murders. In addition, Mirkovic indicated that Romano wanted the federal judge and prosecutor beheaded and the body of the prosecutor mutilated and that he was willing to pay extra for those services. Over the following weeks, the undercover officer received $22,000 in cash down payments for the murders and was promised payment of the final $18,000 when the murders were completed. At the time of the arrests of Romano and Mirkovic on October 9, 2012, law enforcement officers recovered $18,000 in cash and a loaded 9mm semi-automatic handgun at Mirkovic’s residence in Lake Worth, Florida.
In March 2013, Dejvid Mirkovic pleaded guilty to conspiracy to murder and was sentenced to 24 years in prison in August 2013.
“A threat against a member of the criminal justice system, such as a Judge or an attorney, is nothing less than an attempt to subvert the system, and as such will not be tolerated,” said U.S. Attorney Hochul.
According to the government’s trial evidence, the defendant agreed to pay $40,000 to an undercover police officer, whom he thought was a hitman, to kill the federal judge and prosecutor. The defendant also requested that the hitman cut off their heads in exchange for a “bonus.” Law enforcement authorities learned of the plot in August 2012 from another inmate at the Nassau County Correctional Center where Romano was being held. During the subsequent investigation, two undercover law enforcement officers, posing as hitmen, met with Romano and co-conspirator Dejvid Mirkovic numerous times at locations on Long Island, including the Correctional Center.
At the first meeting, Romano offered to pay one of the undercover officers $3,000 to assault an individual with whom he had a financial dispute. Co-conspirator Mirkovic then met with one of the undercover officers and paid him $1,500 as a down payment for the assault. After one of the undercover officers showed proof of the purported assault of the intended victim—in fact, a staged photograph and an identification card—Mirkovic paid the undercover officer the $1,500 balance.
Later that same day, Mirkovic again met with the undercover officer, relayed Romano’s instructions to murder the federal judge and prosecutor, and offered $40,000 for the commission of the two murders. In addition, Mirkovic indicated that Romano wanted the federal judge and prosecutor beheaded and the body of the prosecutor mutilated and that he was willing to pay extra for those services. Over the following weeks, the undercover officer received $22,000 in cash down payments for the murders and was promised payment of the final $18,000 when the murders were completed. At the time of the arrests of Romano and Mirkovic on October 9, 2012, law enforcement officers recovered $18,000 in cash and a loaded 9mm semi-automatic handgun at Mirkovic’s residence in Lake Worth, Florida.
In March 2013, Dejvid Mirkovic pleaded guilty to conspiracy to murder and was sentenced to 24 years in prison in August 2013.
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