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Twenty-Four Defendants Charged in Federal Court with Drug Distribution on Milwaukee’s East Side

Posted: 12 Jul 2012 06:14 PM PDT

United States Attorney James L. Santelle announced that today, three indictments were unsealed in federal court charging 11 defendants with various drug trafficking offenses. In addition, 13 defendants were charged by criminal complaint with drug offenses related to a federal wiretap investigation. The indicted defendants are charged with drug offenses, including conspiracy to distribute controlled substances and attempted possession with intent to distribute cocaine. The defendants charged by complaint are alleged to have unlawfully used telephones in furtherance of their drug trafficking activities.

In the first indictment, two defendants, Ramone Locke (25) and Joey Vazquez (27), are charged with conspiring to possess with the intent to distribute and distribute five kilograms or more of a mixture and substance containing cocaine, a Schedule II controlled substance, in violation of Title 21, United States Code, Sections 841(a)(1), 841(b)(1)(A), and 846. If convicted, each faces a minimum of 10 years’ imprisonment with a maximum of life, a $10,000,000 fine, and between five years and life on supervised release. In the same indictment, defendants Billy Cannon, Jr. (27), Sharta Harris (24), Jesse Locke (44), Marilyn Mack (53), and Herberto Torres (26) are charged with attempted possession with intent to distribute at least 500 grams of cocaine, a Schedule II controlled substance, in violation of Title 21, United States Code, Sections 841(a)(1), 841(b)(1)(B), and 846. If convicted, each defendant faces a minimum of five years’ imprisonment with a 40 year maximum, a $5,000,000 fine, and between four years and life on supervised release.

A second indictment charges Larry Lawrence (21), Andre Apontey (26), and Garry Hughes (28) with conspiracy to distribute and possess with intent to distribute of crack cocaine. The maximum penalties faced by these defendants are minimum of five, maximum of 40 years’ imprisonment, a $5 million fine, and a minimum of four years’ supervised release.

The third indictment charging Robert Woods, a.k.a “Young Robbo,” (29) with distribution of cocaine. The maximum penalty for this crime is 20 years’ imprisonment, up to a $1 million fine, and at least three years of supervised release.

Name

Age and Residency

Count(s)

Ramone Locke

25, Milwaukee

First indictment, count one

Joey Vazquez

26, Milwaukee

First indictment, counts one and three

Billy Cannon, Jr.

27, Milwaukee

First indictment, count three

Sharta Harris

24, Milwaukee

First indictment, count three

Jesse Locke

44, Milwaukee

First indictment, count two

Marilyn Mack

53, Milwaukee

First indictment, count three

Herberto Torres

26, Milwaukee

First indictment, count two

Andrey Apontey

26, Milwaukee

Second indictment

Larry Lawrence

21, Milwaukee

Second indictment

Garry Hughes

28, Milwaukee

Second indictment

Robert Woods

29, Milwaukee

Third indictment

The following defendants were charged by criminal complaint with using a telephone in furtherance of a drug trafficking offense, in violation of Title 21, United States Code, Section 843(b):

Defendant

Age and Residency

Adkins, William M.

24, Milwaukee

Benjamin, Konrad B.

24, Milwaukee

Erby, Chauncey O.

26, Milwaukee

Erby, Wayne C.

25, Milwaukee

Fayne, Brandon M.

22, Milwaukee

Kittler, Jushar L.

24, Milwaukee

Benjamin, Konrad B.

24, Milwaukee

Sills, Leo R.

24, Milwaukee

Tatum, Kendale M.

22, Milwaukee

Watkins, Bobby J.

21, Milwaukee

Whittley, Anthony T.

29, Milwaukee

Willis, Felix D.

21, Milwaukee

Woods, Terry L.

28, Milwaukee

The maximum penalties for this offense are four years’ imprisonment and a $250,000 fine.

Today, law enforcement arrested 10 of the individuals. Nine others were already in custody. Five are still at large, including Joey Vazquez, Michael Moore, Anthony Whittley, Herberto Torres, and Sharta Harris.

The defendants were charged based on a lengthy investigation by the Milwaukee High Intensity Drug Trafficking Area (HIDTA) Drug Gang Task Force, which includes officers from the Milwaukee Police Department and special agents of the Federal Bureau of Investigation, with assistance from the Wisconsin Department of Justice-Division of Criminal Investigations; the West Allis Police Department; the Internal Revenue Service; the Drug Enforcement Administration; the Bureau of Alcohol, Tobacco, Firearms, and Explosives; the United States Marshals Service; the Wisconsin Department of Corrections Probation and Parole; and the Milwaukee County District Attorney’s Office. The investigation is the second phase of an ongoing, long-term effort by law enforcement to eradicate the sales of powder and crack cocaine and associated violence on Milwaukee’s east side. The first phase concluded in November 2011 with the federal indictment of 13 drug traffickers and their associates on drug conspiracy charges. To date, 37 east side drug traffickers have been federally charged in connection with the investigation.

According to United States Attorney James L. Santelle, “The significant law enforcement action that we are announcing follows on the equally important work accomplished in November of 2011—when, like today, we also apprehended and brought to justice a large group of people whose drug dealing and related criminal conduct compromised the safety and security of neighborhoods on the east side of Milwaukee. This second phase of our targeted, effective, and evidence-based initiative affirms for all of the people of our community that we continue to identify and to dismantle conspiracies that distribute controlled substances—including, as in these matters, powder and crack cocaine. The 13 people prosecuted since the fall of last year are now joined by 24 more—and, like the others, they are all facing significant prison terms and the prospect of losing all of the assets that they acquired during the period of the several years of their illegal and destructive trafficking. Our announcement today of these charges and these arrests also reflects the sort of affirmative, law enforcement success that comes when federal, state, and local agencies are united in attacking violent crime—including drug trafficking.” Santelle specifically recognized the critically important work of all of the agencies participating in the investigation of this matter—including the arrests of earlier today—and he specially commended the Federal Bureau of Investigation, the Milwaukee Police Department, the United States Marshals Service, the Department of Criminal Investigation, Wisconsin Department of Justice, and the Milwaukee High Intensity Drug Trafficking Area (HIDTA) Initiative.

This case is being prosecuted by Assistant U.S. Attorney Bridget J. Domaszek.

An indictment or criminal complaint is a method of charging an individual and does not constitute inference of his or her guilt. An individual is presumed innocent until such time, if ever, that the government establishes his or her guilt beyond a reasonable doubt.


Broward Woman Sentenced for Role in Identity Theft Tax Fraud Scheme Involving U.S. Marine Victims

Posted: 12 Jul 2012 06:14 PM PDT

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida; Jeffrey C. Mazanec, Acting Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office; and José A. Gonzalez, Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI), Miami Field Office, announced that Dorothy Boulin, 29, was sentenced today to 70 months in prison, to be followed by three years of supervised release, in connection with an identity theft tax fraud scheme. Boulin pled guilty on April 19, 2012 to one count of wire fraud and one count of aggravated identity theft.

According to court documents, sometime prior to January 2012, the defendant received a list of military personnel (United States Marines) containing their names and Social Security numbers to be used for identity theft tax fraud purposes.

On January 17, 2012, the defendant, from a computer in her residence in Broward County, caused six fraudulent tax returns to be submitted online. Five of these returns were submitted without the authorization of the individuals whose Social Security numbers appear on the returns. These five returns sought approximately $21,301 in fraudulent refunds. Several of these victims were U.S. Marines.

On January 19, 2012, the defendant caused another eight fraudulent tax returns to be submitted online. Seven of these returns were submitted without the authorization of the individuals whose social security numbers appear on the returns. These seven returns sought approximately $32,627 in fraudulent refunds. Several of these victims were U.S. Marines.

Mr. Ferrer commended the FBI, IRS-CI, and the FBI Miami Area Corruption Task Force for their work on the case. The case is being prosecuted by Assistant U.S. Attorney Michael N. Berger.

A copy of this press release may be found on the website of the United States Attorney’s Office for the Southern District of Florida at www.usdoj.gov/usao/fls.


Utah Man Pleads Guilty to Charges Connected to Multi-Million-Dollar Mortgage Fraud Scheme

Posted: 12 Jul 2012 06:14 PM PDT

CHARLESTON, WV—U.S. Attorney Booth Goodwin announced today that a Utah man pleaded guilty in federal court for his involvement in a multi-million-dollar mortgage fraud scheme linked to properties at a Putnam County, West Virginia. subdivision. Raymond Paul Morris, 51, of South Weber, Utah, pleaded guilty to wire fraud and bank fraud. Morris admitted to participating in the sophisticated multi-million-dollar mortgage fraud scheme in early 2006 along with co-conspirators Deborah L. Joyce, 38, of Hurricane, West Virginia, and Michael Hurd, 37, of Utah.

The mortgage fraud scheme based on properties in the Stonegate subdivision involved illegal property “flipping” to out-of-state borrowers at inflated prices using a company called “The Gift Program” or “Advanced Capital Services” that was operated at the time by co-conspirator Hurd. Hurd described The Gift Program as a “seller-funded down payment assistance program” used to provide home buyer’s money to make down payment and initial mortgage payments on real estate purchases. Hurd further admitted that he used The Gift Program to create an elaborate scheme to defraud lenders by concealing the transfer of loan funds to the borrower from the lender. In essence, through the use of The Gift Program, lenders unwittingly funded their own down payment and made the initial mortgage payments.

Deborah Joyce obtained inflated appraisals from two local appraisers, James Thornton and Mark Greenlee, and subsequently sent the appraisals on to Raymond Morris in Salt Lake City, Utah.

Morris admitted that he then identified investors in Utah to purchase the Stonegate properties at fraudulently inflated prices, while claiming that the properties were significantly undervalued. Morris then got those investors in contact with Hurd, who then used The Gift Program to conceal the transfer of a portion of the loan proceeds to the investor from the lender. Morris admitted that he received an undisclosed “commission” from Hurd for the referral.

Hurd also admitted at his plea in November 2011 that during the scheme, he wired additional loan funds to the investor to make initial mortgage payments. Once those funds ran out, the investors defaulted on the loans and the properties went into foreclosure.

Hurd, Joyce, and Morris illegally flipped a total of six properties in the Stonegate subdivision. The respective lender losses totaled almost $2 million.

At the same time, Morris and Hurd orchestrated a similar investment-type scheme in Modesto, California.

Hurd previously pleaded guilty in November 2011 to conspiracy to commit wire fraud and bank fraud. The defendant also pleaded guilty to mail fraud arising out of his involvement in a similar scheme in Modesto, California. Hurd acknowledged that he was involved in illegally flipping 20 properties with losses in excess of $5.5 million. As part of his plea agreement, Hurd agreed to transfer those charges from the Eastern District of California to the Southern District of West Virginia so the matters could be disposed of jointly. Morris agreed to include the lender losses suffered as a result of the Modesto, California illegal property flips as relevant conduct for sentencing purposes here in the Southern District of West Virginia.

Deborah L. Joyce was sentenced in April 2011 to three years and 10 months in prison and five years of supervised release for her involvement in the Stonegate subdivision mortgage fraud scheme. Joyce’s husband, Todd Joyce, 38, of Hurricane, Putnam County, West Virginia, was also sentenced in April 2011 to one year and six months in prison on mortgage fraud and tax evasion charges.

Hurd faces up to 60 years in prison and a $2 million fine when he is sentenced on August 10, 2012.

Morris faces up to 30 years in prison and a $1 million fine when he is sentenced on October 29, 2012 by United States District Judge Thomas E. Johnston.

This case was investigated by the Federal Bureau of Investigation and the Internal Revenue Service-Criminal Investigative Division. Assistant United States Attorney Thomas Ryan is in charge of the prosecution. This case was prosecuted as part of President Obama’s 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.


Three Defendants Plead Guilty to Theft of Government Funds

Posted: 12 Jul 2012 06:14 PM PDT

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida; Jeffrey C. Mazanec, Acting Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office; and Manuel Orosa, Chief, City of Miami Police Department, announce that defendants Chante Sweet, 35, of Miami, Simone West, 22, of Hollywood, and Ashley Rolle, 27, of St. Petersburg, Florida, pled guilty on Wednesday, July 11, 2012 to theft of money from a government program, in violation of Title 18, United States Code, Section 666(a)(1)(A).

During the change of plea hearing, Chante Sweet, an employee of the city of Miami Neighborhood Enhancement Team from 2007 through 2009, admitted to stealing approximately $21,932.43 in federal grant money from the city of Miami that was designated for the Miami ACES program, a program designed to advise members of the community about hurricane and emergency preparedness. Sweet admitted to issuing checks to Simone West and Ashley Rolle from the Miami ACES program even though West and Rolle performed no work for the program. West and Rolle cashed the checks and shared the money with Sweet. During the plea, West and Rolle admitted to their role in the scheme, with West acknowledging that she cashed approximately $9,799 in checks, and Rolle admitted that she cashed approximately $9,603 in checks for work that neither of them performed.

The defendants are scheduled to be sentenced on September 26, 2012 at 11:00 a.m. before U.S. District Judge Marcia G. Cooke.

Mr. Ferrer commended the investigative efforts of the FBI, the FBI’s Miami Area Public Corruption Task Force, and the City of Miami Police Department. The case is being prosecuted by Assistant U.S. Attorneys Alejandro O. Soto and John P. Gonsoulin.

A copy of this press release may be found on the website of the United States Attorney’s Office for the Southern District of Florida at www.usdoj.gov/usao/fls.


Discipline committee denies Smith’s request for more time

Posted: 12 Jul 2012 06:14 PM PDT

By Jayette Bolinski | Illinois Statehouse News

SPRINGFIELD – House lawmakers charged with deciding possible discipline for indicted Rep. Derrick Smith have denied his attorney’s request to delay the final hearing.

Victor Henderson, Smith’s Chicago attorney, on July 6 asked the committee to delay the hearing for at least 30 days after July 19, the scheduled date for the final hearing. Henderson said he needed more time so he could ask the federal court to modify a protective order and allow him to use some kind of unidentified evidence at the hearing.

Smith, a Chicago Democrat, is under federal indictment, charged with taking a $7,000 bribe in his job as a state legislator.

The House Select Committee on Discipline responded Wednesday that it saw no point in waiting because the U.S. attorney has repeatedly said any evidence revealed during the committee hearings could jeopardize Smith’s criminal case.

“There is therefore no need for this committee to await the outcome of litigation over the protective order in federal court – the committee already has its answer,” it wrote in its denial. “The U.S. attorney has consistently indicated that he believes a modification of the protective order would hinder his investigation, and thus this committee will not entertain any evidence currently covered by that protective order.”

Smith was in court Thursday afternoon and could not be reached for comment. He previously told Illinois Statehouse News the committee is moving too fast and lacks the information it needs to make a fair decision.

“All you’re doing is undercutting the system of Democracy we have. We might as well be in Communist Russia if this is the way things are going to proceed,” he said. “This is not something you’d expect to see from one of the greatest states in the union.”

Members of the bipartisan Select Committee on Discipline are charged with deliberating possible professional punishment for Smith. It has four options: Smith could be expelled, censured, reprimanded or exonerated.

The 12 House lawmakers appointed to the committee will act as jurors who hear Smith’s case. Two other lawmakers will “try” the case.

The committee and Smith last week submitted witness and evidence lists.

The committee’s evidence list includes transcripts of prior hearings, the criminal complaint against Smith, the court protective order, a copy of Smith’s oath of office, Smith’s statement of economic interest, Smith’s ethics training attendance record, entries into the Journal of the Illinois House of Representatives showing Smith participated in official House business, and letters from lawmakers to the U.S. attorney’s office.

The committee’s witness list has just three people: Smith and two court reporters who transcribed prior hearings.

Smith is not on the witness list Henderson submitted. It has two people: a confidential source who assisted federal investigators in their probe of Smith and an FBI agent who worked on the case.

Henderson’s evidence list includes reports provided by the confidential source, the agent’s affidavit and information about the employment history and criminal background of the confidential source.

An earlier committee, the House Special Investigating Committee, determined enough evidence existed to proceed with possible discipline.

Jayette Bolinski can be reached at jayette.bolinski@franklincenterhq.org.

Originally reported by Illinois Statehouse News. Read the original article here.


Governor Quinn Breaks Ground on Newest Innovative School on Chicago’s Southwest Side – UNO’s Soccer Academy High School to Relieve Overcrowding, Offer More School Options

Posted: 12 Jul 2012 06:13 PM PDT

CHICAGO – July 12, 2012. Governor Pat Quinn today continued his commitment to improving education in Illinois by joining students, parents, advocates and community leaders to break ground on the United Neighborhood Organization’s (UNO) newest school on Chicago’s Southwest Side. The state is providing an $18 million Illinois Jobs Now! capital investment to help build UNO’s Soccer Academy High School and a $1 million Brownfields loan from the Illinois Environmental Protection Agency (EPA) to help clean up the construction site by removing hazardous waste and petroleum contamination. The project is expected to create 200 construction jobs and 70 full- and part-time permanent jobs.

“The foundation of our state’s future is the education of our children,” Governor Quinn said. “Investments in schools we make today will pay dividends for years to come and make Illinois stronger.”

The UNO Soccer Academy High School is based on an innovative concept of integrating the game of soccer into a traditional curriculum, including science, social studies, math and physical fitness, with the goal of using sports as a motivational tool to make sure students are academically well-rounded. The new high school will be constructed just a few hundred feet from the UNO Soccer Academy elementary school, 5050 S. Homan Ave., which has recorded a 98 percent student attendance in its first year of classes—among the highest in Chicago.

“The high school will be one of the most innovative facilities in Chicago,” said Juan Rangel, CEO of UNO, which operates a network of 11 charter schools serving 5,500 students across the city. “We have shown our concept works by boosting attendance and creating an environment where children learn with the commitment and support of their families. When this new high school is complete in the fall of 2013, this campus will combine our community’s passion for soccer with a true love of learning. I thank Governor Quinn for his strong support of this project.”

The school will serve approximately 960 students in ninth through twelfth grades and help relieve overcrowding that has plagued schools in many Chicago communities. The new 79,000 square foot facility is part of a larger campus that includes a stadium, a community plaza and an elementary school Governor Quinn helped open in 2011. The building will be submitted for LEED silver certification at a minimum and the construction will have 30 percent participation from minority- and women-owned businesses.

Governor Quinn’s Illinois Jobs Now! capital program includes $98 million for UNO charter schools that will alleviate school overcrowding and provide quality education options for Illinois children. To date, the state has invested more than $84 million for green, capital and digital literacy initiatives at UNO schools.


Metairie Bank Manager Pleads Guilty to Bank Theft

Posted: 12 Jul 2012 01:16 PM PDT

NEW ORLEANS—Karen Sork, age 50, a resident of New Orleans, Louisiana, pleaded guilty as charged today in front of United States District Judge Susie Morgan to a bill of information charging her with bank theft relating to her unauthorized embezzlement of funds from her employer, announced United States Attorney Jim Letten.

According to court documents, Sork was employed at a Whitney Bank branch in Metairie, Louisiana, from December 2008 to August 2009 as a banking officer and manager. In that capacity, Sork had the combination to, and was able to access, the branch’s vault. She also had a “cash drawer” for times when she had to act as a teller. Between February 2009 and August 2009, Sork would regularly take cash from her cash drawer without authorization and use it for personal expenses. After taking cash from the cash drawer, Sork engaged in a process called “forced balancing,” whereby she misstated the amount of money remaining in her drawer on the balance sheet that she had to complete at the end of each shift. Sork deposited the money she stole into one of two Whitney Bank personal checking accounts under her control. In total, Sork stole approximately $56,299.29.

Sentencing has been scheduled on October 10, 2012, at 2:00 p.m. Sork faces a maximum term of imprisonment of 10 years, a $250,0000 fine, restitution, and three years of supervised release following any term of imprisonment.

The case was investigated by the Federal Bureau of Investigation. The case is being prosecuted by Assistant United States Attorney Jordan Ginsberg.


Dallas Men Indicted in $485 Million Investment Fraud Scheme in East Texas

Posted: 12 Jul 2012 01:15 PM PDT

PLANO, TX—Two Dallas men have 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.

Brendan Coughlin, 46, and Henry Harrison, 47, both of Dallas, have been charged with one count of conspiracy to commit mail fraud and 10 counts of mail fraud. The indictment was returned by a federal grand jury on July 11, 2012.

According to the indictment, Coughlin and Harrison, on behalf of Provident Royalties LLC, 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 approximately September 2006, Coughlin, Harrison, and other individuals 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.

If convicted, Coughlin and Harrison face up to 20 years in federal prison.

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 the FBI and prosecuted by Assistant U.S. Attorney Shamoil T. Shipchandler.

A grand jury indictment is not evidence of guilt. A defendant is presumed innocent until proven guilty beyond a reasonable doubt in a court of law.


Web Designer Pleads Guilty to Unlawful Computer Intrusion

Posted: 12 Jul 2012 01:15 PM PDT

ALBUQUERQUE—This morning, Andrew West, 40, of Albuquerque, entered a guilty plea to an information charging him with fraud in connection with computers in Albuquerque federal court. At sentencing, West faces a maximum penalty of five years of imprisonment, a $250,000 fine, and restitution as ordered by the court. West was released under pretrial supervision pending his sentencing hearing, which has yet to be scheduled.

The information to which West pleaded guilty charged West with accessing a protected computer without authorization and with the intention of committing fraud and obtaining money in November 2011, in Bernalillo County, New Mexico.

According to West’s plea agreement, in early November 2011, West executed a scheme to defraud an artist who routinely sold his artwork through online sales and collected payment using a Paypal account. West admitted that he obtained unauthorized access to the victim’s computer system and caused the payments that were intended to go into the victim’s Paypal account to be diverted to a Paypal account he created and controlled. Between November 6, 2011 and November 17, 2011, West unlawfully diverted more than $4,000 intended for the victim’s account to an account that he controlled. Under the terms of the plea agreement, West will pay restitution to the victim of his crime.

The case was investigated by the FBI as part of its Cyber Criminal Computer Intrusion Initiative and is being prosecuted by Assistant U.S. Attorney John C. Anderson.


Beaumont Man Indicted for Pappadeaux’s Carjacking

Posted: 12 Jul 2012 01:15 PM PDT

BEAUMONT, TX—A 19-year-old Beaumont, Texas man has been indicted for carjacking in the Eastern District of Texas, announced U.S. Attorney John M. Bales.

Rogelio Arellano Torres was indicted by a federal grand jury on July 11, 2012, and charged with carjacking.

According to court documents, on June 24, 2012, law enforcement officers were dispatched to the Walden Road area of Interstate-10 South, where they found a young woman visibly upset, crying, and shaking. The woman told them she had been forcibly kidnapped from the Pappadeaux’s parking lot in her own car and forced to withdraw money from her account through an ATM. The woman was eventually forced from her vehicle and the assailant fled with her car, purse, and cell phone. She described the man, whom police believed to be Torres based on previous contact with him, and she was able pick him out of a photo line-up.

If convicted, Torres faces up to 15 years in federal prison.

This case is being investigated by FBI and the Beaumont Police Department and prosecuted by Assistant U.S. Attorney Joseph R. Batte.

A grand jury indictment is not evidence of guilt. A defendant is presumed innocent until proven guilty beyond a reasonable doubt in a court of law.


San Fernando Valley Woman Arrested in Million-Dollar Real Estate Ponzi Scheme Run Through Companies in Santa Clarita Valley

Posted: 12 Jul 2012 01:15 PM PDT

LOS ANGELES—A San Fernando Valley real estate agent and self-described real estate investor charged with running a million dollar-plus Ponzi scheme out of companies based in the Santa Clarita Valley has been arrested on federal wire fraud and mail fraud charges.

Celia Gallardo, 42, of North Hills, was arrested yesterday by special agents with the Federal Bureau of Investigation. Gallardo was arraigned in United States District Court in Los Angeles yesterday afternoon and pleaded not guilty to charges contained in a 16-count indictment.

A federal grand jury indicted Gallardo on Tuesday, accusing her of bilking dozens of investors who put money into Gallardo’s purported real estate investment program. Gallardo told the investors that she would purchase condominiums in other states and that these properties would yield extremely high rates of return in very short time periods—as much as a 100 percent return in only 30 days, according to the indictment.

Gallardo allegedly assured victims that their money was safe. She issued “Promissory Notes” to investors that “confirmed” their money was being used in the purported real estate transactions. However, as alleged in the indictment, Gallardo spent a majority of investor funds on undisclosed and unauthorized purposes, including her residence, foreign luxury travel, cash withdrawals, and to repay certain earlier investors to perpetuate the scheme. The victims, including investors in California and Arizona, lost more than $1 million.

Gallardo’s scheme allegedly ran from September 2007 until September 2008.

At yesterday arraignment, United States Magistrate Judge Carla Woerhle ordered that Gallardo be released on a $75,000 bond. The case was assigned to United States District Judge Dean D. Pregerson, who scheduled a trial for September 4.

The indictment charges Gallardo with nine counts of wire fraud and seven counts of mail fraud. If she is convicted of all 16 counts in the indictment, Gallardo would face a maximum possible sentence of 320 years in federal prison.

An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.

The charges against Gallardo resulted from an investigation conducted by the Federal Bureau of Investigation.


South Jersey Man Admits Robbing Three Banks

Posted: 12 Jul 2012 01:15 PM PDT

CAMDEN, NJ—A Camden County, New Jersey man today admitted robbing three banks in Pennsauken, New Jersey, in November 2011 while on federal supervised release for bank robbery, U.S. Attorney Paul J. Fishman announced.

Richard B. Jones, 38, of Pennsauken, pleaded guilty to an information charging him with one count of bank robbery in connection with his robbing a Sovereign Bank on November 28, 2011. He also admitted robbing the same Sovereign Bank and the PNC Bank in Pennsauken, New Jersey, that same month. Jones committed these three bank robberies while on federal supervised release for a bank robbery he committed in Rhode Island in 2006 and pleaded guilty to violating his supervised release. Jones entered his guilty pleas before U.S. District Judge Renée Marie Bumb in Camden federal court.

According to documents filed in this case and statements made in court:

In November 2011, Jones entered a PNC Bank in Pennsauken, approached a bank teller, and presented a note that said, “Got a gun, no dye packs, all 20s, 50s, 100s.” He received money from the teller and fled. He also robbed the Sovereign Bank twice that month.

The charge to which Jones pleaded guilty is punishable by a maximum penalty of 20 years in prison and a fine of $250,000. Jones faces up to two additional years in prison for the violation of supervised release. Sentencing is scheduled for October 19, 2012.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent In Charge Michael B. Ward in Newark, and the Pennsauken Police Department, and the Camden County Prosecutor’s Office for the investigation leading to today’s guilty plea.

The government is represented by Assistant U.S. Attorney Alyson M. Oswald of the U.S. Attorney’s Office Criminal Division in Camden.


0 Months in Prison for Health Care Fraud Involving Unnecessary Patient Tests

Posted: 12 Jul 2012 01:15 PM PDT

CHICAGO—A physician who operated a south side medical clinic, Dr. Jaswinder Rai Chhibber, was sentenced to 2½ years in federal prison for engaging in a health care fraud scheme between 2007 and July 2010, federal law enforcement officials announced today. Chhibber, who operated the former Cottage Grove Community Medical Clinic, located at 642 East 79th St., Chicago, was convicted following a trial in March of defrauding BlueCross BlueShield of Illinois by submitting false insurance claims for medically unnecessary tests he ordered for patients and using false diagnosis codes to justify those tests.

Chhibber, 50, of Schaumburg, was ordered to begin serving his 30-month prison term on September 5 by U.S. District Judge Suzanne Conlon, who imposed the sentence, along with a $15,000 fine, late yesterday in federal court.

Chhibber was found guilty of five counts of health care fraud and four counts of making false statements involving a health care benefits program after a week-long trial. The jury found him not guilty of seven additional counts.

The evidence at trial showed that Chhibber ordered medically unnecessary tests, falsified patients’ medical records, and used false diagnosis codes on insurance claim forms in various fashions for at least five patients who testified at trial, including two undercover federal agents who posed as patients. Evidence also showed that Chhibber administered echocardiograms, electrocardiograms, nerve conduction studies, carotid doppler exams, and abdominal ultrasounds for an unusually high percentage of his patients.

The sentence was announced by Gary S. Shapiro, Acting United States Attorney for the Northern District of Illinois, together with Lamont Pugh, III, Special Agent in Charge of the Chicago Region of the U.S. Department of Health and Human Services Office of Inspector General; and Robert D. Grant, Special Agent in Charge of the Chicago Office of Federal Bureau of Investigation. The U.S. Department of Labor Office of Inspector General and the U.S. Railroad Retirement Board Office of Inspector General also participated in the investigation.

The investigation was conducted by the Medicare Fraud Strike Force, which expanded to Chicago in 2011, and is part of the Health Care Fraud Prevention and Enforcement Action Team (HEAT), a joint initiative between the Justice Department and HHS to focus their efforts to prevent and deter fraud and enforce anti-fraud laws around the country.

The government is being represented by Assistant U.S. Attorneys Joel Hammerman and Samuel B. Cole.


Executives, Borrowers Indicted in Massive Fraud That Led to Collapse of Bank of the Commonwealth

Posted: 12 Jul 2012 01:15 PM PDT

NORFOLK, VA—Top executives and favored borrowers have been indicted by a federal grand jury in Norfolk, Virginia, accused of masking non-performing assets at the Bank of the Commonwealth for their own personal benefit and to the detriment of the bank. This long-running scheme allegedly contributed to the failure of the bank in 2011, which the Federal Deposit Insurance Corporation (FDIC) estimates will cost the FDIC deposit-insurance fund $268 million.

Neil H. MacBride, United States Attorney for the Eastern District of Virginia; John Boles, Special Agent in Charge of the FBI’s Norfolk Field Office; Rick A. Raven, Special Agent in Charge of the Internal Revenue Service Criminal Investigation’s Washington, D.C., Field Office; Christy L. Romero, Special Inspector General for the Troubled Asset Relief Program (SIGTARP); and Jon T. Rymer, Inspector General of the Federal Deposit Insurance Corporation (FDIC-OIG), made the announcement.

“The Bank of the Commonwealth’s high risk lending practices resulted in soaring losses after the 2008 financial crisis. Led by former CEO and Board Chairman Edward Woodard, these bank insiders and their favored borrowers allegedly conspired to hide the rapidly deteriorating financial condition of the bank through fraud,” said U.S. Attorney MacBride. “For more than 30 years, this community put their trust—and their money—in the Bank of the Commonwealth. These charges portray a bank leadership that betrayed that trust for their own profit at the detriment to their own bank, its shareholders, and the community it served.”

“The common qualities of the wide-ranging criminal acts alleged in the indictment are deceit, unfettered greed and breach of trust,” said FBI SAC Boles. “I want to thank the investigators and prosecutors for their hard work and persistence in revealing these misdeeds and serving the public trust.”

“IRS-Criminal Investigation takes particular interest in cases where individuals, for their own personal benefit, use deceit and fraud to line their pockets,” said IRS SAC Rave. “The illegal activity alleged in the indictment has had a negative and long lasting impact on the community. Honest and law abiding citizens are fed up with the likes of those motivated merely by greed. IRS-Criminal Investigation is proud to bring our forensic accounting skills to this investigation, putting a stop to this type of white collar fraud.”

“CEO Edward Woodard, his son Troy, and Executive Vice Presidents Simon Hounslow and Stephen Fields are charged today with lying and whitewashing in a fraud scheme that helped drive this community bank to fail,” said SIGTARP Special Inspector General Romero. “They allegedly used scheme after scheme to conceal past-due loans and remove foreclosed property from the bank’s books. Today’s charges allege that friends of the bank received sweetheart deals in return for helping mask the bank’s true financial position, and bank insiders personally benefitted. This type of fraud contributed to the economic crisis and left Tidewater citizens, who depended on this TARP applicant bank, to deal with the bank’s collapse. Whether it happens on Wall Street or Granby Street, SIGTARP and its law enforcement partners will hold accountable those who commit crimes related to TARP.”

“The FDIC Office of Inspector General is pleased to join our law enforcement colleagues in announcing indictments resulting from our investigation of alleged fraud that contributed to the failure of the Bank of the Commonwealth and the resultant loss to the Deposit Insurance Fund of more than $265 million,” said FDIC Inspector General Rymer. “We are particularly concerned when financial institution insiders allegedly abuse positions of trust to commit crimes. We are committed to continuing our efforts on this case and others throughout the country—to bring guilty parties to justice, help maintain public trust and confidence in the banking system, and protect the FDIC’s Deposit Insurance Fund from further losses.”

The 25-count indictment was returned on July 11, 2012, and made public today after the following individuals from Norfolk were taken into custody:

Edward J. Woodard, 69, served as the bank’s chief executive officer and chairman of the board for more than three decades until he was forced to step down as chairman in April 2010 and forced to retired from the bank in December 2010. Edward Woodard is charged with conspiracy to commit bank fraud, bank fraud, false entry in a bank record, multiple counts of unlawful participation in a loan, multiple counts of false statement to a financial institution, and multiple counts of misapplication of bank funds.

Simon Hounslow, 47, served as an executive vice president and chief lending officer until the bank closed in September 2011. Hounslow is charged with conspiracy to commit bank fraud, misapplication of bank funds, false statement to a financial institution, and multiple counts of false entry in a bank record.

Stephen G. Fields, 48, served as an executive vice president and commercial loan officer until he was terminated in December 2010. Fields is charged with conspiracy to commit bank fraud, multiple counts of false entry in a bank record, multiple counts of false statement to a financial institution, and multiple counts of misapplication of bank funds.

Troy Brandon Woodard, 35, the son of Edward Woodard, was employed by a wholly owned subsidiary of the bank as a vice president and mortgage loan specialist until he was terminated in January 2011. Brandon Woodard is charged with conspiracy to commit bank fraud, bank fraud, and multiple counts of unlawful participation in a loan.

Thomas E. Arney, 56, leased office space on the third floor of the bank’s headquarters and owned and operated a residential development company, several restaurants, rental properties, and a car restoration business. Arney is charged with conspiracy to commit bank fraud, bank fraud, unlawful participation in a loan, misapplication of bank funds, and multiple counts of false statement to a financial institution.

Dwight A. Etheridge, 47, owned and operated a residential and commercial development company, as well as an employment staffing company. Etheridge is charged with conspiracy to commit bank fraud, misapplication of bank funds, and multiple counts of false statement to a financial institution.

Each charge contained in the indictment carries a maximum penalty of 30 years in prison, if convicted. Criminal indictments are only charges and not evidence of guilt. A defendant is presumed to be innocent until and unless proven guilty.

According to the indictment, in 2006, leaders at the Bank of the Commonwealth began an aggressive expansion beyond its traditional focus on Norfolk and Virginia Beach to include branches in northeastern North Carolina and the Outer Banks. By December 2009, bank’s assets reached approximately $1.3 billion, built largely through brokered deposits, a financial tool that allows investors to pool their money and receive higher rates of return. Because of the high-volatility of these deposits, an institution must remain well-capitalized to accept and renew brokered deposits.

The indictment alleges that many of the bank’s loans were funded and administered without regard to industry standards or the Bankbanks own internal controls, and by 2008, the volume of the bank’s troubled loans and foreclosed real estate soared. From 2008 through 2011, bank insiders—Edward Woodard, Hounslow, and Fields—allegedly masked the bank’s true financial condition out of fear that the bank’s declining health would negatively impact investor and customer confidence and affect the bank’s ability to accept and renew brokered deposits.

To fraudulently hide the bank’s troubled assets, bank insiders allegedly overdrew demand deposit accounts to make loan payments, used funds from related entities—at times without authorization from the borrower—to make loan payments, used change-in-terms agreements to make loans appear current, and extended new loans or additional principal on existing loans to cover payment shortfalls.

In addition, the indictment alleges that bank insiders also provided preferential financing to troubled borrowers—including Arney, Etheridge, and others—to purchase bank-owned properties. These troubled borrowers were already having difficulty making payments on their existing loans; however, the financing allowed the bank to convert a non-earning asset into an earning asset, and the troubled borrowers obtained cash at closing to make payments on their other loans at the bank or for their own personal purposes.

The indictment also alleges that troubled borrowers purchased or attempted to purchase property owned by bank insiders and Brandon Woodard. These real estate loans were fraudulently funded by the bank.

According to the indictment, in November 2008, the Bank of the Commonwealth sent to the Federal Reserve an application requesting approximately $28 million from the Troubled Asset Relief Program (TARP). Based on its regulator’s concerns about the health of the bank, the Federal Reserve later requested that the bank withdraw its TARP application, which the bank did.

From 2008 up to its closing in 2011, the bank lost nearly $115 million. The indictment alleges that the bank’s failure will cost the federal government through the deposit insurance fund in excess of $260 million. The forfeiture notice in the indictment attributes at least $71 million as illegal proceeds of the fraud.

Others charged as part of this ongoing investigation include the following:

  • Business partners Eric H. Menden, 53, of Chesapeake, Virginia, and George P. Hranowskyj, 47, of Chesapeake, Virginia, pled guilty to engaging in a $41 million bank fraud scheme that contributed to the failure of the Bank of the Commonwealth. They also pled guilty to a separate fraud involving a six-year historic tax credit scheme that cost state and federal governments over $12 million and investors more than $8 million. Menden faces a maximum penalty of five years in prison for each count of conspiracy to commit wire fraud, making false statements, and conspiracy to commit bank fraud when he is sentenced on September 26, 2012. Hranowskyj faces a maximum of 20 years in prison for conspiracy to commit wire fraud and a maximum of five years in prison for conspiracy to commit bank fraud when he is sentenced on October 15, 2012.
  • Natallia Green, 29, of Norfolk, Virginia, and formerly employed by Menden and Hranowskyj, pled guilty to making a false statement on a loan application to the Bank of the Commonwealth. In January 2012, Green was sentenced to five years’ probation.
  • Maria Pukhova, 30, of Virginia Beach, Virginia, and formerly employed by Menden and Hranowskyj, has been charged with making a false statement on a loan application to the Bank of the Commonwealth.
  • Jeremy C. Churchill, 35, of Norfolk, Virginia, and a former vice president and commercial loan officer at the bank, pled guilty to conspiring with others to cause the bank to suffer millions of dollars in losses from loans meant to conceal financial problems at the bank and with one of its customers. Convicted of conspiracy to commit bank fraud, he faces a maximum penalty of five years in prison when he is sentenced on August 24, 2012.
  • Recardo S. Lewis, 61, of Norfolk, Virginia, a former employee with by Tivest Development & Construction LLC, pled guilty to conspiring with others to defraud the Bank of the Commonwealth by submitting fraudulent draws on a multi-million-dollar construction project in Virginia Beach, Virginia. Convicted of conspiracy to commit bank fraud, Lewis faces a maximum penalty of five years in prison when he is sentenced on September 19, 2012.

This investigation is being conducted by the FBI’s Norfolk Field Office, IRS-CI, SIGTARP, and the FDIC-OIG. Assistant United States Attorneys Melissa E. O’Boyle, Katherine Lee Martin, and Uzo Asonye are prosecuting the case on behalf of the United States.

The investigation has been coordinated by the Virginia Financial and Securities Fraud Task Force, an unprecedented partnership between criminal investigators and civil regulators to investigate and prosecute complex financial fraud cases in the nation and in Virginia. The task force is an investigative arm of the President’s Financial Fraud Enforcement Task Force, an interagency national task force.

President Obama established the 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.

A copy of this press release may be found on the website of the United States Attorney’s Office for the Eastern District of Virginia at http://www.justice.gov/usao/vae.


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Posted: 12 Jul 2012 01:15 PM PDT

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Originally reported by Illinois Statehouse News. Read the original article here.


Federal Reserve Board issues supervisory guidance for new optional pre-filing process for an applicant to request a response on a potential bank acquisition or other proposal

Posted: 12 Jul 2012 08:15 AM PDT

Release Date: July 12, 2012

For immediate release

The Federal Reserve on Thursday issued supervisory guidance describing a new optional process for an applicant to request a response on a potential bank acquisition or other proposal before the submission of a formal application or notice.

Federal Reserve System staff will review submitted questions about potential filings, otherwise known as pre-filings, before the submission of formal filings.  Pre-filings may include a variety of information such as business plans, presentations outlining potential proposals, or other items about which potential applicants may have questions.  This process is expected to benefit community banking organizations that do not file applications frequently and also pre-filers with novel proposals.

Pre-filings should be submitted to the appropriate Reserve Bank or through the System’s Electronic Applications System, E-Apps. The Federal Reserve anticipates that the review of pre-filings will take no more than 60 days.  While most types of pre-filings should take considerably less than 60 days to review, the evaluation of complex or novel proposals may require the full 60 days or longer.

For media inquiries, call 202-452-2955.

2-12/CA 12-11


Federal Reserve Board announces termination of enforcement action with Tower Financial Corporation and Tower Bank & Trust Company

Posted: 12 Jul 2012 08:15 AM PDT

Release Date: July 12, 2012

For immediate release

The Federal Reserve Board on Thursday announced the termination of the enforcement action listed below: 

Tower Financial Corporation and Tower Bank & Trust Company, both of Fort Wayne, Indiana

Written Agreement dated April 23, 2010

Terminated July 10, 2012

Search of Federal Reserve enforcement actions.

For media inquiries, call 202-452-2955.


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