Examples of Public Corruption Investigations - Fiscal Year 2013
The following examples of public corruption investigations are written from public record documents on file in the court records in the judicial district in which the cases were prosecuted.
Former Texas Judge Sentenced on Racketeering Charges
On August 21, 2013, in Brownsville, Texas, Abel Corral Limas, former 404th State District Judge, was sentenced to 72 months in prison, three years of supervised releases and ordered to pay $6,777,270 in restitution and to forfeit $257,300. Limas pleaded guilty on March 31, 2011 to racketeering charges. According to court documents, Limas used his office of judge of the 404th District Court as a criminal enterprise to enrich himself and others through extortion. Limas accepted money and other consideration from attorneys in civil cases pending in his court in return for favorable pre-trial rulings in certain cases, including a case involving a helicopter crash at South Padre Island in February 2008. Limas served as judge for eight years, retiring in December 2008, and thereafter, he was associated with the law firm of Rosenthal & Watson, as “of counsel.” Limas participated in a series of meetings with attorneys at the Rosenthal & Watson law firm in the summer of 2008 during which they planned and negotiated the terms of Limas’ employment as an “of counsel” attorney with the firm. During those meetings, Limas was promised an advance of at least $100,000 as well as a percentage of attorneys’ fees earned in the helicopter crash case in return for favorable rulings on the case. Limas received a check for $50,000 in December 2008 and another check for $50,000 in January 2009. In October 2009, the helicopter case settled for approximately $14 million and Limas received approximately $85,000 from the law firm.
City Councilman Man Sentenced for Failure to File Tax Returns
On August 13, 2013, in Hammond, Ind., Alfonso Salinas, an elected Hammond City Councilman, was sentenced to 42 months in prison and one year of supervised release. Salinas pleaded guilty to receipt of a bribe by an agent of a local government receiving federal funds and failure to file a federal tax return. According to court documents, Salinas accepted $10,500 in bribes and accepted 10 checks during a 21-month period. Over a 10-year period Salinas failed to file federal tax returns or pay any of the over $45,000 in taxes owed. Salinas also took in campaign contributions and deposited the money in his personal account. These contributions never appeared on campaign contribution account reports filed with the Board of Elections.
Former Congressman and Wife Sentenced
On August 14, 2013, in Washington, D.C., former Congressman Jesse L. Jackson, Jr. was sentenced to 30 months in prison for conspiring to defraud his re-election campaigns. Jackson’s wife, Sandra Stevens Jackson, a former Chicago alderman, was sentenced to 12 months in prison for filing false tax returns as part of the scheme. Jesse Jackson pleaded guilty in February 2013 to one count of conspiracy to commit wire fraud, mail fraud and false statements. According to court documents, Jackson used about $750,000 in campaign funds to pay for personal items and expenses, including high-end appliances and electronics. He then filed misleading reports to conceal seven years of the illegal activities. Sandra Jackson pleaded guilty in February 2013 to filing false tax returns for calendar years 2006 through 2011. According to the government’s evidence, she knowingly and willfully failed to report nearly $570,000 in taxable income for those tax years. Jesse Jackson was elected to Congress in 1995 and served until November 2012 as the representative for the 2nd Congressional District of Illinois. Sandra Stevens Jackson was an alderman in Chicago from May 2007 until January 2013. Additionally, she had various roles in her husband’s re-election campaigns, starting in January 2005, working at different points as treasurer, consultant, and campaign manager. Jackson and his wife carried out the fraud scheme from in or about August 2005 until in or about April 2012.
Former Indiana Law Enforcement Officials Sentenced on Conspiracy, Tax and Money Laundering Charges
On June 27, 2013, in Hammond, Ind., Ronald Slusser was sentenced to 70 months in prison, one year of supervised release and ordered to pay $198,817 in restitution to the IRS for tax years 2005 through 2010. Slusser pleaded guilty to conspiracy to provide false information to a Federal Firearms Licensee, conspiracy to defraud the FDA, making false statements on a tax return and laundering/structuring of monetary instruments. Joseph Kumstar was sentenced to 57 months in prison, one year of supervised release and ordered to pay $22,612 in restitution to the IRS for tax years 2005 through 2009. Kumstar pleaded guilty to conspiracy to provide false information to a Federal Firearms Licensee, conspiracy to defraud the FDA and making false statements on a tax return. According to documents filed by the government, Slusser, while a patrol officer with the Lake County Sheriff’s Department, and Kumstar, while the Deputy Chief for the Lake County Sheriff’s Department, conspired to obtain restricted firearms and defraud the FDA in order to retain restricted laser sites. The conspiracy involved the trafficking of between 25-99 firearms. According to the indictment, from about September 2008 until January 2010, Slusser, Kumstar and a third defendant used the Lake County Sheriff’s Department letterhead to create letters falsely representing that the weapons were by purchased by and were going to be used by the sheriff’s department, despite the fact that the defendants used their own funds to purchase the weapons. When the weapons arrived, Slusser illegally removed the upper receivers and other parts that could be removed from the lower receiver. These parts were then illegally sold over the Internet with Slusser, Kumstar and the third defendant retaining the profits. In April 2007, Slusser filed his 2006 federal income tax return understating his income by approximately $298,566 and around December 16, 2008 Slusser made a series of cash withdrawals from various banks in part to avoid currency transaction reports, and hide the fact that the monies involved were derived from an unlawful activity. Court documents also show that in May 2010, Kumstar filed a federal tax return understating his total income by about $30,102.
Former Missouri Public Official Sentenced on Mail Fraud and Tax Charges
On June 13, 2013, in St. Louis, Mo., Eric Hinson, of St. Clair, Mo., was sentenced to 35 months in prison and ordered to pay $615,298 in restitution. Hinson pleaded pleaded guilty on February 6, 2013 to mail fraud and tax evasion. According to court documents, as treasurer for the St. Clair Fire Protection District, Hinson used the District credit cards to pay for family vacations to Hawaii and Florida, to pay for personal items such as sporting goods and other items, limousine rentals, tickets for entertainment expenses, as well as to obtain significant cash advances. Without the knowledge and authority of the District, Hinson directed that these personal credit card charges be paid with District funds. On several occasions, Hinson wrote District checks to pay for his own personal expenses, including a pickup truck, furniture, tractor parts and other personal expenses. In order to conceal his scheme, Hinson accessed the District's QuickBooks to alter reported general ledger activity by backdating certain fraudulent transactions and by changing the payee in order to manipulate the District's accounting records. Through his fraudulent conduct, Hinson obtained approximately $593,236 from the St. Clair Fire Protection District. Additionally, Hinson filed false tax returns for the years 2006 through 2010, leaving total additional taxes due of $132,383.
Florida Contractors Sentenced for Paying Bribes
On April 23, 2013, in Miami, Fla., Anthoneel Allen, of Wellington, Fla., and James Hashim, of Plantation, Fla., were sentenced for conspiracy to commit bribery, mail fraud, extortion and tax fraud. Allen was sentenced to 60 months in prison, three years of supervised release, a $15,000 fine and forfeiture of $3 million. Hashim was sentenced to 36 months in prison, three years of supervised release, a $15,000 fine and forfeiture of $3 million. According to court documents, beginning in the fall of 2006 through 2010, Hashim and Allen were part of a scheme that paid bribes to secure approximately $26 million in contracts from Broward County. They obtained approximately $6.5 million in benefits. Allen and Hashim paid more than $150,000 in cash, provided a car and a job in exchange for help securing multi-million dollar contracts from the Broward County Traffic Engineering Division. Projects included the Signalization and Street Light Installation contract, a contract to make installations and do repair work of the streetlights and traffic equipment in Broward County. The Advanced Transportation Management System, a federally-funded project, which required the contractor to install an integrated traffic control system which entailed laying hundreds of thousands of feet of underground cable and conduit in order to synchronize traffic flow within Broward County. The Video Detection Contract, which required the contractor to install video detection cameras in various intersections in Broward County in order to improve traffic flow.
Former New Jersey School Administrator Sentenced for Bribery Scheme
On December 10, 2012, in Trenton, N.J., Frank D’Alonzo, the former supervisor of Athletics and Special Projects for the Toms River, N.J., Regional School District, was sentenced to 37 months in prison, three years of supervised release. D’Alonzo pleaded guilty to one count of bribery and one count of tax evasion. According to court documents and statements made in court, D’Alonzo admitted to participating in a scheme in which he received corrupt payments from Francis X. Gartland, an insurance broker who specialized in providing insurance brokerage services for public entities, including the Toms River Regional School District. As early as 2001 through June 2006, D’Alonzo took hundreds of thousands of dollars in corrupt payments from Gartland and others and then passed on a portion of these proceeds as bribes to Michael J. Ritacco, who was then superintendent of the school district, in exchange for Ritacco’s official assistance in maintaining insurance and other business with the school district. Ritacco and Gartland were each sentenced recently to 135 months in prison. D’Alonzo also admitted that for the 2005 tax year, he evaded the assessment of hundreds of thousands of dollars of federal income tax by concealing the illegal proceeds that he received from the bribery scheme.
Former Head of Dallas Crime Stoppers Sentenced on Conspiracy and Tax Convictions
On December 3, 2012, in Dallas, Texas, Theadora Ross, a former senior corporal with the Dallas Police Department, was sentenced to 46 months in prison and ordered to pay $274,304 in restitution. Ross pleaded guilty in August 2012 to one count of conspiracy to commit wire fraud and one count of willfully attempting to evade assessment of income taxes. According to court documents, Ross worked at the Dallas Crime Stoppers office from 2003 to May 2010, and was the head of that office from March 2006 to May 2010. The Dallas Crime Stoppers office is funded by the North Texas Crime Commission (NTCC). From February 2005 through May 2010, Ross and co-defendant Malva R. Delley conspired to defraud the NTCC. Ross determined which tips would be listed and presented for cash reward approval. These lists contained both bogus tips that Ross created and legitimate cash reward tip numbers. Ross provided the bogus tip information to Delley, who then presented that information to the bank and collected cash rewards. Delley divided the cash with Ross. Ross admitted that for calendar years 2006, 2007, 2008 and 2009, she filed false federal income tax returns by omitting nearly $175,000 in proceeds of her illegal scheme. Delley pleaded guilty in May 2011 and is awaiting sentencing.
Former Pennsylvania State Senator Sentenced on Mail Fraud and Tax Charges
On November 30, 2012, in Scranton, Pa., Robert Mellow, former Pennsylvania State Senator, was sentenced to 16 months in prison, three years of supervised release and ordered to pay $79,806 in restitution. Mellow previously paid over $31,000 in restitution for federal tax charges. Mellow pleaded guilty in May 2012 to conspiracy to commit mail fraud and to defraud the United States. According to court documents, Mellow, in his capacity as a state Senator and the Democratic Leader during 2006 through 2010, conspired with others to misuse the staff and resources of the Pennsylvania Senate for political fund-raising and campaign purposes. As part of the scheme, Mellow caused and knowingly permitted the submission to the Chief Clerk of the Senate of false job classification and re-classification forms and memos for Senate staff who performed political fund-raising and campaign work while being compensated by the Senate. Mellow also conspired with others to file a false individual federal income tax return for the year 2008. The unreported income consisted of money paid to Mellow in connection with the sale of property where Mellow’s district office was located.
Maryland County Developer Sentenced for Extortion and Tax Evasion
On November 16, 2012, in Greenbelt, Md., Patrick Q. Ricker, of Bowie, Maryland, was sentenced to 12 months and one day in prison, three years of supervised release and ordered to pay $250,000 in restitution for conspiring to provide gifts and services to public officials in exchange for favorable official action, and for tax evasion. According to Ricker’s plea agreement and court documents, Ricker is a real estate broker and president of Ricker Brothers, Inc. Ricker and other co-conspirators had ownership interests in Greenbelt Metropark (which sought to design, develop and build a mixed-use project) and Day Homes (which was incorporated to construct single-family homes). From about 1997 through at least September 11, 2008, Ricker and his co-conspirators regularly provided money, in-kind campaign contributions and other items to state and local officials, in exchange for obtaining beneficial treatment for the Greenbelt Station site plan and Day Homes. Finally, Ricker under-reported his taxable income by more than $1.1 million for tax years 2004 to 2007.
Insurance Broker Sentenced for Bribery, Kickback, Fraud and Perjury
On November 16, 2012, Trenton, N.J., Francis X. Gartland, of Baltimore, Md., was sentenced to 135 months in prison and three years of supervised release. Gartland, the former insurance broker for the Toms River Regional School District, pleaded guilty to charges of mail fraud, conspiracy to defraud the IRS, and perjury. According to court documents, from 2002 to 2010, Gartland and co-conspirators Frank D’Alonzo, Frank Cotroneo and others paid $1 to $2 million in bribes and other benefits to Michael J.Ritacco, then superintendent of schools. The payments were made to allow Gartland to obtain and keep the insurance contract with the district. Gartland admitted that in 2002, he, Ritacco, Cotroneo, and D’Alonzo agreed to have Ritacco approve a workers’ compensation insurance contract between Gartland and the school district in which the contract fee would yield $500,000 to $600,000 per year in excess fees, which would be used to pay bribes and kickbacks to Ritacco. Gartland admitted his role in conspiring with Ritacco to defraud the IRS by hiding these bribes and other benefits that were paid to Ritacco – and to other individuals at Ritacco’s direction – during the same period. To conceal the scheme, Gartland and Ritacco agreed to use middlemen, shell companies, sham consulting contracts, and third-party payments to secretly pass hundreds of thousands of dollars in cash bribes and other payments to Ritacco. Gartland also filed fraudulent individual tax returns for tax years 2004 through 2007 and to conspired with Cotroneo and Thomas O’Leary to evade their respective federal income taxes. In addition, Gartland admitted that on January 23, 2012, he committed perjury when he submitted a false affidavit that stated his payments to D’Alonzo and another individual were not, and were never intended to be, disguised bribes to Ritacco. Gartland also admitted his role in a scheme to funnel thousands of dollars in illegal campaign contributions through straw contributors to the Democratic primary election campaign of Joseph Vas, who was running for Congress in 2006.
Wisconsin Man Sentenced in Ho-Chunk Indian Nation Bribery Case
On October 24, 2012, in Madison, Wis., Timothy Whiteagle, of Black River Falls, Wis., was sentenced to 120 months in prison, three years of supervised release, and ordered to pay $162,854 in taxes to the IRS. Whiteagle was convicted by a jury on August 1, 2012, on bribery, tax, and obstruction charges. According to the evidence presented at the trial, the Ho-Chunk Nation, an Indian tribal government, operates casinos in the Western District of Wisconsin and annually receives federal grants well in excess of $10,000. Whiteagle is a Ho-Chunk tribal member. From 2002 to 2009, Whiteagle, at times with the assistance of Deborah H. Atherton, acted covertly as a behind-the-scenes consultant for clients seeking to do business with the Ho-Chunk Nation. The clients included companies that provided cash access services (such as check cashing and ATMs) at Ho-Chunk casinos, and a company that sought to provide mortgages and housing for tribal members. Whiteagle received over $3 million dollars from the clients. Clarence Pettibone was an elected legislator of the Ho-Chunk Nation. Whiteagle and Atherton offered and gave the money and valuables to Pettibone to influence and reward him for helping certain clients do business with the Nation. On July 11, 2012, Pettibone was sentenced to 60 months in prison. Atherton was sentenced on October 10, 2012, to 50 months in prison. In a related case, Brian Johnson, Shakopee, Minn., was sentenced to four months in prison for lying to federal agents during the course of the bribery investigation.
Former City Clerk Sentenced for Embezzling City Funds
On October 24, 2012, in Wichita, Kan., Laura Whittley, a former city clerk of the City of Thayer in Neosho County, Kan., was sentenced to 12 months and a day in prison and ordered to pay $120,000 in restitution. Whittley pleaded guilty to one count of bank fraud and one count of money laundering. According to her plea agreement, she used more than one method to steal money from the city including:
– Pocketing cash paid by citizens for utility bills, municipal court payments, parks and wildlife licenses and permits.
– Issuing unauthorized checks to herself.
– Using a city credit card to pay for her personal purchases.
– Submitting fraudulent bills for cleanup work done after a large storm in May 2009. The bills were paid by the city, partly with funds received through the Federal Emergency Management Agency (FEMA).
In order to conceal the thefts, Whittley presented a fraudulent letter to Emprise Bank directing the bank to cash a $100,000 certificate of deposit belonging to the city. She had the bank put $50,000 into a new CD, and she deposited some of the remaining proceeds into the city’s account to conceal the thefts. She went back the next year and removed the remaining money in the CD without authorization in order to cover her embezzlement, which left the city’s general account depleted and unable to cover regular bills.
Maryland County Developer Sentenced in Extortion Scheme
On October 3, 2012, in Greenbelt, Md., Karl Granzow, of Upper Marlboro, Maryland, was sentenced to 18 months in prison and three years of supervised release for conspiring to commit extortion and cause false statements to be filed with the Federal Election Commission and income tax evasion. Granzow was also ordered to pay a $10,000 fine and forfeit his financial interest in Greenbelt Metropark. Granzow and his co-conspirators had ownership interests in Greenbelt Metropark, which sought to design, develop and build a mixed-use project near the Greenbelt Metro Station, called Greenbelt Station. According to his guilty plea, from 1997 through September 11, 2008, Granzow and others provided money and other items to state and local government officials in exchange for approval letters for the Greenbelt Station Detailed Site Plan and other beneficial treatment. Further, Granzow and his co-conspirators concealed campaign contributions to the state and local officials that were above state and federal legal limits by using conduits and in-kind contributions. Additionally, Granzow prepared or caused to be prepared a federal income tax return for the calendar year 2004 which failed to report $225,974 in taxable income, resulting in a tax loss of $74,191.
Former Executive Director of South Amboy, N.J., Housing Authority Sentenced
On October 1, 2012, in Trenton, N.J., Thomas J. O’Leary, the former executive director of the South Amboy Housing Authority, was sentenced to 30 months in prison, three years of supervised release and fined $12,000. O’Leary, of South Amboy, pleaded guilty to charges of conspiracy to defraud the Federal Election Commission by participating in a scheme to funnel thousands of dollars through straw contributors to Joseph Vas’s campaign and to one count of tax evasion. According to court documents and statements made in court, O’Leary admitted he participated in a scheme with co-defendant Francis X. Gartland, an insurance broker based in Towson, Md., to use “straw” or “conduit” contributors to make contributions to the 2005-2006 Vas congressional campaign for the 13th Congressional District. Gartland, through his various companies, was the insurance broker of record for the City of Perth Amboy and the Perth Amboy Board of Education. Gartland received thousands of dollars in commissions for those representations and split a portion of the commissions with O’Leary. The purpose of the straw contributions to Vas, then the Mayor of Perth Amboy and a New Jersey State assemblyman, was to ensure that Gartland maintained the lucrative insurance brokerage representations with the City of Perth Amboy and the Perth Amboy Board of Education. O’Leary acknowledged that he recruited five straw contributors to contribute $2,000 each to Vas’ federal campaign committee. He reimbursed the straw contributors by cash or check with funds provided by Gartland. The Federal Election Campaign Act prohibits straw contributions. O’Leary also admitted that for tax year 2006, he evaded the assessment of thousands of dollars of federal income tax by concealing income and other benefits that he received from Gartland.