- Arlyn Castro Found Guilty in U.S. Federal Court
- Pennsylvania Man Charged with Sex Trafficking of a Minor
- State Prisoner Sentenced to Over Four Years in Federal Prison for Sending a Threatening Letter to a U.S. District Judge
- Hardin County Woman Charged with Using the Internet to Arrange Sex with a Minor
- Daniel Jack Parrent Pleads Guilty in U.S. Federal Court
- Glastonbury Man Admits Using the Internet to Persuade Children to Engage in Sexual Activity
- Texas Resident Convicted on Charge of Attempted Use of Weapon of Mass Destruction
- Birmingham Woman Indicted for Disaster Fraud
- Smith attorney says House discipline process not ‘fair’ and ‘deliberate’
- Man Who Threatened to Rob Bank with Explosives Pleads Guilty
- Colorado Man Pleads Guilty to Receiving Child Pornography
- Tenth Defendant Pleads Guilty to Federal Charges in Bribery and Kickback Scheme Involving Government Contracts
- Nigerian Fugitive Returned to Houston to Face Charges in Multi-Million-Dollar Health Care Fraud
- Assistant Manager of Gambrills Mortgage Company Sentenced to Over Four Years in Prison in $4.9 Million Mortgage Fraud Scheme
- Omaha Man Gets Four Years for His Role in Distributing Methamphetamine
- 5 Years in Prison
- Medical Clinic Owners Indicted for Health Care, False Tax Returns
- Sandusky-inspired legislation becomes law in Illinois
- Army Sergeant and Associate Convicted on All Counts for Roles in Bribery and Money Laundering Scheme Related to Defense Contracts to Support Iraq War
- Barclays Bank PLC Admits Misconduct Related to Submissions for the London InterBank Offered Rate and the Euro InterBank Offered Rate and Agrees to Pay $160 Million Penalty
Posted: 27 Jun 2012 07:09 PM PDT
The United States Attorney’s Office announced that on June 20, 2012, in Billings, after a federal district court trial before Chief U.S. District Judge Richard F. Cebull, Arlyn Castro, a 29-year-old resident of Lame Deer, was found guilty of abusive sexual contact. Sentencing is set for September 20, 2012. He is currently detained.
Assistant U.S. Attorney Lori Harper Suek prosecuted the case for the United States.
Castro faces possible penalties of life in prison, a $250,000 fine, and lifetime supervision.
The investigation was a cooperative effort between the Federal Bureau of Investigation and the Bureau of Indian Affairs.
Posted: 27 Jun 2012 07:09 PM PDT
NEWARK—An Allentown, Pennsylvania man was indicted by a federal grand jury today on charges of sex trafficking involving a 16-year-old girl, U.S. Attorney Paul J. Fishman announced.
Francisco Torrellas, 29, a/k/a “Dream,” a/k/a “Daddy,” a/k/a “Pretty,” was charged by complaint on May 25, 2012 before U.S. Magistrate Judge Mark Falk. Torrellas has been detained since his arrest in Pennsylvania on May 29, 2012.
According to documents filed in this case and statements made in court:
From May 14, 2012 until May 19, 2012, Torrellas allegedly operated a prostitution service out of hotel rooms in Bergen, Hudson, and Union Counties, including at the Red Roof Inn in Secaucus, New Jersey, and hotels in Elizabeth and Elmwood Park, New Jersey. Torrellas acted as a “pimp” employing young women, one of whom was a 16-year-old girl, to work for him as prostitutes. Torrellas required the girl to give him all of the money she made from performing sexual acts on customers, including any tips. The girl was also told that she was expected to earn $1,500 per day, except for Sundays, when she was expected to earn $750.
Torrellas allegedly took pictures of the 16-year-old girl posing seductively wearing a thong and bra, which were used in advertisements for sexual acts found on backpage.com. When the minor girl told Torrellas that she was only 16 years old, Torrellas instructed her to tell clients that she was 19 years old. After the minor asked Torrellas to return her cell phone and told Torrellas that she wanted to leave, Torrellas told her he had broken her cell phone and directed another woman to keep a close eye on the minor.
On another day, Torrellas allegedly hit the minor in the face for not following Torrellas’ instruction to retrieve another woman. The minor also witnessed Torrellas punishing one of the other young women by choking and slapping her.
The count of sex trafficking of a minor is punishable by a maximum penalty of life in prison and a mandatory minimum of 10 years in prison. It also carries a maximum fine of $250,000 and a mandatory minimum term of five years of supervised release.
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Michael B. Ward in Newark; the Secaucus, Jersey City, and the Allentown, Pennsylvania Police Departments with the investigation leading to today’s indictment.
The government is represented by Assistant U.S. Attorney Shana W. Chen of the U.S. Attorney’s Office OC/Gangs Unit in Newark.
The charges and allegations contained in the indictment are merely accusations, and the defendant is considered innocent unless and until proven guilty.
Posted: 27 Jun 2012 07:09 PM PDT
BALTIMORE—U.S. District Judge Richard D. Bennett sentenced Willie Ray Bryant, age 41, a Maryland state prisoner housed in Cumberland, Maryland, today to 51 months in federal prison, followed by three years of supervised release, for willfully causing a threatening communication to be mailed to a United States judge. The federal sentence will run consecutive to the 40-year Maryland and 50-year Delaware state sentences that he must serve first.
The sentence was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Richard A. McFeely of the Federal Bureau of Investigation; and Special Agent in Charge Barbara Golden of the United States Secret Service-Baltimore Field Office.
According to Bryant’s plea agreement, sometime prior to September 11, 2010 while he was incarcerated, Bryant smuggled out a letter addressed to a U.S. District Judge and caused that letter to be mailed on September 11, 2010, from Baltimore, Maryland. On September 14, 2010, the judge received the one-page letter at his chambers which threatened, “Boom see how easy this was, next time you wont be so lucky, ERM Family Anthrax.” The judge had presided over one of Bryant’s prior state criminal cases.
The letter was unsigned, but FBI fingerprint analysis determined that it bore Bryant’s prints and found that the letter also bore imprints of letters and numbers appearing to partially match Bryant’s mother’s name and phone number.
After the FBI determined the sender’s identity from Bryant’s fingerprints, a message was sent to Maryland Corrections officials to monitor Bryant’s use of the mail. Shortly thereafter, corrections officials intercepted a letter Bryant had addressed to President Obama excoriating the President for turning his back on Islam and threatening to kill the President. Bryant signed the letter and included his state prisoner number.
United States Attorney Rod J. Rosenstein commended the FBI and Secret Service for their work in the investigation. Mr. Rosenstein thanked Assistant United States Attorney Adam K. Ake, who prosecuted the case.
Posted: 27 Jun 2012 07:09 PM PDT
A Rosiclare (Hardin County), Illinois woman has been charged in federal court with using the Internet to arrange sex acts with a minor, the United States Attorney for the Southern District of Illinois, Stephen R. Wigginton, announced today.
According to a criminal complaint filed today in federal district court in Benton, Illinois, Heather M. Banks, 23, of Rosiclare, Illinois, is alleged to have used the Internet on June 18, 2012 to induce a minor to engage in illegal sex acts. The complaint further alleges that Banks was using the Internet to induce a minor to provide her with prescription medications in exchange for sex. The charged offense carries a penalty of from 10 years, up to life in prison, a $250,000 fine, and a term of supervised release from five years to life. The case was investigated by the Federal Bureau of Investigation and the Hardin County State’s Attorney’s Office. The case is being prosecuted by Assistant United States Attorney Thomas E. Leggans.
Posted: 27 Jun 2012 07:09 PM PDT
The United States Attorney’s Office announced that during a federal court session in Billings, on June 26, 2012, before Chief U.S. District Judge Richard F. Cebull, Daniel Jack Parrent, a 26-year-old resident of Bozeman, pled guilty to conspiracy to possess with the intent to distribute marijuana. Sentencing has been set for September 22, 2012. He is currently released on special conditions.
In an offer of proof filed by Assistant U.S. Attorney Jessica T. Fehr, the government stated it would have proved at trial the following:
On July 20, 2010, a Yellowstone County Sheriff’s Office deputy initiated a traffic stop on a black 2010 Mercedes Benz SUV after running the license plate and determining that the owner had a valid arrest warrant. The owner of the vehicle provided a false name to the deputy but ultimately admitted the individual’s name. A narcotics-detecting K-9 was called to the scene and positively alerted on the vehicle for the presence of narcotic odors.
The vehicle was impounded pending a search warrant application. A subsequent search yielded airline tickets, a cell phone, documents, $14,154 in cash, and user amounts of marijuana.
Pursuant to the search warrant, detectives had the cell phone seized from the vehicle analyzed. The contents revealed that the owner of the vehicle had been involved with selling multiple pounds of marijuana, as well as transporting tens of thousands of dollars in cash. Some of the text messages on the phone blatantly discussed prices for pounds of marijuana, smuggling bulk cash via the airlines, having bulk cash from drug proceeds deposited into bank accounts, and dealing marijuana to the Indian reservations in Montana. According to the text messages on the phone marijuana was distributed to Browning, Polson, Crow Agency, as well as Havre, St. Ignatius, Great Falls, Missoula, Cut Bank, Lolo, and other places throughout Montana.
One of the subjects having drug-related communications with the owner of the vehicle stopped in Yellowstone County was Parrent of Bozeman. When interviewed by law enforcement, Parrent admitted to being a drug courier for the owner of the vehicle and making numerous trips to California and Washington to pick up marijuana from a supplier in Humboldt County, California and elsewhere. Parrent’s trips to pick up marijuana occurred during the course of the conspiracy, the summer of 2008 to the summer of 2010. Parrent estimated he personally delivered over 50 pounds of marijuana to the owner of the vehicle. Additional investigation uncovered that the members of the conspiracy, including Parrent, possessed with the intent to distribute over 100 kilograms of marijuana during the course of the conspiracy. It was reasonably foreseeable to Parrent that the conspiracy would distribute over 100 kilograms of marijuana.
Parrent faces possible penalties of a mandatory minimum of five years and could be sentenced to 40 years, a $2,000,000 fine, and four years’ supervised release.
The investigation was a cooperative effort between the Billings Big Sky Safe Streets Task Force and the Federal Bureau of Investigation.
Posted: 27 Jun 2012 07:09 PM PDT
David B. Fein, United States Attorney for the District of Connecticut, announced that William Paul Patrick, 67, of Glastonbury, waived his right to indictment and pleaded guilty today before United States Magistrate Judge Holly B. Fitzsimmons in Bridgeport to one count of using an interstate facility to persuade a minor to engage in sexual activity.
According to court documents and statements made in court, in late 2008, the FBI and the Connecticut Computer Crimes Task Force began investigating Patrick’s suspected possession and distribution of child pornography. On May 8, 2009, law enforcement agents conducted a court-authorized search of Patrick’s Glastonbury residence and seized several computers, detachable hard drives, and computer-related components. Subsequent analysis of the seized computers and hard drives revealed numerous images and videos depicting child pornography.
Forensic review of the seized items also revealed videos, e-mails, and text files that indicated that Patrick had communicated with individuals in the Philippines for the purposes of arranging Internet sex shows involving minors. In one e-mail, Patrick offered money for a sex show involving multiple individuals and a 7-year-old girl. Patrick provided explicit instructions to the adult and the minors about the nature and duration of the sex acts he wanted to view and offered them cash rewards if they could perform certain acts on the child.
Patrick also engaged in another Internet chat session with an adult and a young child, who indicated that she was 9 years old. During the chat session, Patrick asked that the girl engage in sexual acts and be photographed while nude. Patrick provided $100 to an individual in the Philippines to facilitate his request, and he subsequently received pornographic photographs of the child.
In addition, Patrick recorded a number of sexual encounters between other minors that occurred over a live streaming web cam.
Patrick was arrested on January 22, 2010. He has been released on bond under electronic monitoring by the United States Probation Office since shortly after his arrest.
Patrick is scheduled to be sentenced by Senior United States District Judge Warren W. Eginton on September 19, 2012, at which time Patrick faces a mandatory minimum term of imprisonment of 10 years and a maximum term of imprisonment of life.
This matter has investigated by the Federal Bureau of Investigation and the Connecticut Computer Crimes Task Force, which includes federal, state, and local law enforcement agencies, including the Hamden Police Department. The case is being prosecuted by Assistant United States Attorneys Deborah Slater and Ray Miller.
The Connecticut Computer Crimes Task Force investigates crimes occurring over the Internet, including computer intrusion, Internet fraud, copyright violations, Internet threats and harassment, and online crimes against children. The task force also provides computer forensic review services for participating agencies. The task force is housed in the main FBI Office in New Haven. For more information about the task force, please contact the FBI at 203-777-6311.
U.S. Attorney Fein noted that this prosecution is part of the U.S. Department of Justice’s Project Safe Childhood Initiative, which is aimed at protecting children from sexual abuse and exploitation. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
To report cases of child exploitation, please visit www.cybertipline.com.
Posted: 27 Jun 2012 07:09 PM PDT
AMARILLO, TX—Khalid Ali-M Aldawsari, 22, a citizen of Saudi Arabia and resident of Lubbock, Texas, was convicted by a federal jury today on an indictment charging one count of attempted use of a weapon of mass destruction in connection with his purchase of chemicals and equipment necessary to make an improvised explosive device (IED) and his research of potential U.S. targets, including persons and infrastructure.
The verdict, which was reached in the Northern District of Texas, was announced by Sarah R. Saldaña, U.S. Attorney for the Northern District of Texas; Lisa Monaco, Assistant Attorney General for National Security; and Diego G. Rodriguez, Special Agent in Charge of the FBI Dallas Field Division.
Sentencing has been scheduled for October 9, 2012, in Amarillo. Aldawsari, who was lawfully admitted into the United States in 2008 on a student visa and was enrolled at South Plains College near Lubbock, faces a maximum sentence of life in prison and a $250,000 fine. He was arrested on February 23, 2011 on a criminal complaint and later charged in a March 9, 2011 federal indictment with attempting to use a weapon of mass destruction.
According to court documents and evidence presented during trial, at the time of his arrest last year, Aldawsari had been researching online how to construct an IED using several chemicals as ingredients. He had also acquired or taken a substantial step toward acquiring most of the ingredients and equipment necessary to construct an IED, and he had conducted online research of several potential U.S. targets, the affidavit alleges. In addition, he had allegedly described his desire for violent jihad and martyrdom in blog postings and a personal journal.
“While many people are responsible for thwarting Aldawsari’s threat and bringing him to justice, we owe a debt of gratitude to all the members of the North Texas Joint Terrorism Task Force, and especially to the hundreds of hardworking and dedicated FBI agents, analysts, linguists, and others,” said U.S. Attorney Saldaña. “Their efforts, coupled with the hard work and excellent cooperation from the Lubbock Police Department and the Texas Tech Police Department, are the reason we were able to stop this defendant from carrying out a catastrophic act of terrorism.”
“As this trial demonstrated, Aldawsari purchased ingredients to construct an explosive device and was actively researching potential targets in the United States. Thanks to the efforts of many agents, analysts, and prosecutors, this plot was thwarted before it could advance further,” said Assistant Attorney General Monaco. “This case serves as another reminder of the need for continued vigilance both at home and abroad.”
“Today’s guilty verdict shows how individuals in the United States with the intent to do harm can acquire the knowledge and materials necessary to carry out an attack,” said SAC Rodriguez. “Our success in locating and preventing Mr. Aldawsari from carrying out an attack is a result of cooperation within the law enforcement and intelligence communities, particularly, the North Texas Joint Terrorism Task Force, the Texas Tech Police Department, the Lubbock Police Department, and the Lubbock County Sheriff’s Office, but also a demonstration of information sharing across FBI divisions, as well as assistance from the community. I want to thank the dedicated agents, officers, and analysts; the computer forensics team; and linguists that worked diligently on this investigation, as well as prosecutors serving in the U.S. Attorney’s Office in the Northern District.”
The government presented evidence that on February 1, 2011, a chemical supplier reported to the FBI a suspicious attempted purchase of concentrated phenol by a man identifying himself as Khalid Aldawsari. Phenol is a toxic chemical with legitimate uses, but it can also be used to make the explosive trinitrophenol, also known as T.N.P., or picric acid. Ingredients typically used with phenol to make picric acid, or T.N.P., are concentrated sulfuric and nitric acids.
Aldawsari attempted to have the phenol order shipped to a freight company so it could be held for him there, but the freight company told Aldawsari that the order had been returned to the supplier and called the police. Later, Aldawsari falsely told the supplier he was associated with a university and wanted the phenol for “off-campus, personal research.” Frustrated by questions being asked over his phenol order, Aldawsari cancelled his order, placed an order with another company, and later e-mailed himself instructions for producing phenol. In December 2010, he had successfully purchased concentrated nitric and sulfuric acids.
Aldawsari used various e-mail accounts in researching explosives and targets and often sent e-mails to himself as part of this process. He e-mailed himself a recipe for picric acid, which was described in the e-mail as a “military explosive” and also e-mailed himself instructions on how to convert a cell phone into a remote detonator and how to prepare a booby-trapped vehicle using household items. Aldawsari also purchased many other items, including a Hazmat suit, a soldering iron kit, glass beakers and flasks, a stun gun, clocks, and a battery tester.
Excerpts from a journal found at Aldawsari’s residence indicated that he had been planning to commit a terrorist attack in the United States for years. One entry describes how Aldawsari sought and obtained a particular scholarship because it allowed him to come directly to the United States and helped him financially, which he said “will help tremendously in providing me with the support I need for Jihad.” The entry continues, “And now, after mastering the English language, learning how to build explosives and continuous planning to target the infidel Americans, it is time for Jihad.”
In another entry, Aldawsari wrote that he was near to reaching his goal and near to getting weapons to use against infidels and their helpers. He also listed a “synopsis of important steps” that included obtaining a forged U.S. birth certificate; renting a car; using different driver’s licenses for each car rented; putting bombs in cars and taking them to different places during rush hour; and leaving the city for a safe place.
Aldawsari conducted research on various targets and e-mailed himself information on these locations and people. One of the documents he sent himself, with the subject line listed as “Targets,” contained the names and home addresses of three American citizens who had previously served in the U.S. military and had been stationed for a time at Abu Ghraib prison in Iraq. In others, Aldawsari sent himself the names of 12 reservoir dams in Colorado and California and listed two categories of targets: hydroelectric dams and nuclear power plants. He also sent himself an e-mail titled “Tyrant’s House,” in which he listed the Dallas address for former President George W. Bush. Aldawsari also conducted research that indicated he considered using infant dolls to conceal explosives and the possible targeting of a nightclub with an explosive concealed in a backpack.
This case was investigated by the FBI’s Dallas Joint Terrorism Task Force, with assistance from the Lubbock Police Department and the Texas Tech Police Department. The prosecution is being handled by Assistant U.S. Attorneys Jeffrey R. Haag, Denise Williams, James T. Jacks, and Matthew J. Kacsmaryk and Trial Attorney David Cora from the Counterterrorism Section of the Justice Department’s National Security Division.
Posted: 27 Jun 2012 07:09 PM PDT
BIRMINGHAM—A federal grand jury today indicted a Birmingham woman for fraudulently claiming disaster benefits following the April 27, 2011 tornadoes that struck North Alabama, announced U.S. Attorney Joyce White Vance, FBI Special Agent in Charge Patrick J. Maley, and Department of Homeland Security, Office of the Inspector General, Special Agent in Charge James E. Ward.
The three-count indictment filed in U.S. District Court charges Charlotte H. Browning, 51, with making fraudulent representations to the Federal Emergency Management Agency in an application for disaster benefits concerning her place of residence on the day of the tornadoes. Browning falsely represented that she lived at a residence on First Avenue South in Birmingham that had been damaged by the storm. She also was charged with making a false statement to FEMA by presenting a false lease on the First Avenue South property in applying for disaster-benefits.
The indictment further charges Browning with mail fraud in connection with an $11,647 U.S. Treasury check mailed to her based on a false FEMA benefits application she filed in someone else’s name, without their knowledge, for a house on Lafayette Street in Birmingham. Neither Browning nor the person in whose name she filed for those disaster benefits lived at the Lafayette Street address, according to the indictment.
The maximum penalties for the charges Browning faces are: disaster fraud, 30 years in prison and a $250,000 fine; false statement, five years in prison and a $250,000 fine; and mail fraud, 30 years in prison and a $1 million fine.
The public can report fraud, waste, abuse, or allegations of mismanagement involving disaster relief operations through the National Disaster Fraud Hotline, toll-free, at 1-866-720-5721 or by e-mailing email@example.com. The telephone line is staffed by a live operator 24 hours a day, seven days a week.
The FBI and DHS-OIG investigated the case.
Members of the public are reminded that the indictment contains only charges. A defendant is presumed innocent of the charges, and it will be the government’s burden to prove a defendant’s guilt beyond a reasonable doubt at trial.
Posted: 27 Jun 2012 07:09 PM PDT
By Jayette Bolinski | Illinois Statehouse News
SPRINGFIELD – House lawmakers and the attorney for indicted Rep. Derrick Smith disagreed Wednesday on how quickly a committee should move in determining whether Smith should be disciplined by his colleagues.
Smith, under federal indictment for one count of bribery in his role as a state representative, has not gone to trial, and he still is receiving discovery information from federal prosecutors about their evidence, the attorney, Victor Henderson, said.
But members of the House of Representatives’ bipartisan Select Committee on Discipline, charged with deliberating possible professional punishment for Smith, want to move forward as quickly as possible, saying they can be ready as early as Friday. The committee’s first meeting was Wednesday morning in Chicago.
Rep. Lou Lang, D-Skokie, said no compelling reason exists to hold off on further hearings, because much of the evidence and the witnesses from the federal probe won’t be available to the committee.
“Much of what Mr. Henderson is referring to may be helpful to him in the criminal case but may not be useful to this committee and this proceeding,” Lang said.
Henderson countered: “Would you want a teacher to give you a grade before giving you a test?”
Henderson said moving forward that quickly would undermine the “fair” and “deliberate” manner in which the committee vowed to proceed.
“From the representative’s perspective, you cannot have a fair and deliberate process that will result in the right (outcome) anytime soon,” Henderson said. “I don’t want to put a date on it. If there is an attempt to expedite the process prior to the time of the November elections, then that undermines any attempt to present the proceeding as being one that is being fair and deliberate.”
Rep. Barbara Flynn Currie, D-Chicago, who chairs the committee, said she will release a schedule of further hearings by the end of the week, possibly sooner.
Smith, a Chicago Democrat, was not at Wednesday’s hearing. Committee members asked Henderson if Smith would attend any of the hearings to testify on his own behalf. Henderson said there is a plan for that, but said he and Smith will not decide until they’ve had a chance to review all information made available to them by the U.S. attorney. He noted that prosecutors had given them discs containing some of the evidence within the past 24 to 48 hours.
“You acknowledge the representative has a constitutional right to remain silent. So to suggest or imply that by exercising his constitutional rights – that are guaranteed to all of us – and his failure to discuss with this body thus far means he has not taken advantage of an opportunity to speak is not completely accurate,” Henderson said. “If that’s the case, the right the Constitution guarantees all of us is meaningless.”
The Select Committee on Discipline is the second step in a process that allows the House of Representatives to determine whether Smith should face some kind of professional discipline.
The first phase of the process involved the House Special Investigating Committee, which was formed to look into the allegations against Smith and determine if there was enough evidence to proceed with possible discipline. Members of that committee announced June 6 sufficient reason existed to move forward.
The House Select Committee on Discipline is made up of lawmakers from both parties. It includes six Democrats – Currie, Edward Acevedo, Greg Harris, Camille Lilly and Kim du Buclet, all of Chicago, and Al Riley of Olympia Fields — and six Republicans – Chapin Rose, of Mahomet; Michael Connelly, of Lisle; Renee Kosel, of New Lenox; Sid Mathias, of Buffalo Grove; Chris Nybo, of Elmhurst; and Joe Sosnowski, of Rockford.
Two representatives, Lang and Jim Durkin, R-Western Springs, will “try” the case before the committee, and the 12 other lawmakers will act as jurors who will “hear” the case. The jurors can recommend that Smith be exonerated, reprimanded, censured or expelled from the Legislature.
Jayette Bolinski can be reached at firstname.lastname@example.org.
Originally reported by Illinois Statehouse News. Read the original article here.
Posted: 27 Jun 2012 02:09 PM PDT
PHILADELPHIA—Dragos Ungurean, 30, of Wyomissing, Pennsylvania, pleaded guilty today to attempting to rob the Wyomissing branch of M&T Bank on March 19, 2012. Ungurean walked into the bank, located at 800 Penn Avenue in Wyomissing, threatened to blow up a bomb or explosive device attached to his person, and demanded money. Ungurean was subdued and handcuffed after a scuffle with an on-duty plain clothes investigator from the Wyomissing Police Department. The officer was utilizing the bank as a customer at the time of the attempted robbery. The bomb or explosive device was fake.
Sentencing is scheduled for September 27, 2012. Ungurean faces an advisory sentencing guideline range of approximately 60 months in prison and a possible fine. He will be sentenced by U.S. District Court Judge Lawrence F. Stengel.
This case was investigated by the Federal Bureau of Investigation, Allentown, Pennsylvania Resident Agency; the Wyomissing, Berks County Police Department; and the Berks County District Attorney’s Office, and it is being prosecuted by Assistant United States Attorney Ewald Zittlau.
Posted: 27 Jun 2012 02:09 PM PDT
MINNEAPOLIS—Yesterday in federal court, a 26-year-old Denver, Colorado man, formerly of Plymouth, Minnesota, pleaded guilty to receiving numerous images of child pornography. Russell Ronald Brimeyer pleaded guilty to one count of receipt of child pornography. Brimeyer, who was charged on May 7, 2012, entered his plea before United States District Court Judge Patrick J. Schiltz.
In his plea agreement, Brimeyer admitted that on April 15, 2009, he received several images via his computer that contained depictions of a minor under the age of 12 engaged in sexually explicit conduct. In addition, Brimeyer admitted that he received the images from a peer-to-peer file sharing program on the Internet. On September 24, 2009, the items were found on Brimeyer’s computer and other media devices during the execution of a search warrant at his residence.
For his crime, Brimeyer faces a potential maximum penalty of 20 years in prison, with a mandatory minimum penalty of five years. Judge Schiltz will determine his sentence at a future hearing.
This case is the result of an investigation by the Minnesota Cyber Crimes Task Force, which is sponsored by the Federal Bureau of Investigation, the U.S. Secret Service, and the National Center for Missing and Exploited Children. It is being prosecuted by Assistant U.S. Attorney Clifford B. Wardlaw.
Presently, the Justice Department is funding a study concerning the correlation between involvement in child pornography and the hands-on sexual abuse of children. A 2008 study (The Butner Study) published in the Journal of Family Violence found that up to 80 percent of federal inmates incarcerated for possession, receipt, or distribution of child pornography also admitted to hands-on sexual abuse of children, ranging from touching to rape.
The U.S. Department of Justice is committed to combating the sexual exploitation of children, particularly via the Internet. In fiscal year 2010, 2,235 defendants pleaded guilty to federal child pornography charges, 2,222 of whom were sentenced to prison. In fiscal year 2009, 2,083 defendants were sentenced to prison on child pornography charges. For more information about these efforts, please visit the Department’s Project Safe Childhood website, at www.projectsafechildhood.gov.
Posted: 27 Jun 2012 02:09 PM PDT
WASHINGTON—Nazim S. Khan, 49, the brother of a former manager with the U.S. Army Corps of Engineers, pled guilty today for his role in a case involving bribery, kickbacks, and federal government contracts, becoming the 10th defendant to plead guilty to charges.
Khan, of Accokeek, Maryland, pled guilty before the Honorable Magistrate Judge John M. Facciola in the U.S. District Court for the District of Columbia to a charge of conspiracy to commit interstate transportation of stolen property. No sentencing date was set. Khan faces up to five years in prison, along with a potential fine and order of restitution. He also has agreed to an order of forfeiture in the amount of $83,403.
The plea was announced by U.S. Attorney Ronald C. Machen, Jr.; James W. McJunkin, Assistant Director in Charge of the FBI’s Washington Field Office; Rick A. Raven, Special Agent in Charge of the Washington Field Office of the Internal Revenue Service-Criminal Investigation (IRS-CI); Peggy E. Gustafson, Inspector General for the Small Business Administration (SBA); Robert E. Craig, Special Agent in Charge of the Mid-Atlantic Field Office of the Defense Criminal Investigative Service (DCIS); and Frank Robey, Director of the U.S. Army Criminal Investigation Command’s Major Procurement Fraud Unit (MPFU).
The developments come a month after the guilty plea of Nazim Khan’s brother, Kerry F. Khan, a former program manager for the Army Corps of Engineers. Kerry Khan, 54, pled guilty on May 17, 2012, to charges of bribery and conspiracy to commit money laundering in a scheme in which he received or was promised more than $26 million in payments from various contractors who submitted fraudulently inflated invoices to the government. The contracts were awarded through the U.S. Army Corps of Engineers and the Department of the Army.
A third family member, Lee A. Khan, 31, also pled guilty on May 17, 2012. Lee Khan, the son of Kerry Khan and nephew of Nazim Khan, pled guilty to a charge of conspiracy to commit money laundering.
According to a statement of offense signed by Nazim Khan as well as the government, Nazim Khan used KC Builders Custom Homes LLC, a company that he controlled, as a way to channel money to Kerry Khan from another government contractor that was involved in the bribery and kickback scheme. Between May 2007 and March 2008, this contractor, Alpha Technology Group Inc., made about $611,904 in payments intended for Kerry Khan to KC Builders. Of this amount, KC Builders retained $83,403 and paid the rest to Kerry Khan.
In addition to the three Khan family members, others who have pled guilty include Michael A. Alexander, a former program manager with the Army Corps of Engineers; Harold F. Babb, the former director of contracts at Eyak Technology LLC (EyakTek), an Alaska Native-owned small business; Alex Cho, the former chief technology officer of Nova Datacom LLC; Theodoros Hallas, who also worked for Nova Datacom; Robert L. McKinney, the president of Alpha Technology Group Inc.; James Edward Miller, the owner of Big Surf Construction Management LLC; and Nick Park, a former employee of Nova Datacom who later opened his own business, Unisource Enterprise Inc. (UEI).
In announcing the plea, U.S. Attorney Machen, Assistant Director in Charge McJunkin, Inspector General Gustafson, Special Agent in Charge Craig, Special Agent in Charge Raven, and Director Robey thanked those who investigated the case from the FBI’s Washington Field Office; the Office of the Inspector General for the Small Business Administration; the Department of Defense’s Defense Criminal Investigative Service; the Defense Contract Audit Agency; the Washington Field Office of the Internal Revenue Service-Criminal Investigation; and the Army Criminal Investigation Command. They also expressed thanks to the U.S. Marshals Service for its assistance on the forfeiture matter.
They also praised the efforts of those who worked on the case from the U.S. Attorney’s Office, including Assistant U.S. Attorneys Michael K. Atkinson and Bryan Seeley of the Fraud and Public Corruption Section and Assistant U.S. Attorney Anthony Saler of the Asset Forfeiture and Money Laundering Section. Finally, they expressed thanks for assistance provided by former Special Assistant U.S. Attorney Christopher Dana; Forensic Accountant Maria Boodoo; Paralegal Specialists Tasha Harris, Lenisse Edloe, Shanna Hays, Taryn McLaughlin, Sarah Reis, Christopher Samson, and Nicole Wattelet; and Legal Assistants Krishawn Graham and Jessica McCormick.
Posted: 27 Jun 2012 02:09 PM PDT
HOUSTON—Godwin Chiedo Nzeocha, 45, a naturalized United States citizen originally from the Federal Republic of Nigeria, has been returned to the United States to stand trial in a $45 million health care fraud case, United States Attorney Kenneth Magidson announced today.
Nzeocha was charged October 19, 2009 with conspiracy to commit health care fraud, 39 counts of health care fraud, three counts of mail fraud, and three counts of money laundering in relation to his role in the City Nursing Services of Texas Inc. health care fraud conspiracy.
Agents were unable to arrest Nzeocha after he was charged in 2009. He was later arrested in Nigeria and arrived back in Houston today. He is expected to make an initial appearance this morning before U.S. Magistrate George C. Hanks, Jr., at which time the United States will request he remain in federal custody pending further criminal proceedings.
According to the indictment, Nzeocha signed patient file documents as the provider of physical therapy services he was not qualified to provide and, according to evidence provided during trial of his alleged co-conspirators, which were not, in fact, provided to Medicare beneficiaries. The indictment also alleges Nzeocha handed out cash payments to recruiters who brought Medicare beneficiaries to City Nursing and to Medicare beneficiaries in return for signatures on blank patient treatment forms.
To date, five people have been convicted in this massive health care fraud conspiracy, including City Nursing’s owner, Umawa Oke Imo, who is now serving 27 years in prison.
Nzeocha faces up to 10 years in prison and a $250,000 fine for each of the health care fraud, conspiracy to commit health care fraud, and money laundering charges, upon conviction. A conviction for mail fraud carries an additional maximum punishment of up to 20 years in prison.
This case has been investigated by the FBI, Internal Revenue Service-Criminal Investigation, the Department of Health and Human Services-Office of Inspector General, and the Texas Attorney General’s Office-Medicare Fraud Control Unit. Special thanks is extended to the Nigerian government and the Office of International Affairs in the Justice Department’s Criminal Division, who provided assistance. Assistant United States Attorney Julie Redlinger is prosecuting the case.
An indictment is a formal accusation of criminal conduct, not evidence. A defendant is presumed innocent unless convicted through due process of law.
Posted: 27 Jun 2012 02:08 PM PDT
BALTIMORE—U.S. District Judge Catherine C. Blake sentenced Todd R. Bettin, age 42, of Crofton, Maryland, to 51 months in prison, followed by three years of supervised release, for conspiracy to commit wire fraud in connection with a five-year scheme to divert or hold mortgage payoff funds from clients’ closings on 17 Maryland properties. Judge Blake also ordered Pierce to pay restitution of $3,392,047.51.
The sentence and guilty plea was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Richard A. McFeely of the Federal Bureau of Investigation; Special Agent in Charge Joseph Clarke of the U.S. Housing and Urban Development Office of Inspector General-Office of Investigations; and Howard County Police Chief William McMahon.
According to his plea agreement, Bettin was the assistant manager of At Home Mortgage, owned by co-conspirator Gary Pierce, who also owned and managed At Home Settlements LCC, in Gambrills, Maryland. At Home Settlements provided settlement services and sold title insurance policies to clients who were buying homes or refinancing existing properties.
In 2007 Bettin refinanced the mortgage on his home. Pierce acted as the settlement agent. Rather than paying off the original mortgage as required, Bettin kept the payoff amount and never informed the original lender that he had refinanced the property. Also in 2007, Pierce obtained a mortgage loan on a property in Edgewater that he did not own. Bettin acted as the loan officer on the transaction. Bettin and Pierce created false documents purporting to show that Pierce owned the property and provided those fraudulent documents to the lender. Bettin and Pierce used the funds obtained from the lender to perpetuate the scheme and each personally diverted $50,000 to themselves. The true owner of the property had no knowledge that documents had been created purporting to show that the property had been sold to Pierce.
Beginning in 2007, Bettin and Pierce diverted or held mortgage payoff funds from clients’ closings for a matter of days, weeks, and sometimes years. Pierce falsely represented on HUD-1 forms sent to the borrower’s lender that the payoff was made, when, in fact, Pierce intended to divert the funds. Bettin and Pierce fabricated wire confirmation reports, which purported to be a bank record of the transfer, to include in loan files. These were created in advance of audits in order to deceive the title insurers. Additionally, to forestall discovery by the lenders, Bettin and Pierce contacted the mortgage lender who should have been paid off and posed as the borrower/homeowner. Bettin would either create an online profile for the borrower and stop any mail from being sent to the borrower, or he would tell the lender that his, the borrower’s, address had changed and would re-direct the lender to send all correspondence to a post office box owned by Pierce. Bettin would then make monthly mortgage payments to the existing lender. Believing that the bank had been paid off as a result of the settlement, the borrower stopped making monthly payments on that mortgage. And since that lender was receiving monthly payments, it had no reason to notify the borrower of any delinquency. With no delinquency in the account, the scheme went undetected.
Because the existing mortgages were not paid off, the liens against the property were not removed and clear title could not be passed to the new lender and borrower. The total amount of diverted or otherwise improperly obtained funds totals $4,971,380.
Judge Blake previously sentenced Gary Pierce, age 44, of Edgewater, Maryland, to six years in prison and ordered Pierce to pay restitution of $4,174,044.41.
The Maryland Mortgage Fraud Task Force was established to unify the agencies that regulate and investigate mortgage fraud and promote the early detection, identification, prevention, and prosecution of mortgage fraud schemes. This case, as well as other cases brought by members of the task force, demonstrates the commitment of law enforcement agencies to protect consumers from fraud and promote the integrity of the credit markets. Information about mortgage fraud prosecutions is available www.justice.gov/usao/md/Mortgage-Fraud/index.html.
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.
United States Attorney Rod J. Rosenstein thanked the FBI, HUD-OIG, and Howard County Police Department for their work in the investigation. Mr. Rosenstein commended Assistant U.S. Attorney Leo J. Wise, who prosecuted the case.
Posted: 27 Jun 2012 02:08 PM PDT
United States Attorney Deborah R. Gilg announced that Salvador Martinez-Tomas, 23, of Omaha, Nebraska, was sentenced by United States District Judge Laurie Smith Camp on June 25, 2012, to four years in prison for his involvement in a conspiracy to distribute methamphetamine in Bellevue and South Omaha in the spring of 2011. More than three pounds of methamphetamine were distributed during the course of the conspiracy that lasted from February 1, 2010 and continued through November 16, 2011. Martinez-Tomas is a citizen and national of Mexico and will be deported upon the completion of serving his prison term.
This case was the result of a joint investigation by the Federal Bureau of Investigation, the Drug Enforcement Administration, the Bellevue Police Department, the Omaha Police Department, and the Homeland Security Investigations.
5 Years in Prison
Posted: 27 Jun 2012 02:08 PM PDT
BALTIMORE—U.S. District Judge Benson E. Legg sentenced Dustin Charles Adams, age 22, of Cumberland, Maryland, today to 15 years in prison, followed by five years of supervised release, for conspiracy to distribute and possess with intent to distribute crack cocaine.
The sentence was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Richard A. McFeely of the Federal Bureau of Investigation; and Colonel Marcus L. Brown, Superintendent of the Maryland State Police; Cumberland Police Chief Charles H. Hinnant; Allegany County Sheriff Craig Robertson; Frostburg Police Chief William Evans; Frostburg University Chief of Police Cindy R. Smith; and Allegany County State’s Attorney Michael O. Twigg of the Allegany County Combined Criminal Investigations Unit (C3I); and Maryland Attorney General Douglas F. Gansler.
According to Adams’ guilty plea, in the spring of 2010, law enforcement began an investigation into Adams’ drug trafficking activities. Agents learned that Adams and two others had been arrested on April 6, 2010 in Baltimore in possession of a concealed knife and $23,910 in cash, bundled in $1,000 increments. Law enforcement intercepted telephone conversations between Adams and his customers and suppliers arranging drug transactions and deliveries. On December 22, 2010, search warrants were executed at several locations in the Cumberland, Maryland area, including the homes of Adams’ mother and sister. Calls were intercepted by law enforcement indicating that Adams was aware of the searches and knew that there was a warrant for his arrest. Adams fled the area and was subsequently arrested on January 14, 2011.
Adams admitted that he conspired to distribute more than a kilogram of crack cocaine.
United States Attorney Rod J. Rosenstein commended the FBI and C3I Narcotics for their work in the investigation. Mr. Rosenstein thanked Assistant United States Attorney Andrea L. Smith and Special Assistant United States Attorney Gerald A. A. Collins, a cross-designated Maryland Assistant Attorney General assigned to Exile cases, who prosecuted this Organized Crime Drug Enforcement Task Force case.
Posted: 27 Jun 2012 02:08 PM PDT
KANSAS CITY, MO—David M. Ketchmark, Acting United States Attorney for the Western District of Missouri, announced today that the married co-owners of a Kansas City, Missouri, medical clinic have been indicted by a federal grand jury for health care fraud and filing false tax returns.
Carol Ann Ryser, 75, and Michael Earl Ryser, 67, both of Mission Hills, Kansas, were charged in a four-count indictment returned by a federal grand jury in Kansas City, Missouri, on Tuesday, June 26, 2012.
Carol and Michael Ryser are co-owners of Health Centers of America-Kansas City LLC (HCA), a medical clinic in Kansas City, Missouri, that purports to specialize in the diagnosis and treatment of chronic diseases such as Lyme disease, chronic fatigue syndrome, fibromyalgia, and other auto immune diseases. Carol Ryser is a medical doctor and the medical director. Michael Ryser is the CEO, chief administrator, and vice-president.
The federal indictment alleges that the Rysers engaged in fraudulent billing by “upcoding” and falsifying claims submitted to insurers (including Blue Cross Blue Shield, Cigna, United Healthcare, and others, as well as government programs such as Medicare and Tricare) in an effort to be paid more than the amount to which HCA was entitled.
According to the indictment, the scheme included (a) billing for physician office visits when Carol Ryser was out of town; (b) billing for physician office visits when Carole Ryser had little or no involvement with the patient; (c) billing for physician office visits when the patient contact was by telephone call; (d) billing for services with no supporting documentation; (e) billing for physician-supervised intravenous services when no physician was on duty at the clinic; and (f) improperly billing for consultation services.
The Rysers are also charged with three counts of filing false tax returns for the calendar years 2006, 2007, and 2008.
The indictment also contains a forfeiture allegation, which would require the Rysers to forfeit to the government any property derived from the proceeds of the health care fraud scheme, including $51,946.
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. Attorneys Thomas M. Larson and Cindi Woolery. It was investigated by the Health and Human Services Office of Inspector General, the Department of Labor Employee Benefits Security Administration, the FBI, IRS-Criminal Investigation, the Defense Criminal Investigative Service, and the Food and Drug Administration.
Posted: 27 Jun 2012 02:08 PM PDT
June 27, 2012
By Jayette Bolinski | Illinois Statehouse News
SPRINGFIELD – Legislation inspired by the Jerry Sandusky child sex abuse case at Penn State University became law in Illinois on Wednesday.
Gov. Pat Quinn signed House Bill 3887, which requires coaches and university employees to report to authorities suspicions of sex abuse and other forms of child abuse. The law is effective immediately.
“Young people place their trust in coaches and university officials, and it is (the adults’) responsibility to report any suspected abuse,” Quinn said in a written statement. “This is an important law that will help us continue to protect our children and youth.”
The bill, sponsored by Rep. Dwight Kay, R-Glen Carbon, and Sen. Kyle McCarter, R-Lebanon, requires coaches, university employees and others to report suspected abuse. It passed unanimously in both chambers of the General Assembly this spring before landing on the governor’s desk.
Sandusky, a popular, long-time football coach at Pennsylvania State University, was convicted June 22 on 45 counts of sexually abusing boys. The abuse, which occurred over at least a 15-year period, allegedly was known but ignored or covered up by numerous people in Sandusky’s circle, including other coaches, university staffers and family members.
Kay said it was clear to lawmakers that Illinois’ reporting laws needed to be tightened once the Penn State scandal came to light.
“The last thing anyone would have wanted to see would be for abuses to go unreported because of loopholes in the law,” he said.
Originally reported by Illinois Statehouse News. Read the original article here.
Posted: 27 Jun 2012 09:09 AM PDT
WASHINGTON—A federal jury in Elkins, West Virginia, convicted Richard Evick, a U.S. Army Sergeant First Class and Non-Commissioned Officer in charge of contracting at a U.S. military base in Kuwait, and his associate, Crystal Martin, of all counts with which they were charged in connection with a bribery and money laundering scheme related to defense contracts awarded in support of Operation Iraqi Freedom, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney William J. Ihlenfeld, II for the Northern District of West Virginia.
Evick was found guilty yesterday of one count of bribery conspiracy, two counts of bribery, one count of money laundering conspiracy, six counts of money laundering, and one count of obstructing an agency proceeding. Martin was found guilty of one count of bribery conspiracy, one count of money laundering conspiracy, and four counts of money laundering.
“As the highest ranking enlisted officer in the U.S. Army’s contracting office at Camp Arifjan in Kuwait, Mr. Evick had a special duty to strike deals in the best interests of the American people,” said Assistant Attorney General Breuer. “Instead, he steered business to dirty contractors in exchange for tens of thousands of dollars in cash and other items. Mr. Evick, Ms. Martin, and their co-conspirators defrauded the government they had sworn to serve. To date, our investigation has led to the convictions of 19 individuals, and we will continue aggressively to pursue corruption and procurement fraud wherever we find it.”
“The investigation and prosecution of public corruption cases continues to be a top priority for the Department of Justice in West Virginia and throughout the country,” said U.S. Attorney Ihlenfeld. “Fortunately, the vast majority of our public officials are honest and trustworthy, but those who are not will be held accountable.”
Evick served as the U.S. Army’s Non-Commission Officer in charge of contracting at Camp Arifjan between 2005 and 2006. In that capacity, Evick had the authority to arrange for the award of valuable contracts to supply the U.S. military with bottled water and catering services, maintain Army barracks, and install security barriers, among other things.
Evidence presented at trial demonstrated that Evick and his co-conspirators manipulated the contracting process in several ways, including disclosing confidential information about the U.S. military’s plans to procure goods and services and accepting fake bids. In this manner, Evick and two of his fellow contacting officials, former Army Majors James Momon and Chris Murray, steered nearly $24 million worth of contracting business to certain contractors. In exchange, these contractors paid Evick more than $170,000 in bribes, a free New Year’s Eve trip to Dubai, and parties.
Among the persons who paid Evick these bribes was Wajdi Birjas, a civilian U.S. government employee at Camp Arifjan who had a secret interest in a military contractor operating in Kuwait. Birjas testified that he provided phony bids to Evick from purportedly independent contractors who were, in reality, controlled by the same individuals. The evidence showed that Evick used these bids to create the false impression that the contracts were awarded according to Army contracting rules providing for a competitive bidding process. Birjas also testified that he had a hidden safe at his villa where Momon stored more than $800,000 in bribe money and which Evick used to exchange a large amount of Kuwaiti currency for U.S. dollars.
According to the evidence, Evick gave much of his bribe money to Martin, who had a concession from the U.S. Army and Air Force Exchange Service to sell merchandise at Camp Arifjan, which was primarily a cash business. Evick and Martin then transferred tens of thousands of dollars worth of Evick’s bribe money to the U.S. into the hands of Evick’s wife and his girlfriend. The evidence showed that, in order to conceal that this was bribe money, Evick and Martin converted the money into Western Union wires, money orders, cashiers checks, and personal checks. Evick and Martin also smuggled cash into the U.S. on their persons, Martin often taking military transport flights to avoid customs screening. Evick used his bribe money, among other things, to purchase and construct a residence on three and one half acres in Parsons, West Virginia, and to buy a pickup truck.
The evidence showed that Evick and Martin also participated in a scheme to smuggle $250,000 of bribe money belonging to Momon into the U.S. Momon testified about a summer 2006 meeting at Kuwait International Airport with Evick and Martin, at which Martin described how she was laundering Evick’s bribe money and offered to provide the same service for Momon. According to evidence presented at trial, Evick offered to bury Momon’s money on Evick’s West Virginia property. When law enforcement agents interviewed Evick several months later about corruption at Camp Arifjan, Evick falsely stated that he did not know the contractor from whom evidence showed he had received a $150,000 bribe, among other things.
“Contingency contracting provides an opportunity for honest contractors to excel but still runs the inherent risk of fraudulent activity that plagues all government contracting,” said Special Agent in Charge Robert Craig of the Defense Criminal Investigative Service. “While our service members and defense civilians expect the best from their supporting contracts, we root out the worst and, working alongside our law enforcement partners, continue to aggressively bring those who defraud our nation’s warfighters to justice.”
“We are very pleased with the guilty verdicts in this case,” said Frank Robey, the director of the U.S. Army Criminal Investigation Command’s Major Procurement Fraud Unit. “It is a warning to anyone, in or out of uniform, who attempts to defraud the army or the government that we will investigate credible allegations and bring those responsible to justice. Our agents have done a remarkable job investigating this case along with our fellow law enforcement partners and the DOJ.”
“The fact that a jury convicted these two individuals on all 11 counts stands as a powerful reminder that those who break the public trust to engage in bribery and money laundering with funds meant for the reconstruction of Iraq will face the full force of the law,” said Stuart W. Bowen, Special Inspector General for Iraq Reconstruction (SIGIR). “SIGIR and those who work with us will continue work on those cases still open against those involved in illegal acts.”
Evick and Martin face a maximum sentence of five years in prison for bribery conspiracy, 20 years in prison for money laundering conspiracy, and 20 years in prison for each count of money laundering. Evick also faces a maximum of 15 years in prison for each count of bribery, five years for obstructing an agency proceeding, and the forfeiture of the proceeds of his bribe scheme, which includes his West Virginia residence. They also face maximum fines of $250,000 per count. They will be sentenced by Chief U.S. District Judge John Preston Bailey. Their sentencing date has not yet been scheduled.
The case against Evick and Martin arose from a corruption probe focusing on the contracting office at Camp Arifjan, a U.S. military base in Kuwait. As a result of this investigation, 19 individuals, including Evick and Martin, have pleaded guilty or been found guilty at trial for their roles in the scheme. Momon pleaded guilty in August 2009 to receiving approximately $1.6 million in bribes and agreed to pay $5.7 million in restitution, and he is awaiting sentencing. Murray pleaded guilty in January 2009 for his role in the scheme and was sentenced in December 2009 to 57 months in prison. Birjas pleaded guilty in September 2010, and he is awaiting sentencing.
The case is being prosecuted by Trial Attorneys Peter C. Sprung and Eric G. Olshan of the Criminal Division’s Public Integrity Section and by Assistant U.S. Attorney Andrew R. Cogar of the U.S. Attorney’s Office for the Northern District of West Virginia. The case is being investigated by special agents of the Defense Criminal Investigative Service, the Army Criminal Investigation Command Division, Internal Revenue Service-Criminal Investigation, the FBI, and SIGIR.
Posted: 27 Jun 2012 09:09 AM PDT
WASHINGTON—Barclays Bank PLC, a financial institution headquartered in London, has entered into an agreement with the Department of Justice to pay a $160 million penalty to resolve violations arising from Barclays’ submissions for the London InterBank Offered Rate (LIBOR) and the Euro Interbank Offered Rate (EURIBOR), which are benchmark interest rates used in financial markets around the world, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and Assistant Director in Charge James W. McJunkin of the FBI’s Washington Field Office.
As part of the agreement with the Department of Justice, Barclays has admitted and accepted responsibility for its misconduct set forth in a statement of facts that is incorporated into the agreement. According to the agreement, Barclays provided LIBOR and EURIBOR submissions that, at various times, were false because they improperly took into account the trading positions of its derivative traders, or reputational concerns about negative media attention relating to its LIBOR submissions. The Justice Department’s criminal investigation into the manipulation of LIBOR and EURIBOR by other financial institutions and individuals is ongoing. The agreement requires Barclays to continue cooperating with the department in its ongoing investigation.
“LIBOR and EURIBOR are critically important benchmark interest rates,” said Assistant Attorney General Breuer. “Because mortgages, student loans, financial derivatives, and other financial products rely on LIBOR and EURIBOR as reference rates, the manipulation of submissions used to calculate those rates can have significant negative effects on consumers and financial markets worldwide. For years, traders at Barclays encouraged the manipulation of LIBOR and EURIBOR submissions in order to benefit their financial positions; and, in the midst of the financial crisis, Barclays management directed that U.S. Dollar LIBOR submissions be artificially lowered. For this illegal conduct, Barclays is paying a significant price. To the bank’s credit, Barclays also took a significant step toward accepting responsibility for its conduct by being the first institution to provide extensive and meaningful cooperation to the government. Its efforts have substantially assisted the Criminal Division in our ongoing investigation of individuals and other financial institutions in this matter.”
“Barclays Bank’s illegal activity involved manipulating its submissions for benchmark interest rates in order to benefit its trading positions and the media’s perception of the bank’s financial health,” said Assistant Director in Charge McJunkin. “Today’s announcement is the result of the hard work of the FBI special agents, financial analysts, and forensic accountants as well as the prosecutors who dedicated significant time and resources to investigating this case.”
Barclays was one of the financial institutions that contributed rates used in the calculation of LIBOR and EURIBOR. The contributed rates are generally meant to reflect each bank’s assessment of the rates at which it could borrow unsecured interbank funds. For LIBOR, the highest and lowest 25 percent of contributed rates are excluded from the calculation and the remaining rates are averaged to calculate the fixed rates. For EURIBOR, the highest and lowest 15 percent are excluded, and the remaining 70 percent are averaged to calculate the fixed rates.
Futures, options, swaps, and other derivative financial instruments traded in the over-the-counter market and on exchanges worldwide are settled based on LIBOR. Further, mortgages, credit cards, student loans, and other consumer lending products often use LIBOR as a reference rate. According to the agreement, an individual bank’s LIBOR or EURIBOR submission cannot appropriately be influenced by the financial positions of its derivatives traders or the bank’s concerns about public perception of its financial health due to its LIBOR submissions.
According to the agreement, between 2005 and 2007, and then occasionally thereafter through 2009, certain Barclays traders requested that the Barclays LIBOR and EURIBOR submitters contribute rates that would benefit the financial positions held by those traders. The requests were made by traders in New York and London, via electronic messages, telephone conversations, and in-person conversations. The employees responsible for the LIBOR and EURIBOR submissions accommodated those requests on numerous occasions in submitting the bank’s contributions. On some occasions, Barclays’s submissions affected the fixed rates.
In addition, between August 2005 and May 2008, certain Barclays traders communicated with traders at other financial institutions, including other banks on the LIBOR and EURIBOR panels, to request LIBOR and EURIBOR submissions that would be favorable to their or their counterparts’ trading positions, according to the agreement.
When the requests of traders for favorable LIBOR and EURIBOR submissions were taken into account by the rate submitters, Barclays’ rate submissions were false and misleading.
Further, according to the agreement, between approximately August 2007 and January 2009, in response to initial and ongoing press speculation that Barclays’ high U.S. Dollar LIBOR submissions at the time might reflect liquidity problems at Barclays, members of Barclays management directed that Barclays’ dollar LIBOR submissions be lowered. This management instruction often resulted in Barclays’ submission of false rates that did not reflect its perceived cost of obtaining interbank funds. While the purpose of this particular conduct was to influence Barclays’ rate submissions, as opposed to the resulting fixes, there were some occasions when Barclays’ submissions affected the fixed rates.
The agreement and monetary penalty recognize Barclays’ extraordinary cooperation. Barclays made timely, voluntary, and complete disclosure of its misconduct. After government authorities began investigating allegations that banks had engaged in manipulation of benchmark interest rates, Barclays was the first bank to cooperate in a meaningful way in disclosing its conduct relating to LIBOR and EURIBOR. Barclays’ disclosure included relevant facts that at the time were not known to the government. Barclays’s cooperation has been extensive, in terms of the quality and type of information and assistance provided, and has been of substantial value in furthering the department’s ongoing criminal investigation. Barclays has made a commitment to future cooperation with the department and other government authorities in the United States and the United Kingdom.
Assistant Attorney General Breuer further stated, “As today’s agreement reflects, we are committed to holding companies accountable for their misconduct while, at the same time, giving meaningful credit to companies that provide full and valuable cooperation in our investigations.”
In addition, Barclays has implemented a series of compliance measures and will implement additional internal controls regarding its submission of LIBOR and EURIBOR contributions, as required by the Commodity Futures Trading Commission (CFTC). Barclays will also continue to be supervised and monitored by the FSA.
The agreement and monetary penalty further recognize certain mitigating factors to Barclays’ misconduct. At times, Barclays employees raised concerns with the British Bankers’ Association, the United Kingdom Financial Services Authority (FSA), the Bank of England, and the Federal Reserve Bank of New York in late 2007 and in 2008 that the Dollar LIBOR rates submitted by contributing banks, including Barclays, were too low and did not accurately reflect the market. Further, during this time, notwithstanding Barclays’s improperly low dollar LIBOR submissions, those submissions were often higher than the contributions used in the calculation of the fixed rates.
As a result of Barclays’s admission of its misconduct, its extraordinary cooperation, its remediation efforts and certain mitigating and other factors, the department agreed not to prosecute Barclays for providing false LIBOR and EURIBOR contributions, provided that Barclays satisfies its ongoing obligations under the agreement for a period of two years. The non-prosecution agreement applies only to Barclays and not to any employees or officers of Barclays or any other individuals.
In a related matter, the CFTC brought attempted manipulation and false reporting charges against Barclays, which the bank agreed to settle. The CFTC imposed a $200 million penalty and required Barclays to implement detailed measures designed to ensure the integrity and reliability of its benchmark interest rate submissions.
The FSA issued a final notice regarding its enforcement action against Barclays and has imposed a penalty of £59.5 million against it.
The case is being handled by Deputy Chief Daniel Braun, Assistant Chiefs Rebecca Rohr and Robertson Park, Trial Attorney Alexander Berlin, and Special Trial Attorney Luke Marsh of the Criminal Division’s Fraud Section. The investigation is being conducted by the FBI’s Washington Field Office, jointly with the Antitrust Division of the Department of Justice.
The Department acknowledges and expresses its appreciation for the significant assistance provided by the CFTC’s Division of Enforcement, which referred the conduct to the department, as well as the FSA’s Enforcement and Financial Crime Division.
This agreement is part of efforts underway by 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. For more information about the task force visit: www.stopfraud.gov.
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