Examples of Money Laundering Investigations - Fiscal Year 2014
The following examples of money laundering investigations are written from public record documents on file in the courts within the judicial district where the cases were prosecuted.
Texan Sentenced for $2 Million Ponzi Scheme
On Feb. 24, 2014, in Austin, Texas, Russell Allen Erxleben, of Dripping Springs, Texas, was sentenced to 90 months in prison, three years of supervised release and ordered to pay restitution for implementing a Ponzi scheme involving an estimated $2 million. Erxleben pleaded guilty in December 2013 to federal wire fraud and money laundering charges. According to court records, from 2005 until October 2009, Erxleben used several companies, including WALTEC Consultants, LRE Holdings, and The MDM Group, to promote investments in fraudulent ventures including investments in post-WWI German government gold bearer bonds and in a work of art purportedly by Paul Gauguin, a famous artist. Erxleben used investment proceeds for the benefit of himself and his family, to pay purported dividends to previous investors, and to fund other undisclosed endeavors. In furtherance of the fraudulent scheme, Erxleben made various wire transfers using numerous financial accounts which were opened and maintained by others in an effort to avoid detection by authorities.
Louisiana Businessmen Sentenced for Money Laundering, Wire Fraud and Tax Evasion
On Feb. 18, 2014, in Shreveport, La., Michael Paul Boyter and Anthony Reuben Riley were sentenced on charges arising out of a money laundering conspiracy operated from their businesses: Mike’s Auto Sales and A-1 Auto Finance Company. Boyter was sentenced to 60 months in prison, three years of supervised release and ordered to pay $290,381 in restitution as well as a $200,000 fine for wire fraud and evading or defeating tax charges. Riley was sentenced to 15 months in prison, three years of supervised release and ordered to pay a $100,000 fine for failure to file Form 8300. As part of their plea agreements, both men will forfeit property of Mike’s Auto Sales and A-1 Auto Finance and agreed to pay a money judgment of $1.3 million. According to evidence presented at the guilty plea on Aug. 26, 2013, the defendants engaged in a conspiracy to commit money laundering beginning in 1996 through November 2010. The defendants’ scheme concerned the sale and financing of used and new vehicles to individuals who derived, or represented that they derived, significant income from the distribution of illegal drugs. The defendants knowingly accepted cash proceeds from drug dealers, allowed vehicle purchases in the names of nominees, and falsified records of payments received.
Oregon Man Sentenced for Money Laundering
On Feb. 18, 2014, in Portland, Ore., Larry Fuentes, of Beaverton, Ore., was sentenced to 70 months in prison and ordered to pay $48,243 to the government in the form of a money judgment. The money judgment represents a portion of the approximately $120,000 that he admitted to laundering with his co-defendant and ex-girlfriend, Janelle Fuston. Fuentes pleaded guilty in Oct. 2013 to money laundering. According to court documents, between April 2011 and April 2012, Fuentes conspired with Fuston, who was employed at a credit union, to launder over $120,000 in Fuentes’s drug proceeds using several of Fuston’s credit union accounts. Before their crime was discovered, Fuston and Fuentes spent all but approximately $11,000 of the laundered drug proceeds. Fuston was sentenced in Oct. 2013 to five years of probation for her role in the crime.
Pennsylvania Man Sentenced for Structuring Financial Transactions
On Feb. 7, 2014, in Pittsburgh, Pa., Daniel Young, of Eighty-Four, Pa., was sentenced to 63 months in prison, three years of supervised release and ordered to forfeit $440,000 in cash and equipment. Young was convicted of conspiracy and structuring financial transactions. According to court documents, Young and his co-defendants, Kimberly Ostrander and Dennis Young, participated in a conspiracy in which they structured financial transactions with financial institutions and businesses to avoid the filing of currency transaction reports. Young structured approximately $260,000 in cash from his drug trafficking proceeds to purchase his home, heavy equipment, and a vehicle. Young and his co-conspirators used a variety of bank accounts and individuals to structure the cash payments.
Two Men Sentenced for Roles in Drug Trafficking Organization
On January 27, 2014, in Phoenix, Ariz., Jonathan Ortiz Troncoza was sentenced to 120 months in prison and five years of supervised release. David Ortiz Troncoza, Jr. was sentenced to 70 months in prison and five years of supervised release. Jonathan Troncoza pleaded guilty on August 6, 2012 to conspiracy to possess with intent to distribute cocaine and marijuana and conspiracy to commit money laundering. David Troncoza pleaded guilty on July 30, 2012 to conspiracy to possess with intent to distribute cocaine and marijuana and conspiracy to commit money laundering. According to court documents, beginning on or about March 29, 2005 and continuing through June 1, 2010, Jonathan Troncoza operated a marijuana and cocaine distribution organization. Jonathan and David Troncoza and others distributed large amounts of marijuana and cocaine and laundered the drug proceeds. Specifically, the drug organization receive marijuana and cocaine from sources in the Republic of Mexico. The defendants used stash houses and warehouses to store the drugs for further distribution. A portion of the proceeds were used to acquire additional quantities of drugs for sale, pay for the expenses of the stash houses, cars, couriers, communication equipment and other needs of the drug organization. In addition, business entities were used in furtherance of the conspiracy in order to conceal the identities of the defendants and the true nature of the drug trafficking organization.
Leader of “Pump and Dump” Stock Fraud Scheme Sentenced
On January 24, 2014, in New York, N.Y., David Levy was sentenced to 108 months in prison and three years of supervised release. Levy was also preliminarily ordered to forfeit $12 million, his home in Florida, certain luxury vehicles and certain bank accounts. Levy previously was found guilty by a federal jury for orchestrating “pump and dump” stock fraud schemes that used the Internet and social networking sites, among other tools, to manipulate the price of penny stocks as well as participating in an international money laundering scheme. Levy’s wife and co-defendant, Donna Levy, who also was found guilty by the federal jury for her role in this and other schemes, is scheduled to be sentenced at a later date. According to court documents, David and Donna Levy offered to help start-up companies obtain financing, take the start-up companies public, and coordinate marketing and investor relations for the companies, in exchange for company shares. Once they had helped the companies go public, Donna Levy put out press releases on behalf of the target companies, and she worked with her husband to secretly fund and distribute misleading third-party recommendations concerning the targeted companies. This misleading promotional campaign, along with other manipulative conduct, generated demand for stock in the targeted companies, and caused the price of the stocks to rise. David Levy also was convicted of a money laundering conspiracy in connection with his efforts to conceal more than $2.3 million in proceeds of the fraudulent schemes in Panamanian shell company bank accounts maintained by a co-conspirator at a bank in Panama. In connection with the scheme, Levy wire transferred $150,000 in fraud proceeds to a Panamanian shell company bank account through a bank account in New York. Levy carried more than $2 million in cashier’s checks, representing proceeds from stock fraud, to Panama and caused them to be deposited into the shell company bank accounts.
Texas Pharmacy Owner Sentenced for Structuring
On January 23, 2014, in Dallas, Texas, Linus Nwosu, of Southlake, Texas, was sentenced to 24 months in prison. Nwosu also agreed to amend his tax returns and has forfeited $476,190 to the government. Nwosu pleaded guilty in June 2013 to conspiracy to commit structuring. According to court documents, Nwosu owns and operates two pharmacies with his wife in the Dallas/Fort Worth area under the name GeneRx Discount Pharmacy, Inc. From on or about October 12, 2011, to May 16, 2012, Nwosu and his wife received cash receipts from GeneRx on a daily basis and divided the cash into amounts under $10,000 with the intent to avoid the currency reporting requirements. During this time, both Nwosu and his wife made approximately 77 cash deposits for a total of $476,190.
Father and Son Sentenced for Bank Fraud and Money Laundering
On January 23, 2014, in Pensacola, Fla., Gary Wayne Thomas, of Daphne, Ala., and his son, Brian Keith Thomas, of Birmingham, Ala., were sentenced to 72 months and 24 months in prison, respectively. Both men were charged with conspiracy to structure cash withdrawals and structuring cash withdrawals to avoid the Currency Transaction Reporting (CTR) requirement, conspiring to commit bank fraud and conspiracy to commit money laundering. Gary Thomas was also charged with money laundering, failure to appear, possession of a firearm and ammunition by a person under indictment, and possession of a firearm and ammunition by a fugitive from justice. Brian Thomas went to trial during the week of July 22, 2013, and was convicted of all counts. Gary Thomas pleaded guilty to all charges on October 30, 2013. The evidence showed that between January 1, 2008, and November 1, 2008, Gary and Brian Thomas caused approximately $4,550,000 to be deposited into their domestic bank accounts and then wired to offshore bank accounts in the Cayman Islands and Belize. Shortly thereafter, Gary Thomas stopped making payments on the loans he and his various entities had obtained from a bank. The total amount of the loans was approximately $56 million. In the summer of 2009, the bank filed civil suits against Gary Thomas on these loans. In a three-year period between 2010 and 2013, Gary Thomas wired approximately $2,150,000 from the offshore banks into several domestic accounts including five accounts that Brian Thomas opened in banks. Thereafter, the father and son conspired to structure withdrawals of cash under $10,000 to avoid the CTR requirement and to hide Gary Thomas’s interest in the funds from his creditor bank. The structured withdrawals were done on roughly 194 occasions and totaled more than $1.6 million. Gary Thomas used some of these funds to purchase five airplanes, numerous vehicles, and homes. Thus far, the government has successfully forfeited the five airplanes; approximately $387,413 in cash, which represents the proceeds of the sale of the home in Alabama; and a $60,000 Hyundai Equus. The government has also obtained monetary judgments of forfeiture against Gary and Brian Thomas in the amounts of $4,970,000 and $1,197,148 respectively.
Five Sentenced in Connection with Cigarette Smuggling Ring Operating in North and South Carolina
On January 22, 2014, in Charlotte, N.C., five of twelve conspirators charged with running a cigarette smuggling ring in North and South Carolina were sentenced on cigarette trafficking and money laundering charges. The smuggling ring was uncovered over the course of a multi-agency investigation into the interstate transport and sales of stolen property and money laundering. Those sentenced include:
•Kamal Zaki Qazah, of Columbia, S.C., was sentenced to 216 months in prison, two years of supervised release and ordered to forfeit property associated with his offenses.
•Tha’er Ismail Ayyad, of Kernersville, N.C., was sentenced to 41 months in prison and two years of supervised release. Ayyad, a Jordanian national, was also convicted of one count of visa fraud and will be deported upon completion of his sentence.
•Ahmed Ibrahim, of Columbia, S.C., was sentenced to 30 months in prison and two years of supervised release.
•Ziad Hashem Najjar, of Greensboro, N.C., was sentenced to 24 months in prison and two years of supervised release.
•Ahmed Samy Hosney Kareem, of Matthews, N.C., was sentenced to 14 months in prison and two years of supervised release.
According to court records, from about August 2009 to November 2011, the co-conspirators engaged in a cigarette smuggling conspiracy that trafficked more than 486,000 cartons of cigarettes across North and South Carolina with an estimated retail value of $20 million. The co-conspirators paid more than $9.3 million in cash for cigarettes they believed to be stolen from Virginia and Tennessee, and profited by selling them to a network of retail businesses and associates willing to purchase the illegally obtained cigarettes at prices far below market value. The co-conspirators laundered their criminal proceeds through businesses owned by Kamal Qazah and Nasser Alquza in Columbia, S.C. Six other defendants involved in the conspiracy have been previously sentenced to terms ranging from one year of probation to 60 months in prison.
Former President of Motorcycle Club Sentenced on Drug Conspiracy and Structuring Charges
On January 21, 2014, in Buffalo, N.Y., Dewey Taylor was sentenced to 144 months in prison. Taylor was convicted, following a five-week jury trial, of conspiracy to possess with intent to distribute cocaine and structuring financial transactions. According to court documents, Taylor was the former president of the Afro Dogs Motorcycle Club and used the motorcycle clubhouse as a front for a cocaine trafficking operation. Between 2006 and March 2, 2011, Taylor supplied a co-conspirator with cocaine for distribution to members and non-members throughout the Buffalo area. In addition, on seven separate occasions, Taylor deposited funds into personal and business accounts in the name of DT Liquors at a credit union. The individual deposits totaled more than $10,000 which requires the filing of a Currency Transaction Report (CTR). However, Taylor split the transactions into smaller amounts in an attempt to evade the reporting requirements.
Idaho Man Sentenced for Conspiring to Launder Money
On January 16, 2014, in Pocatello, Idaho, John D. Heim was sentenced to 37 months in prison and three years of supervised release. In addition, Heim will forfeit to the government two properties. Heim pleaded guilty on September 26, 2013 to conspiracy to money laundering. According to the plea agreement, between March 1 and September 14, 2013, Heim owned and operated Heim, Inc., a business engaged in the sale of “spice,” a smokeable material containing a Schedule I controlled substance analogue. Heim and other individuals engaged in monetary transactions in excess of $10,000 from funds derived from the illegal sale and distribution of spice. According to the plea agreement, the total amount of funds derived from the unlawful activity is $163,534.
International Fugitives Sentenced for Asset Tracing Scheme
On January 16, 2014, in Newport News, Va., Elaine White, formerly a resident of Toronto, Canada, and her husband, Cullen Johnson, were both sentenced to 66 months in prison, three years of supervised release and ordered to pay $1,021,738 in restitution for their role in an international asset tracing scheme. Johnson and White pleaded guilty to participating in a conspiracy to engage in money laundering. According to court documents, starting in 2006, Johnson and White owned and/or operated an asset location business called “Internal Affairs,” “World Solutions” and then “Occipital.” Clients seeking to locate funds that had been stolen from them or trying to trace lost, missing or stolen assets, hired White and Johnson to investigate the location of such assets. White and Johnson then produced reports of information to clients, which purported to contain financial and other information subject to the clients’ requests. Rather than providing valid information, White and Johnson provided the client-victims with fabricated banking records, purporting to show that the assets or money that clients sought had been moved from one banking institution to another in locations such as Monaco, Greece, Hong Kong, Switzerland, Latin America and the Caribbean. For additional payments, White and Johnson claimed that they could continue to trace the funds to their final destination. On any occasion where the client-victims determined that the information provided by the defendants was false, the defendants claimed that the information was valid and accused the client-victims or their representatives of improperly trying to collect the funds. Court documents also state that, in or about 2009, White and Johnson were charged by the Ontario Provincial Police in Canada with crimes related to this asset tracing fraud. The couple fled Canada, travel to the Turks & Caicos Islands, where they continued to operate this fraudulent asset tracing business on U.S. and Canadian victims. The couple resided there until they were apprehended by Turks & Caicos authorities. All told, the couple solicited more than $1,000,000 from U.S. and Canadian victims, including about $500,000, which they wired to one of their co-conspirators.
Missouri Man Sentenced on Structuring Charges
On January 14, 2013, in Springfield, Mo., Richard Eugene Moore was sentenced to 21 months in prison, three years of supervised release and ordered to forfeit $14,298 to the government. On March 6, 2013, Moore pleaded guilty to structuring currency transactions to avoid federal reporting requirements. According to court documents, Fleming Recycling purchased stolen grease from Moore and then resold the grease to refiners. Fleming Recycling paid Moore for stolen grease with company checks that Moore would cash. On multiple occasions, Moore received several checks with an aggregate dollar value in excess of $10,000. On or about August 16, 2011, Moore presented a check in the amount of $5,499 and a check in the amount of $8,806 at a bank for payment in cash. Moore presented these two checks to separate tellers and requested the cash be returned to him in separate envelopes. He specifically requested that the transaction be split up so a currency transaction report would not be filed.
Pill Mill Doctor Sentenced for Drug Conspiracy and Money Laundering
On January 7, 2014, in Miami Fla., Dr. Scott Becker, of Pembroke Pines, Fla., was sentenced to 70 months in prison and three years of supervised release. Becker previously pleaded guilty to conspiring to distribute and dispense large amounts of oxycodone without a legitimate medical purpose and outside the usual course of professional practice and money laundering. Becker also agreed to forfeit $470,400 in money and property representing the illegal narcotics proceeds he earned as a result of his involvement as a physician at All Pain Management in Dania Beach. According to court documents, between February 16 and September 17, 2010, Becker was employed as a clinic doctor at All Pain Management which, at the time, was owned by co-conspirators Vincent Colangelo and several other individuals. Colangelo pleaded guilty to narcotics, money laundering and federal income tax offenses on April 2, 2012. According to a review of medical records, while at All Pain Management, Becker prescribed 932,259 oxycodone, 30 milligram pills during the course of 4,821 patient visits and more than 98% of Becker’s patients received prescriptions for oxycodone. Becker also laundered approximately $24,142 in illegal narcotics proceeds.
Former Mining Supply Businessman Sentenced for Illegal Cash Structuring Scheme
On January 6, 2014, in Bluefield, W.Va., Michael J. Prasatek, Sr., was sentenced to 16 months in prison, three years of supervised release and ordered to pay a $3,000 fine. According to court documents, Prasatek managed several supply companies in and around southern West Virginia since 1978. He knowingly provided a coal mine operator with bogus invoices in a scheme known as “selling cash.” During the scheme, in exchange for fake supply invoices, Prasatek received a check in the amount of the fictitious invoice and deposited the money into his personal bank account. Prasatek then returned the cash to his associate for a fee. Prasatek knew that the false invoice could be used for unlawful purposes such as filing a false tax deduction. To further his scheme, Prasatek opened up checking accounts at two banks using the names “Michael Prasatek DBA Prestige Paving & Sealing” and “Michael Prasatek DBA Quality Services” and routinely structured cash withdrawals. Prasatek admitted that beginning in May 2010 until December 2011, he structured several cash transactions totaling approximately $55,000, to intentionally avoid the mandatory financial reporting requirements.
New York Man Sentenced for Fraud and Money Laundering
On January 3, 2014, in Rochester, N.Y., Kenneth Griffin was sentenced to 46 months in prison. Griffin was previously convicted of conspiracy to commit mail and wire fraud and conspiracy to engage in money laundering. According to court documents, Griffin was the owner of an employment staffing business that operated under various names. From August 2007 to June 2008, Griffin spearheaded a conspiracy to defraud lenders by selling them false invoices in transactions known as factoring. The fraud involved creating false invoices and other supporting documents that Griffin then sold to a series of financing companies on a weekly basis for immediate cash. When a financing company realized that it had been sold uncollectible invoices and stopped dealing with Griffin's business, Griffin would change business names and continue the scheme with another financing company. In total, Griffin and others sold and attempted to sell more than $650,000 worth of bogus invoices to three separate factoring companies over a period of almost a year. He then laundered the proceeds of his crimes.
National Drug Trafficking and Money Laundering Organization Based in Georgia Dismantled
On December 19, 2013, in Atlanta, Ga., Jiles Delwin Johnson, of Sandy Springs, Ga., was sentenced to 180 months in prison and five years of supervised release. On the same date, Johnson’s wife, Shannon Renee Johnson, was sentenced to 36 months in prison and three years of supervised release. Jiles Johnson previously pleaded guilty to conspiracy to possess and distribute cocaine and money laundering. Shannon Johnson previously pleaded guilty to money laundering conspiracy. According to court documents, the Johnsons participated in a large-scale drug trafficking and money laundering organization that distributed thousands of kilograms of cocaine nationwide and laundered millions of dollars in drug proceeds in Georgia. The organization coordinated its efforts through the KC Pit BBQ Restaurant in Sandy Springs, which had been owned by the Johnsons. Jiles Johnson was also a commercial truck driver. To supplement his income, he began transporting drugs from California to Philadelphia. As Johnson generated cash from cocaine sales, he purchased real estate. The Johnsons invested over three million dollars in real estate holdings. When the cash volume increased, Jacques Degaule, a financial planner, assisted with the laundering. Degaule traveled to banks in other states where he deposited over $7 million. No IRS Forms 8300 were filed, which are required when a trade or business receives cash over $10,000. The Johnsons used these laundered funds to underwrite their investments and their restaurant’s operations. On September 4, 2013, Degaule was sentenced to 36 months in prison and one year of supervised release.
Texas Real Estate Agent Sentenced for Money Laundering
On December 19, 2013, in McAllen, Texas, Freddy Centeno, of Brownsville, Texas, was sentenced to 24 months in prison and two years of supervised release for money laundering. Centeno was also ordered to forfeit all real properties. Centeno, a licensed real estate agent, pleaded guilty on August 30, 2013 to a one-count criminal information. At the time of his plea, Centeno admitted he helped a narcotics trafficker launder drug profits through the purchase of real properties in Brownsville. Centeno structured financial transactions of residential and commercial properties to conceal the identity and ownership of a narcotics trafficker. The conviction and sentence comes as a result of a narcotics trafficking and money-laundering investigation targeting the Armando Arambul drug trafficking organization, which operated under the auspices of the Gulf Cartel in Matamoros, Mexico, and throughout the Southern District of Texas.
Former West Virginia Bank Manager Sentenced for Embezzlement and Structuring
On December 19, 2013, in Elkins, W.Va., Deborah D. Radcliff, of Weston, W.Va., was sentenced to 37 months in prison for embezzlement and structuring. According to court documents, during July 1, 2011 to November 5, 2012, while serving as the branch manager of a bank, Radcliff embezzled and misapplied more than $247,249 from customers’ accounts and engaged in acts of structuring to cause the bank to fail to file a Currency Transaction Report for currency transactions of $10,000 or more. To execute the scheme, Radcliff utilized her position as branch manager to issue, or direct to be issued, cashier’s checks from funds withdrawn from customer accounts issued in the name of the customer. Radcliff would then take possession of the cashier’s check, forge the name of the depositor and cash the checks for her own personal benefit.
Texas Smoke Shop Owners and Realtor Sentenced for Structuring Financial Transactions
On December 17, 2013, in Corpus Christi, Texas, Leroy Mitchan Jr. and Justin Colmenero were sentenced for structuring financial transactions. Mitchan was sentenced to 20 months in prison and one year of supervised release. Colmenero was sentenced to three years of probation. Mitchan’s wife, Kimberly Davis was sentenced on November 18, 2013 to five months in prison and five months home confinement. According to court documents, Mitchan and Davis own Mr. Nice Guys and another smoke shop in Corpus Christi, as well as a used car dealership. Mitchan worked with Colmenero, a local real estate agent, and provided him with large amounts of cash to deposit it into his personal bank account. Colmenero was directed by Mitchan to withdraw the money later in the form of cashier’s checks or via Moneygram to pay for property under the control of Mitchan. The total amount Colmenero structured at the direction of Mitchan was approximately $461,000. As part of her plea agreement, Davis admitted to conducting three separate deposits in amounts less than $10,000 each in one morning at a credit union. In another instance, she made two separate deposits of less than $10,000 each on the same day. The total amount for all five deposits was $44,101. All of these deposits were made in an attempt to avoid the currency reporting requirements. Mitchan and Davis have also agreed to the criminal forfeiture of three pieces of real property located in Nueces County, valued at approximately $1,200,000, approximately $396,000 in cash as well as 42 vehicles valued at approximately $409,000.
New Mexico Man Sentenced for Wire Fraud and Money Laundering
On December 16, 2013, in Albuquerque, N.M., Rodney Chavez was sentenced to 63 months in prison, three years of supervised release and ordered to pay $847,370 in restitution. In addition, Chavez was ordered to forfeit $233,548 seized from three bank accounts. On September 9, 2013, Chavez pleaded guilty to wire fraud and conspiracy to commit money laundering. According to his plea agreement, between March 2010 and April 2011, Chavez designed and executed a scheme to defraud a group of investors of their interest in certain properties located in Puerto Peñasco, Mexico. After learning that a group of investors were interested in selling properties, Chavez used an assumed identity and entered into an agreement to sell the properties on behalf of the investors with the understanding that the investors would receive a return of 30% of their original investments. Chavez hired a real estate agent and sold five properties which generated approximately $847,370 in proceeds. After the proceeds were wire-transferred to a bank in Albuquerque, Chavez did not distribute the proceeds to the investors. Instead, Chavez and a co-conspirator kept the proceeds and concealed the source of the proceeds by transferring the money to bank accounts held in the names of businesses they exclusively controlled. None of the proceeds from the sale of properties were returned to the investors.
Wisconsin Man Sentenced for Role in Drug Trafficking Operation
On December 10, 2013, in Milwaukee, Wis., Randy Martinez, aka Robin Lee Martinez, of Sheboygan, was sentenced to 124 months in prison. Martinez pleaded guilty to his role in the Balderas Organization drug trafficking activities. According to court documents, beginning in the mid-1990's, the Balderas Drug Organization transported cocaine and marijuana from Texas to Wisconsin. Instrumental in the Balderas Organization’s ability to sell drugs in Wisconsin was Martinez’s role as leader of the organization in Wisconsin. The Balderas Organization was involved in conspiring to transport over 5 kilograms of cocaine and over 1,000 kilograms of marijuana to Wisconsin. Martinez shielded some of the members of the Balderas Organization from being linked to the organization; he controlled the Wisconsin distribution of narcotics and played an integral part in the money laundering of funds for the Balderas Organization. When a load was brought from Texas to Wisconsin, Martinez would cut up the narcotics and distribute it to customers for the Balderas Organization. In addition, Martinez was involved in recruiting individuals to receive packages mailed from Texas to Wisconsin and for the distribution. He was also in charge of deposits made into various bank accounts controlled by the Balderas Organization from Wisconsin to Texas. Martinez would direct individuals to send payment via wire transfer, bulk cash smuggling, and on their person to various individuals and accounts in Texas so as to help the Balderas Organization receive its profits. Bank records support that through a complex bank account scheme, the Balderas Organization was able to launder, at least $300,000 and up to $500,000.
Virginia Couple Sentenced for Fraud and Money Laundering
On December 6, 2013, in Alexandria, Va., Kathleen D. McGrade and Brian C. Collinsworth, of Stafford, Va., were sentenced to 24 months and 18 months in prison, respectively, for fraud, conspiracy to launder monetary instruments and engaging in unlawful monetary transactions. According to court records, Collinsworth worked at a company that received Department of State contracts. In 2006, the defendants married and started a company, the Sterling Royale Group (SRG) with McGrade as president and Collinsworth as vice-president and project manager. In late 2007, McGrade caused a State Department contracting officer to sign a contract between the Department of State and SRG. McGrade failed to disclose her role in SRG, her marriage, or that proper contracting competitive procedures had not been followed. The contract made SRG eligible to receive task orders for work to be done at embassies and McGrade began steering work to the company. She acted as the contract negotiator between the Department of State engineers responsible for getting the jobs done and Collinsworth acted on behalf of SRG and the subcontractors. Between 2008 and 2011, McGrade caused Department of State contracting officers to sign 17 task orders awarding work worth almost $53 million. In 2010, the defendants also lied about their marriage to investigators conducting McGrade’s background investigation regarding renewal of her security clearance. The Department of State paid SRG about $39 million, and after the defendants had paid their subcontractors, they still had millions of dollars. Among other things, they bought houses, a condominium, a yacht, a Lexus automobile, jewelry, and a Steinway piano with the fraudulently obtained money. The defendants were ordered to forfeit all of those items in the amount of $7,864,795.
Defendant Sentenced for Structuring Monetary Transactions
On November 21, 2013, in Los Angeles, Calif., Theanna Khou, aka San Huy Khou, was sentenced to 12 months and one day in prison and three years of supervised release. Khou pleaded guilty in August 2013 to structuring monetary transactions to evade reporting requirements. According to court documents, Khou and a co-defendant owned and operated Huntington Pharmacy. Between approximately August 2009 and November 2009, Khou structured approximately $105,826 in cash deposits. The cash was proceeds from the sale of oxycontin that Huntington Pharmacy dispensed without medical necessity based on fraudulent prescription issued by a clinic. In addition, Khou entered into an agreement with others operating Manor Medical Imaging, Inc. to fill large volumes of prescriptions for anti-psychotic medications which were not medically needed. Khou, through Huntington Pharmacy, billed Medicare and Medi-Cal for the service of filling the prescriptions.
Couple Sentenced for Conspiracy and Money Laundering
On November 19, 2013, in Portland, Ore., Hossein Lahiji and Najmeh Vahid Dasterjerdi, aka Najmeh Lahiji, from McAllen, Texas, were both sentenced to 12 months and one day in prison and ordered to jointly pay $973,503 in restitution to the IRS. In addition, Lahiji and Dasterjerdi were each ordered to pay $200,000 in fines and to forfeit an additional $600,000. In June 2013, Lahiji and Dasterjerdi were convicted for conspiracy to defraud the United States and money laundering. According to court documents, Lahiji and Dasterjerdi conspired to impede and impair the functions of the IRS in the collection of income taxes and the Office of Foreign Assets Control of the Treasury Department in the enforcement of the Presidential Embargo against Iran. Trial evidence showed that the defendants provided funds to a Portland charity, the Child Foundation, between 1998 and 2006. The Child Foundation, in turn, gave the defendants charitable donation receipts and transferred the funds to Iran. Lahiji and Dasterjerdi claimed charitable deductions from their income taxes for these payments. Some of the funds were used to purchase a building in Tehran in the name of Hossein Lahiji’s sister. Additional funds were used to invest in an interest-bearing account in an Iranian bank or committed to be spent at the discretion of an Iranian Ayatollah. Some of the payments were backdated to facilitate claims of charitable donations for a year prior to the year of actual payment. Many of the uses of the funds violated the Presidential embargo against Iran, instituted in 1995.
Illinois Accountant Sentenced for Defrauding Elderly Client
On November 15, 2013, in Benton, Ill., Kevin C. Williams, of Mt. Carmel, Ill., was sentenced to 120 months in prison, three years of supervised release and ordered to pay $1,719,444 to the victim of his fraud. In addition, Williams agreed to pay $106,438 in restitution to the IRS, to pay $38,547 to a former employer for embezzling and to pay $16,174 to the State of Illinois for fraudulently claiming unemployment benefits. On June 5, 2013, Williams, a tax accountant, pleaded guilty to misusing his trusted relationship with an elderly Illinois resident. According to court documents, Williams engaged in a lengthy scheme to defraud the victim, by stealing her money while she was alive and forging will and trust documents so that he would stand to inherit more of her money upon her passing. Williams defrauded the 96-year old victim of nearly $2 million dollars through a series of 476 identified financial transactions over the course of more than 20 years. Williams transferred the victim’s funds into his personal accounts and provided the victim with phony account statements. Williams committed money laundering by engaging in a series of financial transactions designed to deceive the victim into believing that she was receiving interest payments from investments when no such investments really existed. Williams misappropriated the victim’s money to buy cashier’s checks, but then later misrepresented those cashier’s checks to be the proceeds of her investments, when in truth and in fact no such investments existed.
Former Gang Leader “Whitey” Bulger Sentenced
On November 14, 2013, in Boston, Mass., James J. Bulger was sentenced to two consecutive life terms plus five years and ordered to pay $19.5 million in restitution. On August 12, 2013, Bulger was convicted of racketeering conspiracy and numerous racketeering acts of murder, extortion, narcotics distribution, money laundering and possession of firearms including machine guns. According to court documents, Bulger, the former leader of the Winter Hill Gang, ran a vast criminal network that emanated from South Boston and controlled much of the city and the surrounding areas during the 1970s and 1980s. In order to generate money and maintain dominance among other criminal enterprises, Bulger and his associates engaged in numerous illegal activities such as loan sharking, extortion of local business owners and bookmakers, trafficking of narcotics and firearms, and murder. Bulger, and associates under his direction, used violence, threats, and intimidation to carry out these illegal activities. In late 1994, upon learning of his impending indictment, Bulger fled Massachusetts. On June 22, 2011, Bulger and his companion, Catherine Greig, were arrested in Santa Monica, California after 16 years on the run. Greig was later convicted of conspiracy to harbor a fugitive and is currently serving eight years in federal prison.
California Man Sentenced for Debit Card Fraud and Student Loan Fraud
On November 8, 2013, in Sacramento, Calif., Mordechay Altit, of Elk Grove, was sentenced to 63 months in prison. Altit pleaded guilty on August 23, 2013 to two counts of mail fraud and one count of money laundering. According to court documents, Altit applied for debit cards issued from banks or other providers of debit cards in his own name or using the names and social security numbers of other persons. Altit then used merchant and terminal identification numbers issued to merchants and businesses across the country to cause fraudulent refunds and credits to be placed on the debit cards he controlled. Before the businesses could rescind these transactions, Altit used the cards to spend and transfer the money. Altit attempted to have at least $450,000 in fraudulent merchant returns credited to his debit cards. In another fraudulent scheme, Altit obtained more than $200,000 in student loans and attempted to receive an additional $250,000 in student loans from banks by means of fraudulent representations. Altit submitted fraudulent applications with names of the students applying for the loans, their social security numbers, their incomes, and that they were attending or planned to attend schools. After receiving some of the proceeds from two of the student loans, Altit then wrote checks for more than $19,000 each to his brother Shay Din Altit. On April 4, 2013, Shay Din Altit pleaded guilty to conspiracy to commit money laundering. He was sentenced on September 27, 2013 to 12 months and a day in prison.
Mississippi Woman Sentenced for Money Laundering
On November 1, 2013, in Jackson, Miss., Bridget Michelle Bland, of Forest, was sentenced to 60 months in prison, two years of supervised release and ordered to pay a $1,000 fine. Bland pleaded guilty on March 18, 2013 to conspiring to launder the drug proceeds of Jessie Hall, of Forest, Mississippi, and for causing a business to file a Form 8300 containing material omission and a misstatement of fact. Five defendants have participated in this extensive scheme to launder proceeds from Jesse Hall’s drug trade. Hall created Hall’s Trucking to facilitate his drug trade and as a way to launder his drug proceeds. As part of the conspiracy, the defendants made purchases in excess of $10,000 and, in an effort to avoid the IRS reporting requirements, they used a combination of cash, cashier's checks and money orders to make the purchases. It was further a part of the conspiracy to cause a misstatement on the IRS Form 8300 by falsely stating the source of funds for the cash purchase. Through these schemes, Hall was able to launder over $900,000 in cash over a two year period.
Member of Drug and Money Laundering Conspiracy Sentenced
On October 25, 2013, in Boston, Mass., Brant Welty, of South Boston, was sentenced to 100 months in prison and ordered to pay a criminal forfeiture money judgment of $85,500. In March 2013, Welty pleaded guilty to conspiracy to distribute oxycodone and money laundering conspiracy. According to court documents, Welty, along with 12 others, was first charged in 2011 for a conspiracy which spanned Massachusetts, Florida, New York, Rhode Island, South Carolina and elsewhere. The conspirators trafficked hundreds of thousands of oxycodone pills and generated over $4 million in proceeds. The investigation has resulted in the seizure of over $480,000 in cash, a 38-foot speed boat, numerous luxury vehicles, 13 firearms and approximately 12,000 oxycodone pills. Investigators also uncovered extensive evidence of illegal gambling and prostitution, as well as the use of extortionate threats to collect loans to gamblers and others.
Businessman Sentenced for Fraudulently Importing $30 Million of Chinese-Made Textiles
On October 21, 2013, in San Diego, Calif., Sunil Jiwat Mirwani was sentenced to 27 months in prison and five years of supervised release. In addition, Mirwani was ordered to forfeit over $30,000 in cash, the contents of a Hong Kong-based bank account, and an inventory of more than 220,000 pairs of blue jeans valued at more than $1 million. According to the evidence presented at a trial in June 2012, Mirwani hired a group of San Diego-based businessmen and logistics professionals to initiate shipments of Chinese-made merchandise from ports in China to the Port of Long Beach, California. When the goods arrived at Long Beach, Mirwani and his conspirators would ensure that the merchandise was classified as “in bond” which is a special customs classification meaning that they had to be shipped directly to Mexico. However, rather than complete the shipment to Mexico, Mirwani and his conspirators forged documents and falsified database entries, allowing them to send the merchandise to warehouses in the Los Angeles area. Mirwani would then sell his merchandise throughout the United States, effectively evading customs duties on more than $30 million in Chinese-made wearing apparel. Mirwani laundered his ill-gotten gains through a complex web of international wire transfers. Mirwani transmitted nearly $10 million from M Trade, Inc.’s bank account to the account of Mirvana International, a Hong Kong-based company. In addition, Mirwani transmitted similar sums to the Mirvana International account through a series of intermediary accounts in the United States and Mexico and even sent money from M Trade Inc.’s account directly to accounts in mainland China.
Car Dealer Owner Sentenced for Structuring Deposits to Evade Bank Reporting Requirements
On October 17, 2013, in Baltimore, Md., Amefika Gray was sentenced to 30 months in prison, two years of supervised release and ordered to forfeit $800,000, a Mercedes Benz vehicle and three residential properties located in Baltimore. Gray pleaded guilty to structuring bank deposits totaling over $2 million over a two year period to avoid bank reporting requirements. According to his plea, Gray owns Network Auto Group, a car dealership operating in Baltimore. Between January 15, 2010 and April 28, 2012, Gray made regular deposits of $10,000 or just under $10,000 into his personal and business bank accounts, including at least 25 instances in which Gray made multiple deposits under $10,000 the same day into the same bank or into different banks. The amount of the structured deposits over this two year period totaled $2,017,205. Gray deposited the money in such amounts because he knew that the banks were required to report to the IRS all deposits over $10,000. The government presented evidence to the court that the cash that Gray structured was the proceeds of drug trafficking activity.
Former Attorney and Her Ex-Husband Sentenced for Stealing $2.8 Million from Clients
On October 17, 2013, in Orlando, Fla., Ross and Linda Littlefield, of Kissimmee, Fla., were sentenced to 48 months and 60 months in prison, respectively. The Littlefields pleaded guilty on June 11, 2013 to money laundering. As part of their sentence, the court also entered a restitution order in the amount of $2,888,418 and a money judgment in the amount of $155,739. According to court records, Linda Littlefield, a former attorney, formed The Littlefield Law Group, P.A which specialized in Medicaid planning. In 2007, Ross and Linda Littlefield and others created a non-profit organization called the JNN Foundation, Inc. and represented that a JNN Special Needs Asset Preservation Pooled Trust could shelter a client’s assets and not affect the beneficiary’s Medicaid or Social Security Income eligibility. Ross Littlefield served as the trustee. Between 2007 and 2010, Ross and Linda Littlefield fraudulently induced approximately 27 clients to contribute more than $4.7 million to the JNN Foundation. Once the client funds were received by the foundation, the Littlefields transferred the money to other accounts under their control and used the money for their own personal benefit. As part of their fraudulent scheme, the Littlefields sent false quarterly statements to their clients showing fictitious balances. Consequently, the Littlefields stole more than $2.8 million from their clients.
Director and Treasurer of Black Nurses Association Sentenced for Fraud Scheme
On October 15, 2013, in Springfield, Ill., Margaret Davis and Tonja Cook, both from Chicago, Ill., were sentenced for their participation in a scheme to defraud state grant programs. Davis was sentenced to 41 months in prison, three years of supervised release and ordered to pay $377,573 in restitution. Cook was sentenced to 19 months in prison, two years of supervised release and ordered to pay $137,111 in restitution. Davis previously pleaded guilty to mail fraud and money laundering; Cook previously pleaded guilty to mail fraud. According to the indictment, from December 2005 to June 2009, Davis, with the assistance of Cook, solicited and received 15 different grants and contracts totaling $1,062,000 by representing herself as acting on behalf of the Chicago Chapter of the Black Nurses Association. The fraudulent grants and contracts were received from various Illinois state agencies. Instead of using the grant funds for their intended purposes, Davis and Cook used a large amount of the funds for their personal use.
New York Man Sentenced for Conspiracy to Import and Distribute Synthetic Drug
On October 11, 2013, in Syracuse, N.Y., Rosario Gambuzza, of East Syracuse, N.Y., was sentenced to 188 months in prison and three years of supervised release. In May 2013, Gambuzza was convicted after a jury trial on charges of a drug conspiracy and money laundering. According to court documents, between January 2010 and April 2011, Gambuzza conspired to import and distribute a controlled substance analogue, known on the street as “Molly” in Syracuse, N.Y. Gambuzza was also convicted of 19 counts of money laundering relating to $73,000 he wired to a co-conspirator in Shanghai, China, in order to purchase the drug.