JEFFERSON CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that a former church youth leader in Iberia, Mo., pleaded guilty in federal court today to attempting to entice a minor for illicit sex.

Jamey Lee Becker, 45, of Iberia, pleaded guilty before U.S. Magistrate Judge Matt J. Whitworth to the charge contained in an Aug. 24, 2016, federal indictment.

By pleading guilty today, Becker admitted that he used the Internet and a cell phone in an attempt to entice an individual under the age of 17 to engage in illegal sexual activity between Feb. 1 and June 10, 2016.

Under federal statutes, Becker is subject to a mandatory minimum sentence of 10 years in federal prison without parole, up to a sentence of life in federal prison without parole. The maximum statutory sentence is prescribed by Congress and is provided here for informational purposes, as the sentencing of the defendant will be determined by the court based on the advisory sentencing guidelines and other statutory factors. A sentencing hearing will be scheduled after the completion of a presentence investigation by the United States Probation Office.

This case is being prosecuted by Supervisory Assistant U.S. Attorney Michael S. Oliver. It was investigated by the Missouri State Highway Patrol and the Miller County, Mo., Sheriff’s Department.

Deirdre M. Daly, United States Attorney for the District of Connecticut, announced that DAVID QUATRELLA, 61, of Trumbull, waived his right to be indicted and pleaded guilty today before U.S. District Judge Alvin W. Thompson in Hartford to a conspiracy charge stemming from a scheme to defraud insurance companies into issuing insurance policies on the lives of elderly people for the benefit of QUATRELLA and other investors, also known as a stranger-originated life insurance (“STOLI”) scheme.

According to court documents and statement made in court, between approximately June 2008 and January 2016, QUATRELLA and others, including insurance brokers based in California, New Jersey and Florida, assisted elderly persons in applying for multimillion dollar life insurance policies.  QUATRELLA, who is an attorney, and his co-conspirators offered the insureds the promise of free life insurance for two years, after which QUATRELLA and his co-conspirators would attempt to sell the policy and provide a share of the proceeds to the insured.  The insured was not obligated to pay anything and was commonly told that the premiums were being borrowed from a third-party source.  As part of the scheme, QUATRELLA and others recruited investors to finance the payment of premiums on the life insurance policies, with the understanding that the investors would earn a profit upon the sale of the policy.

QUATRELLA and his co-conspirators then caused to be submitted to various life insurance providers applications containing false and misleading information, and which failed to disclose the third-party premium funding arrangements for the policies.

QUATRELLA and his co-conspirators received large commissions from the providers as a result of the issuance of insurance policies on the lives of the insureds, and QUATRELLA personally profited approximately $272,000 as a result of the scheme.  QUATRELLA and his co-conspirators attempted to sell the life insurance policies to life settlement investment funds or brokers but, in certain cases, they could not find a buyer and the policies lapsed.

QUATRELLA pleaded guilty to one count of conspiracy to commit wire fraud.  Judge Thompson scheduled sentencing for April 28, 2017, at which time, QUATRELLA faces a maximum term of imprisonment of five years.  QUATRELLA also has agreed to forfeit $272,000.

This matter is being investigated by the Federal Bureau of Investigation and is being prosecuted by Assistant U.S. Attorney Avi M. Perry.

Preet Bharara, the United States Attorney for the Southern District of New York, announced a settlement between the United States of America and DEUTSCHE BANK, A.G., DB U.S. FINANCIAL MARKETS HOLDING CORP., and DEUTSCHE BANK SECURITIES, INC. (“DEUTSCHE BANK”), resolving a civil lawsuit in which the United States alleges that DEUTSCHE BANK participated in a series of transactions that amounted to fraudulent conveyances carried out with the purpose and effect of evading tens of millions of dollars in federal tax liability. 

Manhattan U.S. Attorney Preet Bharara said:  “Using a web of shell companies and series of calculated transactions, Deutsche Bank sought to escape liability for tens of millions of dollars in taxes.  The Government, through this action and settlement, has made Deutsche Bank admit to its actions designed to avoid taxes and pay $95 million to the United States to account for this conduct.”

According to the allegations of the Complaint previously filed by this Office against DEUTSCHE BANK in Manhattan federal court:

In 2000, DEUTSCHE BANK acquired a corporation that held stock with a very low cost basis, meaning that when this stock was subsequently sold, significant taxable income would be incurred.  In order to dispose of the stock without paying the taxes that would be due on this transaction, DEUTSCHE BANK entered into a fraudulent plan with a tax shelter promoter.  Pursuant to this plan, DEUTSCHE BANK transferred the shares of the acquired corporation to a shell company (“BMY”) created by the promoter, which then transferred the stock back to DEUTSCHE BANK in such a way as to cause the shell company to get stuck with the tax bill.  DEUTSCHE BANK and the promoter structured this transaction (the “May 2000 Transaction”) so that the shell company would have little or no assets and would be unable to pay the taxes due.  The net result:  DEUTSCHE BANK would be able to cleanse the stock of its low cost basis and purport to leave the tax liability with a “taxpayer” – the shell company – that would be unable to pay the tax.  Ultimately, this transaction left the shell company BMY with a liability of more than $52 million in taxes, plus interest and penalties.  

*                *                *

Pursuant to the Settlement Agreement approved today by the United States District Court for the Southern District of New York, DEUTSCHE BANK agrees to pay the United States $95 million to resolve the claims in the Complaint. 

In the Settlement Agreement, DEUTSCHE BANK also “admits, acknowledges, and accepts responsibility for” certain key facts related to the Government’s allegations in the complaint, including the following:

• “DEUTSCHE BANK engaged in the May 2000 Transaction in order to avoid having to pay the built-in tax liability associated with” the stock.

   

• “Each aspect of the May 2000 Transaction was pre-planned” and “[a]s a result of the May 2000 Transaction, BMY realized substantial taxable gain.”

   

• “Deutsche Bank knew or, had it made reasonable inquiries, would have known that BMY did not have legitimate tax losses to offset this gain.”

• BMY nonetheless “claimed [to the IRS] that no tax was due because the income was offset by unrelated foreign currency transaction losses” that “were attributable to a tax shelter known as a Currency Option Investment Strategy (‘COINS’) tax shelter.”

• DEUTSCHE BANK itself had “participated in this COINS tax shelter,” and, “[a]s Deutsche Bank admitted in 2010” in a statement of facts accompanying a non-prosecution agreement entered into by this Office’s Criminal Division, “the COINS shelter, in which it participated willfully and knowingly, was a fraudulent tax shelter, and it was unlawful for Deutsche Bank to have participated in the COINS tax shelter.”

   

• “IRS disallowed [these] claimed foreign currency transaction losses and assessed BMY tens of millions of dollars of tax (plus interest and penalties) resulting from the sale of” the stock.

• “Deutsche Bank knew that BMY had no material assets and no operating business,” and “Deutsche Bank knew or should have known that as a result of the May 2000 Transaction, BMY lacked the funds necessary to pay the substantial taxes resulting from the sale of” the stock.

   

Mr. Bharara thanked Frederick C. Mutter of the Office of Chief Counsel, Internal Revenue Service, for his extraordinary assistance on this matter.

The case has been handled by this Office’s Tax and Bankruptcy Unit.  Assistant U.S. Attorneys Robert William Yalen, Christine S. Poscablo, Natasha Waglow Teleanu, Anthony J. Sun, and Ellen M. London have handled this matter.

MARTINSBURG, WEST VIRGINIA – Hawke Anthony Coffman, 26, of Ridgeley, West Virginia, pled guilty to illegally possessing a firearm, Acting United States Attorney Betsy Steinfeld Jividen, announced.

Coffman, who had previously been convicted of felony offenses in West Virginia and Maryland, is prohibited from possessing a firearm. He admitted to possessing a .7mm caliber rifle in Hampshire County, West Virginia in November 2015.

Coffman pled guilty to one count of “Felon in Possession of a Firearm.” He faces up to ten years in prison and a fine of up to $250,000. Under the Federal Sentencing Guidelines, the actual sentence imposed will be based upon the seriousness of the offenses and the prior criminal history, if any, of the defendant.

Assistant U.S. Attorney Paul T. Camilletti prosecuted the case on behalf of the government. The Bureau of Alcohol, Tobacco, Firearms, and Explosives and the West Virginia Division of Natural Resources investigated.

U.S. Magistrate Judge Robert W. Trumble presided.

BOSTON – An employee of the United States Postal Service (USPS) pleaded guilty today in U.S. District Court in Boston in connection with purchasing and importing anabolic steroids.

John A. Psehoyas, 54, pleaded guilty to one count of importation of a controlled substance.  According to the terms of the plea agreement, Psehoyas has agreed to resign from the USPS.  U.S. District Court Senior Judge Douglas P. Woodlock scheduled sentencing for April 6, 2017.

Psehoyas was a customer service supervisor at the Lynnfield, Mass. Post Office.  From August 2014 to March 2016, Psehoyas purchased anabolic steroids, a controlled substance, from online sources.  He had the parcels containing steroids shipped to him from China, Poland, Turkey and Romania.  The parcels were addressed to multiple addresses to avoid suspicion, but Psehoyas tracked the parcels using a USPS tracking system. 

The charging statute provides for a sentence of no greater than 15 years in prison, three years of supervised release and a fine of $500,000.  Actual sentences for federal crimes are typically less than the maximum penalties.  Sentences are imposed by a federal district judge based upon the U.S. Sentencing Guidelines and other statutory factors.

United States Attorney Carmen M. Ortiz and Eileen Neff, Special Agent in Charge of the Office of Inspector General for the U.S. Postal Service, made the announcement today.  Assistant U.S. Attorney Eugenia M. Carris of Ortiz’s Public Corruption Unit is prosecuting the case.

            WASHINGTON – The husband of the former Deputy Chief of Mission in Rabat, Morocco was sentenced today to 30 months in prison for sexually abusing a former household staff member from 2010 to 2013.  

            Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Channing D. Phillips of the District of Columbia, and Director Bill A. Miller of the U.S. Department of State’s Diplomatic Security Service (DSS) made the announcement. 

            Labib Chammas, 65, of McLean, Virginia, pleaded guilty on Oct. 12, 2016, to one count of abusive sexual conduct before U.S. District Judge Christopher R. Cooper of the District of Columbia.  Judge Cooper also sentenced Chammas to a five-year term of supervised release and ordered him to pay a $15,000 fine.  Chammas is required to register as a sex offender for a period of 15 years.

            In pleading guilty, Chammas admitted that between August 2010 and February 2013, while living in State Department-owned housing in Rabat, he sexually abused a woman who had worked at the residence for 16 years.  According to the plea agreement, Chammas supervised the staff at the residence and repeatedly threatened to fire staff members.  Out of fear that she would lose her job, the victim complied with Chammas’s requests that she massage his legs, hip and back, and then with his subsequent demands that she “massage” his genitalia.  On at least five occasions, Chammas took the victim by her head or hair and attempted to force her to perform oral sex.

            DSS’s Office of Special Investigations investigated the case.  Assistant U.S. Attorney Andrea Hertzfeld of the District of Columbia and Special Counsel Stacey Luck of the Criminal Division’s Human Rights and Special Prosecutions Section prosecuted the case.

          A Bellevue developer who raised more than $150 million from immigrant investors pleaded guilty today to fraud charges in U.S. District Court in Seattle, announced U.S. Attorney Annette L. Hayes.  LOBSANG DARGEY, 43, entered guilty pleas to two federal felonies alleging that DARGEY defrauded immigrant investors, federal regulators, and institutional investors.  The charges allege that DARGEY promised to use the immigrant investors’ investment funds to construct two Puget Sound-area developments in compliance with a federal immigration program designed to stimulate growth and create jobs.  DARGEY admitted at the court hearing that, contrary to his promises to investors, regulators and others, he secretly diverted tens of millions of dollars of investor funds to unauthorized uses and attempted to make up the resulting funding shortfall by raising additional capital using falsified financial records. 

                “Mr. Dargey exploited the dreams of his investors to line his own pockets,” said U. S. Attorney Annette L. Hayes.  “He promised to use the money he received in a way that would allow investors to apply to become permanent U.S. residents.  Instead, Mr. Dargey secretly sent millions of dollars overseas and used millions more for his own pet projects.  In doing so, he harmed his investors financially and risked their dreams of legal status in the United States.”

            According to records filed in the case, between 2012 and 2015, DARGEY recruited overseas investors, primarily in China, to fund two development projects – one in Everett, Washington known as the “Path American Farmer’s Market” and one in Seattle’s Belltown neighborhood known as the “Potala Tower.”  DARGEY promoted the projects under a federal program known as the “EB-5” program, which allows immigrant investors to qualify for permanent residency if they create American jobs by investing $500,000 in a qualifying American business project.  DARGEY represented to the immigrant investors and to the U.S. Department of Homeland Security that he was investing all of investors’ funds in the Everett and Seattle projects in compliance with program requirements. 

          DARGEY admitted at the court hearing that, contrary to his promises, he used tens of millions of investor dollars for uses not allowed under the federal program and not disclosed to investors.  This included approximately $11.5 million of investor funds that DARGEY secretly used to pay unauthorized sales expenses, including sales commissions to Asian brokers, as well as $16.8 million that DARGEY used for unrelated real estate projects.  In addition, DARGEY told investors and the United States government that DARGEY would contribute $32.5 million of his own money toward the projects.  DARGEY admitted at the hearing that, in fact, he made no contribution to the projects.  DARGEY’s fraud resulted in tens of millions of dollars in funding shortfalls for the projects.  DARGEY admitted that he attempted to fill these shortfalls by using a falsified bank statement to obtain a $25 million construction loan, and by using altered financial statements to obtain $60 million in additional funding from a private institutional investor. 

            DARGEY’s fraudulent conduct came to an end in August 2015 when the Securities and Exchange Commission filed a civil suit and won a court order freezing his assets.  The FBI simultaneously executed search warrants at DARGEY’s offices in Bellevue and Everett. 

            Each of the two criminal counts carries a prison term of up to five years, for a total maximum term of ten years.  DARGEY has agreed to provide restitution of more than $24 million to the investors.  Sentencing is currently scheduled in front of U.S. District Judge Thomas S. Zilly on April 6, 2017.

          The case is being investigated by the FBI and is being prosecuted by Assistant United States Attorneys Justin Arnold and Seth Wilkinson.  The Department of Justice appreciates the assistance of the Securities and Exchange Commission and United States Citizenship and Immigration Services in connection with this matter.

KANSAS CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that a Lee’s Summit, Mo., woman was sentenced in federal court today for embezzling nearly $5.3 million from her employer.

Jane Barnes, 54, of Lee’s Summit, was sentenced by U.S. District Judge Roseann Ketchmark to eight years in federal prison without parole. The court also ordered Barnes to pay $5,293,300 in victim restitution. Barnes has paid partial restitution by turning over three properties bought and/or improved using proceeds from her fraud scheme, plus her profit sharing account with former employer ACI Boland Architects.

On Aug. 2, 2016, Barnes pleaded guilty to wire fraud, bank fraud and aggravated identity theft.

Barnes began working for ACI Boland Architects, a prominent architecture company in Kansas City, Mo., in 1998 and worked as the office manager from 2008 until her resignation in March 2016. Barnes abused her position of trust as the office manager for ACI Boland in order to enrich herself. Barnes fraudulently stole money from ACI Boland and forged the signature of a principal partner on hundreds of occasions over a 10-year period.

Barnes admitted that she conducted two schemes to defraud and embezzle a total of at least $5,293,300 from ACI Boland.

In Barnes’ first fraud scheme, she used the payroll system to pay herself unauthorized amounts in excess of her approved salary/bonus. Barnes inflated her bi-weekly salary without the authorization of ACI Boland. Barnes admitted that she embezzled at least $1,622,078 in her first scheme, which lasted from at least 2006 until 2011.

In her second fraud scheme, Barnes created unauthorized payroll checks to herself, which did not reflect on her W-2 forms; thus federal income and other taxes were not deducted from her checks through this scheme. Barnes issued 359 unauthorized checks to herself directly from ACI Boland’s payroll account. Barnes signed the checks with the forged signature of one of the principals of ACI Boland and deposited them into her personal bank accounts. Barnes admitted that she embezzled a total of $3,671,222 from ACI Boland in her second scheme, which began in 2010 and lasted until her resignation in March 2016.

Barnes used the stolen money to travel, buy cars, furnish her house, eat out, give money to relatives and generally live well above her means. The investigation revealed Barnes’ spending of the stolen funds included:

• $1,969,210 in various credit card payments;
• $770,393 in transfers to relatives;
• $425,493 in entertainment, retail and travel;
• $424,945 in vehicle expenses, including car loan payments;
• $302,636 in cash and cash equivalents;
• $253,856 in home expenses, excluding mortgage payments;
• $124,412 in taxes
• $119,375 in insurance and medical expenses; and
• $107,683 in restaurant and food expenses.

   

  Under the terms of her plea agreement, Barnes must forfeit to the government $5,293,300, a 2014 Ford F150 Crew Cab Raptor 4WD, a 2014 Ford Explorer Utility 4D Sport 4WD and a 2013 Lincoln MKS, all of which was derived from the proceeds of her fraud.

   

This case was prosecuted by Assistant U.S. Attorney Kathleen D. Mahoney. It was investigated by the FBI.

SPRINGFIELD, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that a Springfield, Mo., man was charged in federal court today with robbing the Bank of America yesterday afternoon.

Anthony Carlton Dunlap, 40, of Springfield, was charged with one count of bank robbery and one count of being a felon in possession of a firearm in a criminal complaint filed in the U.S. District Court in Springfield, Mo.

According to an affidavit filed in support of the federal criminal complaint, Dunlap entered Bank of America, 633 W. Kearney St., Springfield, at approximately 4:30 p.m. on Tuesday, Jan. 3, 2017. Dunlap allegedly handed a bank teller a note, which began with “Stay calm.” The teller did not read any further, but made eye contact with Dunlap, the affidavit says. Dunlap allegedly looked toward his hand, which was in his coat pocket, as if to indicate he was armed.

The teller removed cash from her teller drawer and placed it on the counter. Dunlap allegedly said, “Give me more,” and she removed more cash from the drawer. Dunlap took the cash, the affidavit says, stuffed it into his pockets, and left the bank. According to the affidavit, Dunlap took $3,910 in the robbery.

Law enforcement officers found Dunlap hiding in the back seat of a vehicle parked in a residential driveway and arrested him. As Dunlap was removed from the car, a large amount of loose cash was dragged out with him. Cash was also on the back floor boards of the car, along with a loaded Hi Point .40-caliber pistol. 

Dickinson cautioned that the charges contained in this complaint are simply accusations, and not evidence of guilt. Evidence supporting the charges must be presented to a federal trial jury, whose duty is to determine guilt or innocence.

This case is being prosecuted by Assistant U.S. Attorney James J. Kelleher. It was investigated by the Springfield, Mo., Police Department and the FBI.

U.S. Attorney Kenneth A. Polite announced that MELVIN STEEN, a/k/a “SKEET,” age 35, of Slidell, and RYAN ELLENDER, age 36, of New Orleans, pled guilty today to one count of conspiring to distribute and to possess with intent to distribute methamphetamine.  

Under STEEN’s plea agreement, STEEN is facing a maximum sentence of 20 years’ imprisonment, a possible fine of up to $1,000,000, and at least three years of supervised release upon his release from prison.  Pursuant to ELLENDER’s Rule 11(c)(1)(C) plea agreement, which the Court may accept or reject, ELLENDER will be sentenced to a term of supervised release of between one year and five years.  U.S. District Judge Sarah S. Vance will sentence STEEN and ELLENDER on April 19, 2017.

BOISE –  Fernando Morales, 50, of Nampa pleaded guilty today in United States District Court to sexual exploitation of children, U.S. Attorney Wendy J. Olson announced.  

According to the plea agreement, officers with the Nampa Police Department contacted Morales at his residence in Nampa on August 23, 2016, after a sixteen-year-old minor living at the residence called 911.  The minor victim informed arriving officers that Morales had sexual contact with the minor victim for several years and had nude images of the minor victim on his cell phone.  During an interview with Nampa Police detectives, Morales admitted that he had sex with the minor victim on numerous occasions, beginning in approximately June of 2015 in El Paso, Texas.  Morales, the victim, and two other children later moved to Nampa in July of 2016.  Morales also admitted that he recorded videos and pictures of himself and the minor victim engaged in sexually explicit conduct, and that the videos and pictures were saved on his cell phone.

Nampa Police detectives seized several electronic devices from Morales.  The devices were analyzed by a computer forensic agent with the Department of Homeland Security, resulting in the discovery of twenty-three videos and twenty-one still images of the minor victim engaged in sexually explicit conduct.  Nineteen of the videos and all of the still images depicted Morales engaged in sexually explicit conduct with the victim.  Two of the videos and nine of the still images contained data showing they were produced in the state of Texas, then transported to the state of Idaho.

Sentencing is scheduled before Chief U.S. District Judge B. Lynn Winmill on March 27, 2017.  Sexual exploitation of children is punishable by a mandatory minimum 15 years, and up to 30 years imprisonment, a $250,000 fine, not less than five years and up to lifetime supervised release, and a $5,000 special assessment.  As part of his plea, Morales also agreed to forfeit two cell phones and a laptop computer used in the commission of the offense.

The case was investigated by the Nampa Police Department and the Department of Homeland Security, with assistance from the Canyon County Prosecutor’s Office, and was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse.  Led by the United States Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims.  For more information about Project Safe Childhood, please visit www.usdoj.gov/psc.  For more information about internet safety education, please visit www.usdoj.gov/psc and click on the tab “resources.”

In San Antonio today, 24-year-old Brennan R. Diaz was sentenced to a total of 56 months in federal prison followed by five years of supervised release for scheming with his mother to steal over $1 million from a local church owned by his grandfather, announced United States Attorney Richard L. Durbin, Jr., U.S. Secret Service Special Agent in Charge Lee Dotson, and Internal Revenue Service-Criminal Investigation Special Agent in Charge William Cotter.

United States District Judge Xavier Rodriguez also ordered that Diaz pay $985,346.06 in restitution.  The restitution figure does not include seized assets valued at more than $100,000 which were returned to the victim.

On September 20, 2016, Diaz pleaded guilty to one count of bank fraud, one count of aggravated identity theft and one count of money laundering.  His mother, Deborah A. Diaz, pleaded guilty on June 30, 2016, to one count of bank fraud and one count of conspiracy to commit bank fraud. 

By pleading guilty, both defendants admitted that between February 2015 and October 2015, they conspired to defraud the La Obra Milagrosa Church (aka “The Miracle Center Church”) (TMC).  Neither defendant had authority to sign TMC Church checks, however, they forged the family member’s signature on dozens of TMC business checks. 

Deborah Diaz, who is currently on bond, is scheduled to be sentenced at 1:30pm on January 11, 2017.

This joint investigation was conducted by the Financial Crimes Section of the U.S. Secret Service South Texas Regional Task Force and the Internal Revenue Service-Criminal Investigation.  Other agencies involved in the Task Force include the San Antonio Police Department, Bexar County Sheriff’s Office, Bexar County District Attorney’s Office and Texas Department of Public Safety-Criminal Investigations Division.  Assistant United States Attorney Thomas P. Moore is prosecuting this case on behalf of the Government.

CHICAGO — A federal jury today convicted six members of a Chicago street gang known as the Hobos of participating in a criminal organization that engaged in narcotics distribution and committed murders, attempted murders and armed robberies.

The verdicts were rendered after a 15-week trial in federal court in Chicago.  In convicting the six defendants of racketeering conspiracy, the jury found the Hobos were a criminal enterprise that robbed from other drug dealers, retaliated against rival gangs, and violently prevented witnesses from cooperating with law enforcement.  For nearly a decade the gang engaged in murders, attempted murders, robberies and narcotics distribution, primarily on the south and west sides of Chicago.

Federal, state and local authorities uncovered the gang activity through an extensive investigation conducted by the Organized Crime Drug Enforcement Task Force (OCDETF) and the Chicago High Intensity Drug Task Force (HIDTA).  The Task Forces have been responsible for disrupting some of the Chicago area’s most sophisticated drug-trafficking organizations.

The verdicts were announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Michael J. Anderson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation; Eddie T. Johnson, Chicago Police Superintendent; and James D. Robnett, Special Agent-in-Charge of the Chicago Office of the Internal Revenue Service Criminal Investigation Division.  The Illinois State Police, Illinois Department of Corrections and Illinois Secretary of State Police provided assistance.

Convicted of racketeering conspiracy were GREGORY CHESTER, of Chicago; ARNOLD COUNCIL, of Chicago; PARIS POE, of Chicago; GABRIEL BUSH, of Chicago; WILLIAM FORD, of Chicago; and DERRICK VAUGHN, of Chicago.  Council, Bush, Poe and Vaughn were also convicted of committing murder in aid of racketeering.  Poe was convicted of committing murder to obstruct justice, and the jury convicted Council of using a firearm during a robbery of a clothing store.  The jury also convicted Ford on a gun charge and a drug charge.

The convictions carry maximum sentences of life in prison.  U.S. District Judge John J. Tharp Jr. scheduled sentencing hearings for June 23, 2017.

The guilty verdicts bring to ten the total number of Hobos convicted in the case.  Four members of the gang, including Chester’s cousin, pleaded guilty prior to trial.  An eleventh Hobo was identified in the indictment as a coconspirator, but he died before the charges were brought.

Evidence at trial revealed the Hobos were comprised of members from other street gangs that were once rivals.  The Hobos allied together in order to more profitably distribute narcotics, accumulate wealth, and establish control of territories on the south and west sides of Chicago.  The Hobos were violent and ruthless, often using high-powered guns and assault rifles.  Members of the gang shared the wealth with each other, buying luxury items and taking trips to Hawaii and Florida.  Although the Hobos lacked a traditional hierarchy, Chester was recognized as its leader.  From 2004 to 2013 the Hobos engaged in narcotics trafficking, home invasions and armed robberies, often of rival drug dealers.

When the Hobos learned that individuals were cooperating with law enforcement, the gang resorted to murder in order to prevent it.  In 2006 Council and Poe fatally shot Wilbert Moore, whose cooperation with Chicago Police had led to state gun and drug charges against Council.  In 2013 Poe shot and killed Keith Daniels after Daniels cooperated with the federal investigation that led to today’s convictions.

The government is represented by Assistant U.S. Attorneys Patrick Otlewski, Derek Owens and Timothy Storino.

CHARLESTON, W.Va. – A Charleston man who falsely told the FBI that he did not get any money from anyone related to the West Virginia Prep Academy pleaded guilty today, announced United States Attorney Carol Casto. Daniel Andrew Hicks, 43, entered his guilty plea to making a materially false statement to an FBI agent.

In 2013, the FBI, along with the South Charleston Police Department, investigated whether any federal criminal violations had occurred in connection with the operation of the West Virginia Prep Academy, a college preparatory school purportedly set up to give students the opportunity to compete for college football and basketball scholarships. When an FBI Special Agent, along with an officer with the South Charleston Police Department, served a federal grand jury target letter on Hicks in the course of that investigation, Hicks stated that he “did not get a dime” from anyone related to the Prep Academy. Hicks later admitted that this statement was materially false, as he had deposited a check from the mother of a student into the bank account of the Prep Academy. Hicks further admitted that he did not return those funds to the mother when her son did not attend the Prep Academy. As part of the plea agreement, Hicks agreed to pay restitution of $11,808.59 to 23 individuals.

As part of a separate prosecution, Hicks previously pleaded guilty to a federal heroin crime, admitting that on several occasions in January and February of 2016, he sold heroin to a confidential informant working with law enforcement. Following his arrest on February 18, 2016, law enforcement found Hicks with close to five grams of heroin that he intended to distribute. Additionally, officers executed a search warrant on an apartment Hicks had rented at 112 Henson Avenue in South Charleston and seized $4,924 in cash stored in a shoe box on the kitchen counter. Next to the shoe box, officers also discovered three sets of digital scales and three cell phones.

Hicks faces a total of up to 25 years in federal prison for his crimes - up to five years for making a false statement to an FBI agent and up to 20 years for distribution of heroin. Hicks will be sentenced for both federal crimes in a consolidated proceeding on April 4, 2017.

The investigation of Hicks for his involvement in the West Virginia Prep Academy was conducted by the South Charleston Police Department and the FBI. Assistant United States Attorneys Meredith George Thomas and John File are in charge of the false statement prosecution. The Metropolitan Drug Enforcement Network Team conducted the heroin investigation. Assistant United States Attorney Monica D. Coleman is handling the prosecution of the drug crime. United States District Judge Thomas E. Johnston is presiding over these cases.

The drug case is being prosecuted as part of an ongoing effort led by the United States Attorney’s Office for the Southern District of West Virginia to combat the illicit sale and misuse of pain pills and heroin. The U.S. Attorney’s Office, joined by federal, state and local law enforcement agencies, is committed to aggressively pursuing and shutting down illegal pill trafficking, eliminating open air drug markets, and curtailing the spread of opiate painkillers and heroin in communities across the Southern District.

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CHARLESTON, W.Va. – A Texas man was sentenced today to seven years and three months in federal prison for a drug crime, announced United States Attorney Carol Casto. Mason Earl Gonzales, 28, of Pasadena, previously pleaded guilty to attempted possession with intent to distribute 50 grams or more of methamphetamine.

Gonzales admitted that on June 13, 2016, he traveled with a confidential source working with the Metropolitan Drug Enforcement Network Team (MDENT) to the Boone Motor Inn in Boone County and searched behind the motel for methamphetamine. Gonzales further admitted that he was unable to locate the methamphetamine and that he planned to return the next day to find the drugs. MDENT went to the same area the following day, located the methamphetamine buried under a rock, and replaced the drugs with a substance resembling methamphetamine. MDENT also set up a surveillance camera in the area. Gonzales admitted that he returned to the area of the motel later that evening and found the bag containing the substance resembling methamphetamine. MDENT then conducted a traffic stop of his vehicle and Gonzales admitted that he went to the area of the motel to get what he believed was methamphetamine and that he intended to distribute the drugs. Lab testing of the methamphetamine seized by MDENT confirmed a weight of over 270 grams and a purity level greater than 97%.

MDENT conducted the investigation. Assistant United States Attorney Monica D. Coleman is in charge of the prosecution. United States District Judge Joseph R. Goodwin imposed the sentence.

This case was brought as part of an ongoing effort led by the United States Attorney’s Office for the Southern District of West Virginia to combat illegal drugs in our communities, including methamphetamine. The U.S. Attorney’s Office, joined by federal, state and local law enforcement agencies, is committed to aggressively pursuing and shutting down illegal pill trafficking, eliminating open air drug markets, and curtailing the spread of illegal drugs in communities across the Southern District. 

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CHARLESTON, W.Va. – A Sissonville man was sentenced today to three years and five months in federal prison for a drug crime, announced United States Attorney Carol Casto. Jacob Reed, 43, previously pleaded guilty to possession with intent to distribute methamphetamine.

Reed admitted that on February 14, 2016, law enforcement conducted a traffic stop of Reed’s vehicle. In a subsequent search of the vehicle, law enforcement discovered a camera bag in the floor of the front passenger side that contained cash and several plastic bags of methamphetamine. Law enforcement also found additional cash and a set of digital scales in the center console of the vehicle. In total, officers recovered over 230 grams of methamphetamine and nearly $15,000 in cash.

The Kanawha County Sheriff’s Office and the Metropolitan Drug Enforcement Network Team conducted the investigation. Assistant United States Attorney Monica D. Coleman is responsible for the prosecution. United States District Judge Joseph R. Goodwin imposed the sentence.

This case was brought as part of an ongoing effort led by the United States Attorney’s Office for the Southern District of West Virginia to combat illegal drugs in our communities, including methamphetamine. The U.S. Attorney’s Office, joined by federal, state and local law enforcement agencies, is committed to aggressively pursuing and shutting down illegal pill trafficking, eliminating open air drug markets, and curtailing the spread of illegal drugs in communities across the Southern District. 

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          GRAND RAPIDS— Patrick A. Miles, Jr., U.S. Attorney for the Western District of Michigan, today announced his resignation effective noon on January 20, 2017. He informed President Barack Obama and Attorney General Loretta E. Lynch of his decision yesterday Wednesday, January 4. “I am extremely blessed and grateful for the opportunity to serve the public in this capacity over the past four and a half years,” Miles, 49, said in a statement. “It’s been an honor and a privilege to lead such an outstanding team of crime-fighters and people who work hard every day to protect the interests of America and its citizens.”

          “Since 2012, Patrick A. Miles, Jr. has served the Western District of Michigan -- and the American people -- with distinction and honor,” said Attorney General Loretta E. Lynch. “Under his leadership, the district successfully stepped up its efforts to prosecute those who exploit the most vulnerable members of our society, commit violent crimes, or defraud taxpayers. Patrick also asserted leadership in reducing recidivism through programs that help returning citizens find jobs and obtain social services. During his term, Patrick's office hosted the first-ever job fair for returning citizens. And Patrick worked hard to strengthen his community -- from forging strong channels of communication between community members and law enforcement officers, to educating local parents and physicians about prescription drug and opioid abuse.  I want to thank Patrick for his tireless devotion to the cause of justice, and I wish him the very best in the next chapter of his career.”

          Miles became U.S. Attorney for the Western District of Michigan on July 9, 2012 after 21 years in private law practice in Grand Rapids as a business attorney. He assessed the strengths and potential of the office through individual meetings with each of the 37 assistant U.S. attorneys and federal judges in Michigan’s Western District as well as meetings with the U.S. Attorney’s Office’s 45 staff members. After those meetings, Miles took the following first-ever actions for the Office:

• Reorganized the Office’s Criminal Division into four sections -- Organized Drug Crimes, Violent Crimes, Financial Crimes, and National Security -- to streamline management and prosecutorial decisions;
• Created several new task forces for his federal prosecutors to team with law enforcement agents and officers to develop cases proactively;
• Placed each Assistant U.S. Attorney in at least one proactive task force or unit handling reactive cases; and
• Implemented an annual strategic planning process at each level in the office that established specific goals and accountability.

         “We get tremendous results in this Office and every day it feels like we make a positive difference,” Miles stated. “From the start of my tenure as U.S. Attorney I focused on protecting the vulnerable and taxpayers. That is why we put more emphasis on preventing and prosecuting cases of children being exploited through pornography or sex trafficking, seniors being targeted by financial scammers, and those who commit fraud against the government and our health care system.” Some criminal prosecution highlights during his tenure include the following:

• The Western District’s first-ever child sex trafficking federal prosecution occurred in 2014 against Eddie Jackson. Jackson was convicted of sex trafficking three teenage girls and received a 30-year federal sentence. Since then, Miles’s office has prosecuted 11 defendants for sex trafficking minors.
• Over the past four years Miles’s child exploitation prosecution team obtained 106 convictions involving the sexual exploitation of children using the internet, resulting in over 1,700 aggregate years of federal sentences.
• Evan Knoll received a 17-year federal sentence in 2012 for defrauding over $82 million from the U.S. government and banks.
• Kim Mulder, the former CEO of Kentwood Pharmacy, conspired to commit a $79 million healthcare fraud based on billing Medicare Part D plans, Medicaid and private insurance plans for misbranded and adulterated drugs and received a 10-year federal prison sentence in 2015.

Combating Gang and Group Violence

          Miles also said he prioritized addressing violent crime with locally-tailored strategies. “We changed our approach to reducing violent crime in our seven urban cities of Battle Creek, Benton Harbor, Holland, Grand Rapids, Kalamazoo, Lansing, and Muskegon Heights by forming violent crime reduction task forces in 2013 to work with federal, state and local law enforcement to continuously identify and prioritize for federal prosecution the people, groups, and gangs causing the most neighborhood shootings and disruptions,” Miles stated.

          Miles said he was particularly satisfied by the 2013 federal indictment against 31 members and associates of the Holland Latin Kings gang wiping out the criminal enterprise that had caused many problems for over a decade in Holland, Michigan. His office obtained 31 convictions for a range of offenses, including conspiring to engage in racketeering, possessing firearms and conspiring to distribute cocaine and marijuana which resulted in a total of 340 years of federal prison sentences.

Effective Prisoner Re-Entry

          Miles highlighted the emphasis he placed on effectively returning citizens from prison to their community as a crime reduction strategy. “Nationally, two-thirds of those released from prison will be re-arrested within three years. In Michigan, we have about a 30 percent rate of recidivism. With 800,000 Americans being released from prison annually, we must get that recidivism rate lower.” In 2014, Miles introduced the “Facing Choices” program where he and the County Prosecutor, Sheriff, a Federal Bureau of Alcohol, Tobacco, and Firearms agent, and local Chief of Police in each of the seven urban cities in the Western District address a group of recent Michigan Department of Corrections parolees and give them a “tough love” speech of warning and encouragement and steer them to social services agencies for assistance. 

          Miles’s U.S. Attorney’s Office hosted its first-ever job fair in September 2016 where approximately 200 returning citizens connected with about 20 employers in Grand Rapids. “Employment is crime prevention,” Miles noted. “If a prison sentence results in a life-time ban on employment, then people will likely return to criminal activity. I’m not calling for a preference to hire those with a criminal record, I’m just asking employers not to rule someone out automatically if the past offense is not related to the job opening.”

Police-Community Relations

          “Improving the relationship between law enforcement and community members was very important to me from the outset as U.S. Attorney,” Miles noted. Since becoming U.S. Attorney Miles co-chaired the Grand Rapids chapter of Advocates & Leaders for Police and Community Trust (ALPACT) group which started in 2012 and consists of local community leaders from different backgrounds who meet regularly with federal, state, and local law enforcement agents and officers to discuss a variety of topics. He also helped form and supported ALPACT groups in Battle Creek, Benton Harbor, Holland, Kalamazoo, and Lansing. “We need trust between community and law enforcement to prevent and address shared problems. It’s difficult to develop trust in a crisis situation. It takes communication for a relationship, and it takes a relationship to develop trust,” Miles noted. 

          In the fall of 2014 Miles began meeting with law enforcement leaders in Berrien, Calhoun, Ingham, Kalamazoo, Kent, Muskegon, and Ottawa Counties to discuss their protocols and best practices before, during, and after an officer-involved shooting. “We are blessed overall with very professional police departments. I encourage police community outreach at the top and on the streets not only to influential community leaders from the Generation X and Baby Boom generations, but also to those in the Millennial Generation who have significant local social media followings.”

Hiring Veterans

          The first prosecutor Miles hired in 2012 as U.S. Attorney was a Major in the U.S. Army who served in Baghdad, Iraq and Guantanamo Bay, Cuba. As U.S. Attorney, Miles also hired the Office’s Administrative Officer, Human Resources Officer, Budget Officer, and his executive assistant who are all U.S. Army or National Guard veterans. Miles received a 2013 Patriot Award from the Employer Support of the Guard and Reserve Committee for his hiring and support of reservists and veterans. 

          Miles’s Office hosted the local ceremony in 2012 where four members of the Montford Point Marines, who were not able to travel to Washington, DC for their award, received their Congressional Gold Medals. Montford Point Marines were the first African American Marines and served in World War II.

Community Outreach and Education

          In 2015, Miles and his Office developed and launched an educational program called Justice Scholars at Gerald R. Ford Middle School in Grand Rapids for 7^th grade students to learn about the American criminal justice system from law enforcement agents and officers, prosecutors, defense attorneys, judges, and probation and parole officers. For one hour each month during the school year the class receives a lesson from a professional about each step in the criminal justice process as well as that career. In the final session, the class conducts a mock trial with instruction from attorneys in a federal courtroom with a judge presiding. Justice Scholars expanded to Lansing Middle Schools in 2016. 

          Miles, along with the U.S. Attorney for the Eastern District of Michigan and the State Attorney General, organized Michigan’s first-ever Prescription Drug Awareness Summit in 2013 which was held in Lansing. Widely attended by law enforcement, education and medical professionals, the Summit raised awareness of prescription pain killer drug diversion and addiction and of various programs and initiatives responding to the epidemic. The increasing use of opioid pain killers is also feeding the heroin epidemic so Miles and his Office are actively educating parents, physicians, and the public about those risks and dangers as well as prosecuting healthcare providers who prescribe drugs illegally in addition to prosecuting illegal drug trafficking organizations.

Background

          President Obama nominated Grand Rapids native Miles to serve as U.S. Attorney for the Western District of Michigan on March 29, 2012, and Miles was confirmed unanimously by the U.S. Senate on June 29, 2012. Prior to his presidential appointment Miles, a 1991 Harvard Law School graduate, was a partner based in Grand Rapids with a large, national law firm. Miles, who served as president of the Grand Rapids Bar Association from 2004 to 2005, was the Democratic nominee for Michigan’s Third District Congressional seat in 2010. He did not announce his future career plans, only stating, “I’m looking forward to the next challenge, whatever that may be.”

          The U.S. Attorney’s Office for the Western District of Michigan has 38 attorneys and a total staff of 83 with offices in Grand Rapids, Lansing, and Marquette. The district covers 49 counties, including Michigan’s entire Upper Peninsula. The Office’s immediately prior presidentially-appointed U.S. Attorney was Margaret Chiara who was appointed by President George W. Bush and served from October 2001 until March 2007.

          For additional information on the accomplishments of the U.S. Attorney’s Office for the Western District of Michigan under the direction of U.S. Attorney Miles, please refer to the Year in Reviews for years 2012, 2013, 2014 and 2015:

https://www.justice.gov/usao-wdmi/year-review

END

Roanoke, VIRGINIA – A Roanoke man, who conspired with his son, and others, to distribute methamphetamine in and around the Roanoke region, was sentenced today in the United States District Court for the Western District of Virginia in Roanoke, United States Attorney John P. Fishwick Jr. announced.

William Arthur Morgan Sr., 58, of Roanoke, Va., previously pled guilty to one count of conspiring to distribute methamphetamine. Today in District Court, Morgan Sr. was sentenced to 65 months in federal prison.

“Methamphetamine is a dangerously addictive drug that destroys lives,” United States Attorney Fishwick said today. “We will continue to do all we can to stop the flow of it into Southwest Virginia.”

According to evidence presented at previous hearings by Assistant United States Attorney Andrew Bassford, Morgan Sr. conspired with his son, William Morgan Jr., to have packages of methamphetamine mailed from California to Morgan Sr.’s address in Roanoke. Morgan Jr. would then sell the methamphetamine and split the profits of the sales with his father. Morgan Jr. was previously sentenced to 60 months in federal prison for his role in the conspiracy.

The investigation of the case was conducted by the Drug Enforcement Administration, the Roanoke City Police Department, the United States Postal Inspection Service, the Roanoke HIDTA and the Virginia State Police. Assistant United States Attorney Andrew Bassford prosecuted the case for the United States.

Abingdon, VIRGINIA – A pair of men, who conspired with others to traffic ICE methamphetamine into Southwest Virginia for further distribution, were sentenced today in the United States District Court for the Western District of Virginia, United States Attorney John P. Fishwick Jr. announced.

Roger Coley, 60, of Rossville, Ga., previously pled guilty to one count of conspiring to possess with the intent distribute ICE methamphetamine. Today in District Court, Coley was sentenced to 57 months in federal prison.

Also in District Court today, Randall Nelson Doss, 52, of Chattanooga, Tenn., who previously pled guilty to one count of conspiring to possess with the intent to distribute ICE methamphetamine, was sentenced to 84 months in federal prison.

“This conspiracy brought large quantities of a very potent form of methamphetamine into Southwest Virginia and preyed upon the addictions of others,” United States Attorney Fishwick said today. “Law enforcement in this case worked cooperatively to dismantle this conspiracy and bring these defendants to justice.”

According to evidence presented at previous hearings, Coley and Doss assisted in a conspiracy to traffic ICE methamphetamine from Tennessee into Virginia. Specifically, Coley and Doss supplied ICE methamphetamine to co-conspirators Mike Warren, Summer Delp, Kevin Roark, Tim Montgomery, and others, who would typically travel from Virginia to Tennessee to purchase the methamphetamine. Once the methamphetamine arrived in Virginia, the group would further distribute the drug.

The investigation of the case was conducted by the United States Bureau of Alcohol, Tobacco, Firearms, and Explosives; United States Drug Enforcement Administration; United States Marshals Service; and Virginia State Police. Special Assistant United States Attorney Kevin Jayne prosecuted the case for the United States.

Abingdon, VIRGINIA – Another pair of defendants who were part of a conspiracy that trafficked methamphetamine in and around Virginia and Kentuck, were sentenced today in the United States District Court for the Western District of Virginia in Abingdon, United States Attorney John P. Fishwick Jr. announced.

Silas Fee, 34, of Rose Hill, Va., previously pled guilty to one count of conspiring to possess with the intent to distribute and distribute methamphetamine and one count of possessing a firearm in furtherance of a drug trafficking crime. Today in District Court, Fee was sentenced to 195 months in federal prison.

Charlinda Harber, 37, of Jonesville, Va., previously pled guilty to one count of conspiring to possess with the intent to distribute and distribute methamphetamine. Today in District Court, Harber was sentenced to 70 months in federal prison.

“These defendants made our community less safe by trafficking in addictive substances and in many cases possessing firearms while they did it,” United States Attorney Fishwick said today. “We will continue to work with our federal, state and local law enforcement partners to stop the flow of this dangerous drug into our communities.”

Along with the two individuals sentenced today, a total of 15 defendants have been charged with being part of the conspiracy, eight of which have already been sentenced to federal prison terms.

The investigation of the case was conducted by the Bell County, Kentucky Sheriff’s Office, the Middlesboro, Kentucky Police Department, the Lee County Virginia Sheriff’s Office and Bureau of Alcohol, Tobacco, Firearms and Explosives Bristol and Atlanta Field Divisions. Assistant United States Attorney Zachary T. Lee prosecuted the case for the United States.