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.
California Woman Sentenced for Role in Offshore Sweepstakes Scheme
On Aug. 11, 2015, in Asheville, North Carolina, Patricia Diane Clark, of Sacramento, California, was sentenced to 130 months in prison and ordered to pay $642,032 in restitution and to forfeit the same amount jointly with her co-defendants. Clark pleaded guilty to conspiracy to commit wire fraud, wire fraud and conspiracy to commit money laundering. According to court documents, from about 2007 through February 2013, Clark and her co-conspirators called U.S. residents from Costa Rican call centers, falsely informing them that they had won a cash “sweepstakes.” The victims, many of whom were elderly, were told that in order to receive the prize, they had to send money for a purported “refundable insurance fee.” Clark picked up money from the victims and sent it to her co-conspirators in Costa Rica. Clark also managed others who picked up money from the victims in the US and she kept a portion of the victims’ payments. Once the victims sent money, Clark’s co-conspirators contacted the individuals again and falsely informed them that the prize amount had increased, either because of a clerical error or because another prize winner was disqualified. The victims then had to send more money to pay for “new” fees to receive the larger sweepstakes prize. The attempts to collect additional money from the victims continued until an individual either ran out of money or discovered the fraudulent nature of the scheme. Clark, along with her co-conspirators, was responsible for approximately $640,000 in losses to more than a hundred U.S. citizens.
Businessman Sentenced for Conspiracy to Misbrand a Product for Human Consumption, Money Laundering
On Aug. 5, 2015, in Providence, Rhode Island, Tayfun Karauzum, of Newport Beach, California, was sentenced to 60 months in prison and three years of supervised release. On Jan. 30, 2015, Karauzum pleaded guilty to conspiracy to misbrand a product for human consumption and money laundering. According to court documents, Karauzum manufactured, marketed and distributed for human consumption Potion 9, a product containing butanediol, an industrial solvent that rapidly metabolizes into gammahydroxybutyric acid (GHB) – commonly referred to as a “club drug” or “date rape drug.” Karauzum was the owner of Max American Distribution LLC in Newport Beach, California, through which he marketed and distributed between $1 million and $2.5 million dollars’ worth of Potion 9 through online sales and dietary supplement companies. Karauzum caused nearly 13.5 million milliliters of the misbranded product Potion 9 to be manufactured and available for distribution. Karauzum routinely transferred proceeds from the sale of Potion 9 sales in increments in excess of $10,000 from his business’ PayPal account into a personal bank account.
Former Pharmacy Operator Sentenced for Structuring Bank Deposits
On Aug. 3, 2015 in Huntington, West Virginia, Kofi Ohene Agyekum, former owner and operator of A+ Care Pharmacy in Barboursville, West Virginia, was sentenced to 64 months in prison. Agyekum also agreed to forfeit to the United States more than $2.3 million plus a Lexus. Agyekum pleaded guilty in May 2015 and admitted to avoiding the federal reporting requirement by making deposits in an amount less than $10,000 and making the deposits in multiple bank accounts in various area banks. Federal banking laws aimed at identifying criminal activity require financial institutions to report cash transactions of more than $10,000 to federal authorities. Structuring, or dividing cash transactions into amounts less than $10,000, is a common technique used by criminals to avoid triggering the reporting requirements and the detection of the underlying crimes. It was found that the funds Agyekum structured were derived from the illegal distribution of oxycodone from A+ Care Pharmacy.
North Carolina Man Sentenced for Theft of Government Funds
On July 29, 2015, in Greensboro, North Carolina, Juan Francisco Martinez, of Concord, was sentenced to 24 months in prison, three years of supervised release and ordered to pay $2,999,905 in restitution to the IRS. According to court documents, from April 2010 through September 2012, U.S. Treasury refund checks bearing out-of-state payee addresses were negotiated through Martinez’s business bank accounts. The vast majority of these refund checks were fraudulently obtained through the submission of false tax returns and the legitimate refund checks processed through the accounts had been stolen. These refund checks often contained payee addresses from New York, New Jersey, Pennsylvania, and other locations outside North Carolina.
Former Ringleader of Albuquerque-Based Drug Trafficking Organization Sentenced
On July 28, 2015, in Albuquerque, New Mexico, Christopher Roybal, the former leader of an Albuquerque-based drug trafficking organization, was sentenced to 168 months in prison, five years of supervised release and required to pay a $184,080 money judgment. On Feb. 25, 2015, Roybal pleaded guilty to five counts of a second superseding indictment, charging him with participating in a cocaine trafficking conspiracy, three money laundering conspiracies, and a substantive money laundering offense. In entering his guilty plea, Christopher Roybal admitted that between Aug. 2011 and Dec. 2012, he conspired with others to distribute kilogram quantities of cocaine in Albuquerque and Las Vegas, N.M. He also admitted participating in three conspiracies that laundered the proceeds of his drug trafficking organization. One conspiracy involved the transportation of drug proceeds from Albuquerque to California to pay for marijuana that was distributed by Christopher Roybal’s organization. The second and third conspiracies involved the laundering of Christopher Roybal’s drug proceeds through accounts at a bank and a credit union. As part of his plea agreement, Roybal agreed to forfeit his Albuquerque residence and a 1967 Chevrolet Camaro. The charges filed in the case were the result of a 16-month multi-agency investigation into a drug trafficking organization headed by Roybal. Roybal was one of the 19 defendants charged in Dec. 2012, with drug trafficking and money laundering charges in a 60-count indictment. The indictment was superseded twice; first in Feb. 2014, to add a 20th defendant and a witness tampering charge, and again in Sept. 2014, to add another witness tampering charge and a heroin trafficking charge.
Ohio Man Sentenced for Over $1.1 Million Unemployment Fraud
On July 27, 2015, in Cleveland, Ohio, Juan Sanders was sentenced to 139 months in prison. He previously pleaded guilty to conspiracy to commit mail and wire fraud, wire fraud, aggravated identity theft and money laundering. According to court documents, from about September 2011 to January 2014, Sanders and others conspired to defraud state unemployment offices in Ohio, California, North Carolina, Massachusetts and Illinois. Sanders fraudulently obtained personal identifying information from unsuspecting individuals to submit fraudulent claims for unemployment insurance benefits. Sanders also created state unemployment insurance accounts for multiple fictitious employers and then filed claims from “employees” who had been purportedly laid off by the fictitious companies. Sanders caused benefit debit cards for the “employees” of these fictitious companies to be mailed to various addresses in Ohio. Once the benefits were loaded or reloaded onto the debit cards, Sanders and his co-conspirators used the debit cards at various ATMs in Ohio to withdraw the fraudulently obtained money. As a result of this scheme, approximately $1,174,767 in fraudulent unemployment benefits were paid from state agencies in North Carolina ($572,170), Ohio ($261,509), Illinois ($144,240), California ($129,600) and Massachusetts ($67,248).
Former New York Stockbroker Sentenced for Financial Fraud Schemes
On June 25, 2015, in Central Islip, New York, Mark Hotton, a former Long Island stockbroker, was sentenced to 135 months in prison, three years of supervised release and ordered to pay $5,750,000 in restitution. On July 30, 2013, Hotton pleaded guilty to conspiring to launder the illicit proceeds of almost two decades of fraud. According to court documents, between January 1995 and October 2012, Hotton used funds he obtained from a series of securities fraud schemes, mail fraud schemes and other crimes to promote his continuing illegal conduct. Throughout the conspiracy, Hotton also laundered proceeds of his frauds to pay employees cash wages, thereby avoiding federal withholding taxes intended for Social Security, Medicare and Medicaid. Hotton also laundered funds to avoid required payments to union pension and benefit funds. Additionally, Hotton pleaded guilty to additional fraudulent conduct arising from the financing of the proposed Broadway play “Rebecca.”
California Woman Sentenced in Connection with Bank Fraud
On July 24, 2015, in Helena, Montana, Erika Rae Brown, of San Diego, California, was sentenced to 56 months in prison, three years of supervised release and ordered to pay approximately $3.7 million in restitution which represents money Brown owes to a bank and the United States Department of Agriculture (USDA). On March 19, 2015, Brown pleaded guilty to money laundering in connection with a bank fraud scheme. According to court records, Brown obtained a four-million dollar bank loan based on a series of fraudulent representations about a data storage facility project she claimed she was working on. In January 2009, the bank forwarded the data company’s loan application to the USDA. Following representations by one of Brown’s associates regarding the project, the USDA committed to guarantee the loan. As part of the parameters for the loan, the bank required proof that companies were interested in using the data storage facility. Brown submitted false letters to the bank from several well-known national companies that purportedly wanted to use the data storage in addition to a number of cashier’s checks and invoices in an effort to show that the company was in fact spending capital on the project. In reality, no national companies were interested and the checks were altered version of checks Brown had written for other expenses. A financial analysis of the loan proceeds revealed that Brown used the money for personal expenses, including $128,135 in rent for a Laguna Beach house and $5,825 for two Rolex watches. The bank foreclosed on the property in August 2013.
Former Bank Branch Manager Sentenced for Cashing Fraudulently Obtained Tax Refund Checks
On July 22, 2015, in Manhattan, New York, Edwin Mejia was sentenced to 44 months in prison, three years of supervised release and ordered to pay $442,642 in forfeiture and $442,642 in restitution. In December 2014, Mejia pleaded guilty to theft of public funds and aggravated identity theft in connection with his participation in a scheme to cash more than $400,000 in fraudulently obtained federal tax refund checks issued in other people’s names. According to court documents, Mejia worked at branches of a bank in Yonkers and Manhattan. Mejia initially was a banker and later became the branch manager of multiple branches of the bank. From 2010 through 2013, Mejia participated in a scheme to fraudulently obtain and cash tax refund checks issued by the United States Treasury. The fraudulent refund checks were generated by the filing of false and fraudulent tax returns in the names of other people. As part of this scheme, Mejia helped facilitate the cashing of the fraudulent refund checks. Mejia cashed the fraudulent checks himself or by paying a co-conspirator to do so.
Two Colombian Citizens Sentenced for International Money Laundering Conspiracy
On July 20, 2015, in Miami, Florida, Leonardo Forero Ramirez and Ubaner Alberto Acevedo Espinosa were sentenced to 37 months and 18 months in prison, respectively, and ordered to serve one year of supervised release. Both defendants previously pleaded guilty to conspiracy to commit money laundering. According to court documents, both Acevedo and Forero were Colombian citizens residing in Bogota. During 2008 and 2009, Acevedo handled customer accounts at a stock brokerage firm that offered accounts that could be used by customers to receive deposits, wire transfers, and other credit or money, and to disburse the funds through wire transfers and cash or other withdrawals. The stock brokerage firm was authorized to receive funds in U.S. dollars, provided that they were properly documented and justified as being for legitimate business transactions. Forero was one of Acevedo's customers. During the course of his participation in this scheme, Forero received approximately $1.2 million from IRS undercover accounts that he passed on to the people designated to receive it. Acevedo was involved in the transfer of approximately $335,000 from IRS undercover accounts in the United States to the stock brokerage firm in Colombia, and the conversion of the dollars into pesos and the subsequent withdrawal of the monies by Forero. Both Acevedo and Forero knew that the money was derived from criminal activity.
Financial Advisor Sentenced for Stealing Over $1.1 Million from His Clients
On July 15, 2015, in Norfolk, Virginia, Joshua Ray Abernathy, of Chesapeake, was sentenced to 90 months in prison, three years of supervised release and ordered to pay $1,181,755 in restitution to his victims and to forfeit all of the proceeds from his offense. Abernathy pleaded guilty on March 13, 2015 to mail fraud and unlawful money transactions. According to court documents, Abernathy, a licensed broker and financial advisory, engaged in a six-year Ponzi scheme. Abernathy convinced his clients to transfer funds from legitimate IRA accounts to his company “Omega Investment Group.” Abernathy claimed that he could invest the funds in “puts” and “calls” and reap fantastic returns. In reality, Abernathy invested only a tiny portion of the money in his personal E*Trade account and used the majority of the monies to fund his extravagant lifestyle including paying for living expenses, home furnishings, restaurants, sporting goods, electronics, clothing and entertainment. Abernathy also spent substantial investor funds for personal travel and vacations as well as using client monies to rent luxury automobiles. After spending all of the client funds and with investors asking questions, Abernathy walked in to the FBI and confessed to running the Ponzi scheme.
Michigan Doctor Sentenced for Providing Medically Unnecessary Chemotherapy to Patients
On July 10, 2015, in Detroit, Michigan, Farid Fata, M.D., of Oakland Township, was sentenced to 540 months in prison and ordered to forfeit $17.6 million. Fata, a Detroit area hematologist-oncologist, pleaded guilty in September 2014 to 13 counts of health care fraud, one count of conspiracy to pay or receive kickbacks and two counts of money laundering. According to court documents, Fata was a licensed medical doctor who owned and operated a cancer treatment clinic, Michigan Hematology Oncology P.C. (MHO), which had various locations in Michigan. He also owned a diagnostic testing facility, United Diagnostics PLLC, located in Rochester Hills, Michigan. Fata prescribed and administered unnecessary aggressive chemotherapy, cancer treatments, intravenous iron and other infusion therapies to 553 individual patients in order to increase his billings to Medicare and other insurance companies. Fata then submitted approximately $34 million in fraudulent claims to Medicare and other insurers for these unnecessary treatments. Furthermore, Fata used the proceeds of the health care fraud at his medical practice, MHO, to promote the carrying on of additional health care fraud at United Diagnostics, where he administered unnecessary and expensive positron emission tomography (PET) scans for which he billed a private insurer.
Pennsylvania Man Sentenced for Violating Federal Drug, Gun and Money Laundering Laws
On July 7, 2015, in Pittsburgh, Pennsylvania, Omali P. McKay, a citizen of Trinidad who formerly resided in Lower Burrell and in Arnold, was sentenced to 180 months in prison, five years of supervised release and ordered to forfeit vehicles, a residence and $272,000 in cash. McKay was previously convicted of violating federal narcotics, firearms and money laundering laws. According to court documents, McKay conspired with others from 2006 to Aug. 25, 2012, to distribute five to 15 kilograms of cocaine and 280 to 840 grams of crack cocaine. Also, McKay admitted possessing with intent to distribute one kilogram of cocaine seized from his Lower Burrell residence on Aug. 25, 2012, while simultaneously possessing an assault rifle in furtherance of the drug crime. Finally, McKay admitted to conspiring with three others to launder his drug trafficking proceeds. He used those laundered funds to purchase the Lower Burrell residence for $243,000 in cash in August 2011.
New York Man Sentenced for Money Laundering Conspiracy
On July 3, 2015, in Albany, New York, Michael Elcox, of Ghent, was sentenced to 37 months in prison and three years of supervised release. Elcox pleaded guilty in March 2015 for his role in a conspiracy to launder the proceeds of an illegal marijuana distribution network. The conspiracy involved routing illegal proceeds through various bank accounts and moving cash from New York to Florida. Federal agents seized more than $300,000 in cash, representing the proceeds of Elcox’s illegal marijuana distribution, from locations in New York and Florida.
Minnesota Man Sentenced for Defrauding Investors
On June 26, 2015, in Minneapolis, Minnesota, Sean Meadows, of Eden Prairie, was sentenced to 300 months in prison and three years of supervised release for using his financial planning and asset management firm, Meadows Financial Group (MFG), to operate a long-term Ponzi scheme. Meadows pleaded guilty on Dec. 11, 2014 to wire fraud, mail fraud, and transaction involving fraud proceeds. According to the plea and documents filed in court, Meadows operated MFG, through which he sold insurance and investment products to clients in Minnesota, Indiana, Arizona, and elsewhere. From 2007 until April 2014, Meadows successfully solicited a total of at least $13 million from more than 100 clients for a purported investment managed by MFG. The defendant falsely told victims that he would use their funds to purchase bonds, real estate, or other legitimate third-party investments. Meadows lured victims into removing funds from their retirement and other savings accounts by promising high rates of returns – up to 10 percent annually – when, in fact, he did not invest their funds and did not have a legitimate means by which to make interest payments. Instead, Meadows used funds from new investors to make interest and/or principal repayments to existing investors and to pay personal expenses. Among the victims Meadows defrauded are senior citizens and the disabled, poor or terminally ill. Victims were left in financial ruin because they lost their financial security, retirement funds, their ability to support their families, and in some cases, their ability to pay for cancer treatments.
Former Senior Executive of Qualcomm Sentenced for Insider Trading and Money Laundering
On June 26, 2015, in San Diego, California, Jing Wang, of Del Mar, California, was sentenced to 18 months in prison and fined $500,000 for his role in a three-year insider trading scheme. Wang, former Executive Vice President and President of Global Business Operations for Qualcomm Inc., pleaded guilty in July 2014 to insider trading, money laundering and obstruction of justice. In connection with his plea, Wang made three, separate insider trades using a brokerage account in the name of his British Virgin Island (BVI) shell company, Unicorn Global Enterprises. First, in early 2010, prior to Qualcomm’s announcement of a dividend increase and stock repurchase, Wang bought company stock valued at approximately $277,000. Then in December 2010, while attending Qualcomm’s Board of Directors meeting in Hong Kong, and hours after the Board approved a non-public offer to purchase Atheros, Wang purchased stock in Atheros. A few weeks later, he directed his stockbroker, Gary Yin, to sell the Atheros stock, for approximately $481,000, and purchase Qualcomm stock one day before the company announced record earnings. Wang transferred the illegal proceeds from Unicorn’s account to an account of a new BVI shell company he controlled. He obstructed justice by creating a false cover story in which he and Yin would blame Wang’s brother Bing Wang, who resides in rural China, for the insider trading and ownership of the Unicorn Account. Yin pleaded guilty to conspiring to obstruct justice and launder money, and is scheduled to be sentenced at a later date. Bing Wang has been charged in connection with the scheme, and is wanted on an international arrest warrant.
North Carolina Land Developer Sentenced in $23 Million Bank Loan Scheme
On June 25, 2015, in Asheville, North Carolina, Keith Vinson, of Arden, was sentenced to 216 months in prison for his role in a scheme involving the failed land development deal of Seven Falls, a golf course and luxury residential community in Henderson County, North Carolina. Vinson was also ordered to serve three years of supervised release and to pay $18,384,584 in restitution in the amount of. A federal jury convicted Vinson in October 2013 of conspiracy, bank fraud, wire fraud, and money laundering conspiracy. According to court documents, beginning in 2008, Vinson and his co-defendants conspired and obtained money from several banks through a series of straw borrower transactions in order to funnel monies to Vinson and his failing development of Seven Falls. In order to advance this scheme Vinson and his co-conspirators, including Avery Ted “Buck” Cashion III, Raymond M. “Ray” Chapman, and others, recruited local bank officials including George Gordon “Buddy” Greenwood and Ted Durham, who at the time were presidents of two different banks. When bank officials realized that they had reached their legal lending limits with respect to some of the straw borrowers, additional straw borrowers were recruited to the scheme and more straw borrower loans were made to them. Additional straw borrower loans were also necessary to keep loans current, a scheme known as “loan kiting.” The loan kiting scheme became necessary when conspirators were unable to make payments on loans made early in the scheme. Seven Falls and another luxury residential golf development by Vinson named “Queens Gap” failed, resulting in millions in property losses. In addition, both banks failed and were taken over by the FDIC. Vinson’s co-conspirators were previously sentenced for their roles in the scheme.
Maryland Man Sentenced for Stealing from a Charity
On June 19, 2015, in Baltimore, Maryland, William Peters, of Glen Burnie, was sentenced to 18 months in prison, three years of supervised release and ordered to forfeit and pay restitution of $4 million. Peters previously pleaded guilty to conspiring to commit mail and wire fraud and conspiring to commit money laundering. According to his plea, Peters was a board member of a charity that provided financial support to Native American communities and individuals. Peters and co-conspirator Brian J. Brown, the former president of the charity, falsely represented that if the charity funded Charity One, Inc., a nonprofit corporation Brown created and controlled, Charity One would use the funds for scholarships for American Indians. Peters used his board membership position to cause the charity to execute a series of endowment agreements in which the charity agreed to fund Charity One with $1 million per year for five years. However, Peters and Brown distributed the proceeds of their fraud scheme to themselves. Peters created and controlled a corporation called August First, Inc., which he used to receive and distribute to himself $950,244 of the fraud proceeds. Brown created and controlled a corporation called Aria Inc. to receive and distribute to himself $3,011,751 of the proceeds. Peters and Brown falsely characterized the funds as consulting fees on their federal income tax returns filed for 2006 to 2009 in order to conceal the source of these funds. Peters has agreed that the actual loss to the charity is $4 million. Brian Brown, of Beaverton, Oregon, was sentenced in Oregon on May 7, 2015 to 37 months in prison.
Colorado Man Sentenced to Prison for Investment Fraud Scheme
On June 18, 2015, in Denver, Colorado, Gary Snisky, of Longmont, Colorado was sentenced to 84 months in prison, three years supervised release and ordered to pay $2,531,032 in restitution to the victims. Snisky pleaded guilty on Jan. 5, 2015 to mail fraud and money laundering charges. Snisky’s co-conspirator, Richard Greeott, was previously sentenced to six months in prison for his significantly smaller role in the scheme. According to court documents, from 2009 through 2011, Snisky operated Colony Capital in Colorado, which purported to be a private equity firm offering investment opportunities in bonds, futures trading, and other offerings. In 2011, Snisky shut down Colony Capital and formed Arete, which operated in a similar manner. As part of his scheme, Snisky repeatedly falsely told financial advisors and investors that he was an “institutional trader” who was “on Bloomberg,” which Snisky claimed made him part of an elite group of people who could “make markets” and who had access to lucrative opportunities to which ordinary investors did not have access. From July 2011 through January 2013, Snisky offered investors a “proprietary value model” which was based on using the investors’ money to purchase Ginnie Mae bonds. Throughout 2012, Snisky continued to make false assurances about the safety of investing in the Bond Program despite the fact that Snisky knew that he had not purchased any Ginnie Mae bonds as promised. Snisky sent fabricated account statements to investors that falsely reflected that their money had been invested in the bonds as promised. Additionally, in 2010, Snisky asked Greeott to develop an algorithm to support a fully-automated trading system for trading in the futures market. The algorithm was never implemented however, Snisky falsely led investors, potential investors, and financial advisors to believe the algorithm was being used, to profitably trade in the futures market. Based on these false representations, several victims invested money in Snisky’s futures trading program. The net loss Snisky caused to investors in the bond and futures trading programs was $5,226,965.
Salesman Sentenced for Role in Bribes-For-Test-Referrals Scheme Involving New Jersey Clinical Lab
On June 17, 2015, in Newark, New Jersey, Len Rubinstein, of Holmdel, was sentenced to 37 months in prison, one year of supervised release and ordered to forfeit $250,000 and pay a $10,000 fine. Rubinstein previously pleaded guilty to one count of conspiracy to commit bribery and one count of money laundering for his role in a long-running and elaborate scheme operated by Biodiagnostic Laboratory Services LLC (BLS), of Parsippany, New Jersey, its president and numerous Associates. According to court documents, from May 2012 through April 2013, Rubinstein agreed with BLS president David Nicoll, of Mountain Lakes, his brother, Scott Nicoll, of Wayne, and others to pay doctors to refer patients to BLS for testing of blood specimens. Rubinstein paid cash bribes to doctors as part of the conspiracy. Rubinstein admitted he used Delta Consulting Group LLC – an entity he controlled – to hide the money he received from BLS and used to make bribe payments to doctors.
California Man Sentenced for Defrauding Investors Out of Almost $1 Million
On June 16, 2015, in Portland, Oregon, Bryan Scott Gunn, of Victorville, California, was sentenced to 20 months in prison, three years of supervised release and ordered to pay $939,308 in restitution. According to court documents, Gunn executed schemes conning investors out of almost $1 million. For the first scam, Gunn convinced his victims to invest more than $500,000 in an alleged heavy equipment leasing company, Republic Funding LLC, promising a high rate-of-return. During the scheme, Gunn showed the investors documentation that falsely showed the alleged company was profitable. Gunn diverted the investors’ money for his personal use. When the investors began to seek a return on their investment and began to challenge Gunn’s claims about the alleged business, he started his second swindle. Gunn created two fictitious companies, a few fictitious employees, and a fictitious attorney, including corresponding email accounts, to conceal his fraud. Gunn told the investors that he had sold the equipment leasing business’ portfolio to one of his fictitious companies, CMC Funding. When the investors sought payment from the sale of the portfolio, Gunn explained that CMC Funding had filed for bankruptcy and that its assets, including the portfolio, were being purchased by Fidelity LLC, Gunn’s other fictitious entity. Gunn, using letters and emails, posed as employees of Fidelity and as an attorney, and falsely claimed that costs associated with the bankruptcy needed to be paid before the investors could receive any payment for the alleged purchase of the portfolio. The investors paid more than $411,000 in an attempt to recover some of their investment. Gunn continued to use their money to live lavishly. At one point, in an attempt to appease the investors, Gunn created and gave two bogus checks to the investors as a payout. The checks, one for $314,113 and the other for $1,169,887, appeared to be issued from CMC Funding and to be drawn on an account at a Federal Credit Union. After depositing the checks, the investors quickly learned that the checks were fraudulent and that the account at the Federal Credit Union did not exist.
Day Trader Sentenced for Investment Fraud Scheme
On June 16, 2015, in Pocatello, Idaho, Michael Justin Hoopes, of Rexburg, Idaho, was sentenced to 24 months in prison, three years of supervised release, and ordered to pay $620,000 in restitution. Hoopes pleaded guilty on Feb. 24, 2015 to wire fraud and monetary transactions in property derived from specified unlawful activity. According to the plea agreement, from 2007 through February 2011, Hoopes engaged in a scheme to defraud investors in various investment opportunities he offered. Specifically, Hoopes solicited investors to provide him with capital he represented would be use in his commodities futures day trading activities and to invest in Connected Lyfe, a publicly traded company. Hoopes misrepresented to investors that he earned returns in excess of 20 to 25 percent, that he would invest all of the capital they provided in day trading and pay them from the profits generated by their investments, and he would receive personal compensation only from profits he made above the 20 to 25 percent return. Hoopes provided false monthly account statements to investors documenting the purported positive returns. In reality, he used much of the capital he received for personal expenses and paying “positive” returns to existing investors primarily from the capital raised from new investors. Hoopes received in excess of $9 million from investors and misappropriated approximately $620,000 for his own personal use. Contrary to monthly account statements showing positive returns, he lost most of the remainder day trading and in other failed investments. Hoopes was also ordered to forfeit shares of Connected Lyfe in his possession.
Former Executive Director of Choctaw Nation Sentenced for Theft, Money Laundering and Tax Fraud
On June 1, 2015, in Muskogee, Oklahoma, Jason Brent Merida, of Fort Towson, Oklahoma, was sentenced to 144 months in prison, two years of supervised release and ordered to pay $545,000 in restitution to the Choctaw Nation of Oklahoma and $32,149 in restitution to the IRS. Merida was convicted by jury trial on Nov. 20, 2014 for conspiracy to commit theft or bribery of programs receiving federal funds, theft by an employee or officer of a tribal government receiving federal funds, conspiracy to commit money laundering and tax fraud. According to court documents, Merida, the former Executive Director of Construction for the Choctaw Nation of Oklahoma, conspired to corruptly demand, solicit and receive cash, trips, a Cadillac Escalade, cattle guards, and other things of value in excess of the $5,000 from subcontractors performing work on Choctaw Nation construction projects. Merida, in concert with others, submitted and approved false invoices from subcontractors allowing him to steal, embezzle and fraudulently convert in excess of $500,000 in funds from the Choctaw Nation of Oklahoma which were used to purchase items for Merida and others. Merida also willfully failed to report the proceeds of the fraud on his federal income taxes in 2009 and 2010. Merida was the eighth person to date to be convicted as part of this investigation and prosecution. Seven additional defendants have been sentenced to terms ranging from 60 months in prison to 3 years' probation.
Creator and Operator of the “Silk Road" Website Sentenced
On May 29, 2015, in Manhattan, New York, Ross Ulbricht, aka “Dread Pirate Roberts,” of San Francisco, California, was sentenced to life in prison and ordered to forfeit $183,961,921. On Feb. 5, 2015, Ulbricht was found guilty of distributing narcotics, distributing narcotics by means of the Internet, conspiring to distribute narcotics, engaging in a continuing criminal enterprise, conspiring to commit computer hacking, conspiring to traffic in false identity documents, and conspiring to commit money laundering. According to court documents, Ulbricht created Silk Road in January 2011, and owned and operated the underground website until it was shut down by law enforcement authorities in October 2013. Silk Road served as a sophisticated and extensive criminal marketplace on the Internet where unlawful goods and services, including illegal drugs of virtually all varieties, were bought and sold regularly by the site’s users. While in operation, Silk Road was used by thousands of drug dealers and other unlawful vendors to distribute hundreds of kilograms of illegal drugs and other unlawful goods and services to more than 100,000 buyers, and to launder hundreds of millions of dollars deriving from these unlawful transactions. Ulbricht sought to anonymize transactions on Silk Road by operating Silk Road on a special network of computers on the Internet, distributed around the world, designed to conceal the true IP addresses of the computers on the network and thereby the identities of the networks’ users. Ulbricht also designed Silk Road to include a Bitcoin-based payment system that concealed the identities and locations of the users transmitting and receiving funds through the site.
Car Dealer Sentenced for Money Laundering
On May 27, 2015, in Buffalo, New York, Jerry Robbins, of Cheektowaga, was sentenced to 63 months in prison. Robbins was previously convicted of money laundering and failure to report cash transactions of $10,000 or more. According to court documents, Robbins, owner of Finish Line Auto, in Buffalo, helped drug dealers launder proceeds of their illicit business by purchasing high end used cars. During these sales, the drug dealers would pay Robbins cash for cars ranging in price from $10,500 to $45,000. Robbins used the name of another person in sales and title paperwork to disguise the true purchaser and source of the money. In an effort to conceal the amount of money received for the sale of the car, Robbins listed that only a small deposit was received from the third party nominee, when in fact, the drug dealers had paid cash in full for the car. For each of these types of transactions, Robbins also failed to file the required forms with the Internal Revenue Service indicating the receipt of over $10,000 cash for the sale of the car.
Louisiana Man Sentenced for Money Laundering
On May 20, 2015, in New Orleans, Louisiana, Richard Zanco, of Slidell, Louisiana, was sentenced to 30 months in prison and three years of supervised release. Zanco previously pleaded guilty to money laundering. According to court documents, about May 2012, Zanco learned that someone had opened a brokerage account in his name and used that account to acquire collateralized mortgage obligations (CMOs), a type of bond, by fraudulent means. Even though he knew that the CMOs did not belong to him, Zanco gained control of the accounts and arranged for the interest proceeds of the CMOs to be diverted to other financial accounts under his control. Between March 11, 2013 and Sept. 19, 2013, Zanco illegally used the funds, in the amount of about $343,998 to engage in a variety of financial transactions, including the purchase of multiple automobiles and one or more boats.
Man Sentenced for Swindling Millions from Persons in Golf Course Scheme
On May 18, 2015, in Reno, Nevada, Scott H. Summerhays, formerly of the South Lake Tahoe, was sentenced to 234 months in prison, three years of supervised release and ordered to pay $1.4 million in restitution. Summerhays pleaded guilty in February 2014 to 14 counts of wire fraud, seven counts of money laundering, two counts of identity theft, and one count of aggravated identity theft. According to the court records, during 2008 to 2010, Summerhays represented to potential investors that he was purchasing the Genoa Lakes Golf Club located west of Gardnerville, Nev. for $17 million and needed a short term loan to complete the deal because his own money was tied up in a trust. Summerhays also represented to the potential investors that he solicited funds for oil and gas investments in Texas and owned over $30 million in Berkshire, Las Vegas Sands and MGM stocks. Summerhays showed some of the investors a fraudulent investment account statement. Summerhays also claimed that he was in partnership with Las Vegas Sands owner Sheldon Aldelson, and showed potential investors a partnership agreement containing the forged signature of Adelson. In reality, Summerhays had no investment portfolio, and Adelson had no any partnerships with him. Using this scheme, Summerhays was able to convince 11 persons to loan him money for the golf course, totaling approximately $3.6 million. None of the investors were repaid and they lost all of the money they loaned Summerhays.
Final Defendant Sentenced in Decade Long Psychic Swindle Case
On April 30, 2015, in Portland, Oregon, Blancey Lee, of Portland, was sentenced to 24 months in prison, three years of supervised release, and ordered to pay $2,599,809 in restitution to the victim, for his role in a conspiracy to commit money laundering and his filing of false personal income taxes for 2012. Co-defendants, Rachel Lee, of Canby, Oregon was previously sentenced to 100 months in prison and ordered to pay $15,490,978 in restitution. Porsha Lee, of Northern California, was previously sentenced to 33 months in prison and ordered to pay $12,822,262 in restitution. According to court records, the victim met Rachel Lee in 2004 when he visited her Psychic Shop. At the time, Blancey Lee and Rachel Lee lived together as a couple at the Psychic Shop and presented themselves as husband and wife. Between 2004 and 2006, Rachel Lee fostered a friendship with the victim for the purpose of extracting money from him. As a result of her lies and the trust she established with the victim, Rachel Lee assumed a role as paid care giver to the victim’s elderly father by 2007. Trusting her to act in his best interest, the victim also turned over all personal and business account control to Rachel Lee. While controlling the victim’s finances, Rachel Lee, Blancey Lee, and their families lived in a million-dollar home in the Portland West Hills purchased with the victim’s money. Rachel Lee recruited members of her family to play key roles in the fraud scheme. Between 2007 and 2011 Rachel Lee directed the victim to incrementally liquidate investments accounts totaling approximately $3.8 million dollars. After depleting the victim’s investment account, Rachel Lee convinced the victim he owed substantial taxes and needed to sell his family’s Tree Farm. At Rachel Lee’s direction, the Tree Farm properties were sold for a total of approximately $12.3 million dollars. Rachel Lee, Blancey Lee, and Lee family members spent the victim’s fortune on a luxury lifestyle. By the time of Rachel Lee’s arrest and indictment in May 2014, the victim held less than $250,000 in accounts under his control. Through the initiation of forfeiture proceedings, a Bentley, Ferrari, Bel-Air, and 10 real properties have already been returned to the victim, and efforts are underway to restore to the victim the $1.9 million in cash seized and forfeited from bank accounts. The government is initiating civil forfeiture proceedings to liquidate numerous Rolexes and other designer goods purchased by the defendants and will provide those proceeds to the victim.
Former Foundation Chairman and Spouse Sentenced for Embezzling More Than $1.1 Million
On April 28, 2015, in Louisville, Kentucky, Charles Muir was sentenced to 46 months in prison and one year of supervised release. Diana Muir was sentenced to six months in prison and one year of supervised release. Both previously pleaded guilty to interstate transportation of stolen property and money laundering. According to court documents, Charles Muir was the chairman of the Woodcock Foundation, a charitable organization associated with the Episcopal Church of Louisville, Kentucky. Diana Muir owned and controlled DBM-Dental Direct of Louisville. Between April 2007 and June 2011, the Muirs unlawfully transferred or caused to be transferred approximately $1,141,030 that had been stolen or taken by fraud from the Woodcock Foundation, a charitable trust providing college scholarships. The funds were transferred from a bank in Louisville, Kentucky, to locations outside of Kentucky. In addition, the Muirs conducted financial transactions involving the proceeds of the fraud by depositing checks from the Woodcock Foundation into a DBM Dental bank account to disguise the nature of the transactions. During the four year period, the couple withdrew approximately $262,000 by ATM at a casino in Indiana and in total withdrew more than $365,000 in cash.
North Carolina Man Sentenced for Structuring Financial Transactions
On April 27, 2015, in Raleigh, North Carolina, James Dino Wills, of Wilson, North Carolina, was sentenced to 102 months in prison, three years of supervised release and ordered to forfeit $733,882. Wills also agreed to file amended federal income tax returns for the tax years 2008 through 2013 and to pay any taxes owed. Wills pleaded guilty on May 7, 2014 to structuring financial transactions to evade the filing of currency transaction reports (CTRs). Federal law requires banks and other financial institutions to file CTRs with the U.S. Treasury Department for all cash transactions exceeding $10,000. According to court documents, Wills operated a business in the Rocky Mount and Wilson, North Carolina areas from 2008 to 2013 and received payments for services primarily in the form of checks. These checks were deposited into his business accounts at two financial institutions. Wills then structured cash withdrawals from these accounts in order to avoid the filing of CTRs. From 2008 to 2013, he structured $755,764 in cash transactions. Wills was prosecuted for the same offense in 1998.
Law School Graduate Sentenced for Conspiring to Launder Drug Money
On April 23, 2015, in Kansas City, Kansas, Mendy Read-Forbes, a law school graduate, was sentenced to 240 months in prison. Read-Forbes, of Platte City, Mo., was pleaded guilty to one count of conspiracy. According to court documents, in March 2012, Read-Forbes began meeting with an agent posing as a drug dealer. Read-Forbes, a law school graduate who was not licensed to practice law, operated Forbes & Newhard Credit Solutions, Inc., a nonprofit corporation registered in Missouri to provide educational and social welfare services. The agent told Read-Forbes he had assets to conceal from the sale of marijuana. She said she could use her legal training and her connections with federal attorneys and law enforcement officers to help him launder the money. She told the agent she would launder his cash by running it through her business. The plan also involved her listing the agent as an employee of her business and putting him on her company’s board of directors. As part of the scheme, she created a fictitious company called Maximus Lawn Care LLC. Over the course of the investigation, she laundered more than $200,000 in purported drug funds. She also agreed to invest $40,000 of her money with the agent for the purchase of marijuana.
Tennessee Businesswoman Sentenced for Fraud and Money Laundering Violations
On April 20, 2015, in Knoxville, Tennessee, Joyce Allen, of Louisville, Tennessee, was sentenced to 360 months in prison and three years of supervised probation. Allen was ordered to pay $20,711,371 in restitution as well as a court-ordered forfeiture of the same cash amount. In September 2014, Allen was found guilty by jury trial of charges contained in a superseding indictment against Allen and five other individuals associated with Benchmark Capital, Inc. (Benchmark). According to court documents, the purpose of Benchmark was to defraud investors by taking their funds in exchange for worthless and nonexistent investments, and paying a portion of the funds received to earlier investors under the guise of paying dividends, interest and mortgage payments, thereby encouraging new investors to entrust their funds to Benchmark. Allen was the president of J. Allen and Associates, Inc., based in Louisville. Through her business, Allen induced individuals to pay funds to her in exchange for annuity investments with Benchmark, knowing that these funds would not be placed with Benchmark or any other company for investments, but converted to personal use by Allen and her other co-conspirators. The other five individuals named in the superseding indictment pleaded guilty and have been previously sentenced.
Prominent Businessman for Private Consulting Group Sentenced after Bilking Elderly Victim of $1.1 Million
On March 31, 2015, in Portland, Oregon, Robert L. Keys was sentenced to 70 months in prison, three years of supervised release, and ordered to pay $1.1 million in restitution. Keys pleaded guilty on Sept. 9, 2014 to wire fraud, money laundering, and bankruptcy fraud. At the plea hearing, the government contended that in 2008, as Keys’ business ventures were failing, he turned to one of his long-term clients, a widow in her mid-80s, and persuaded her to loan $1.1 million to co-defendant William Kearney, now deceased. Keys lied to his client about the terms of the loan, such as the existence of treasury bonds as collateral for the loan, and he failed to disclose important facts to her in order to fraudulently obtain money for his benefit and that of Kearney. Keys also received over $100,000 in kickbacks as part of the scheme. Those kickbacks were wired to him by Kearney the day after Keys persuaded his client to loan Kearney the $1.1 million. In addition, Keys and his wife filed for bankruptcy in 2010, and Keys fraudulently attempted to discharge $148 million in debt by lying to the Bankruptcy Court, concealing assets and income, and filing false documents with the Court.
Florida Man Sentenced For $100 Million Surety Bond Fraud Scheme
On March 24, 2015, in Atlanta, Georgia, Eric Campbell, of Orange Park, Florida, was sentenced to 57 months in prison, three years of supervised release and ordered to pay $1,904,376 in restitution. Campbell pleaded guilty on Oct. 20, 2014 to operating a multi-million dollar surety bond fraud scheme. According to court documents, from August 2012 until July 2013, Campbell used several corporations to sell fraudulent surety bonds on construction projects. Surety bonds are three party bonding agreements in construction projects where a surety company assures the project owner that a contractor will perform a construction contract. Campbell fraudulently held himself out to contractors and government agencies as having the authority to execute or issue surety bonds on behalf of Federal Insurance Company and Pacific Indemnity Company, affiliates of the Chubb group. To perpetuate the scheme, Campbell created fraudulent surety bonds, embossed the bonds using a counterfeit seal and forged the signatures of Chubb group officials. Campbell and his associates issued bonds with a face value of more than $100 million and received premium payments of more than $2.2 million during the course of the fraud. Many of these funds were then deposited into bank accounts owned and under the control of Campbell. In addition to financial losses, Campbell’s fraud scheme caused delays in several construction projects and compromised the construction bidding process because contracts were sometimes awarded to unqualified construction companies.
Former University Employee Sentenced On Fraud Charges
On March 19, 2015, in Rochester, New York, Debra Bulter, of Penfield, was sentenced to 36 months in prison, three years of supervised release and ordered to pay restitution totaling $4,285,637. Bulter was previously convicted of conspiracy to commit mail fraud and money laundering. According to court documents, Bulter worked as the Program Administrator for the Department of Anesthesiology at the University of Rochester in Rochester (the Department). From 2001 through 2012, CGF Anesthesia Associates, P.C. (CGF), contracted with the Department to provide anesthesiologists at medical facilities served by the Department. From 2007 to 2009, Bulter deceived the Department into making fraudulent payments of $930,000 to two doctors from CGF and $530,000 to CGF. The two doctors each executed fraudulent contracts with the Department worth more than $3,000,000 with the assistance of Bulter. The scheme caused the Department to divert compensation of $2,410,015 actually earned by CGF to the two doctors. For the years 2010 through 2012, CGF was deceived into paying $1,169,606 to Bulter’s business, DJA Solutions, LLC. Bulter also caused the Department to make a fraudulent and unauthorized loan to a doctor working for the Department. Bulter disguised various payments to the doctor as extra compensation resulting in total fraudulent payments to the doctor of $510,726. From October 2012 to May 2012, Bulter also caused the Department to pay a former employee $7,168. Doron Feldman, of Williamsville, New York, one of the two doctors with CGF, was sentenced to 24 months in prison and ordered to pay $1,617,000 in restitution.
Maine Man Sentenced for Drug Trafficking and Money Laundering
On March 18, 2015, in Portland, Maine, David Jones, of Portland, was sentenced to 110 months in prison and three years of supervised release for distributing marijuana and money laundering. According to court documents, from August 2011 through October 2013, Jones obtained hundreds of pounds of marijuana from an out-of-state source and distributed it in Maine. In October 2013, agents seized $291,981 from a storage unit Jones rented, $92,104 from an associate’s apartment and $6,278 from Jones’ residence. Agents also seized two boats, a truck, several motorcycles, two trailers, numerous pieces of electronic recording equipment and jewelry. All the seized cash and items were forfeited. Jones also laundered $216,500 of his drug proceeds through other financial transactions.
Ohio Couple Sentenced for $2.3 Million Student Loan Fraud
On March 11, 2015, in Cleveland, Ohio, John “Richard” Ceroni, of Canton, was sentenced to 69 months in prison and Adale “Marie” Cernoni was sentenced to 55 months in prison. They were ordered to pay more than $2.3 million in restitution. The Ceronis previously pleaded guilty to conspiracy to commit mail fraud and conspiracy to launder money. Richard Ceroni also pleaded guilty to obstruction. According to court documents, the Ceronis were co-founders of Carnegie Career College. From at least 2003, Carnegie College held itself out to the public as a private not-for-profit college. From June 2007 through May 2012, the Ceronis fraudulently obtained approximately $2.3 million from the Department of Education by submitting applications for SFA funds that stated students at Carnegie College had obtained valid high school diplomas. They also falsely told prospective students they would earn a valid high school diploma at the same time they attended Carnegie College and that such a diploma would be paid for by a “scholarship from a church” in order to increase enrollment and access to SFA funds. The Ceronis recruited students who had not earned high school diplomas or G.E.D. certificates, and thus were not eligible for SFA funds. The couple also submitted fraudulent financial aid documents to the Department of Education. They used online high schools, including Australia-based Adison High School, to purchase fake high school diplomas and coursework transcripts for students who were not required to attend any classes or complete any coursework. The Ceronis comingled fraudulently obtained money in several accounts and used that money to fund personal expenditures and expand Carnegie College.
Two Men Sentenced for Roles in Cross-Country Marijuana Distribution Ring
On March 9, 2015, in Phoenix, Arizona, two defendants were sentenced for their roles in a cross-country marijuana distribution ring. Darius Blackwell, of Mesa, Ariz., was sentenced to 110 months in prison and Grady Blackwell, of Lithonia, Ga., was sentenced to 60 months in prison. Both defendants previously pleaded guilty to conspiracy to possess marijuana with intent to distribute and conspiracy to commit money laundering. According to their plea agreements, the Blackwells participated in a conspiracy to distribute marijuana using the United States Postal Service. Their organization purchased marijuana in Arizona, mailed it throughout the United States, primarily to Georgia, and then arranged for the proceeds to be sent back to Arizona. Shipping records and seizures show that at least 50 kilograms of marijuana were mailed in this fashion. In addition, seven bank accounts were opened in March 2012 for the purpose of receiving and transferring the proceeds of the scheme. Nearly $410,000 was deposited into these accounts and over $395,000 was withdrawn.
Suspended Attorney Sentenced for Using Law Firm to Launder Drug Money
On March 9, 2015, in Minneapolis, Minnesota, Robert David Boedigheimer was sentenced to 60 months in prison and three years of supervised release. Boedigheimer was convicted by jury on June 17, 2014, of using his law firm to launder drug money, lying to investigators, and encouraging his brother-in-law to lie to federal investigators. As proven at trial, Boedigheimer had his own personal injury practice since 1995. The law firm and Boedigheimer began to experience financial problems in 2006. As proven at trial, Boedigheimer’s brother-in-law, Brandon Lusk, was a distributor of high-end marijuana in and around Rochester, Minn. Boedigheimer approached Lusk for a cash loan. Lusk agreed to provide many loans to Boedigheimer, on the condition that the Boedigheimer repay the loans, plus interest, in checks issued from his law firm. Ultimately, Boedigheimer created a “no-show” job for Lusk at the law firm, which paid Lusk $48,000 per year. Lusk’s no-show job was entirely paid for through drug proceeds that Lusk funneled to Boedigheimer, and which were laundered through the law firm. Between March 26, 2010 and Jan. 28, 2011, nine payroll cash advances were provided by Lusk, ranging from $5,000 to $10,000 each, and totaling approximately $55,000. In exchange, Lusk received payroll checks from the law firm. In March 2011, Lusk lost his source of income as a marijuana distributor when his supplier was under investigation. Lusk and a marijuana distribution associate approached the Boedigheimer for help in obtaining legal representation. Lusk was eventually interviewed by the US Attorney’s office, before which Boedigheimer advised Lusk not to tell investigators about the money laundering arrangement between the two of them. Lusk then withheld information from investigators about his employment and the disposition of the drug proceeds. Lusk was sentenced to 30 months in prison for distribution of marijuana and money laundering.
Sham Church Director and Professed “Enforcer” Sentenced for Looting Church
On March 6, 2015, in Boston, Massachusetts, Edward J. MacKenzie, Jr., of Weymouth, was sentenced to 144 months in prison, three years of supervised release, and ordered to pay $754,569 in restitution. In October 2014, MacKenzie pleaded guilty to 13 counts, including RICO conspiracy, racketeering, mail fraud, wire fraud and money laundering in connection with his decade-long scheme to siphon off considerable financial assets of a church located in the Beacon Hill area of Boston. According to court documents, in 2003, MacKenzie became the “Director of Operations” at the church, a position that had not previously existed and paid him a salary as high as $200,000 per year. In order to drain the church of its assets, he began voting himself and his associates into positions of authority within the church, and consolidated and fortified his control by, among other things, changing the church’s by-laws for his own benefit. MacKenzie was able to gain control over substantial church assets, including an 18-story apartment building in downtown Boston, because the church had a small number of voting members, many of whom were elderly. After obtaining control, MacKenzie stole church funds through a combination of fraud, deceit, theft, and bribery. Moreover, MacKenzie intimidated and threatened individuals who were employed by the church by, among other things, providing them with signed copies of his 2003 autobiography, Street Soldier: My Life as an Enforcer for Whitey Bulger and the Boston Irish Mob. In the autobiography, MacKenzie admitted to a lengthy criminal history, including burglary, robbery, armed assault, and narcotics trafficking. MacKenzie’s crimes cost the church millions of dollars and deprived the needy who relied on its charity.
Arizona Man Sentenced on Drug and Money Laundering Charges
On Feb. 10, 2015, in Phoenix, Arizona, Carlos Antonio Garcia-Hurtado was sentenced to 168 months in prison and five years of supervised release. Garcia-Hurtado pleaded guilty on Oct. 6, 2014 to conspiracy to possess with intent to distribute marijuana and conspiracy to launder monetary instruments. According to the plea agreement, around June 2010 to on or about Dec. 10, 2013, Garcia-Hurtado was in agreement with others to receive and distribute marijuana from Mexico. The marijuana was brought from Mexico through the desert into Arizona by backpackers and then Garcia-Hurtado coordinated the distribution of bulk quantities of marijuana within the United States and the return of the drug proceeds to Mexico. Garcia-Hurtado also admitted to paying for a property, which is titled in his wife’s name, with the proceeds from the drug trafficking and money laundering conspiracies.
Texas Men Sentenced in Drug Distribution Conspiracy
On Feb. 9, 2015, in Wichita Falls, Texas, Rodolfo Trevino, of Wichita Falls, was sentenced to 97 months in prison. In June 2014, Trevino pleaded guilty to one count of conspiracy to possess with the intent to distribute cocaine base and one count of money laundering. Trevino was also ordered to forfeit a residence, two vehicles, a firearm and assorted ammunition. In mid-December 2014, co-defendant Rene Villastrigo, Jr., also of Wichita Falls, was sentenced to 30 months in prison. He pleaded guilty to one count of conspiracy to possess with the intent to distribute cocaine. According to court documents, beginning in 2012 and continuing to April 18, 2014, Trevino and Villastrigo conspired with others to possess with the intent to distribute cocaine and cocaine base. Trevino traveled frequently to McAllen, where he recruited another individual to transport drugs from McAllen to Wichita Falls. Trevino also recruited Villastrigo to rent a residence in Wichita Falls to store and repackage the drugs for distribution. Trevino deposited the drug proceeds he acquired into bank accounts in Wichita Falls and withdrew those deposits in the McAllen area, intending for these financial transactions to conceal his drug trafficking activity.
Former Pharmacist Sentenced for Role in Drug Distribution Scheme and Money Laundering
On Feb. 5, 2015, in Detroit, Michigan, Waleed Yaghmour, a Dearborn pharmacist, was sentenced to 72 months in prison and ordered to forfeit $973,177 for conspiracy to illegally distribute prescription pills and money laundering. In March 2013, Waleed Yaghmour was charged with 43 others in a health care fraud and drug distribution scheme. According to court documents, Sardar Ashrafkhan and others, who owned home health agencies, provided kickbacks, bribes and other illegal benefits to physicians in exchange for prescriptions for patients with Medicare, Medicaid and private insurance. The prescriptions were for controlled substances such as oxycodone (Oxycontin). Patient recruiters or “marketers” would pay kickbacks and bribes to patients in exchange for the patients’ permitting the pharmacies and physicians to bill their insurers for medications and services that were medically unnecessary and/or never provided. During the conspiracy, prescriptions were presented to the Sav-Mart Pharmacy in Detroit, which was owned and operated by Yaghmour, as well as several other pharmacies. Yaghmour knew that the controlled substances he dispensed for these fraudulent prescriptions had no legitimate medical purposes. Yaghmour dispensed at least 1,500 oxycodone 100,000 hydrocodone and 100,000 alprazolam doses as part of the scheme. Yaghmour received nearly $2 million in cash payments for illegally dispensing the controlled substances. Many of the defendants charged in the indictment have been convicted by pleas and have been sentenced already.
South Carolina Man Sentenced for Money Laundering, Drug Trafficking
On Feb. 5, 2015, in Charleston, South Carolina, Hadden Andre Smith was sentenced to 144 months in prison, four years of supervised release and ordered to forfeit over $248,000 that authorities seized from his residence. Smith pleaded guilty on July 31, 2012 to conspiracy to possess with intent to distribute cocaine and marijuana, possession of firearms in furtherance of a drug trafficking crime, and conspiracy to launder money. According to court documents, upon executing a search warrant at Smith's residence, law enforcement officers found approximately $248,000 cash, 1.8 kilograms of marijuana, two firearms and drug packaging paraphernalia. Further investigation revealed that Smith used the drug proceeds to purchase several vehicles and had the vehicle titles put in the name of third parties to disguise the true ownership of the property.
Charity Fundraiser Sentenced for Fraud Against Veterans
On Feb. 3, 2015, in Indianapolis, Indiana, Scott M. Gruber was sentenced to 48 months in prison and three years of supervised release. On Aug. 21, 2014, Gruber pleaded guilty to two counts of mail fraud and one count of structuring to evade reporting requirements. As part of his plea, Gruber agreed to pay $365,750 to a legitimate veterans’ charity and forfeit two vehicles. According to court documents, in late 2009, Scott Gruber changed his business, Independent Promotions, Inc., into a professional fundraiser/solicitor business for a specific charity - Purple Hearts Veterans Foundation, a charity owned and operated by his brother. Gruber would solicit funds and deposit the funds into Independent Promotion’s account and then convert the cash into an official check payable to Purple Hearts. Gruber’s brother then sent Gruber a Purple Hearts’ business check for 80% of the donations transmitted. Between January 2010 through August 2011, Gruber received approximately $437,669 in checks from Purple Hearts as his 80% fundraising fee. Additionally, Gruber retained approximately $116,192 in cash collections that were never forwarded to Purple Hearts. From the total amount of $553,861, Gruber paid 40% of the collections to his solicitors and used another 25% to run his fraudulent business. Gruber’s brother did not expend the 20% received in support of veteran’s causes but rather made minimal expenses in support of veteran’s causes. From Purple Heart’s account, less than 8% of the collected proceeds were expended in what might possibly be considered a benefit to a soldier or veteran. Gruber followed the same process to purportedly raise funds for Service Connected Disabled Veterans of America (SCDVA), a charity established in the name of a friend, retaining 85% of the fundraising proceeds. Gruber received approximately $491,791 as his 85% fee from SCDVA. From his 85%, Gruber paid 40% of the collections to his solicitors and used another 25% to run his fraudulent business. From SCDVA’s account, $4,500, which represents less than 1% of the collected proceeds, were expended to benefit soldiers or veterans.
Connecticut Man Sentenced for Role in Coast-to-Coast Cocaine Trafficking Ring
On Feb. 3, 2015, in Hartford, Connecticut, Jermaine Jenkins, formerly of Newington, was sentenced to 72 months in prison and four years of supervised release. On Oct. 14, 2014, Jenkins pleaded guilty to conspiracy to distribute and to possess with intent to distribute 500 grams or more of cocaine, and conspiracy to commit money laundering. According to court documents, Jenkins participated in a drug trafficking organization that involved individuals in California using the U.S. Mail and commercial carriers to send large quantities of cocaine to co-conspirators in the Hartford area who sold the narcotics for profit. Joseph Miller of Los Angeles, formerly of East Hartford, sent kilogram parcels of cocaine from California to Jenkins, Luther Nance and their associates in Connecticut. Jenkins, Nance and others then distributed the cocaine, or converted the cocaine into crack for street sale. Certain co-conspirators traveled to California with a large amount of cash to finance the purchase of cocaine. Co-conspirators also made numerous cash deposits into local bank accounts, as well as wire transfers. The cash deposits were made at several branches of the same bank in the Hartford area in amounts of less than $10,000 in order to evade the bank’s currency transaction reporting requirements. Miller and Nance have pleaded guilty and await sentencing.
Former Liberty Reserve IT Manager Sentenced for Operating an Unlicensed Money Transmitting Business
On Jan. 30, 2015, in New York, New York, Maxim Chukharev, a citizen of Russia and resident of Costa Rica, was sentenced to 36 months in prison in connection with his work for Liberty Reserve, a company that operated one of the world’s most widely used digital currency services. Chukharev pleaded guilty in September 2014 to conspiring to operate an unlicensed money transmitting business. According to court documents, Chukharev was primarily responsible for maintaining Liberty Reserve’s technological infrastructure and for implementing systems designed to create the false appearance that Liberty Reserve had an effective anti-money laundering program. Chukharev created and implemented a system designed to hide information about Liberty Reserve’s users and the sources of its business from the company’s Costa Rican regulatory agency. By design, the system provided mostly “fake” statistics about Liberty Reserve’s business to the agency, in order to give the appearance that Liberty Reserve had an effective anti-money laundering program. Beginning in January 2012, Chukharev took over responsibilities in the day-to-day management of Liberty Reserve’s technical operations, including the maintenance and operation of its website. The fact that Liberty Reserve had not registered as a money transmitting business under U.S. law was a vital component of its success as a system used to launder funds derived from, or intended to promote, criminal activity.
First of Two Massachusetts Brothers Sentenced for Oxycodone Trafficking Scheme
On Jan. 22, 2015, in Boston Massachusetts, Joshua M. Gonsalves, of Dennisport, was sentenced to 240 months in prison, five years of supervised release and ordered to forfeit $1,522,372 and property. In October 2014, Gonsalves was convicted of oxycodone conspiracy, money laundering conspiracy and money laundering. According to court documents, Gonsalves and his brother, Stanley D. Gonsalves participated in a three-year conspiracy involving the distribution of hundreds of thousands of 30-milligram oxycodone pills generating over $5 million in proceeds. The conspiracy’s couriers transported multi-thousand-pill loads of 30-milligram oxycodone pills from South Florida up to New England, first by plane and later by car. The primary object of the related money laundering conspiracy was to use the millions of dollars in drug proceeds to purchase additional oxycodone pills and to pay the ongoing expenses of the oxycodone conspiracy. Stanley D. Gonsalves, of Sandwich, was convicted of oxycodone trafficking conspiracy, money laundering conspiracy and 17 substantive money laundering charges. Stanley Gonsalves’ sentencing has been scheduled.
North Carolina Man Sentenced for Role in Federal Racketeering Conspiracy
On Jan. 20, 2015, in Charlotte, North Carolina, Travis Bumpers, of Charlotte, was sentenced to 66 months in prison and three years of supervised release. Bumpers pleaded guilty in March 2013 to RICO conspiracy to commit securities fraud, bank fraud, wire fraud and money laundering conspiracy. According to court documents, Bumpers engaged in multiple mortgage fraud transactions, arranging for a straw buyer, providing down payment money, and receiving more than $800,000 in kickback money through a sham corporation. Bumpers also engaged in extensive investment fraud, defrauding approximately 70 victims out of more than $4.6 million. Four other defendants have received sentences ranging from an eight month split sentence to 46 months in prison.
Bitcoin Exchanger Sentenced for Selling Nearly $1 Million in Bitcoins for Drug Buys on Silk Road
On Jan. 20, 2015, in Manhattan, New York, Robert M. Faiella, of Fort Myers Beach, Florida, was sentenced to 48 months in prison, three years of supervised release and ordered to forfeit $950,000. Faiella, an underground Bitcoin exchanger, pleaded guilty in September 2014 to operating an unlicensed money transmitting business. According to court documents, from about December 2011 to October 2013, Faiella ran an underground Bitcoin exchange on Silk Road, 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 BitInstant, a company based in New York. BitInstant was designed to enable customers to exchange cash for Bitcoins anonymously, that is, without providing any personal identifying information, and charged a fee for its service. Faiella obtained Bitcoins with BitInstant’s assistance, and then sold the Bitcoins to Silk Road users at a markup. With the knowledge and active assistance of Charles Shrem, the Chief Executive Officer of BitInstant, Faiella exchanged nearly $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. Faiella’s co-defendant, Shrem, was sentenced to two years in prison on Dec. 19, 2014.
Pennsylvania Man Sentenced for Drug Distribution and Conspiracy to Commit Money Laundering
On Jan. 20, 2015, in Harrisburg, Pennsylvania, Ronald Belciano, of Newtown Square, was sentenced to 63 months in prison and four years supervised release. In February 2014, Belciano pleaded guilty to conspiracy to distribute 100 kilograms of marijuana in and through central Pennsylvania and conspiracy to commit money laundering between December 2007 and November 2011. According to court documents, in 2011 Belciano rented a vehicle and paid a co-conspirator to drive the vehicle, containing $1,184,340 in U.S. currency, from Pennsylvania to California to pay for marijuana, some of which was grown on Belciano’s 190 acre property in Northern California. Agents obtained a search warrant for one of Belciano’s homes; during the search, agents located $2,582,920 in U.S. currency and 1.5 kilograms of marijuana. Law enforcement agents later located 68 kilograms of marijuana, $316,800 in U.S. currency and 59 paintings valued at over $600,000 in a storage locker and at a co-conspirator’s farm which was used to warehouse and distribute the marijuana transported from California to Pennsylvania. The assets seized and forfeited in this case included a residence, a 190-acre property in Laytonville, California, artwork appraised at over $619,000 and $4,084,060 in U.S. currency.
Man Sentenced for Roles in Multi-Million Dollar Fraud Schemes
On Jan. 15, 2015, in Columbus, Ohio, Haider Zafar, formerly of Dublin, Ohio, was sentenced to 72 months in prison, three years of supervised release and ordered to pay $15,723,034 in restitution, of which $2,083,565 is payable to the IRS. Zafar also agreed to a forfeiture money judgment of $10,115,000. Zafar previously pleaded guilty to wire fraud, money laundering, filing a false federal income tax return and failing to file federal income tax returns in connection with a $10.1 million fraud scheme involving false representations about investments in Pakistani real estate. According to court documents, Zafar, told the primary victim of his real estate scheme that his uncle was the Minister of Defence of Pakistan and was responsible for acquiring land on behalf of the Pakistani government. Zafar recruited the victim to be his partner in purchasing such land before the Pakistani government did, saying they would then sell the land to the government at a greatly inflated price. Between January 2008 and February 2010, Zafar prompted his victim to wire $10,115,000 into accounts controlled by Zafar. In another scheme, Zafar pleaded guilty to five counts of wire fraud for fraudulently obtaining $3,524,469 from seven victims associated with the Miami Heat professional basketball franchise. Zafar fraudulently obtained a Miami Heat premium three-season ticket package, which cost $1,055,000, approached several investors and promised various fraudulent investment opportunities. He ultimately obtained in excess of $3,500,000 from his Miami fraud scheme. Finally, Zafar reported a taxable income of zero on his 2007 federal income tax return, omitting $221,500 in taxable income. Zafar also earned more than $10 million from his fraud scheme between 2008 and 2010, but did not file income tax returns.
CPA Hedge Fund Manager Sentenced for Role in $40 Million Ponzi Scheme
On Jan. 15, 2015, in Charlotte, North Carolina, Jonathan D. Davey, of Newark, Ohio, was sentenced to 252 months in prison, three years of supervised release and ordered to pay $21,815,407 in restitution. In February 2013, a federal jury convicted Davey of securities fraud conspiracy, wire fraud conspiracy, money laundering conspiracy and tax evasion. According to court documents and today’s sentencing hearing, Davey, a certified public accountant and registered investment advisor, served as the “Administrator” for numerous hedge funds for the Black Diamond Ponzi Scheme, an investment fraud scheme that deprived 400 victims of more than $40 million. Davey collected over $11 million from victims with his own hedge fund, “Divine Circulation Services,” by falsely stating that he had done proper due diligence on Black Diamond and that he was operating a legitimate hedge fund with significant safeguards, when, in reality, neither claim was true. As the Black Diamond scheme began to collapse, Davey and his co-conspirators collected over $5 million from new victim investors for the cash account and used this money to make payments to old investors and to themselves. Davey controlled most funds and wires and published a website for victims that reflected fake high returns. By the end of the scheme, the website falsely reflected over $120 million in supposed value for victim-accounts, when in reality the funds were less than $1 million. Davey also used an elaborate network of shell companies to evade taxes and commit money laundering with the proceeds of the Ponzi scheme. Ten other defendants have been sentenced in this case to terms ranging from 40 years to six months in prison. In addition, in April 2011, a criminal bill of information and a Deferred Prosecution Agreement were filed against CommunityONE Bank, N.A., related to its failure to file a suspicious activity report about the Black Diamond scheme and failing maintain an effective anti-money laundering program. The bank agreed to pay $400,000 toward restitution to victims of the Ponzi scheme that operated through accounts maintained at the bank.
Former CEO of Bitcoin Exchange Company Sentenced for Helping to Sell Nearly $1 Million in Bitcoins for Drug Buys on Silk Road
On Dec. 19, 2014, in Manhattan, New York, Charlie Shrem, of New York, was sentenced to 24 months in prison, three years of supervised release and ordered to forfeit $950,000. Shrem pleaded guilty in September 2014 to knowingly transmitting nearly $1 million in Bitcoins intended to facilitate drug trafficking on the “Silk Road” website, a black-market international cyber business, designed to enable users to buy and sell illegal drugs anonymously and beyond the reach of law enforcement. According to court documents, Shrem was the Chief Executive Officer of BitInstant, and from about August 2011 until about July 2013, when BitInstant ceased operating, he was also its Compliance Officer, in charge of ensuring BitInstant’s compliance with federal and other anti-money laundering (AML) laws. Shrem was also the Vice Chairman of the Bitcoin Foundation, a foundation dedicated to promoting the Bitcoin virtual currency system. Shrem’s co-defendant, Robert M. Faiella, ran the underground Bitcoin exchange on the Silk Road website. Shrem was fully aware that Silk Road was a drug-trafficking website and he also knew that Faiella was operating a Bitcoin exchange service for Silk Road users. Nevertheless, Shrem knowingly allowed Faiella to use BitInstant’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 and deliberately helped Faiella circumvent BitInstant’s AML restrictions. Faiella, pleaded guilty in September 2014, and his sentencing has been scheduled for a later date.
Colorado Man Sentenced for Role in Mortgage Fraud Scheme
On Dec. 16, 2014, in Denver, Colorado, Peter V. Capra, of Littleton, was sentenced to 144 months in prison, three years of supervised release and ordered to pay over $9 million in restitution. Capra was convicted on March 21, 2014, on fourteen counts of wire fraud, two counts of mail fraud, and ten counts of money laundering. According to court documents and evidence presented at trial, Capra was the President of Golden Design Group, Inc. (GDG), a company which built and sold houses. Capra was also the registered agent for Distinctive Mortgages, LLC, which provided mortgages to some of the customers buying houses from GDG. From January 2005 through July 2008, Capra and others executed a scheme to defraud several mortgage lenders through applications for residential mortgage loans and related documents associated with real estate purchases. Capra structured transactions involving GDG homes to allow buyers to receive substantial amounts of the lenders’ money at the time of closing without the knowledge of the lenders. He also sold a large volume of homes to otherwise unwilling or unqualified buyers. Capra netted over $11,000,000 as a result of his scheme. Loan applications for the buyers were submitted through several different mortgage brokers which contained materially false and fraudulent representations about the buyers’ income, liabilities, source of down payment, and intent to occupy the properties as their primary residences. At closing, funds ranging from $85,000 to over $200,000 were distributed to the buyers in ways that prevented the lenders from discovering that these funds were actually going to the buyers; these funds were not disclosed in the HUD-1 closing statements or were disguised in those statements.
Virginia Attorney Sentenced for Mail Fraud and Unlawful Monetary Transactions
On Dec. 16, 2014, in Norfolk, Virginia, David R. Flynn, of Norfolk, was sentenced to 71 months in prison, three years of supervised release and ordered to pay $2,296,657 in restitution. Flynn pleaded guilty on April 23, 2014 to mail fraud and unlawful monetary transactions. According to the plea agreement, Flynn, an attorney licensed to practice law in Virginia and owner of Assured Title of Virginia, LLC in Virginia Beach, stole over $2 million from real estate trust accounts in order to cover up problems with his escrow account that dated back to 2008. Flynn also used the stolen funds to pay a personal credit card, to travel to tropical destinations, sometimes paying for friends to join him, and on at least one occasion, to charter a private plane.
Pennsylvania Attorney Sentenced for Defrauding Clients of Over $6 Million
On Dec. 16, 2014, in Harrisburg, Pennsylvania, Wendy Weikal-Beauchat was sentenced to 180 months in prison and ordered to pay $6,365,913 in restitution and $6,341,451 in forfeiture. On Nov. 15, 2014, Weikal-Beauchat pleaded guilty to wire fraud and money laundering in connection with the misuse of her clients’ funds. According to court documents, Weikal-Beauchat, who has since been disbarred, was an attorney with the Gettysburg firm of Beauchat and Beauchat, concentrating on estate, trust, and long-term care planning. Beginning in 2007, Weikal-Beauchat diverted approximately $6 million from a trust account she maintained for her clients at a bank. Weikal-Beauchat used the proceeds to operate her law firm, for vacations and other personal expenses. She falsely represented she could invest in certificates of deposit with high interest rates as a result of her “special relationship” with the bank. She generated bogus bank CDs and distributed them to her clients to further mislead them.
Maine Attorney Sentenced for Money Laundering Conspiracy
On Dec. 16, 2014, in Portland, Maine, Gary Prolman, Esq., of Saco, was sentenced to 24 months in prison and two years of supervised release for conspiracy to launder marijuana trafficking proceeds. Prolman pleaded guilty on April 29, 2014. According to court documents, between 2011 and October 2013, David Jones and others illegally distributed hundreds of pounds of marijuana in Maine and elsewhere. Between June and September 2012, Prolman laundered about $177,500 worth of those drug proceeds by: (1) taking cash from Jones to purchase an interest in Prolman’s sports agency business; (2) illegally structuring cash deposits and cashier’s check purchases to avoid federal currency reporting requirements; and (3) using structured cashier’s checks to jointly purchase real estate with Jones in a transaction where only Prolman’s name appeared on the deed as the owner.
Real Estate Developer Sentenced for Defrauding His Business Partners
On Dec. 15, 2014, in Santa Ana, California, William Warren Geary, a real estate developer, was sentenced to 18 months in prison and ordered to pay $891,791 in restitution to investors. In September 2014, Geary pleaded guilty to conspiracy to commit mail fraud and money laundering. According to court documents, between August 2009 and April 2010, Geary, along with his bookkeeper, devised a scheme to defraud his business partners in connection with two capital calls he requested for tenant improvements to their joint real estate development. Geary along with nine other limited partners, purchased Ocean Walk Shoppes (OWS), a shopping center in Daytona Beach, Florida. In August 2009, Geary sent a letter to the OWS limited partners seeking $900,000 in capital contributions to complete tenant improvements for two prospective new tenants of OWS. The partners sent Geary $616,791 in response. In October 2009, Geary sent another letter requesting an additional $350,000 for additional tenant improvements. The OWS limited partners sent Geary another $270,000. Instead of using the funds as promised, Geary and his bookkeeper caused almost $900,000 of OWS funds to be used for Geary’s personal benefit.
Convicted Ponzi Schemer Sentenced on New Fraud and Money Laundering Charges
On Dec. 15, 2014, in Trenton, New Jersey, Eliyahu Weinstein, of Lakewood, was sentenced to 135 months in prison, 111 months of which will be served concurrently with a previous sentence and 24 months to be served consecutively. His total sentence for the two schemes is 24 years in prison. In addition, Weinstein was ordered to pay $6.2 million restitution and forfeiture. Weinstein previously pleaded guilty to conspiracy to commit wire fraud, committing wire fraud while on pretrial release and money laundering. According to court documents, in February 2012, Weinstein and his fellow conspirators offered a pair of investors (the “Facebook victims”) the opportunity to purchase large blocks of Facebook shares prior to the company’s initial public offering, or IPO, in May 2012. The Facebook victims wired millions of dollars that the conspirators then misappropriated. Weinstein and his conspirators also persuaded the Facebook victims to invest $2.83 million in the purported purchase of an apartment complex, “Belle Glade Gardens,” in Florida. However, Weinstein and his conspirators redirected the money to accounts that they controlled, returned $1.8 million to the Facebook victims as a purported return on investment and used the remaining money for their own purposes. In July 2012, Weinstein approached another group of investor victims (the “Florida condominium victims”) and told them he had the opportunity to purchase the notes on seven condominiums in Florida. Weinstein did not use this money to purchase the notes on the Florida condominiums; instead, Weinstein and his conspirators converted the money to their own use. Throughout the scheme, Weinstein was already under indictment and on pretrial release. Weinstein pleaded guilty on Jan. 3, 2013, admitting he ran a Ponzi-style real estate investment fraud scheme that caused $200 million in losses and then laundered the proceeds of the scheme. Weinstein was previously sentenced on Feb. 25, 2014, to 264 months in prison and ordered to pay more than $200 million in restitution and forfeiture to the victims of his scheme.
Chief Technology Officer of Liberty Reserve Sentenced for Fraud
On Dec. 12, 2014, in Manhattan, New York, Mark Marmilev, of Brooklyn, was sentenced to 60 months in prison, three years of supervised release and fined $250,000. Marmilev pleaded guilty in September 2014 to conspiring to operate an unlicensed money transmitting business that he knew involved the transmission of funds derived from criminal activity. In conjunction with the sentencing, a civil forfeiture complaint was filed seeking the forfeiture of two businesses located in Brooklyn, and the forfeiture of his interest in a pizzeria located in the Coney Island area of Brooklyn. According to the complaint, Marmilev purchased these business interests using more than $1.6 million in Liberty Reserve proceeds. Marmilev was a longtime associate of Liberty Reserve founder Arthur Budovsky and served as Liberty Reserve's chief technology officer. In that role, Marmilev was principally responsible for designing and maintaining Liberty Reserve’s technological infrastructure. Liberty Reserve was incorporated in Costa Rica in 2006 and billed itself as the Internet’s “largest payment processor and money transfer system.” Liberty Reserve was created, structured, and operated to help users conduct illegal transactions anonymously and launder the proceeds of their crimes. It emerged as one of the principal money transfer agents used by cybercriminals around the world to distribute, store, and launder the proceeds of their illegal activity. Marmilev worked for Liberty Reserve for years despite knowing that the business was used extensively to process criminal transactions. Marmilev even promoted Liberty Reserve to criminals on Internet discussion forums, where, using aliases, he touted Liberty Reserve’s lack of anti-money laundering policies and its tolerance for, as he put it, “shady businesses.” Before being shut down by the U.S. government in May 2013, Liberty Reserve had more than five million user accounts worldwide, including more than 600,000 accounts associated with users in the United States, and processed tens of millions of transactions through its system, totaling more than $16 billion in funds. These funds encompassed suspected proceeds of credit card fraud, identity theft, investment fraud, computer hacking, child pornography, narcotics trafficking, and other crimes.
Ohio Man Sentenced for Role in Cocaine Distribution Ring
On Dec. 11, 2014, in Columbus, Ohio, Stephen A. Cagle was sentenced to 36 months in prison and ordered to forfeit $142,020 in cash and $14,800 in lieu of vehicles seized on his property, as well as at least 13 firearms. Cagle pleaded guilty on May 21, 2014 to conspiracy to distribute a controlled substance and money laundering. According to court documents, on about January 2010 through September 2011, Cagle and others were part of a large scale narcotics organization involved in importing, manufacturing and distributing cocaine. Specifically, Cagle was responsible for distributing multiple kilograms of cocaine. Cagle was also involved in operating an unlicensed money transmitting business, often transporting several hundreds of thousands of dollars from Ohio to Texas. While executing a search warrant at Cagle’s residence in September 2011, investigators discovered more than 5 kilograms of cocaine, several firearms, more than $142,000 in cash and several vehicles.
South Dakota Woman Sentenced in Drug and Money Laundering Conspiracies
On Dec. 8, 2014, Sioux Falls, South Dakota, Faith Ashely Rasmussen was sentenced to 80 months in prison and four years of supervised release. Rasmussen pleaded guilty on Sept. 2, 2014, to conspiracy to distribute marijuana and conspiracy to commit money laundering. According to court documents, from approximately January 2012 to December 2013, Rasmussen received marijuana through the mail in South Dakota from her source of supply in California. When the amounts of marijuana became too large to mail, Rasmussen had co-conspirators drive to California and back to South Dakota with large quantities of marijuana. In addition, Rasmussen deposited the proceeds of marijuana sales into her bank account in South Dakota. She also deposited drug sales proceeds into the account of her source of supply, and instructed a co-conspirator to deposit marijuana proceeds into her account. She never deposited more than $10,000 in cash per occasion to intentionally avoid bank reporting requirements.
Defendant Sentenced for Money Laundering Charge Involving Tax Fraud
On Dec. 8, 2014, in Miami, Florida, Price Jules was sentenced to 57 months in prison and three years of supervised release. Jules previously pleaded guilty to one count of money laundering. According to court documents, the IRS uncovered a pattern of approximately 1,285 attempted fraudulent tax claims seeking approximately $5.7 million in refunds. There were approximately $629,942 in cash withdrawals and approximately $34,000 in ATM withdrawals from the bank accounts that Jules controlled. Jules knew that the laundered money was the proceeds of tax fraud because he received approximately $180,000 of tax fraud directly into his personal E-Trade account and approximately $73,000 into his personal bank account. In addition, Jules spoke about engaging in tax fraud and offered to launder the proceeds of tax fraud for a fee. None of the individuals or estates of individuals listed on the tax returns received any money.
New Jersey Man Sentenced for Role in Multi-Million Dollar Real Estate Investment Scheme
On Dec. 8, 2014, in Trenton, New Jersey, Alex Schleider, of Lakewood, was sentenced to 12 months and one day in prison, three years of supervised release and ordered to pay restitution of $613,200 and forfeiture of $363,200. Schleider previously pleaded guilty to wire fraud. According to court documents, Schleider, along with Eliyahu Weinstein, of Lakewood, and others persuaded victims to invest in the purported purchase of an apartment complex, “Belle Glade Gardens,” in Florida. They told the victims that Weinstein could purchase Belle Glade Gardens at a discounted price and immediately flip it at a substantial profit. Schleider and Weinstein further told the victims that Weinstein had already placed $2.5 million in the trust account of a Miami law firm for the transaction; if the victims contributed another $2.5 million toward the transaction, those funds would remain in escrow until the deal closed and the victims would be repaid within 60 days. The victims wired $2.83 million to complete the Belle Glades Gardens transaction, however, Schleider and Weinstein redirected the money to accounts that they controlled, returned $1.8 million to the victims as a purported return on a prior Facebook investment, and used the remaining money for their own purposes.
Wisconsin Businessman Sentenced for Bank Fraud and Theft from Pension Fund
On Dec. 3, 2014, in Madison, Wisconsin, Christian Peterson was sentenced to 84 months in prison and ordered to pay $816,168 in restitution to Greenwoods State Bank. Peterson was convicted by jury trial in May 2014 for bank fraud, money laundering and making false statements to banks. According to evidence given at the trial, between 2006 and 2007, Peterson committed two acts of bank fraud and made false statements to banks by lying to a bank about the purpose of a wire transfer of funds taken from Maverick, Inc.’s $6.25 million business line of credit to a casino in Las Vegas, and by lying to Greenwoods State Bank in Lake Mills, Wisconsin, about the purpose of a $1.1 million loan for real estate development in Fitchburg. In addition to his convictions for bank fraud, money laundering and making false statements to banks, Peterson was convicted of stealing his former employees’ 401(k) account funds and using the money to pay his former wife $7,500 in alimony and to lend himself $10,000.
Former Attorney Sentenced for Money Laundering
On Dec. 3, 2014, in Kansas City, Missouri, James C. Wirken, of Kansas City, was sentenced to 13 months in prison and ordered to pay a $4,000 fine. On May 12, 2014, Wirken pleaded guilty to one count of money laundering. Wirken was a lawyer and principal at The Wirken Law Group until he surrendered his law license in 2012 and was disbarred by the Missouri Supreme Court. According to court documents, Wirken withdrew money from his law firm’s trust account, which was being held for the benefit of a client, and deposited the funds into his law firm’s operating account. Wirken wrote six checks between December 2009 and Jan. 13, 2010, totaling $116,730 and used the funds for his personal benefit. All of the transactions were conducted without the client’s consent. Wirken’s law firm was engaged in a long-term, unethical Ponzi-type business model that spanned over many years. As early as 2007, Wirken began improperly borrowing substantial amounts of money from clients, and then he refused to pay his clients back. Wirken borrowed over $800,000 from at least seven clients from 2007 to 2012.
Former Apple Executive Sentenced for Defrauding Apple in Kickback Scheme and Laundering the Proceeds
On Dec. 1, 2014, in San Jose, California, Paul S. Devine was sentenced to 12 months and one day in prison, three years of supervised release and ordered to pay $4,464,664 in restitution. Devine pleaded guilty on Feb. 28, 2011, to wire fraud, conspiracy to commit wire fraud, money laundering and engaging in transactions with criminally-derived property. According to the plea agreement, beginning in approximately February 2007, Devine engaged in a scheme to defraud Apple of money or property as well as to defraud Apple of its right to his honest services. Devine had been a Global Supply Manager at Apple from 2005 until August 2010. Devine’s job gave him access to confidential internal Apple information. In the course of the scheme, Devine transmitted confidential information, such as product forecasts, pricing targets, and product specifications, to suppliers and manufacturers of Apple parts. In return, the suppliers and manufacturers paid Devine kickbacks. The scheme enabled the suppliers and manufacturers to, among other things, negotiate more favorable contracts with Apple than they would have been able to obtain without the confidential information. Devine received kickbacks as wire transfers into bank accounts that he opened for that purpose in the U.S. and South Korea, including accounts in the name of a shell corporation, CPK Engineering. Devine knowingly transferred the proceeds of the wire fraud between his various accounts, including CPK Engineering accounts, in order to conceal and disguise the nature, location, source, ownership, and control of the proceeds. Devine agreed to forfeit $951,552 in proceeds of the fraud and a vehicle, all of which were seized by the FBI and IRS at the time of his arrest. Devine also agreed to forfeit $612,407 in proceeds of the fraud, which he transferred from overseas bank accounts and deposited with the clerk of the District Court following his arrest.
Indiana Man Sentenced on Money Laundering Charges
On Nov. 26, 2014, in South Bend, Indiana, Jeffrey Miller, of Osceola, was sentenced to 135 months in prison, two years of supervised release and ordered to pay $1,086,222 in restitution. Miller previously pleaded guilty to the interstate transportation of stolen goods and money laundering. According to court documents, from approximately June 2012 through January 2014, Miller stole copper wire from his former employer, an RV manufacturer located in Elkhart, Indiana. Miller then sold the copper to scrapyards after transporting the copper wire across the state line from Indiana to Michigan locations. He used these illegal funds to gamble at various casinos. Miller deposited cash into his bank account when he won at the casino because then he was able to justify to the bank where the cash came from. He avoided putting money from his sells of stolen copper wire directly into his bank accounts because he did not want to justify the source of the cash. In addition, Miller intentionally made bank deposits of cash below $10,000 to avoid the filing of currency transaction reports.
Ohio Man Sentenced for Investment Fraud
On Nov. 24, 2014, in Cleveland, Ohio, Anthony Davian was sentenced to 57 months in prison and ordered to pay $1,787,679 in restitution, as well as forfeit property. Previously, Davian pleaded guilty to one count of securities fraud, two counts of mail fraud, four counts of wire fraud, and seven counts of money laundering. According to court documents, Davian used his hedge fund, Davian Capital Advisers, LLC, to promote and sell securities to at least 20 investors between 2008 and 2013, resulting in $1.8 million in overall investor loss. Davian purported to sell securities in the form of shares in the various funds he created and controlled, including Davian Capital, Rubber City Gravity, Rubber City Pure Alpha, Cleveland Precious Metals Fund, and others. Instead, he used the investors’ monies to pay earlier investors, enrich himself and pay off personal expenses. Davian persuaded investors’ into giving him hundreds of thousands of dollars by claiming to manage hundreds of millions of dollars to make himself appear more sophisticated than he really was and by falsifying client account statements.
Former Bank CEO Sentenced for Bank Fraud and Money Laundering
On Nov. 24, 2014, in Wilmington, Delaware, James A. Ladio, was sentenced to 24 months in prison and ordered to pay restitution of $700,000. Ladio pleaded guilty on Dec. 17, 2013, to two counts of bank fraud and two counts of money laundering. According to court documents, Ladio was the founder and former CEO of Midcoast Community Bank, Inc. (“Midcoast”). On two occasions, Ladio convinced existing MidCoast customers to apply for commercial loans, ostensibly for valid business purposes. The true purpose of the loans, however, was to allow those MidCoast customers to loan money to Ladio. Ladio had been involved in a decade-long “loan-swap” arrangement with former Wilmington Trust Co. (“WTC”) Market Manager Brian Bailey, in which the two men provided more than twenty (20) loans to each other totaling in excess of $1.5 million. In June 2010, WTC called Ladio’s loans and required him to enter into a Global Restructuring Agreement (the “Agreement”). Ladio engaged in the nominee loan scheme in substantial part to make interest and principal payments under the Agreement.
Convenience Store Owners Sentenced for Selling Synthetic Cannabinoids, Money Laundering
On Nov. 21, 2014, in Tulsa, Oklahoma, Iqbal Makkar, of Bentonville, Arkansas, was sentenced to 97 months in prison, and Gaurav Sehgal, of Grove, Oklahoma, was sentenced to 84 months in prison. Additionally, both were ordered to forfeit their interests in two convenience stores, various property and currency valued at over $3,475,535. A joint and several criminal forfeiture money judgment of $2,584,981was also levied and restitution of more than $6,000 was ordered. Both were convicted of conspiracy to distribute controlled drug analogues, possession of Schedule 1 controlled substance analogue with intent to distribute, maintaining drug-involved premises, and money laundering. According to court documents, from November 2011 to January 2013, Makkar and Sehgal operated the “Gitter Done Station” convenience store in Grove, Oklahoma, for the purpose of storing and distributing the controlled substance analogue known as XLR11. The men were charged with depositing funds from the illegal sales and distributions of the controlled substance analogues into a checking account in Missouri.
Ohio Man Sentenced for Criminal Schemes Centered Around IHOP Restaurants
On Nov. 21, 2014, in Toledo, Ohio, Mazen Khdeer, of Sylvania, was sentenced to 57 months in prison and two years of supervised release. Khdeer was also ordered to pay $1.3 million in restitution and forfeit two properties. Khdeer previously pleaded guilty to 13 counts, including money laundering, malicious use of fire, conspiracy to harbor aliens, identity theft, conspiracy to commit health care fraud and filing false claims. According to court documents, Khdeer was the last of 18 people to be sentenced for their roles in a series of criminal schemes that centered around seven IHOP restaurants owned by Tarek “Terry” Elkafrawi in northwest Ohio and Indiana. The schemes resulted in losses of more than $3 million. In 2008, the Findlay IHOP burned as the result of arson started by a co-conspirator at the direction of Elkafrawi and Khdeer to facilitate an insurance fraud scheme. Additionally, Khdeer used two identities to split his salary from the restaurants between two paychecks, creating lower reportable income for both identities. Using those identities, he claimed approximately $140,000 in Medicaid payments and $35,000 in food stamps and welfare benefits from the state of Ohio. Khdeer and Elkafrawi created a false property company to which Khdeer paid “rent” to Elkafrawi to show a lower income. Elkafrawi was sentenced to eight years in prison.
International Drug Dealer Sentenced to Prison
On Nov. 19, 2014, in Raleigh, North Carolina, Andrew Wayne Landells, of Jamaica, was sentenced to 180 months in prison, three years of supervised release and ordered to pay a money judgment of $1,000,000 and forfeit his interest in several properties located in New Jersey and Florida. Landells previously pleaded guilty to conspiracy to launder monetary instruments. According to court documents, Landells directed the activities of his estranged wife, and at least seven co-conspirators to assist him in the trafficking marijuana from Mexico throughout, New York, Florida, Virginia, Arizona, and North Carolina. Landells then used the drug proceeds to purchase luxury vehicles and residences, and to rent residences in others’ names. In order to disguise the source of the proceeds from his illegal activities, Landells also operated sham companies purporting to be in the candle manufacturing business. Landells distributed up to 1,000 kilograms of marijuana and laundered money from drug proceeds through the straw purchase of at least seven pieces of real property, thirteen motor vehicles, and four businesses, all with a combined value of over $1,000,000.
Missouri Man Sentenced for Stealing Money from ATMs
On Nov. 18, 2014, in Kansas City, Missouri, Anthony T. Civella, Jr., was sentenced to 24 months in prison and ordered to pay $70,000 in restitution, in addition to the restitution that has already been paid. On Feb. 27, 2014, Civella pleaded guilty to bank larceny and money laundering. According to court documents, from 2011 through 2013, Civella owned and operated a company called C Management Group, LLC, which serviced 35 ATMs in the Kansas City, Missouri, metropolitan area. Civella stole $330,040 from the ATMs by obtaining a maintenance code to access the machines. Civella moved money between the ATM machines in order to conceal the theft from the bank. He then comingled the stolen money from the ATMs by depositing most of the cash into his personal checking account at a credit union.
California Man Sentenced for Running Ponzi Scheme
On Nov. 17, 2014, in Sacramento, California, James Berghuis was sentenced to 168 months in prison for orchestrating a Ponzi scheme in the Sacramento area that defrauded family members, friends, and other acquaintances of more than $2.7 million. On Oct. 18, 2013, a jury convicted Berghuis of four counts of mail fraud, four counts of wire fraud, and one count of money laundering. According to evidence presented at trial, between 2005 and 2008, Berghuis convinced certain investors to take out home equity loans to make investments. Berghuis promised these investors he would use their money to invest in hard-money loans, real estate transactions, or the purchase of real estate franchises. He also offered several victims a deed of trust on his commercial property, promising each that they would be in second position on the title. However, Berghuis used investors’ money to pay back other investors and to buy himself luxury goods, including several Mercedes Benz cars. Some victims lost their homes or continue to pay on mortgages they took out to make their investments with Berghuis.
Colorado Man Sentenced on Charges Related To Stealing Telecommunications Equipment, Money Laundering
On Nov. 14, 2014, in Tulsa, Oklahoma, Jesse Michael Greenwald, of Colorado, was sentenced to 84 months in prison, three years of supervised release and ordered to pay restitution of $4,419,125 on charges related to stealing and selling millions of dollars’ worth of Verizon Communications telecommunications equipment. Greenwald pleaded guilty on Aug. 13, 2014, to conspiring to commit money laundering. Scott Gollan, and Michael Greenwald, both of Bastrop, Texas, and James Pennoyer, of Tulsa have also pleaded guilty to charges arising from the thefts from Verizon and are awaiting sentencing. According to court documents, from July 2009 to May 2014, Pennoyer was a contract employee at the Verizon Communications warehouse in Tulsa, and aided the other defendants in stealing telecommunications equipment from the warehouse. The defendants transported the stolen equipment to Colorado Springs, Colorado, and stored it in a facility to be sold at a later date. Much of the equipment was sold to a company in North Carolina, which made substantial payments to Greenwald and his co-conspirators. The conspirators, including Greenwald, then used the funds to engage in illegal monetary transactions of more than $10,000 each.
Illinois Man Sentenced on Drug and Money Laundering Offenses
On Nov. 13, 2014, in East St. Louis, Illinois, Demarcus L. Freeman, of East Alton, was sentenced to 151 months in prison and ordered to forfeit $10,000. On Aug. 7, 2014, Freeman pleaded guilty to distribution of cocaine base (“crack cocaine”), possession with intent to distribute cocaine base and money laundering. According to court documents, Freeman sold crack cocaine in Wood River, Illinois, on May 13, 2013 and again on June 4, 2013. On July 8, 2013, Police seized nine ounces of crack cocaine from Freeman which he admitted owning. Freeman also opened a credit union account in the name of a relative. Freeman laundered the proceeds of his drug dealing through the account, in an attempt to disguise the source of the money. Freeman laundered over $60,000.
Costa Rica Based Telemarketing Fraud Results in Prison Terms for Two
On Oct. 30, 2014, in Charlotte, North Carolina, Glen Adkins Jr., of San Diego, California, was sentenced to 300 months in prison and Warren F. Tonsing Jr., of St. Paul, Minnesota, was sentenced to 144 months in prison. Both were ordered to pay $2.4 million in restitution, joint and several with their co-defendants. Adkins and Tonsing were convicted in August 2013 of wire fraud and money laundering. According to court documents, the defendants schemed to defraud United States residents, most over the age of 55, out of millions of dollars by deceiving them into believing that each had won a large monetary prize in a “sweepstakes contest.” Both defendants worked in a Costa Rica-based call center that used computers to make telephone calls over the internet to victims in the United States. This process allowed the defendants and their co-conspirators to disguise the originating location of the calls. Victims were informed that the callers were from a federal agency and that to receive their “prize” they had to wire thousands of dollars to Costa Rica for a purported “refundable insurance fee.” As long as the victims continued to pay, the co-conspirators continued to solicit more money from them in the form of purported fees. To date, 46 defendants have been convicted for their participation in similar Costa Rican telemarketing schemes.
Former Arkansas Business Developer Sentenced For Fraud
On Oct. 28, 2014, in Fort Smith, Arkansas, Brandon Lynn Barber, of New York, New York, was sentenced to 65 months in prison and three years supervised release. On July 31, 2013, Barber pleaded guilty to conspiracy to commit bankruptcy fraud, conspiracy to commit bank fraud and money laundering. According to court documents, from approximately 2005 through 2009, Barber was involved in several schemes to defraud banks, creditors and the Federal Bankruptcy Court. Barber provided false financial information and statements to banks for loans to finance the Legacy Condominium building and the Bellafont project in Fayetteville. Barber also concealed assets and income from creditors and the bankruptcy court by transferring funds to other co-defendants or accounts controlled by them and using those funds for his own personal benefit and expenses.
Former Boeing Procurement Officer and two Sub-Contractors Sentenced on Federal Fraud Charges
On Oct. 27, 2014, in St. Louis, Missouri, Deon Anderson, a former Boeing Procurement Officer, was sentenced to 20 months in prison. William P. Boozer, of Hacienda Heights, California, was sentenced to 18 months in prison. Robert Diaz, Jr., of Alta Loma, California, was sentenced to 15 months in prison. Anderson pleaded guilty in June 2014 to three counts of mail fraud, one count of wire fraud and one count of currency structuring. Co-defendants Boozer and Diaz previously pleaded guilty to related charges in connection with a bribery/kickback scheme involving Boeing military aircraft parts. According to court documents, between November 2009 and February 2013, Boozer requested Anderson provide him with non-public competitor bid information and historical price information in connection with Boeing military aircraft part purchase order requests for quotes. Anderson gave the information to Boozer to be used in preparing and submitting bids on behalf of Globe Dynamics in response to approximately sixteen different Boeing requests for quotes, in exchange for cash payments. Of the sixteen bids Globe Dynamics was awarded seven purchase orders to supply United States military aircraft parts to Boeing totaling in excess of $1,500,000. The net benefit to Globe Dynamics on those seven purchase orders was approximately $116,339. Beginning in May 2011 and continuing through April 2013, Anderson provided Diaz and another individual with non-public competitor bid information and historical price information in connection with one and more Boeing military aircraft part purchase order requests for quotes. They used that information in preparing and submitting bids on behalf of J.L. Manufacturing to Boeing for approximately nine different Boeing requests for quotes. Of the those nine, J.L. Manufacturing was awarded seven purchase orders to supply United States military aircraft parts to Boeing totaling in excess of orders totaled approximately $2,052,746. In exchange for that information they made cash payments to Anderson. On more than one occasion, Anderson structured cash deposits into his personal checking account to conceal his bribe scheme.
California Man Sentenced for Money Laundering
On Oct. 24, 2014, in Muskogee, Oklahoma, David Lewis McDowell, of Riverside, California, was sentenced to 51 months in prison, ordered to pay approximately $2,500,000 in restitution and to forfeit $3,000,000. In March, 2014, McDowell pleaded guilty to money laundering. According to court documents, from about June 25, 2008 through Nov. 9, 2009, McDowell devised a scheme to defraud investors by fraudulently representing and promising that a company had a system that could produce ethanol at a commercial production rate sufficient to sell commercially. Based upon those fraudulent and material representations, his actions caused victims to send money to be invested in this company. In addition, McDowell caused money derived from wire fraud to be transferred from accounts at a bank.
Three Chiropractors Sentenced in Staged Automobile Accident Scheme
On Oct. 14, 2014, in West Palm Beach, Florida, three chiropractors were sentenced for their participation in a massive staged automobile accident scheme. Kenneth Karow, of West Palm Beach, was sentenced to 132 months in prison; Hermann J. Diehl, of Miami, was sentenced to 108 months in prison; and Hal Mark Kreitman, of Miami Beach, was sentenced to 96 months in prison. Karow was convicted of 48 counts of mail fraud and 11 counts of money laundering. Diehl was convicted of two counts of mail fraud and three counts of money laundering. Kreitman was convicted of 21 counts of mail fraud and two counts of money laundering. According to court documents, between October 2006 and December 2012, the defendants and their co-conspirators staged automobile accidents and caused the submission of false insurance claims through chiropractic clinics they controlled.
Three Sentenced in Illegal Gambling Operation in Guam
On Oct. 8, 2014, in Hagatna, Guam, three individuals were sentenced in a criminal conspiracy to conduct an illegal gambling business at the former MGM Spa in Tamuning. Jimmy Hsieh was sentenced to 24 months in prison and ordered to pay a $423,640 money judgment. In addition, Hsieh agreed to forfeit $178,113 from personal accounts and that three of his condos are subject to possible forfeiture proceedings. Hsieh pleaded guilty to gambling conspiracy and money laundering. William Perez, the manager and supervisor of the MGM poker operation in 2010, was sentenced to six months in prison, six months home confinement and three years of supervised release for conspiring to operate the illegal gambling business. Pauline Perez was sentenced to one year of probation and community service. According to court documents, from at least January 2006 until December 2010, the defendants conspired to offer card games of chance, including baccarat and poker, at the MGM Spa building. The defendants took a percentage of the winnings from each game. They knowingly conducted financial transactions involving the proceeds from the illegal gambling operation.
Washington Man Sentenced for Operating Unlicensed Money Transmitting Business
On Oct. 6, 2014, in Seattle, Washington, Pavel Rombakh was sentenced to 24 months in prison and ordered to forfeit cash and property worth $510,000. Rombakh, who immigrated to the United States from Ukraine in the 1990’s, pleaded guilty in May 2014 to operating an unlicensed money transmitting business. According to court documents, over a five year period, Rombakh received wires of more than $150 million from overseas and then wired the funds back out to other accounts. Many of the wires originated in Russia and Cyprus and were promptly re-wired to England, Latvia, the United Arab Emirates, and China. Rombakh kept a small percentage of the funds as his fee.
Illinois Man Sentenced for Money Laundering and Wire Fraud
On Oct. 3, 2014, in Springfield, Illinois, Brian J. Fields, of Belleville, was sentenced to 27 months in prison, three years of supervised release and ordered to pay $98,800 in restitution. Fields previously pleaded guilty to money laundering and wire fraud. According to court documents, Fields conspired with a person in Nigeria to defraud United States citizens by sending counterfeit checks and money orders to people in several schemes (such as a “Secret Shopper” scam). The schemes resulted in victims receiving the counterfeit check or money order, depositing it into their own bank account, and then at the direction of Fields, the victim would wire transfer legitimate funds to Fields. By the time the person learned the check or money order was worthless, they had already sent the money to Fields. When Fields received the victims’ money, he would keep a portion for himself. Then to further the scheme, Fields would send the remaining funds to a person located in Nigeria.
Caribbean-Based Investment Advisor and Attorney Sentenced for Using Offshore Accounts to Launder and Conceal Funds
On Oct. 3, 2014, in Washington, DC, Eric St-Cyr, an investment advisor, and Patrick Poulin, an attorney, were each sentenced to 14 months in prison and three years of supervised release for conspiring to launder monetary instruments. St-Cyr and Poulin, both Canadian citizens, along with Joshua Vandyk, a U.S. citizen, previously pleaded guilty. Vandyk was sentenced on Sept. 5, 2014, to 30 months in prison. According to court documents, Vandyk, St-Cyr and Poulin conspired to conceal and disguise the nature, location, source, ownership and control of property believed to be the proceeds of bank fraud, specifically $2 million. Vandyk, St-Cyr and Poulin assisted undercover law enforcement agents posing as U.S. clients in laundering purported criminal proceeds through an offshore structure designed to conceal the true identity of the proceeds’ owners. Vandyk and St-Cyr invested the laundered funds on the clients’ behalf and represented that the funds would not be reported to the U.S. government. Poulin established an offshore corporation for the undercover agents. Upon request from the U.S. client, Vandyk and St-Cyr liquidated investments and transferred money, through Poulin, back to the United States. According to Vandyk and St-Cyr, the investment firm would charge clients higher fees to launder criminal proceeds than to assist them in tax evasion.
North Carolina Man Sentenced for Conspiracy, Mail Fraud, and Money Laundering
On Oct. 2, 2014, in Raleigh, North Carolina, Thomas L. Kimmel was sentenced to 264 months in prison, three years of supervised release and ordered to pay over $16.5 million in restitution. On June 26, 2014, Kimmel was convicted of conspiracy, mail fraud, and money laundering. According to court documents, Kimmel solicited about $20 million for Sure Line Acceptance Corporation from investors. Most of these investors found out about Sure Line through financial conferences that Kimmel gave at churches relating to Biblical principles of finance and getting out of debt. Most of the victims never received any of their principal back. Kimmel would typically spend a few minutes of each conference telling investors about a 12% collateralized note program. Kimmel’s statements about Sure Line were false and that the collateralized note program was a Ponzi scheme.
Former Sheriff’s Deputy Sentenced for Laundering $40 Million in Drug Proceeds
On Oct. 1, 2014, in McAllen, Texas, Robert Ricardo Maldonado, of Weslaco, Texas, was sentenced to 144 months in prison and three years of supervised release. Maldonado, a former deputy with the Hidalgo County Sheriff’s Office, pleaded guilty on May 12, 2014, to conspiracy to commit money laundering. According to court documents, from 2001 to November 2013, Maldonado transported $40 million worth of drug proceeds. Maldonado was paid a percentage of the total amount of the currency transported. He then utilized these funds to purchase various properties and assets.
Utah Resident Sentenced for Role in Investment Fraud Scheme
On Oct. 1, 2014, in Salt Lake City, Utah, Armand R. Franquelin, of Liberty, Utah, was sentenced to 57 months in prison, three years of supervised release and ordered to pay $6,566,596 in restitution. In September 2014, Martin Pool was sentenced to 78 months in prison. Franquelin and Pool pleaded guilty in May 2014 to securities fraud and money laundering in connection with an investment fraud scheme related to a real estate project in Vernal, Utah. According to court documents, from 2006 to 2010, Franquelin and Pool persuaded investors to convert their traditional IRAs to self-directed IRA accounts and invest their funds in a residential real estate project known as Haven Estates. This was accomplished by inducing the investors to direct funds to their company, The Elva Group, in return for notes promising monthly interest payments at annual rates between 8 and 20 percent. In reality, investors’ funds were used for purposes other than the development of Haven Estates. Investors were not told of encumbrances already in place on Haven Estates. Eventually, Haven Estates was foreclosed. Investors’ funds were used by Pool and Franquelin and their associates for their personal benefit and to pay interest to earlier investors as Ponzi payments. The Ponzi payments had the effect of lulling the earlier investors, persuading them to leave their funds in the company and inducing them to renew their promissory notes from time to time. The payments also enticed new investors to invest.