Former Vice President of Investor Relations for Carter’s Inc. Pleads Guilty to Long-Running Insider Trading Conspiracy

ATLANTA—Eric M. Martin, 42, of Roswell, Georgia, former head of investor relations for Carter’s Inc., the major children’s clothing company, pleaded guilty today to conspiracy to commit securities fraud and wire fraud in connection with a multi-year, multi-state insider trading conspiracy primarily involving Carter’s stock. Martin was convicted of tipping a former Wall Street analyst about Carter’s quarterly and annual financial results and other material, non-public information in advance of the public announcement of the information during Martin’s employment with Carter’s between 2005 and 2009.
“This conviction is further evidence that illegal insider trading takes place throughout the country, not just on Wall Street,” said United States Attorney Sally Quillian Yates. “This office is committed to combating illegal insider trading wherever it occurs, and public company executives and employees in this district and elsewhere should take note. Relying on insider tips to make profits in the nation’s stock markets is not a sound investment strategy, but a federal crime. And, tipping others for trading purposes—including friends and relatives—is a federal crime.”
Mark F. Giuliano, Special Agent in Charge, FBI Atlanta Field Office, stated, “Mr. Martin, as a corporate executive and leader at Carter’s Inc., betrayed the trust bestowed upon him and attempted to enrich his bank account and others by engaging in insider trading using financial data that he was entrusted with safeguarding. The FBI will continue to play a significant role in the federal government’s efforts to investigate and prosecute these types of financial fraud based crimes.”
According to United States Attorney Yates, the charges, and other information presented in court: Martin was employed as the head of investor relations for Atlanta-based Carter’s Inc. from early 2005 until his termination in March 2009.
Carter’s is a publicly traded company registered with the U.S. Securities and Exchange Commission (SEC), and its stock is listed on the New York Stock Exchange under the ticker symbol CRI. Carter’s is obligated to report its financial results in annual and quarterly filings with the SEC so that members of the public can make informed investment decisions.
Among other duties as Carter’s head of investor relations, Martin participated in and helped the company’s key executives prepare for Carter’s public disclosure of its quarterly and annual financial results at the end of each quarter or fiscal year. These disclosures took place in the form of “earnings releases,” the issuance of a formal press release to the public and the SEC that contained the financial results, followed by a conference call in which the company’s key executives presented the financial results to investors and Wall Street analysts. These and other duties afforded Martin regular access to material, non-public information about Carter’s upcoming earnings releases and other significant developments.
On a consistent basis between early 2005, and his termination in March 2009, Martin disclosed material, non-public information about Carter’s upcoming earnings releases and other developments to a former Wall Street analyst identified in the indictment as “Cooperator Number 1” for the purpose of making illegal insider trades. Cooperator Number 1 repeatedly bought and sold Carter’s stock on the basis of this information, earning substantial illegal profits and illegally avoiding substantial losses. As an example, Martin disclosed material, non-public information to Cooperator Number 1 in advance of Carter’s May 2005 acquisition of competitor Oshkosh B’Gosh, which was at that time publicly traded on the NASDAQ Stock Market under the ticker symbol GOSHA. The information related to the fact that Carter’s would be surprising the market by acquiring Oshkosh for a price that was lower than the price at which Oshkosh stock was then trading. This material, non-public information enabled Cooperator Number 1 to short thousands of shares of Oshkosh stock and then make substantial illegal profits after the merger became public and Oshkosh’s stock price fell. Martin disclosed this and other material, non-public information in exchange for friendship, reciprocal stock tips about other public companies to which Cooperator Number 1 had access, and future business and networking opportunities.
Martin also traded in Carter’s stock for his own benefit on the basis of material, non-public information about Carter’s earnings releases and other events during his employment with the company. Between June 2004 and his termination in March 2009, Martin bought thousands of shares of Carter’s stock during company-wide trading blackout periods that preceded the company’s quarterly and annual earnings releases, even though company policies prohibited company insiders from trading in Carter’s stock at those times. Martin did so without obtaining approval for the trades from Carter’s Chief Financial Officer, which company policies required Martin and a select group of key personnel to do, given their regular access to and receipt of material, non-public information. As part of his plea agreement with the United States, Martin has agreed that he is responsible for illegal insider trading gains and losses avoided resulting from the conspiracy, his own trading, and relevant conduct between $2.5 million and $7 million.
A federal grand jury indicted Martin on November 7, 2012, on one count of conspiracy, seven counts of securities fraud, and three counts of wire fraud. Martin could receive a maximum sentence of 25 years in prison and a fine of up to $250,000. In determining the actual sentence, the court will consider the United States Sentencing Guidelines, which are not binding but provide appropriate sentencing ranges for most offenders.
A date for sentencing has not yet been set.
This law enforcement action is part of President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch and, with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.
This case is being investigated by special agents of the Federal Bureau of Investigation. The Atlanta Regional Office of the U.S. Securities and Exchange Commission has conducted a separate investigation of possible civil violations of the U.S. securities laws, and, on August 22, 2012, the SEC filed a civil enforcement action against Martin for insider trading. That case remains pending.
Assistant United States Attorney David M. Chaiken is prosecuting the case.
For further information please contact the U.S. Attorney’s Public Information Office at USAGAN.Pressemails@usdoj.gov or (404) 581-6016. The Internet address for the U.S. Attorney’s Office for the Northern District of Georgia is www.justice.gov/usao/gan.

Ten Kansas City-Area Men Indicted for Nearly $1 Million Conspiracy to Steal Trucks and Trailers and Their Cargo

KANSAS CITY, MO—David M. Ketchmark, Acting United States Attorney for the Western District of Missouri, announced today that 10 Kansas City, Missouri-area men have been indicted by a federal grand jury for their roles in a conspiracy to steal nearly $1 million worth of trucks and trailers and their cargo.
Kenneth Ray Borders, 42; Christopher Dwight Turner, 44; Reginald Shawn Tidwell, 43; Harold Robertson, 55; Verdie Carr, Jr., 53; Ryonell Eugene Fredrick, 45; Michael O’Neal Foster, 54; and Myron Piggie, 51, all of Kansas City, Missouri; Jon Dirk Dickerson, 55, of Raytown, Missouri; and Kyle Wayne Dickerson, 30, of Holden, Missouri, were charged in a 25-count indictment returned under seal by a federal grand jury in Kansas City, Missouri, on Friday, December 14, 2012. That indictment was unsealed and made public today upon the arrests and initial court appearances of several defendants.
The federal indictment alleges that all of the co-defendants participated in a conspiracy that involved the theft of commercial trucks and trailers and their cargo, such as stolen meat, beer, Nike shoes, electronics, appliances, and dog food. Borders, Tidwell, Turner, and Foster allegedly stole commercial tractor-trailers and their contents. John and Kyle Dickerson allegedly disguised and altered identifying characteristics of the stolen commercial trucks and trailers. Frederick, Robertson, and Piggie, who owns the MP Convenience Store in Kansas City, allegedly received the stolen cargo.
According to the indictment, conspiracy involved the thefts of five Freightliner trucks and 17 trailers between 2005 and 2011. The stolen trailers included refrigerated trailers containing such cargo as 39,000 pounds of meat, 565 boxes of beef valued at $149,790, $125,000 worth of frozen ribs, and several refrigerated trailers that each contained tens of thousands of dollars’ worth of frozen chicken, including a load of frozen chicken wings valued at $59,706. Also stolen were utility trailers containing such cargo as Budweiser beer valued at $16,657, Nike shoes valued at $217,353, and 21,018 pounds of Little Sizzler sausages.
The indictment also alleges that conspirators reused and disguised these commercial trucks and trailers through the use of false and fraudulent vehicle identification numbers, license plates, registration documents, carrier names, and other United States Department of Transportation certificates. Eventually, the indictment says, they disposed of these vehicles rather than maintain and repair them. Stolen trucks and trailers that had been dismantled were recovered from lots that were leased by the defendants.
In addition to the conspiracy, Borders, Jon Dickerson, and Kyle Dickerson are charged together in one count of aiding and abetting the possession of stolen vehicles that were transported across state lines.
Borders is charged with one count of transporting stolen goods across state lines and two counts of aiding and abetting the transportation of stolen goods across state lines.
Borders is charged with six counts of aiding and abetting the possession of stolen goods that were transported across state lines. Borders, Jon Dickerson, and Tidwell are charged together in one count and Jon and Kyle Dickerson are charged together in three counts of the same offense. Roberts is charged with one count of possessing stolen goods that were transported across state lines.
Kyle Dickerson is charged with one count of aiding and abetting the transportation of stolen vehicles across state lines. Kyle Dickerson is also charged with six counts of altering motor vehicle identification numbers.
Borders and Turner are charged together in three counts of aiding and abetting the altering of motor vehicle identification numbers.
The federal indictment also contains a forfeiture allegation, which would require the defendants to forfeit to the United States any property derived from the proceeds of the alleged conspiracy, including $991,234.
Ketchmark cautioned that the charges contained in this indictment are simply accusations and not evidence of guilt. Evidence supporting the charges must be presented to a federal trial jury, whose duty is to determine guilt or innocence.
This case is being prosecuted by Assistant U.S. Attorney William L. Meiners. It was investigated by the Department of Agriculture-Office of Inspector General, the FBI, the Kansas City, Missouri Police Department, the National Insurance Crime Bureau, the National White-Collar Crime Center, the Mid-States Organized Crime Information Center, Travelers Investigative Services, the Missouri State Highway Patrol, CargoNet, and the U.S. Department of Transportation-Federal Motor Carrier Safety Administration.

NEW YORK (Reuters) - Amgen Inc pleaded guilty in a New York federal court on Tuesday for improper marketing practices involving its once top-selling Aranesp anemia drug, and prosecutors said the company has agreed to pay $762 million in a civil settlement and criminal fines.

The world's largest biotechnology company had set aside funds it expected to have to pay as a result of federal and state investigations, as well as nearly a dozen civil whistleblower lawsuits.

Federal prosecutors said in court that the company had agreed to pay $612 million in a civil settlement, a $14 million criminal forfeiture payment, and a $136 million criminal fine.

Amgen entered the guilty plea to one misdemeanor count. Acting U.S. attorney Marshall Miller confirmed that under the agreement Amgen will not lose any federal business or contracts. Exclusion from federal programs, such as Medicare, could have crippled its business.

As part of the deal, Amgen will enter into a five-year corporate integrity agreement with the Office of Inspector General of the U.S. Department of Health and Human Services, prosecutors said. The agreement will require Amgen's executives and members of its board of directors to certify compliance with applicable regulations, institute new transparency measures and put corporate officers "on the hook" for compliance failures within that five-year period, prosecutors said.

The plea agreement must be approved by U.S. District Judge Sterling Johnson. He has scheduled a hearing for Wednesday morning.
Aranesp, primarily used to treat anemia in cancer patients undergoing chemotherapy, remains one of Amgen's largest drugs with sales of $2.3 billion in 2011. Its sales, and that of a related older red blood cell booster Epogen, have declined significantly over the past few years amid safety concerns, stricter usage guidelines and reimbursement restrictions.
Amgen was accused of promoting Aranesp for anemia caused by cancer, for which it was not approved, rather than to combat anemia as a side effect of chemotherapy treatments. The company was also accused of pushing higher doses and more convenient treatment schedules than what was approved in the drug's label for both cancer and chronic kidney disease patients.

The government said the illegal practices were undertaken in part to help Amgen take market share from Johnson & Johnson's similar anemia drug Procrit.

Amgen was "pursuing profits at the risk of patients' safety," Miller told reporters Tuesday after the plea hearing. He added that while the company "circumvented the FDA approval process," the investigation had not uncovered any evidence of fraudulent intent on Amgen's part.

Federal prosecutors declined to comment further on the civil portion of the settlement, which they said is still under seal.

A spokeswoman for the company, based in Thousand Oaks, California, said that if the judge accepts the criminal plea tomorrow, "Amgen expects immediately thereafter to complete the comprehensive resolution of related civil and criminal matters," for which it had previously recorded a $780 million charge in the third quarter of 2011.

In a recent regulatory filing with the U.S. Securities and Exchange Commission, Amgen said it had accrued $806 million related to the proposed settlement of charges arising out of the federal civil and criminal investigations.

Amgen shares were down 14 cents at $89.36 in late morning trading on the New York Stock Exchange.

Seven Members of the Cash Out Boyz Street Gang Indicted in Racketeering Conspiracy

SOUTH BEND, IN—United States Attorney David Capp announced that seven individuals alleged to be members of the Cash Out Boyz street gang were charged in an indictment with RICO violations. The indictment alleges that from 2010 through 2012, these individuals conducted the affairs of the Cash Out Boyz, an ongoing criminal enterprise, by engaging in the distribution of controlled substances and in acts of violence, including murder, attempted murder, assaults with deadly weapons, robbery, and home invasions. This pattern of illegal activity occurred primarily in South Bend, Indiana.
The indictment unsealed today charges the following individuals:

• Demerius M. Shaw, 20, of South Bend, Indiana, is charged with participating in and conspiracy to participate in racketeering activity; carrying a firearm during a crime of violence and drug trafficking crime and aiding and abetting; carrying and using a firearm during a crime of violence; and carrying a firearm during a drug trafficking crime.
• Timothy Whitfield, 21, of South Bend, Indiana, is charged with participating in and conspiracy to participate in racketeering activity; carrying a firearm during a crime of violence and drug trafficking crime; and violent crime in aid of racketeering/assault with a deadly weapon.
• Alvin Blade, III, 20, of South Bend, Indiana, is charged with participating in and conspiracy to participate in racketeering activity and carrying a firearm during a crime of violence and drug trafficking crime.
• Jarvis Ward, 19, of South Bend, Indiana, is charged with participating in and conspiracy to participate in racketeering activity; and aiding and abetting the carrying of a firearm during a crime of violence and drug trafficking crime.
• Jaleen L. McGee, 20, of South Bend, Indiana, is charged with participating in and conspiracy to participate in racketeering activity; and carrying and using a firearm during a crime of violence.
• Brison K. Williams, 20, of South Bend, Indiana, is charged with participating in and conspiracy to participate in racketeering activity; and violent crime in aid of racketeering/assault with a deadly weapon.
• Rickey Hemphill, 19, of South Bend, Indiana, is charged with participating in and conspiracy to participate in racketeering activity; and violent crime in aid of racketeering/assault with a deadly weapon.

Ward and Whitfield are alleged to be leaders of the Cash Out Boyz.
The indictment alleges 18 acts of racketeering which include multiple acts of attempted murder and one act of murder. Specifically:

• The attempted murder of David Adams on March 19, 2010, allegedly committed by Timothy Whitfield.
• The attempted murders of three members of the Kaley St. gang on May 22, 2010, allegedly committed by Rickey Hemphill and other Cash Out Boyz members.
• The attempted murder of Devencie Ervin on May 28, 2010, allegedly committed by Timothy Whitfield.
• The attempted murder of Anthony Carter on June 19, 2010, allegedly committed by Timothy Whitfield.
• The attempted murder of Jerrell Sanders on January 21, 2011, allegedly committed by Alvin Blade, III.
• The attempted murder of Kenny Wade on June 5, 2011, allegedly committed by Demerius Shaw, Jaleen McGee, and other Cash Out Boyz members.
• The murder of Steven Chatman on August 8, 2011, allegedly committed by Demerius Shaw.

The remaining acts of racketeering allege various drug transactions and robberies.
United States Attorney Capp stated, “The indictment today represents part of our ongoing effort in northern Indiana against violent street gangs. Our investigation is continuing, and we are not going to stop until we remove these violent offenders from the streets.”
Capp praised the cooperative efforts of the ATF, FBI, USMS, and the SBPD. Capp also stated, “My office has been working in conjunction with St. Joseph County Prosecutor Michael Dvorak and his office. This is a team effort on all fronts, and this Cash Out Boyz indictment would not have occurred without the St. Joe County Prosecutor’s office.”
Timothy Whitfield and Demerius Shaw are in custody on other charges. Blade, McGee, and Hemphill were arrested today and will have their initial appearance before Magistrate Judge Andrew Rodovich at 4 p.m. The United States Attorney’s Office will be seeking pre-trial detention on all defendants.
Brison Williams and Jarvis Ward are still at large. If anyone has any information that would assist in bringing them to justice, please call the FBI at 574-233-4488 or the U.S. Marshals Service at 574-236-8291. All calls will be treated confidentially.
Three members of the Cash Out Boyz gang—Javon D. Thomas, Jeffrey A. Sheppard, and Wilber Crawford—were charged earlier this year (May 9, 2012) in a federal indictment. They pleaded guilty in June 2012 to brandishing a firearm during a federal drug trafficking crime. The three are awaiting sentencings that are set in late May 2013 and early June 2013 in federal court.
This case is being investigated by the Bureau of Alcohol, Tobacco, Firearms, and Explosives; the Federal Bureau of Investigation; the United States Marshals Service; the St. Joseph County Prosecutor’s Office; the St. Joseph County Police Department; and the South Bend Police Department. This case is being prosecuted by Assistant United States Attorneys Donald Schmid and Kenneth Hays.
If convicted in court, any specific sentence to be imposed will be determined by the judge after consideration of federal sentencing statutes and the Federal Sentencing Guidelines.
The United States Attorney’s Office emphasized that an indictment is merely an allegation and that all persons charged are presumed innocent until and unless proven guilty in court.

Homegrown Violent Extremism

 
Multiple long guns were seized in the case of Daniel Patrick Boyd, who conspired to kill Americans at home and abroad. He was sentenced in August to 18 years in prison.


To his sons and others in their rural North Carolina community, Daniel Patrick Boyd was a charismatic figure. But the U.S. citizen used his persuasive powers to no good end—he promoted violent jihad against Americans at home and abroad.

After a four-year investigation by the Raleigh-Durham Joint Terrorism Task Force (JTTF), Boyd and two of his sons, along with five other conspirators—known as the Triangle Terror Group—were arrested and charged with providing material support to terrorists and conspiring to murder persons overseas, including U.S. military personnel. Boyd pled guilty and was sentenced in August 2012 to 18 years in prison.

	A Well-Planned Takedown The Triangle Terror Group takedown was planned months in advance. The FBI’s elite Hostage Rescue Team (HRT) helped create a ruse so that Daniel Patrick Boyd, his two sons, and other followers could be arrested without bloodshed. A source inside the group helped arrange a shooting trip to a farm and a stop on the way at a construction site where Boyd would bid on a job—but the construction site was a fake. After extensive surveillance, investigators knew that when Boyd and his followers went shooting, most of their weapons would be placed unloaded in the back of a pickup truck, said Dewayne Burroughs, a Durham Police Department officer who has been a member of the Raleigh-Durham JTTF since 2006. Only Boyd and his son Dylan were known to regularly carry a loaded sidearm. On July 27, 2009, the takedown was executed. Dozens of law enforcement officers were hiding at the fake construction site when Boyd and his group arrived. Separate SWAT teams were assigned to arrest each subject—a tactic designed to further reduce the risk of violence. The plan worked flawlessly. The only injury that occurred was to Dylan Boyd’s arm. He was bitten by an HRT canine to prevent him from getting to his loaded sidearm.

Chris Briese, then-special agent in charge of our Charlotte office, noted at the time, “People who are plotting to harm Americans are no longer a world away from us.” The men and women of the JTTF who investigated the Boyd case learned that fact firsthand as they worked to unravel the network of homegrown violent extremists.

The case began in 2005 with a tip from someone in the Muslim community that one of its members was becoming radicalized. Boyd was a hero to young Muslim-Americans because at the age of 19 he had traveled to Pakistan and Afghanistan to receive military training and to fight with the mujahedeen.

In 2006, one of Boyd’s North Carolina jihad recruits traveled to Jordan and e-mailed his mentor to ask how to get to the front lines to fight. “That’s when we began to understand how serious this threat was,” said Special Agent Paul Minella, a JTTF member who worked the case.

Over the next three years, the JTTF monitored the group—with the help of partner agencies and the support of the U.S. Attorney’s Office— using a variety of investigative tools, including court-ordered wiretaps and sources who infiltrated the group.

During one monitored conversation inside the food market Boyd owned, said Maria Jocys, who supervises the Raleigh-Durham JTTF, “in an effort to ingratiate himself with Boyd, one of the foreign-born co-conspirators bragged about his experience as a skilled sniper and graphically described how he shot a man overseas.”

“The talk at the market was often about fighting jihad and how, in their belief, fighting jihad was an obligation,” added Special Agent Bill Logallo, another JTTF member.

Investigators tracked Boyd’s network across the United States and six foreign countries. “It became very clear,” Jocys said, “that Boyd’s followers wanted to fight on the front lines overseas. And if they didn’t have the opportunity to do that, then they would wage jihad here at home.”

Boyd dug a hole in his yard to bury a cache of weapons.

As the investigation continued, “we saw them buying a lot of weapons and ammunition,” Logallo said. Boyd dug a hole in his yard to bury a cache of weapons, and positioned long guns in every room of his house. He took his sons and recruits out to train with weapons and taught them military tactics.

Even after Boyd suspected that the FBI was onto his group, “they kept going,” Minella said. “That’s how committed they were to jihad and how right they thought they were about their obligation to kill non-Muslims.”

After a carefully orchestrated takedown planned months in advance (see sidebar), Boyd and the Triangle Terror Group were arrested in July 2009. They had committed no acts of violence, but the JTTF was certain it was only a matter of time before they did.

“Boyd and his followers wanted to kill people,” Jocys said. “We had to stop them.”

Provident CFO Indicted in $485 Million Investment Fraud Scheme

PLANO, TX—A 59-year-old Plano Texas, man has been indicted in connection with a $485 million investment fraud scheme in the Eastern District of Texas, announced U.S. Attorney John M. Bales today.
W. Mark Miller was indicted by a federal grand jury late yesterday and charged with conspiracy to commit mail fraud.
According to the indictment, Miller, who served as chief financial officer of Provident Royalties, is alleged to have conspired with others to defraud investors in an oil and gas scheme that involved over $485 million and 7,700 investors throughout the United States. Specifically, beginning in September 2006, Miller and other individuals are alleged to have made materially false representations and failed to disclose material facts to their investors in order to induce the investors into providing payments to Provident. Among these false representations were statements that funds invested would be used only for the oil and gas project for which those funds were raised; among the omissions of material fact were the facts that another of Provident founders, Joseph Blimline, had received millions of dollars of unsecured loans; that Blimline had been previously charged with securities fraud violations by the state of Michigan; and that funds from investors in later oil and gas projects were being used to pay individuals who invested in earlier oil and projects.
Blimline, 35, pleaded guilty in connection with the scheme and was sentenced in May 2012 to 20 years in federal prison. Provident CEO/founder Paul R. Melbye, 47, pleaded guilty in connection with the scheme in November 2012 and awaits sentencing. Two other Provident principals, Brendan Coughlin, 46, and Henry Harrison, 47, were indicted by a federal grand jury in July 2012 and are awaiting trial.
If convicted, Miller faces up to 20 years in federal prison for his role in the conspiracy.
This case is being investigated by the Federal Bureau of Investigation and prosecuted by Assistant United States Attorney Shamoil T. Shipchandler.
A grand jury indictment is not evidence of guilt. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

Former Wells Fargo Investment Banker and Co-Conspirators Charged with $11 Million Insider Trading Conspiracy

CHARLOTTE, NC—A federal indictment unsealed today in U.S. District Court charged nine defendants in Charlotte and elsewhere with insider trading and money laundering, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. The charges in the indictment arise from the Charlotte-based FBI investigation, Operation Insider Out, which began in early 2012 and identified targets involved in insider trading activities in the Charlotte area.
Roger A. Coe, Acting Special Agent in Charge of the FBI, Charlotte Division, joined U.S. Attorney Tompkins in making today’s announcement.
The federal criminal indictment was returned by a federal grand jury in Charlotte on Wednesday, December 12, 2012, and was unsealed today following the arrest of the lead defendant, John Femenia. Six other defendants named in the indictment have agreed to plead guilty to the charges against them. The indictment alleges that from about March 2010 through December 2012, the defendants were members of an insider trading conspiracy that stole material non-public information, including information about upcoming corporate mergers and acquisitions, from Wells Fargo and its clients and used that information to conduct illegal insider trading. Stealing material non-public inside information allows a trader to cheat and earn substantial profits by trading before such news becomes public, earning substantial profits by trading again once the news becomes public and impacts the price of a stock. The indictment alleges that the criminal conspiracy netted over $11 million in proceeds as a result of the illegal insider trading activities.
The indictment charges Femenia, 31; Shawn C. Hegedus, 32; and Danielle C. Laurenti, 31, all of New York, with conspiracy to commit insider trading, conspiracy to commit wire fraud, securities fraud, and money laundering. Femenia and Hegedus are also charged with bank fraud. Femenia was arrested this morning in New York and is expected to be released on bond conditions following his initial appearance in U.S. District Court. Hegedus and Laurenti are currently fugitives.
The remaining six defendants named in the indictment, Matthew J. Musante, 32, of Miami; Aaron M. Wens, 32, of Encinitas, California; Roger A. Williams, 51, of Georgetown, South Carolina; Kenneth M. Raby, 50, of Greer, South Carolina; Frank M. Burgess, Jr., 42, of Charlotte, North Carolina; and James A. Hayes, 38, also of Charlotte, have agreed to plead guilty to conspiracy to commit insider trading. Their individual plea agreements have been filed, and the defendants will appear upon a summons for their initial appearances and plea hearings on a date set by the court.
According to allegations contained in the indictment, Femenia, an investment banker who lived in Charlotte and New York, stole material, non-public information from his employer, Wells Fargo, and its clients about potential and upcoming mergers and acquisitions. The indictment alleges that Femenia provided the inside information to co-conspirators who traded on the information. These co-conspirators then passed the confidential inside information to other co-conspirators who also traded on that information, the indictment alleges. In total, the co-conspirators made over $11 million in profits when news of the mergers and acquisitions finally became public.
The indictment further alleges that Femenia was paid kickbacks for the stolen information in several forms. For example, according to the indictment, Hegedus, who was a stockbroker and Femenia’s high school friend, bought 550 gold bars with proceeds of the insider trading. Femenia then sold four of the gold bars for $70,877 to a precious metals dealer in Oklahoma. According to allegations contained in the indictment, Femenia also received kickbacks in cash, including by co-conspirators making cash deposits by ATM into an account in the name of Femenia’s girlfriend. The indictment also alleges that co-conspirators Hegedus and Laurenti laundered proceeds of the insider trading through a casino in Las Vegas. The indictment further alleges that Femenia and Hegedus engaged in mortgage fraud through the fraudulent purchase of a luxury home in Waxhaw, North Carolina.
The conspiracy to commit insider trading charge carries a maximum term of five years in prison and a $250,000 fine. The conspiracy to commit wire fraud charge carries a maximum term of 20 years in prison and a $250,000 fine. The securities fraud charge carries a maximum term of 20 years in prison and a $250,000 fine. The bank fraud charge carries a maximum term of 30 years in prison and a $1,000,000 fine. The money laundering conspiracy charge carries a maximum term of 20 years in prison and a $250,000 fine, or a fine of twice the amount of criminally derived proceeds.
An indictment is merely an allegation, and the defendants are presumed innocent unless and until proven guilty beyond reasonable doubt in a court of law. In addition, the agreement to plead guilty by any other person is not relevant to the guilt of any indicted person.
In announcing the insider trading indictment, U.S. Attorney Tompkins praised the investigative work of the FBI in Charlotte and thanked the U.S. Securities and Exchange Commission, the Financial Industry Regulatory Authority, and Wells Fargo for their assistance.
Operation Insider Out in the Western District of North Carolina is handled by the Charlotte Division of the FBI. The prosecution for the government is handled by Assistant U.S. Attorney Kurt W. Meyers.
President Obama established the Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The President’s Financial Fraud Enforcement Task Force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch and, with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit www.stopfraud.gov.

Former Mexican Hotel Operator Pleads Guilty in First Stage of Resolving $500 Million Scheme to Defraud Thousands of U.S. Investors in Sales of Promissory Notes and Timeshare Leases

CHICAGO—Partially resolving one of the largest investment fraud cases ever in federal court here, a defendant who owned hotel properties in Mexico pleaded guilty yesterday to securities fraud, admitting that he fraudulently obtained approximately $500 million from some 8,000 investors throughout in the United States. The defendant, Michael E. Kelly, was sentenced today to the maximum term of five years in prison, ensuring that final orders of restitution and forfeiture will be imposed despite Kelly’s ill health. Meanwhile, Kelly still faces additional charges carrying substantial additional periods of incarceration.
On November 20, U.S. District Judge Ronald Guzman ordered the first distribution of $50 million in restitution to more than 7,000 victims, who collectively lost more than $340 million as a result of Kelly’s fraud scheme. Kelly has remained in federal custody in Chicago since he was arrested in December 2006. Since then, authorities, including a court-appointed special master, have worked to untangle and liquidate a complex web of businesses and properties in Mexico and Panama to provide restitution to victims.
Judge Guzman stressed today that these developments are only a “small step” in the overall proceedings against Kelly.
Kelly, 63, formerly of South Bend, Indiana—who holds citizenship in the United States, Mexico, and Belize—and others associated with him used a significant portion of the funds raised from investors for their own personal benefit, including the purchase of hotels, businesses, homes, boats, automobiles, an airplane, a night club, and an interest in a real estate development project in Cancun, Mexico, where Kelly resided for several years before he was arrested.
Kelly’s guilty plea to one count of securities fraud was designed to be the first step in resolving his entire prosecution since final orders of restitution in criminal cases may only be issued at the time of sentencing. As part of today’s sentencing, Kelly agreed to, and Judge Guzman ordered, restitution totaling $342,143,221, minus any credit for funds distributed by the court-appointed special master overseeing the liquidation of Kelly’s assets.
Before imposing the five-year sentence, which exceeds the amount of time Kelly has been in custody, Judge Guzman granted Kelly’s request to be released temporarily under home incarceration, with global position electronic monitoring, for up to four months or no longer than necessary to receive medical treatment for colon cancer at his own expense without using any investor or government funds. Kelly’s relatives co-signed a $10 million signature bond and posted properties in Lakeville, Indiana, and Double Springs, Alabama, to secure his release.
Kelly still faces 13 additional counts of mail, wire, and securities fraud, which remain pending until they are resolved by a trial or a second guilty plea at a later date. If convicted of those counts, Kelly will be subject to substantial additional terms of imprisonment.
The guilty plea and sentence were announced today by Gary S. Shapiro, Acting United States Attorney for the Northern District of Illinois, and Thomas R. Trautmann, Acting Special Agent in Charge of the Chicago Office of the Federal Bureau of Investigation. FBI agents in South Bend, Indiana also participated in the investigation. The U.S. Securities and Exchange Commission also cooperated with the investigation.
In pleading guilty, Kelly admitted that beginning in 1998, he defrauded purchasers and prospective purchasers of two types of investments—one, a nine-month promissory note, and the second, a so-called “universal lease.” Kelly was the president and sole shareholder of Yucatan Investment Corp. and Resort Holdings International Inc., both of which at various times offered and sold either the promissory notes or universal leases.
Between January 1998 and June 1999, Kelly fraudulently obtained approximately $34 million from the sale of the promissory notes, which guaranteed an annual rate of return as high as 10.75 percent of the purchase price and could be renewed for one or more additional nine-month terms. Through various companies and a network of salesmen, Kelly fraudulently obtained approximately $500 million from the sale of promissory notes and interests in universal leases, which had a 25-year term and purported to relate to particular rooms for particular time periods in particular Mexican hotels operated by Kelly. A lease investor had three options: 1) use the room; 2) rent the room; or 3) allow a purported independent third-party management company, World Phantasy Tours Inc., doing business as Majesty Travel, Viajes Majesty, or, later, Galaxy Properties Management, to rent the room in exchange for guaranteed payments to the investor. Almost all of the lease purchasers chose the third option under which World Phantasy Tours guaranteed investors an annual return as high as 11 percent, regardless of whether the room was actually rented. Kelly and others promoted the investment as carrying little risk by promising to buy back the interest in the universal lease at any time at a slight discount and further promising to pay back 100 percent of the purchase price in as little as either two or three years.
Between 1999 and 2004, Kelly regularly met with salesmen and prospective purchasers to explain the terms of the universal lease investments, often as part of an all expenses paid trip to Cancun. Many of the investments were sold to retirees who found the promised high fixed rates of return, coupled with the reported safety of the buy-out (or repurchase) provision, to be an attractive investment. In the offer and sale of both the promissory notes and the interests in the leases, Kelly and others made material misstatements and omissions about the return on investments, the guaranteed nature of the returns, and the liquidity and risks of the investments. Kelly and others concealed from investors that the ability to make promised payments depended on continually raising funds from new investors and using those funds to pay earlier investors.
The government is being represented by Assistant U.S. Attorneys Edward Kohler and Daniel Gillogly.
The case falls under the umbrella of the Financial Fraud Enforcement Task Force, which includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit: www.stopfraud.gov.

Iranian Citizen, U.S. Citizen Living in Kentucky and Holding Iranian Passport Plead Guilty in Plot to Export Aircraft and Aircraft Parts to Iran

LOUISVILLE, KY—Two men pleaded guilty today to charges related to the unlawful export of aircraft and aircraft parts from the United States to Iran, announced David J. Hale, U.S. Attorney for the Western District of Kentucky; Lisa Monaco, Assistant Attorney General for National Security; and Perrye Turner, Special Agent in Charge, FBI Louisville Division.
One of the defendants, Hamid Asefi, 68, is a citizen and resident of the Republic of Iran. The other, Behzad Karimian, also known as Tony Karimian, 53, is a U.S. citizen living in Louisville who holds a valid Iranian passport and is employed as a Mesaba Airlines pilot. The guilty pleas were entered today in Louisville before Magistrate Judge James D. Moyer. The two-count indictment was returned by a federal grand jury in Louisville on August 2, 2012, and was unsealed before the hearing today.
Asefi and Karimian were both charged with conspiracy to violate and violating the International Emergency Economic Powers Act for exporting, selling or causing the export or sale of aircraft and aircraft parts without first having obtained the required license from the U.S. Department of Treasury. Asefi made his initial appearance in U.S. District Court in Louisville on June 1, 2012. Karimian was arrested and made his initial appearance in U.S. District Court in Louisville on June 6, 2012.
Asefi is the principal officer of Aster Corp Ltd., an Iranian company with offices in both Iran and the United Kingdom. The indictment charges that, beginning as early as August 2007 and continuing through April 2011, Asefi used the U.K. office of Aster to serve as a transshipment point to facilitate shipment of goods from the United States to Iran and that Asefi used Aster to facilitate the shipment of goods from the United States to Iran through third party countries. The indictment further charges that Asefi sent requests on behalf of Iranian entities to Karimian for purchases of aircraft and aircraft parts located in the United States or owned by U.S. persons; and that Karimian knowingly and willfully made inquiries, placed orders, and attempted to facilitate the purchase of aircraft and aircraft parts located in the United States and owned by U.S. persons on behalf of Asefi and persons in Iran.
The indictment also asserts that Asefi and Karimian acted with knowledge and intent to violate the Iran embargo when on September 27, 2007, Asefi sent an e-mail to Karimian regarding Karimian’s interest in establishing a “profitable business collaboration” for the purpose of procuring aircraft and aircraft components for end-users in Iran. The indictment further alleges that on or about October 1, 2009, Asefi sent an e-mail to Karimian which outlined the terms of delivery and payment on future transactions with Iran Air and stated, “…remember that, only U.S. Embargo has brought this chance and benefit to us, to get involved in these deals….”
According to count two of the indictment, beginning in September 2009 and continuing through April 2010, Asefi and Karimian violated the embargo against Iran by exporting and causing the export of services related to the sale of a G.E. Aircraft Engine Model CF6-50C2, as well as the procurement of helicopters manufactured by Bell Helicopter, from the United States to Iran, without first having obtained the required authorizations from the U.S. Department of Treasury. All of the aircraft and aircraft parts involved in this case were intended for civilian use.
“The investigation and prosecution of national security cases is the top priority of the Department of Justice and my office,” said U.S. Attorney Hale. “We view the circumvention of Iranian export control laws as a very serious matter. The FBI should be commended for its excellent work in disrupting this international scheme and bringing these men to justice.”
The International Emergency Economic Powers Act authorizes the President to impose economic sanctions on a foreign country when the President declares a national emergency with respect to a national security threat. On March 15, 1995, the president issued an executive order declaring the actions and policies of the government of Iran constituted a national emergency. On May 6, 1995, the president issued an executive order imposing the Iran trade embargo. On June 23, 2011, the U.S. Department of the Treasury imposed sanctions on Iran Air after designating it as a proliferator of weapons of mass destruction for providing material support and services to Iran’s Islamic Revolutionary Guard Corps.
At sentencing, Asefi and Karimian face a maximum sentence of 40 years in prison, a fine of $500,000, and a three-year period of supervised release on each count. Sentencing is scheduled before Chief District Judge Joseph H. McKinley, Jr. on March 4, 2013 at 2 p.m. in Louisville.
This case is being prosecuted by Assistant U.S. Attorney Bryan Calhoun of the U.S. Attorney’s Office for the Western District of Kentucky, and Trial Attorney Casey Arrowood of the Counterespionage Section of the Justice Department’s National Security Division. The case was investigated by the FBI.

FBI Requests the Public’s Assistance Concerning Israel Keyes

Mary Rook, Special Agent in Charge of the Federal Bureau of Investigation (FBI) for the state of Alaska, requests the public’s assistance in developing information concerning the travels of suspected serial killer Israel Keyes, deceased, in order to identify additional victims. Anyone with information concerning Keyes is encouraged to contact the FBI at 1-800-CALL-FBI.
Based upon investigation conducted following his arrest in March 2012, Israel Keyes is believed to have committed multiple kidnappings and murders across the country between 2001 and March 2012. Keyes lived in Washington from 2001 to March 2007, at which time he moved to Alaska. While living in Alaska, Keyes worked as a general contractor but traveled extensively. In a series of interviews with law enforcement, Keyes described significant planning and preparation for his murders, reflecting a meticulous and organized approach to his crimes. It was not unusual for Keyes to fly into an airport, rent a car, and drive hundreds of miles to his final destination. This was the case in the murder of Bill and Loraine Currier, where Keyes flew into Chicago, rented a car, and drove across several states before arriving in Essex, Vermont. After the murder of the Curriers, Keyes continued his travels on the east coast before returning to Chicago and then to Alaska.
Keyes admitted responsibility for robbing several banks during this timeframe, two of which investigators have corroborated. Keyes used the proceeds from his bank robberies to pay for his travel, along with money he made as a general contractor. Keyes also admitted traveling to various locations to leave supplies he planned to use in a future crime. Keyes buried caches throughout the United States. The FBI has recovered two caches buried by Keyes—one in Eagle River, Alaska, and one near Blakes Falls Reservoir in New York. The caches contained weapons and other items used to dispose of bodies. Keyes indicated the other caches he buried throughout the U.S. contain weapons, money, and items used to dispose of victims.
Investigators believe that Keyes did not know any of his victims prior to their abductions. He described several remote locations that he frequented to look for victims—parks, campgrounds, trailheads, cemeteries, boating areas, etc. Keyes also told investigators that prior to the Currier case, his victims’ disappearances received little if any media coverage. Based on his own research, Keyes stated that one of his victims has been recovered but authorities ruled the death accidental. Investigators have not identified this victim or where this crime occurred.
Keyes admitted to murdering four people in Washington; he killed two people (independent of each other) sometime during 2005 and 2006 and murdered a couple in Washington between 2001 and 2005. It is unknown if these victims were residents of Washington or if they were vacationing in Washington but resided in another state. It is also possible Keyes abducted them from a nearby state and transported them to Washington.
Additionally, Keyes admitted to investigators that in 2009 he murdered a victim on the east coast and disposed of the body in New York State. Based on Keyes’ statements, investigators believe Keyes abducted the victim from a surrounding state and transported him/her to New York.
The timeline below is an outline of Keyes’ travels and whereabouts throughout the United States from 2001 to present. Due to Keyes’ pattern of traveling significant distances by car, the locations are grouped by region rather than specific states.
October 5, 2004 to October 16, 2004: Eastern US

April 20, 2005 to April 25, 2005: Washington, British Columbia

May 10, 2006 to May 15, 2006: Western US

September 1, 2006 to September 7, 2006: Alaska

October 21, 2006 to October 23, 2006: Western US, Mexico

November 8, 2006 to November 16, 2006: Alaska

February 5, 2007 to February 8, 2007: Southwest US

March 1, 2007 to March 9, 2007: Washington, Canada (drove to Alaska)

April 24, 2007 to May 4, 2007: Western US, Mexico

August 26, 2007 to September 6, 2007: Western US

October 29, 2007 to November 2, 2007: Western US

November 12, 2007 to November 13, 2007: Western US

12/April 2007 to 12/17/2007: Midwest and Western US

01/May, 2008 to 01/08/2008: Western US

01/28/2008 to 02/15/2008: Southern U.S. and Western US

May, 11/2008 to May, 17/2008: Western US

07/03/2008 to 07/07/2008: Western US
 
09/16/2008 to 09/24/2008: Western US

October 24/2008 to November 5, 2008: Southwest US, Midwest U.S. and Western US

December 5, 2008 to December 7, 2008: Hawaii

December 11, 2008 to December 25, 2008: Mexico

February 23, 2009 to February 27, 2009: Western US

April 1, 2009 to April 14, 2009: Eastern US, Western US

09/11/2009 to October 03/2009: Southern US

December 17, 2009 to December 29, 2009: Southern US

January 11, 2010 to February 25, 2010: Western US

March 1, 2010 to March 10, 2010: Western US

April 24, 2010 to April 30, 2010: Western US

May 19, 2010 to July 18, 2010: Midwest U.S. and Western US

July 18, 2010 to July 22, 2010: Southwest US

October 15, 2010 to October 25, 2010: Midwest US, Eastern US

June 2, 2011 to June 16, 2011: Midwest US, Eastern US

September 15, 2011 to September 25, 2011: Western US

February 2, 2012 to February 18, 2012: Southern US

March 6, 2012 to March 13, 2012: Southwestern and Southern US

FBI Releases 2011 Statistics on Law Enforcement Officers Killed and Assaulted

Washington, D.C. November 19, 2012

FBI National Press Office (202) 324-3691

According to the FBI, 72 law enforcement officers were feloniously killed in the line of duty in 2011. Another 53 officers died in accidents while performing their duties, and 54,774 officers were assaulted in the line of duty. Comprehensive tabular data about these incidents and brief narratives describing the fatal attacks are included in the 2011 edition of Law Enforcement Officers Killed and Assaulted, released today.
Felonious Deaths
The 72 felonious deaths occurred in 30 states and Puerto Rico. The number of officers feloniously killed in 2011 increased by 16 when compared with the 2010 figure (56 officers). The five- and 10-year comparisons show an increase of 14 felonious deaths compared with the 2007 figure (58 officers) and an increase of 16 deaths compared with 2002 data (56 officers).
Officer Profiles: The average age of the officers who were feloniously killed was 38. The victim officers had served in law enforcement for an average of 12 years at the time of the fatal incidents. Sixty-nine of the officers were male, and three were female. Sixty-eight of the officers were white, three were black, and one was American Indian/Alaskan Native.
Circumstances: Of the 72 officers feloniously killed, 23 were killed in arrest situations, 15 were ambushed, 11 were involved in performing traffic pursuits/stops, nine were involved in tactical situations, and seven were answering disturbance calls. Five of the slain officers were investigating suspicious persons/circumstances; one was conducting an investigative activity, such as surveillance, searches, or interviews; and one officer was killed while transporting or maintaining the custody of prisoners.
Weapons: Offenders used firearms to kill 63 of the 72 victim officers. Of these 63 officers, 50 were slain with handguns, seven with rifles, and six with shotguns. Six officers were killed with vehicles used as weapons. Two victim officers were killed with personal weapons (hands, fists, feet, etc.). One officer was killed with a knife or other cutting instrument.
Regions: Twenty-nine of the felonious deaths occurred in the South, 21 in the Midwest, 10 in the West, and 10 in the Northeast. Two of the deaths took place in Puerto Rico.
Suspects: Law enforcement agencies identified 77 alleged assailants in connection with the 72 felonious line-of-duty deaths. Sixty-four of the assailants had prior criminal arrests, and 17 of the offenders were under judicial supervision at the time of the felonious incidents.
Accidental Deaths
Fifty-three officers were killed accidentally while performing their duties in 2011. The majority (30 officers) were killed in automobile accidents. The number of accidental line-of-duty deaths was down 19 from the 2010 total (72 officers).
Assaults
In 2011, 54,774 law enforcement officers were assaulted while performing their duties. Of the officers assaulted, 26.6 percent suffered injuries. The largest percentage of victim officers (33.3 percent) were assaulted while responding to disturbance calls. Assailants used personal weapons (hands, fists, feet, etc.) in 79.9 percent of the incidents, firearms in 4.0 percent of incidents, and knives or other cutting instruments in 1.8 percent of the incidents. Other types of dangerous weapons were used in 14.3 percent of assaults.

Brooklyn Clinic Employee Pleads Guilty in Connection with $71 Million Medicare Fraud Scheme

U.S. Department of Justice December 03, 2012

Office of Public Affairs (202) 514-2007/TDD (202)514-1888

WASHINGTON—A Brooklyn, New York resident pleaded guilty today to his role in a $71 million Medicare fraud scheme, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney for the Eastern District of New York Loretta E. Lynch, Acting Assistant Director in Charge Mary E. Galligan of the FBI’s New York Field Office, and Special Agent in Charge Thomas O’Donnell of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG).
Yuri Khandrius, 50, pleaded guilty today before U.S. District Judge Nina Gershon in the Eastern District of New York to one count of conspiracy to commit health care fraud, one count of health care fraud, and one count of conspiracy to pay kickbacks.
Khandrius was an employee of a clinic in Brooklyn that operated under three corporate names: Bay Medical Care PC, SVS Wellcare Medical PLLC and SZS Medical Care PLLC (Bay Medical clinic). According to court documents, owners, operators and employees of the Bay Medical clinic paid cash kickbacks to Medicare beneficiaries and used the beneficiaries’ names to bill Medicare for more than $71 million in services that were medically unnecessary or never provided. The defendants billed Medicare for a wide variety of fraudulent medical services and procedures, including physician office visits, physical therapy, and diagnostic tests.
According to the criminal complaint, the co-conspirators allegedly paid kickbacks to corrupt Medicare beneficiaries in a room at the clinic known as the “kickback room,” in which the conspirators paid approximately 1,000 kickbacks totaling more than $500,000 during a period of approximately six weeks from April to June 2010.
Khandrius admitted in court that he conspired with co-workers at Bay Medical to commit health care fraud and to pay cash kickbacks to Medicare beneficiaries as part of the scheme.
At sentencing, Khandrius faces a maximum penalty of 25 years in prison. Sentencing is scheduled for March 11, 2013.
In total, 16 individuals have been charged in the Bay Medical scheme, including two doctors, nine clinic owners/operators/employees, and five external money launderers. To date, 11 defendants have pleaded guilty for their roles in the conspiracy. Five individuals await trial before Judge Gershon on January 22, 2013.
The case is being prosecuted by Assistant U.S. Attorney Shannon Jones of the Eastern District of New York and Trial Attorney Sarah M. Hall of the Criminal Division’s Fraud Section. The case was investigated by the FBI and HHS-OIG.
The case was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of New York. The Medicare Fraud Strike Force operations are part of the Health Care Fraud Prevention & Enforcement Action Team (HEAT), a joint initiative announced in May 2009 between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,480 defendants who have collectively billed the Medicare program for more than $4.8 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.

 

Two Mississippi Men Plead Guilty to Committing Hate Crimes Against African-Americans

U.S. Department of Justice December 04, 2012

Office of Public Affairs (202) 514-2007/TDD (202) 514-1888

WASHINGTON—William Kirk Montgomery, 23, from Puckett, Mississippi, and Jonathan K. Gaskamp, 20, from Brandon, Mississippi, pleaded guilty today in U.S. District Court in Jackson, Mississippi, to conspiracy and federal hate crime charges in connection with their roles in the assault of African-Americans in Jackson, the Justice Department announced today. Defendants Deryl Paul Dedmon, 20; John Aaron Rice, 19; and Dylan Wade Butler, 21, all from Brandon, Mississippi, have previously entered guilty pleas in connection with their roles in these offenses. The conspiracy culminated in the death of James Craig Anderson, who was assaulted and killed on June 26, 2011.
Montgomery and Gaskamp were both charged with one count of conspiracy and one count of violating the Matthew Sheppard James Byrd, Jr. Hate Crimes Prevention Act.
Beginning in the spring of 2011, Montgomery, Gaskamp, and others conspired with one another to harass and assault African-Americans in and around Jackson. On numerous occasions, the co-conspirators used dangerous weapons, including beer bottles, sling shots, and motor vehicles, to cause and attempt to cause bodily injury to African-Americans, specifically targeting those they believed to be homeless or under the influence of alcohol because they believed that such individuals would be less likely to report an assault. Additionally, the co-conspirators would often boast about these racially motivated assaults.
“We hope that today’s guilty pleas provide further closure to James Craig Anderson’s family and to the community that has mourned his senseless death and been further disheartened by the scope of the conspiracy to commit racially motivated assaults in Jackson by these and other co-conspirators,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Justice Department’s focus in this matter is ongoing and broad; we will vigorously pursue those who commit racially motivated assaults and will use every tool at our disposal to ensure that those who commit such acts are brought to justice.”
According to plea documents presented in court today, the defendants engaged in a series of racially motivated assaults in and around Jackson. On one occasion, Montgomery, Gaskamp, Deryl Paul Dedmon, John Aaron Rice, and two other co-conspirators chased down and stopped an African-American man’s vehicle and then beat the man to the point that he begged for his life. Gaskamp kicked the victim in the head and body at least two times.
On another occasion, Montgomery, Gaskamp, and others attended a birthday party/bonfire in Puckett, Mississippi, during which they discussed going to Jackson to harass and assault African-Americans. Montgomery, Dedmon, Rice, Butler, and three other co-conspirators agreed to carry out the plan. At around 4:15 a.m. on June 26, 2011, Montgomery, Rice, Butler, and another co-conspirator drove to Jackson in Montgomery’s white Jeep with the understanding that Dedmon and two other co-conspirators would join them a short time later. Gaskamp did not go to Jackson on this occasion. Upon arriving in Jackson, Montgomery and the other three occupants of the Jeep drove around and threw beer bottles at African-American pedestrians.
At approximately 5:00 a.m., Montgomery and the other three occupants of the Jeep spotted Anderson in a motel parking lot off Ellis Avenue. Rice and another co-conspirator decided to get out of the Jeep to distract Anderson while they waited for Dedmon and the other co-conspirators to arrive. After Dedmon and the other two co-conspirators arrived, Dedmon and Rice physically assaulted Anderson. After the assault, one of the co-conspirators yelled “White Power,” with Dedmon responding by also yelling “White Power.” Dedmon then deliberately used his vehicle to run over Anderson, causing injuries that resulted in his death.
Thereafter, a number of the co-conspirators, including Montgomery, agreed to and did give false statements to law enforcement officials about the nature of their interactions with Anderson.
“The defendants today took responsibility for committing federal hate crimes by assaulting vulnerable Americans solely because of their race,” said U.S. Attorney Gregory K. Davis. “Working with the Civil Rights Division of the Department of Justice, our office will continue to make the prosecution of hate crimes and other civil rights violations a top priority in the Southern District of Mississippi.”
“As the agency responsible for investigating criminal violations of federal civil rights statutes, the FBI takes very seriously its responsibility to uphold the civil rights of all citizens,” said Daniel McMullen, the Special Agent in Charge of the FBI’s Jackson Division. “The FBI will continue its efforts to identify and bring to justice all those individuals who participated in depriving Anderson and other citizens of their civil rights because of the color of their skin.”
These guilty pleas were the result of a cooperative effort between the U.S. Attorney’s Office for the Southern District of Mississippi, the Civil Rights Division of the Department of Justice, and the Hinds County District Attorney’s Office. This case was investigated by the Jackson Division of the FBI and the Jackson Police Department. It is being prosecuted by Trial Attorney Sheldon L. Beer and Deputy Chief Paige M. Fitzgerald of the Civil Rights Division and Assistant U.S. Attorney Glenda R. Haynes of the U.S. Attorney’s Office for the Southern District of Mississippi.

Former Head of Dallas Crime Stoppers Sentenced to 46 Months in Federal Prison on Conspiracy and Tax Convictions

Theadora Ross also Ordered to Pay $274,304 in Restitution to North Texas Crime Commission and Internal Revenue Service

U.S. Attorney’s Office December 03, 2012

Northern District of Texas (214) 659-8600

DALLAS—Theadora Ross, a former senior corporal with the Dallas Police Department, was sentenced this morning by U.S. District Judge David C. Godbey to 46 months in federal prison, following her guilty plea in August 2012 to one count of conspiracy to commit wire fraud, stemming from her role as head of the Dallas Crime Stoppers office, and one count of willfully attempting to evade assessment of income taxes. In addition, Judge Godbey ordered that Ross, 52, of Rowlett, Texas, pay $274,304 in restitution to the North Texas Crime Commission (NTCC) and the Internal Revenue Service (IRS) and ordered her to surrender to the Bureau of Prisons on January 14, 2013. Today’s announcement was made by U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.
Crime Stoppers is a nationwide program that offers cash rewards for information, from anonymous callers, that leads to the arrest and indictment of criminals. The program guarantees the anonymity of callers. The Dallas Crime Stoppers office is funded by the NTCC, fines levied by the Dallas and Collin County courts, private donations, and fundraising. At the time of the offense, the office was staffed by officers of the Dallas Police Department and deputies with the Dallas County Sheriff’s Office.
Ross’s co-defendant in the case, Malva R. Delley, 38, of Dallas pleaded guilty in May 2011 to one count of conspiracy to make a false statement to a financial institution. Delley, who remains on bond, faces a maximum statutory sentence of five years in prison and a $250,000 fine. A sentencing date has not yet been set.
According to the indictment in the case, Ross worked at the Dallas Crime Stoppers office from 2003 to May 2010 and was the head of that office from March 2006 to May 2010.
According to plea documents filed in the case, beginning in February 2005 and continuing to May 2010, Ross and Delley conspired together to defraud the NTCC. Ross determined which tips would be presented to the NTCC for cash reward approval and prepared the list of Crime Stoppers cash rewards that were to be paid each month and sent the lists to JP Morgan Chase Bank. These lists contained both bogus tips that Ross had created as part of the scheme and legitimate cash reward tip numbers and code words. Ross provided the bogus tip information to Delley, who then presented that information to the bank and collected cash rewards. Afterwards, Delley, per Ross’ instructions, divided the cash with Ross. On many occasions, Delley would deposit Ross’s share directly into Ross’s bank account.
From February 2005 through May 2010, the conspirators collected at least $250,000 in cash rewards for bogus tips, resulting in a loss to the NTCC. No false arrests were made based on Ross’s actions.
Regarding the tax conviction, according to the factual resume filed in the case, Ross admitted that for calendar years 2006, 2007, 2008, and 2009, she filed false and fraudulent federal income tax forms on which she falsely and substantially understated her taxable income by omitting the proceeds of her illegal fraudulent scheme. For those four years, Ross failed to report a total of nearly $175,000 in income and failed to pay nearly $38,000 in taxes due.
The case was investigated by the FBI, the Dallas Police Department-Public Integrity Unit, and IRS-Criminal Investigation. Assistant U.S. Attorney Errin Martin prosecuted.

International Organized Crime Cyber Fraud Ring Responsible for Millions of Dollars in Fraud Dismantled

Seven Defendants in Custody in Romania, Czech Republic, United Kingdom, and Canada in Coordinated Takedown

U.S. Attorney’s Office December 05, 2012

Eastern District of New York (718) 254-7000

In a coordinated international takedown, law enforcement officials in Romania, the Czech Republic, the United Kingdom, and Canada, acting on provisional arrest requests made by the United States, arrested Romanian nationals Emil Butoi, Aurel Cojocaru, Nicolae Ghebosila, Cristea Mircea, Ion Pieptea, and Nicolae Simion. Another defendant, Albanian national Fabian Meme, is already incarcerated in the Czech Republic. The U.S. arrest warrants, unsealed today, were issued in the Eastern District of New York based on a federal complaint alleging the defendants’ involvement in a sophisticated multi-million-dollar cyber fraud scheme that targeted consumers on U.S.-based Internet marketplace websites. The government will seek the defendants’ extradition to the United States pursuant to the relevant international treaties.
The charges and arrests were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; Lanny A. Breuer, Assistant Attorney General of the Criminal Division of the Department of Justice; and George Venizelos, Assistant Director in Charge, Federal Bureau of Investigation, New York Field Office.
As alleged in the complaint, the defendants were responsible for saturating Internet marketplace websites, such as eBay.com, Cars.com, AutoTrader.com, and CycleTrader.com, with detailed advertisements for cars, motorcycles, boats, and other high-value items generally priced in the $10,000 to $45,000 range. Unbeknownst to the buyers, however, the merchandise did not exist. The so-called sellers, who worked for the defendants, corresponded with the victim buyers by e-mail, sending fraudulent certificates of title and other information designed to lure the victims into parting with their money. Sometimes, they pretended to sell cars from non-existent auto dealerships in the United States and even created phony websites for these fictitious dealerships. In at least one transaction, involving defendant Ghebosila, the purported “seller” pretended to be the widow of an Iraq war veteran who was selling her family’s mobile home so that she could care for her children. In other transactions, the defendants duped victims into sending tens of thousands of dollars for non-existent vehicles, including Lexus, Audi, Ford, Chevrolet, Dodge, Toyota, Mercedes, Porsche, and BMW cars; Big Dog Mastiff and Ninja motorcycles; a Fleetwood Storm motor home; and boats.
As part of the scheme alleged in the complaint, defendants Cojocaru, Meme, Butoi, and others produced high-quality fake passports so that foreign national co-conspirators in the United States, known as “arrows,” could use the passports as identification to open American bank accounts. As alleged in the complaint, Cojocaru was recorded on video during the investigation displaying new holograms that he was using to create more authentic-looking passports.
As alleged in the complaint, after the fake “sellers” reached an agreement with the victim buyers, they would often e-mail them invoices purporting to be from Amazon Payments, PayPal, or other online payment services, with wire transfer instructions. However, these invoices were also fraudulent—the defendants and their co-conspirators used counterfeit service marks in designing the invoices so that they would appear identical to communications from legitimate payment services. The fraudulent invoices directed the buyers to send money to the American bank accounts that had been opened by the “arrows.” Finally, the “arrows” would collect the illicit proceeds and send them to the defendants in Europe by wire transfer and other methods. For example, the “arrows” forwarded defendant Pieptea $18,000 cash in fraud proceeds hidden inside hollowed-out audio speakers. Other “arrows” used the proceeds to purchase expensive Audemars Piguet watches and then sent the watches to the defendants abroad.
According to the complaint, it is estimated that the defendants earned over $3 million from the fraudulent scheme.
Each defendant is charged with wire fraud conspiracy and money laundering conspiracy, and defendants Butoi, Cojocaru, Meme, Mircea, Pieptea, and Simion are also charged with passport fraud conspiracy. If convicted, the defendants each face a maximum sentence of 20 years’ imprisonment on each of the wire fraud conspiracy and money laundering conspiracy counts and 10 years’ imprisonment on the passport fraud conspiracy count.
“As alleged, the defendants ran a sophisticated fraud scheme that used the Internet to reach across the globe and into the homes of unsuspecting Americans. They utilized high-tech counterfeiting techniques to create an aura of online legitimacy. This virtual con game nevertheless cost Americans real money. Thanks to our international partnerships, even the most sophisticated and tech-savvy criminal organizations are not beyond the reach of law enforcement. No matter how complex the scheme, we will spare no effort in protecting American consumers from fraud on the Internet,” stated United States Attorney Lynch.
“As a result of extensive cooperation between U.S. and European law enforcement officials, the defendants have been charged with a scheme to defraud unsuspecting Americans of millions of dollars,” said Assistant Attorney General Breuer. “The Department of Justice is committed to finding and prosecuting Internet fraud aggressively, wherever it happens and however hard the perpetrators work to conceal their crimes.”
FBI Assistant Director in Charge Venizelos stated, “The FBI is committed to protecting the American public from predatory conduct whether it originates here or abroad. The international nature of many organized crime groups makes it essential for us to work with our partners here and overseas—as we did in this investigation—to rein in the alleged criminals.”
The offices of the FBI Legal Attachés in Romania, the Czech Republic, the United Kingdom, Canada, and Hungary were instrumental in coordinating efforts with the United States’ international partners, and the Department of Justice’s Office of International Affairs worked with its counterparts in these countries to effect the provisional arrests and requests for mutual legal assistance, including the forfeiture of the illegal proceeds of these crimes. The Department of Justice’s Asset Forfeiture and Money Laundering Section also provided assistance with the forfeitures.
The U.S. government thanks the Romanian government, particularly the Ministry of Justice, the Romanian Internal Intelligence Service, and the Directorate for Combating Organized Crime, for their collaborative efforts throughout this long-term investigation, and also thanks the Czech National Police, Hungarian National Bureau of Investigation, Metropolitan Police Service in England, Montreal Police Service, Royal Canadian Mounted Police, International Organized Crime Intelligence and Operations Center (IOC2), Internet Crime Complaint Center (IC3), Costa Mesa Police Department, Orange County District Attorney’s Office, and the New York City Police Department for their assistance.
The government’s case is being prosecuted by Assistant United States Attorneys Cristina Posa, Vamshi Reddy, and Claire Kedeshian, and Trial Attorney Carol Sipperly of the Criminal Division’s Computer Crimes and Intellectual Property Section.
The charges in the complaint are merely allegations, and the defendants are presumed innocent unless and until proven guilty.

Defendants

Emil Butoi
Age: 34
Romanian

Aurel Cojocaru
Age: 43
Romanian

Nicolae Ghebosila
Age: 43
Romanian

Fabian Meme
Age: 42
Albanian

Cristea Mircea
Age: 30
Romanian

Ion Pieptea
Age: 36
Romanian

Nicolae Simion
Age: 37
Romanian

Former Navy Sailor Charged in Virginia with Attempted Espionage

NORFOLK, VA—Robert Patrick Hoffman, II, 39, of Virginia Beach, Virginia, has been indicted by a federal grand jury for attempting to provide classified information to individuals who he believed to be representatives of the Russian Federation.
Neil H. MacBride, U.S. Attorney for the Eastern District of Virginia; Lisa Monaco, Assistant Attorney General for the Justice Department’s National Security Division; Juan C. Molina, Acting Special Agent in Charge of the FBI’s Norfolk Field Office; and Charles T. May, Special Agent in Charge of the Naval Criminal Investigative Service (NCIS) Norfolk Field Office, made the announcement after the indictment was unsealed.
Hoffman was charged in an indictment returned yesterday with attempted espionage, which carries the penalty of imprisonment for any term up to life, if convicted. Hoffman was arrested this morning without incident and is scheduled to make his initial appearance at 2:30 p.m. in federal court in Norfolk before U.S. Magistrate Judge Tommy Miller.
According to the indictment, Hoffman is a U.S. citizen born in Buffalo, New York, who served for 20 years in the U.S. Navy until his retirement on November 1, 2011. While serving in the navy, Hoffman held security clearances that granted him access to classified and national defense information relating to programs and operations in which he participated, and he repeatedly signed agreements to not disclose that sensitive information.
The indictment alleges that on October 21, 2012, Hoffman attempted to deliver to the Russian Federation classified documents that revealed national security information. He is alleged to have carried out this activity with the intent to cause injury to the United States and to give an advantage to the Russian Federation. In fact, Hoffman delivered the information to the FBI, which was conducting an undercover operation, according to the indictment.
The indictment does not allege that the Russian Federation committed any offense under U.S. laws in this case.
This case was investigated by the FBI and NCIS. Assistant U.S. Attorneys Robert J. Krask and Alan M. Salsbury and Trial Attorney Heather M. Schmidt of the Counterespionage Section of the Justice Department’s National Security Division, are prosecuting the case on behalf of the United States.
Criminal indictments are only charges and not evidence of guilt. A defendant is presumed to be innocent until and unless proven guilty.

Seattle Man Pleads Guilty in Plot to Attack Seattle Military Processing Center

SEATTLE—A Seattle man pleaded guilty today in connection with the June 2011 plot to attack a military installation in Seattle, U.S. Attorney Jenny A. Durkan announced. Abu Khalid Abdul-Latif, aka Joseph Anthony Davis, 34, pleaded guilty to conspiracy to murder officers and agents of the United States and conspiracy to use weapons of mass destruction. If the plea agreement is accepted by the court, Abdul-Latif will be sentenced to between 17 and 19 years in prison, under the terms of the agreement. Following the prison term, Abdul-Latif will be on federal supervised release for a term to be decided by the court. Abdul-Latif will be sentenced by U.S. District Judge James L. Robart on March 25, 2013.
“This defendant plotted to kill American servicemen and women and other innocent people in furtherance of his extremist views,” said U.S. Attorney Durkan. “The continued vigilance of the community and the work of law enforcement ensured that we were able to successfully disrupt his deadly plan and bring Mr. Abdul-Latif to justice. My thanks go again to the many leaders of the Muslim community who have worked tirelessly with my office to make clear that acts of extremists cannot and should not be used to condemn the faith of many. I want to thank the FBI, Seattle Police Department, and the Joint Terrorism Task Force for their work and determination to keep our community safe.”
“The FBI is pleased that Mr. Abdul-Latif accepted responsibility for his actions,” said Laura M. Laughlin, Special Agent in Charge of the FBI Seattle Office. “Combating terrorism is the highest priority of the FBI, and, as this case demonstrates, also a commitment of the American people. Because Seattle’s Muslim community was alert to and rejected extremist plotting, a cowardly act of violence was prevented. In addition, working with the U.S. Attorney’s Office, the FBI’s Joint Terrorism Task Force, and the Seattle Police Department together moved quickly and effectively on critical intelligence. Today, we see Mr. Abdul-Latif face justice as a result of many vital partnerships.”
“This joint SPD-FBI investigation showcases the excellent working relationship we have with our federal partners and sends a strong signal to society’s enemies that we will continue to combine our efforts in both enforcement and prosecution to bring them to justice and hold them accountable,” said Chief John Diaz of the Seattle Police Department.
The other defendant in the case, Walli Mujahidh, 33, of Los Angeles, previously entered a guilty plea in the case on December 8, 2011.
Law enforcement first became aware of the plot when a citizen alerted them that he/she had been approached by Abdul-Latif about participating in the attack and supplying firearms to the conspirators. The person then agreed to work with law enforcement, which began monitoring Abdul-Latif and Mujahidh. Beginning in early June 2011, the conspirators were captured on audio and videotape discussing a violent assault on the Military Entrance Processing Station (MEPS). The MEPS is where each branch of the military screens and processes enlistees. In addition to housing many civilian and military employees, the building houses a federal daycare center.
In his plea agreement, Abdul-Latif admits that he agreed to carry out the planned attack and that he made plans for Mujahidh to travel to Seattle from Los Angeles to participate in the attack. Mujahidh arrived in Seattle on June 21, 2011. On that same day, during a meeting between Abdul-Latif, Mujahidh, and a person who was working with law enforcement, Abdul-Latif outlined the plan of attacking the MEPS with machine guns and grenades and took steps to purchase weapons and further the plot. In accordance with the defendants’ plan, the next day, the person working with police brought three machine guns to a meeting with Abdul-Latif and Mujahidh. The men were arrested after they took possession of the weapons, which had been rendered inoperable by law enforcement.
The case is being prosecuted by the U.S. Attorney’s Office for the Western District of Washington, with assistance from the Counterterrorism Section of the Justice Department’s National Security Division. The investigation is being conducted by the FBI’s Joint Terrorism Task Force, which has investigators from federal, state, and local law enforcement, and the Seattle Police Department. The Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) contributed significant expertise to this investigation.

FBI Releases 2011 Hate Crime Statistics

According to statistics released today by the Federal Bureau of Investigation, 6,222 criminal incidents involving 7,254 offenses were reported in 2011 as a result of bias toward a particular race, religion, sexual orientation, ethnicity/national origin, or physical or mental disability. The statistics, published by the FBI’s Uniform Crime Reporting (UCR) program in Hate Crime Statistics, 2011, provide data about the offenses, victims, offenders, and locations of the bias-motivated incidents reported by law enforcement agencies throughout the nation. Due to the unique nature of hate crime, however, the UCR program does not estimate offenses for the jurisdictions of agencies that do not submit reports.
Hate Crime Statistics, 2011 includes the following information:

• There were 6,216 single-bias incidents, of which 46.9 percent were motivated by a racial bias, 20.8 percent were motivated by a sexual orientation bias, 19.8 percent were motivated by a religious bias, and 11.6 percent were motivated by an ethnicity/national origin bias. Bias against a disability accounted for 0.9 percent of single-bias incidents.
• Of the 4,623 hate crime offenses classified as crimes against persons in 2011, intimidation accounted for 45.6 percent, simple assaults for 34.5 percent, and aggravated assaults for 19.4 percent. Four murders and seven forcible rapes were reported as hate crimes.
• There were 2,611 hate crime offenses classified as crimes against property. The majority of these (81.4 percent) were acts of destruction/damage/vandalism. Robbery, burglary, larceny-theft, motor vehicle theft, arson, and other offenses accounted for the remaining 18.6 percent of crimes against property.
• Fifty-nine percent of the 5,731 known offenders were white; 20.9 percent were black. The race was unknown for 10.8 percent, and other races accounted for the remaining known offenders.
• Most hate crime incidents (32.0 percent) occurred in or near homes. Eighteen percent took place on highways, roads, alleys, or streets; 9.3 percent happened at schools or colleges; 5.9 percent in parking lots or garages; and 4.4 percent in churches, synagogues, or temples. The location was considered other (undesignated) or unknown for 11.3 percent of hate crime incidents. The remaining 19.1 percent of hate crime incidents took place at other specified or multiple locations.