GREAT FALLS—A Lewistown woman convicted of possessing methamphetamine for distribution was sentenced on Tuesday to 54 months in prison and five yearssupervised release, U.S. Attorney Kurt G. Alme said.

 Jahmel Halabi, 43, pleaded guilty to the charge in August.

U.S. District Judge Brian M. Morris presided at sentencing.

On April 14, 2018 near Lewistown, a Montana Highway Patrol trooper stopped a car in which Halabi was a passenger. The trooper arrested Halabi on an outstanding warrant and took her to jail. Additional information that Halabi and the driver were involved in drug activity led to officers getting a search warrant for the car. A search turned up about 99 grams, or 3.5 ounces, of actual meth and baggies that were hidden in the dome light.

That same day, the Fergus County Sheriff’s Office reviewed jail calls and identified Halabi as having called a person and requesting he “get the stuff out of the car” and “the stuff out of the house.” Halabi also indicated that drugs were located in a safe in the residence and provided the safe’s combination in the jail call.

Lewistown police officers got a search warrant for Halabi’s residence and seized about 14 ounces of actual meth, $4,000 cash and drug paraphernalia.

During an interview with law enforcement, Halabi admitted to dealing meth and said officers had missed meth and firearms during the search of her home. Officers returned to the residence and seized about 31 ounces, or 1.95 pounds of actual meth, which is the equivalent of about 7,072 individual doses. Also seized were various rounds of ammunition and bank receipts.

Assistant U.S. Attorney Jessica Betley prosecuted the case, which was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives.

The case is part of Project Safe Neighborhoods (PSN), which is the centerpiece of the Department of Justice’s violent crime reduction efforts.  PSN is an evidence-based program proven to be effective at reducing violent crime. Through PSN, a broad spectrum of stakeholders work together to identify the most pressing violent crime problems in the community and develop comprehensive solutions to address them. As part of this strategy, PSN focuses enforcement efforts on the most violent offenders and partners with locally based prevention and reentry programs for lasting reductions in crime.

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HOUSTON - An international businessman and his wife have learned their fate for international parental kidnapping, announced U.S. Attorney Ryan K. Patrick and Special Agent in Charge Perrye K. Turner of the FBI. A federal jury deliberated for more than two days following a 10-day trial before convicting Carlos Otavio Guimaraes, 68, and Jemima Guimaraes, 66.

Today, U.S. District Judge Alfred Bennett heard arguments from both the prosecution and defense teams. The government requested the court impose a term of imprisonment advised by the sentencing guidelines or slightly higher, while the defense asked for a non-custodial sentence. Ultimately, the court imposed a three-month sentence for Carlos Guimaraes, while Jemima was ordered to serve one month. Both will also be ordered to serve one year of supervised release following their terms of imprisonment during which time they will be required to remain in the United States. The court continued its order that both their U.S. and Brazilian passports remain surrendered and they cannot obtain new ones. The court also ordered the defendants may not have any contact with their fugitive co-defendant daughter, but placed no prohibition on communicating with their grandson.

Each was also ordered to pay a $75,000 fine. Restitution will be determined at a later date, but could be in excess of $400,000.

At the hearing, the judge also heard from the victim – the child’s father – who gave impassioned testimony about how this has impacted him and how much he misses his son. He stated that he has been “emotionally crippled by this experience. What my family and I have endured at the hands of these defendants has been so painful that I cannot imaging inflicting it on another human soul. How do you take away a parent’s right to have their child in their life?” He further noted that he has been consumed by grief. “My boy was just gone,” he said. “For years, I have begged and begged and begged them to bring my boy back, but they refused.”

The father also told the court the court that each trip to Brazil to see his son for even a short time cost him close to $20,000 and that, for years, he had been working an enormous amount of hours - averaging 100 a week - just to finance his fight to try to get his son back.

He also noted that what these defendants did was devoid of any concern for the child’s well-being, that the decision was motivated by greed, power, control and fear – fear not of him, but that he would get in the way of them taking the child for themselves. “They sought to enforce their own brand of vigilante justice,” he said, adding that the couple had undermined orders, lied to the court and succeeded in obtaining full custody of the child, noting they had stripped him of his parental rights, “making a mockery of the United States judicial system.”

At trial, the jury heard that the child’s grandparents helped illegally retain the child in Brazil away from his father in Houston. The mother and minor child traveled to Brazil to attend a family event in July 2013, but were supposed to return to Houston no later than July 20, 2013. The child was never returned to the United States.  

The jury also heard how the child’s mother allegedly orchestrated a plan to travel to Brazil for her brother’s wedding via an agreed travel agreement as part of the pending divorce. While in Brazil, she went to a Brazilian state court and obtained custody of the minor. From that moment forward, the father of the child was limited in his ability to visit with his son. The visits he did have were supervised by a guard hired by the child’s mother. Currently, despite a Harris County divorce ruling in 2015 favorable to the father, his ability to maintain a relationship with his son has been incredibly difficult. The child no longer speaks English, and the father had to learn Portuguese to navigate the Brazilian legal system and communicate with his son.

The child’s father testified and told the jury that all he ever wanted was for his son to return to Houston so he could be a constant presence in his life. 

Evidence was also presented which included the fact that the grandparents support their daughter by providing housing and employment as well as attorney fees. Additionally, when the father would visit Brazil, Jemima was present for most of the exchanges of the child. Video evidence showed both Carlos, Jemima, the hired guard and their Brazilian attorney at one of the exchanges.

The defense attempted to convince the jury that the Brazilian court rulings should be respected despite the fact they disregard the father’s position. The rulings found the United States was not the place to raise a child in the “egotistical profile of the American family.” 

The defense provided an expert on the Hague Convention to testify, but that expert was unable to give even one example of a child that has been returned from Brazil when the abducting parent was alive and domiciled in Brazil. Further, the expert acknowledge the U.S. State Department has found Brazil to be non-compliant with the provisions of the Hague Convention on the Civil Aspects of International Child Abduction since 2005.

The defendants claimed the mother was fleeing from domestic violence, but the jury rejected that defense. The jury ultimately found Carlos and Jemima Guimaraes aided and abetted their daughter in the international parental kidnapping of their grandson.  

They were permitted to remain on bond and voluntarily surrender to a U.S. Bureau of Prisons facility to be determined in the near future. 

The child’s mother - Marcelle Guimaraes, 40 - is also charged but remains a fugitive in Brazil. She is presumed innocent unless and until convicted through due process of law.

The FBI conducted the investigation. Assistant U.S. Attorneys Sherri L. Zack and Kimberly Ann Leo are prosecuting the case.

If you are a parent or legal custodian who has been deprived of your child through abduction, please see the Department of Justice’s International Parental Kidnapping webpage for more information.

SAN FRANCISCO – Manuel Gonzalez Chavez, aka Manuel Gonzalez Cobain, was sentenced today to 26 years in prison for his involvement in a heroin, cocaine, and methamphetamine trafficking conspiracy, announced United States Attorney Alex G. Tse and Drug Enforcement Administration Special Agent in Charge Chris Nielsen.  The sentence was handed down by the Honorable James Donato, U.S. District Judge. 

Gonzalez Chavez, 40, a citizen of Mexico, formerly of Stockton, Calif., pleaded guilty to the charges on November 9, 2017.  As part of his plea agreement, Gonzalez Chavez acknowledged that he participated in a conspiracy to traffic heroin, cocaine, and methamphetamine.  Gonzalez Chavez admitted that he bought and sold heroin, cocaine, and methamphetamine and that he distributed these controlled substances to his customers.  Gonzalez Chavez also admitted that he directed at least one other person to act as his courier and to pick up or drop off controlled substances or the proceeds of drug sales on his behalf.

In sentencing Gonzalez Chavez, U.S. District Judge James Donato characterized the drug conspiracy in this case as a “massive and very destructive conspiracy” that trafficked drugs “in mercenary fashion” and “effectively poisoned” the community.  Judge Donato declared that he was “particularly troubled” by the fact that Gonzalez Chavez had previously been convicted of possessing a firearm in furtherance of a drug trafficking offense and acted in this case “as if that [prior] conviction meant nothing.”  Judge Donato also declared that the “intersection of drugs and firearms [is] particularly pernicious.”  

Gonzalez Chavez was arrested on October 13, 2015.  As part of his plea agreement, he admitted that on the day before his arrest, October 12, 2015, law enforcement authorities executed a search warrant at his residence in Stockton, Calif.  At the time authorities entered Gonzalez Chavez’s home, he was actively packaging cocaine for distribution.  Authorities’ search of Gonzalez Chavez’s residence resulted in the total seizure of approximately 5.2 kilograms of heroin, approximately 1.6 kilograms of methamphetamine, and approximately 4.2 kilograms of cocaine.  

Law enforcement found heroin, methamphetamine, and cocaine throughout Gonzalez Chavez’s house.  For example, the heroin, some of the methamphetamine, and some of the cocaine was found under the bathroom sink.  In Gonzalez Chavez’s living room, authorities found additional cocaine and, in the living room closet, a .40 caliber Taurus PT100 pistol loaded with ammunition.  In the kitchen, authorities found three digital scales, packaging materials, additional methamphetamine, more than one kilogram of cocaine, and bullets.  In the backyard, authorities found approximately 1.8 kilograms of cocaine.  In one of the bedrooms, authorities found a .38 caliber revolver and an Air Soft pistol.  Authorities also seized approximately $43,500 in cash.  Gonzalez Chavez admitted as part of his plea agreement that he knew the $43,500 represented the proceeds from drug sales.

On November 19, 2015, a federal grand jury indicted Gonzalez Chavez and twelve co-defendants for various crimes related to the scheme.  The grand jury charged Gonzalez Chavez with conspiracy to distribute and possess with intent to distribute controlled substances, in violation of 21 U.S.C. §§ 846 and 841(a)(1), and with possession of a firearm in furtherance of drug trafficking, in violation of 18 U.S.C. § 924(c).   Pursuant to his plea agreement, Gonzalez Chavez pleaded guilty to both charges.  In addition to the 26-year prison term, Judge Donato sentenced Gonzalez Chavez to a 3-year term of supervised release.  The defendant has been in custody since his arrest on October 13, 2015. 

Gonzalez Chavez’s sentence brings to 12 the number of defendants sentenced as part of the conspiracy to distribute and possess with intent to distribute controlled substances in this case.  All of Gonzalez Chavez’s co-defendants have pleaded guilty.  During the course of this investigation, law enforcement seized more than 40 pounds of methamphetamine, more than 65 pounds of cocaine, more than 11 pounds of heroin, more than $1,200,000 in cash drug proceeds, and approximately twelve firearms.  
 

Assistant U.S. Attorneys Christiaan Highsmith, Sheila Armbrust, Katie Burroughs Medearis, and Gregg Lowder are prosecuting the case.  The prosecution is the result of an investigation by the DEA, the Concord Police Department, and the IRS Criminal Investigations.  The investigation was conducted and funded by the Organized Crime Drug Enforcement Task Force, a multi-agency task force that coordinates long-term narcotics trafficking investigations.

PORTLAND, Ore. – Gregory Rex Wilson, 52, of Portland, was sentenced today to 84 months in federal prison and five years’ supervised release for distributing heroin and illegally possessing a firearm.

According to court documents, Wilson was part of a drug trafficking organization that transported heroin from El Monte, California to the Portland metropolitan area. The investigation revealed that Wilson was being supplied with heroin by “Chino Antrax,” later identified as co-defendant Pablo Flores. Flores had actively been trafficking heroin to Portland for more than a year. At the time of his arrest on December 12, 2016 in Portland, Wilson had 880 grams of heroin, 100 Xanax pills and a loaded Ruger 9mm pistol in his vehicle. Four additional firearms were later found in a second vehicle owned by Wilson, including one with an obliterated serial number.

On June 12, 2018, Wilson pleaded guilty in this case to one count of possession with intent to distribute heroin and one count of being a felon in possession of firearms. Three of Wilson’s co-defendants, Aaron Ray West, Ricardo Anguiano Cruz, Jr., and Jose Manuel Rodriguez, have also pleaded guilty to related charges. Flores awaits trial.

The case was investigated by the Clackamas County Interagency Task Force (CCITF), FBI, Homeland Security Investigations (HSI), the U.S. Drug Enforcement Administration (DEA), and the Portland Police Bureau. It was prosecuted by Matthew J. Semritc, Special Assistant U.S. Attorney for the District of Oregon.

The case is part of Project Safe Neighborhoods (PSN). PSN is the centerpiece of the Department of Justice’s violent crime reduction efforts. PSN is an evidence-based program proven to be effective at reducing violent crime. Through PSN, a broad spectrum of stakeholders work together to identify the most pressing violent crime problems in the community and develop comprehensive solutions to address them. As part of this strategy, PSN focuses enforcement efforts on the most violent offenders and partners with locally based prevention and reentry programs for lasting reductions in crime.

RENO, Nev. – A Reno resident was sentenced today to 160 months in prison in connection to a methamphetamine distribution conspiracy, announced U.S. Attorney Dayle Elieson for the District of Nevada.

Jose Efrain Larios Rivera, 37, previously pleaded guilty to one count of conspiracy to possess with intent to distribute at least 500 grams of methamphetamine. He has a prior felony drug conviction in Reno. In addition to the prison term, U.S. District Judge Howard D. McKibben sentenced Rivera to five years of supervised release.

Rivera admitted that he conspired with others to distribute large amounts of methamphetamine throughout the Reno area. He offered to sell methamphetamine for $5,000 per pound or $500 per ounce. The investigation revealed that law enforcement intercepted 3,082 grams of pure methamphetamine during a traffic stop on July 27, 2017. That load of narcotics was being driven by co-defendant Jose Bautistia-Miranda, Rivera’s cousin, and two others, from Los Angeles into Nevada. The trio were pulled over for a traffic violation during which the vehicle was searched and the methamphetamine was recovered.

The July seizure did not stop Rivera’s drug distribution. Less than a month later, in August 2017, Rivera and his “cousins” had agreed to transport one kilogram of heroin from Southern California to Reno. Rivera agreed to sell the kilogram of heroin to a buyer in Reno for $32,500. The defendant was arrested after he was stopped driving his truck traveling down  Highway 395. He was traveling in tandem with another co-defendant, Leon Valdez, who was driving a separate car with the heroin. Rivera and Valdez were stopped when traveling to the arranged location for the negotiated sale. During the traffic stop on Valdez’s car, a K-9 alerted the deputy to the presence of drugs. A search of the load car revealed 915 grams of heroin. In the defendant’s truck, stopped in close vicinity of the load car on Highway 395, Rivera had a Taurus .45 pistol under the driver’s seat and a small amount of heroin in his pocket.

The case was investigated by the DEA and Washoe County Sheriff’s Office. Assistant U.S. Attorney Jim Keller prosecuted the case.

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LAS VEGAS, Nev. – A Las Vegas man who told his apartment manager that he was going to rob a bank so he could pay his rent, and then robbed a bank with a fake bomb, was sentenced today to 46 months in prison and five years of supervised release, announced U.S. Attorney Dayle Elieson for the District of Nevada.

Robert Lynn Dufloth, 65, pleaded guilty in January to robbing the Wells Fargo Bank located at 3800 Howard Hughes Parkway. United States District Judge Kent Dawson presided over the sentencing hearing.

On January 10, Dufloth handed a bank teller a note that said he was robbing the bank and to give him the money “and no one will get hurt.” He then showed the teller a device with a red button in his hand and threatened to press the button, implying by gestures that the button was a trigger for an explosive device. The teller put approximately $536 in an envelope. Dufloth left the bank with the stolen money.

Officers with the Las Vegas Metropolitan Police Department reviewed video surveillance of the robbery and canvased the area. Officers quickly identified Dufloth and learned he was a long-time resident at a nearby weekly rental complex. The manager of the property reported that when she confronted Dufloth earlier about late rent, he told her not to worry, that he would rob a bank. Between the time of the robbery and when the officers arrived at the weekly rental complex, Dufloth had paid his rent in cash. On January 11, after Dufloth was identified as the robber in a photo line-up, officers executed a search warrant at his residence. During the search, the officers found and seized the device used during the bank robbery.

Dufloth has a total of 10 previous felony convictions dating back to 1972, including a prior robbery conviction in 1980.

The case was investigated by the FBI and Las Vegas Metropolitan Police Department. Assistant U.S. Attorney Dan Cowhig prosecuted the case.

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SOUTH BEND – Sven Eric Marshall, 61 years old, formerly of South Bend, Indiana, has been charged with five counts of mail fraud, announced United States Attorney Thomas L. Kirsch II.

U.S. Attorney Kirsch said, “Elder abuse scams, such as the scheme alleged in this case, will be aggressively prosecuted in this district.  The elderly are among the most vulnerable of victims.  When they place their trust, and in some case their life savings, into the hands of someone who abuses that trust to steal for personal gain, it is incumbent upon law enforcement to take action.  Schemes targeting the elderly will never be tolerated.”  

According to the indictment, Marshall owned and ran an investment company named Trust & Advisory Services of Indiana, Inc.  Beginning about March 1998, Marshall recruited investors and promised returns of about four to eight percent per year with the option to receive interest payments or to reinvest gains in their account.  As part of his scheme, Marshall provided monthly statements to investors that showed the purported balance of the investments.  But, by January 2016, the Trust & Investment account was nearly empty.  When investors requested information about their money, Marshall misrepresented the status and balance of the investments.  Marshall did pay money to some investors who asked to withdraw a portion of their investments, even though the Trust & Investment account was almost empty, by transferring money from other unrelated accounts.  In about December 2017, Marshall stopped communicating with investors and closed his office without notifying investors or providing a forwarding address.  Since Marshall closed his office, investors have been unable to locate Marshall or recover their investments.

The investors were elderly.  Several were in their seventies and eighties at the time of the alleged crimes, and two are now deceased.

The United States Attorney’s Office emphasized that an Indictment is merely an allegation and that all persons charged are presumed innocent until, and unless, proven guilty in court.

If convicted in court, any specific sentence to be imposed will be determined by the judge after a consideration of federal sentencing statutes and the Federal Sentencing Guidelines.

This case was investigated by the FBI and is being prosecuted by Assistant United States Attorney Luke Reilander.

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ALBANY, NEW YORK – Kyle Touchstone, age 31, of Plattsburgh, New York; Melissa Kusalonis, age 37, of Plattsburgh; Anthony DeFilippo, age 37, of Schenectady, New York; and Luke Kiroy, age 34, of Saranac, New York, were sentenced yesterday and today for conspiring to distribute heroin.

The announcement was made by United States Attorney Grant C. Jaquith; Acting Special Agent in Charge Keith Kruskall, U.S. Drug Enforcement Administration (DEA), New York Division; and Clinton County Sheriff David Favro.

Touchstone was sentenced to 84 months in prison and 4 years of supervised release; Kusalonis to 41 months in prison and 3 years of supervised release; DeFilippo to 46 months in prison and 3 years of supervised release; and Kiroy to 3 years of probation and a $1,000 fine. 

As part of their guilty pleas, Touchstone and Kusalonis admitted to obtaining nearly a kilogram of heroin from Jimolo Coates, a.k.a. “Brodie,” in Annapolis, Maryland, and DeFilippo in Schenectady between June 2016 and May 2017, and selling the heroin in Plattsburgh.  DeFilippo admitted to regularly providing Touchstone and Kusalonis with heroin in Schenectady, and Kiroy admitted to transporting heroin from Annapolis to Plattsburgh with Kusalonis. 

Touchstone, Kusalonis, DeFilippo, and Kiroy were charged with six other people in two related indictments pertaining to a heroin-distribution ring that transported heroin from Annapolis and Schenectady and sold it in the Plattsburgh area.  In addition to Touchstone, Kusalonis, DeFilippo, and Kiroy, five other defendants pled guilty and were sentenced as follows: 

The tenth defendant, Danielle Conners, age 33, of Plattsburgh, was convicted at trial and is scheduled to be sentenced on March 5, 2019.  

The convictions are the result of a nearly yearlong investigation led by the DEA Task Force in Plattsburgh, which consists of law enforcement officers from the DEA, Homeland Security Investigations, United States Border Patrol, New York State Police, Clinton County Sherriff’s Office, Essex County Sheriff’s Office, and the Plattsburgh Police Department.  The U.S. Department of Justice, Office of the Inspector General, as well as the New York State Department of Corrections and Community Supervision, assisted in the investigation.

The case is being prosecuted by Assistant U.S. Attorneys Cyrus P.W. Rieck and Katherine Kopita. 

SYRACUSE, NEW YORK – Johny Elvis Vela Molina, age 39, and a citizen of Peru, was sentenced today to time served (44 days in jail), for illegal re-entry into the United States.

The announcement was made by United States Attorney Grant C. Jaquith and Thomas R. Decker, Director of the New York Field Office of Immigration and Customs Enforcement (ICE), Enforcement and Removal Operations (ERO).

Vela Molina was removed from the United States to Peru on December 8, 2009.  On October 29, 2018, he was encountered and arrested by an ICE Officer in Wallkill, Ulster County, New York. A fingerprint check of Vela Molina resulted in the discovery of the prior removal.  Vela Molina admitted that he returned to the United States without permission following the 2009 removal.    Vela Molina has never lawfully entered the United States. 

Following sentencing, Vela Molina was remanded to the custody of the Department of Homeland Security, for removal proceedings.

This case was investigated by ICE-ERO and prosecuted by Assistant U.S. Attorney Edward P. Grogan.

UTICA, NEW YORK – Laura Olguin Mercado, age 30, and a Mexican citizen living in Lafayette, Indiana, pled guilty today to transporting illegal aliens within the United States.

The announcement was made by United States Attorney Grant C. Jaquith and Robert N. Garcia, Chief Patrol Agent, United States Border Patrol, Swanton Sector.

As part of her plea, Olguin Mercado admitted that on June 22, 2018 she drove to a remote spot along the Canadian border in northern Vermont and picked up three illegal aliens from Mexico who were waiting there.  After picking them up, Olguin Mercado drove west and south away from the border until she reached Interstate 87 and proceeded south.  As she drove south on Interstate 87 with her passengers, Olguin Mercado was required to stop at the Border Patrol checkpoint near North Hudson, New York.  Border Patrol determined that three passengers in Olguin Mercado’s car were illegal aliens who had just illegally crossed the border into the United States from Canada.  Olguin Mercado admitted that she knew the people she picked up and transported had illegally entered the United States from Canada.  Olguin Mercado admitted that she intended to drive the three people to Indiana.      

As a result of her conviction, Olguin Mercado faces up to 5 years in prison and a fine of up to $250,000 when she is sentenced by United States District Judge David N. Hurd on April 11, 2019.  A defendant’s sentence is imposed by a judge based on the particular statute the defendant is charged with violating, the U.S. Sentencing Guidelines, and other factors.    

This case was investigated by Border Patrol and prosecuted by Assistant U.S. Attorney Edward P. Grogan.

ALBANY, NEW YORK – James Haskins, age 42, of Schenectady, New York, pled guilty today to possessing and intending to distribute crack cocaine and possessing a firearm in furtherance of a drug trafficking crime.

The announcement was made by United States Attorney Grant C. Jaquith and Special Agent in Charge Ashan M. Benedict of the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), New York Field Division.

Haskins, who has 6 prior felony convictions, admitted that on April 11, 2018, he possessed 152 grams of crack cocaine and a .380 caliber pistol and ammunition in Schenectady.  He further admitted that he intended to distribute the crack cocaine to others in exchange for cash, and that he possessed the firearm, which he obtained illegally, to protect his crack and drug proceeds from potential robbers.

Haskins faces at least 15 years and up to life in prison, a fine of up to $250,000, and at least 8 years of post-release supervision when he is sentenced by Senior United States District Judge Norman A. Mordue on April 17, 2019.  A defendant’s sentence is imposed by a judge based on the particular statute the defendant is charged with violating, the U.S. Sentencing Guidelines, and other factors. 

This case was investigated by the ATF and Schenectady County Sheriff’s Office, and is being prosecuted by Assistant U.S. Attorney Alicia Giglio Suarez.

ALBANY, NEW YORK – Finance of America Mortgage LLC has agreed to pay the United States $14,500,000 to resolve allegations that Gateway Funding Diversified Mortgage Services, L.P. (Gateway), which it acquired in 2015, violated the False Claims Act by knowingly originating and underwriting deficient mortgage loans insured by the U.S. Department of Housing and Urban Development’s (HUD) Federal Housing Administration (FHA), announced United States Attorney Grant C. Jaquith.

“Gateway misrepresented that its federally-insured loans met HUD’s quality standards, harming borrowers who were left underwater on their homes and taxpayers who backed the mortgages,” said United States Attorney Jaquith.  “We are committed to holding mortgage lenders accountable when they abuse government programs for their own gain.”

During the time period covered by the settlement, Gateway participated as a direct endorsement lender (DEL) in the FHA insurance program.  A DEL has the authority to originate, underwrite and endorse mortgages for FHA insurance.  If a DEL approves a mortgage loan for FHA insurance and the loan later defaults, the holder of the loan may submit an insurance claim to HUD, FHA’s parent agency, for the losses resulting from the defaulted loan.  Under the DEL program, the FHA does not review a loan for compliance with FHA requirements before it is endorsed for FHA insurance.  DELs are therefore required to follow program rules designed to ensure that they are properly underwriting and certifying mortgages for FHA insurance, to maintain a quality control program that can prevent and correct deficiencies in their underwriting practices, and to self-report any deficient loans identified by their quality control program.

The settlement announced today resolves allegations that Gateway failed to comply with certain FHA origination, underwriting and quality control requirements.  As part of the settlement, Gateway admitted that the company failed to audit all early-payment default loans (EPD) as required by HUD and, on those occasions when it did audit these loans, it “ignored calls from its compliance department regarding the company’s poor EPD rate for FHA loans.”  Gateway also admitted that, in late 2011, some of its senior executives learned that the company’s one-year compare ratio (a figure HUD uses to compare lenders, with a higher ratio indicating that a lender has an unusually high default percentage compared to its peers) was increasing due, in part, to Gateway’s origination activities out of its Horsham, Pennsylvania headquarters and certain branch offices.  Many of those same executives were then told in early 2014 that the same underwriters and offices identified in 2011 continued to “show a pattern of poor performance” on EPD loans.  Gateway also admitted that it failed to adhere to HUD’s self-reporting requirements for loans containing material deficiencies.  Notably, Gateway acknowledged that its conduct and omissions resulted in HUD insuring many loans approved by Gateway that were not eligible for FHA mortgage insurance under the DEL program.

“This investigation, along with others similar to it, represents our steadfast commitment toward protecting the integrity of federal housing programs,” said Michael Powell, Special Agent in Charge, Joint Civil Fraud Division, HUD’s Office of Inspector General (HUD-OIG).  “It further reaffirms our intent to pursue those who exploit HUD programs for corporate gain.”

This investigation was triggered by a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act, which allow private persons, known as “relators,” to file civil actions on behalf of the government and share in any recovery.  The relator in this case, a former Gateway employee, will receive $2,392,500 of the settlement proceeds.  The case is docketed with the U.S. District Court for the Northern District of New York under number 1:16-cv-750.

The investigation and settlement were the result of a coordinated effort among the U.S. Attorney’s Office for the Northern District of New York, the Department of Justice’s Civil Division, HUD-OIG, and HUD.  The United States was represented by Assistant U.S. Attorney Adam J. Katz and Department of Justice Trial Attorneys Christopher Reimer and Harin Song.

PROVIDENCE - A Cranston man was arrested today on charges he allegedly manufactured and sold a “ghost” machinegun without a license to an out-of-state Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) undercover agent.

As the result of a Project Safe Neighborhoods investigation initiated by the Cranston Police Department in November, David Ladwig, 63, was arrested today as ATF agents, ATF Task Force members, and Cranston Police executed a federal court-authorized search of his residence, a boat moored in Pawtuxet Cove. From the houseboat, law enforcement seized arched the Boat and inside found, among other things, an AR-15 receiver, ammunition, firearm parts, and silencer parts. 

“Ghost-guns” are firearms manufactured without serial numbers, making them difficult for law enforcement to trace. It is alleged in court documents that on November 15, 2018, Ladwig sold a “ghost” machinegun he manufactured to an undercover ATF agent who is a resident of Connecticut.

Ladwig appeared today before U.S. District Court Magistrate Judge Lincoln D. Almond on a federal criminal complaint charging him with possession/transfer of a machine gun, possession of a firearm not registered to him, engaging in the business of selling firearms, and selling a firearm to an out-of-state resident. Ladwig was released on $10,000 unsecured bond.

Ladwig’s arrest and initial appearance in U.S. District Court are announced by United States Attorney Stephen G. Dambruch, ATF Special Agent in Charge Kelly D. Brady, and Cranston Police Chief Colonel Michael J. Winquist.

According to Court documents, it is alleged that in November 2018, ATF acquired information that suggested that Ladwig was engaged in the manufacture of firearms, including machineguns, and was searching for buyers. On November 11, 2018, an ATF undercover agent contacted Ladwig by telephone. The agent identified himself as a resident of Connecticut.

It is alleged that during the call with the ATF agent, Ladwig said that he manufactured “ghost guns” from parts, and that he had a machinegun available for $4,000. Shortly after the call, at the agent’s request, Ladwig texted him photographs of other “ghost guns” he allegedly manufactured and that were available for sale. The photographs depicted a rifle described as having a “reticle sight and aimpoint laser and suppressor” for $1,600; a “full auto” rifle for $4,000; a sig p228 9mm pistol for $850; and a 9mm pistol for $750.

On November 15, 2018, the undercover agent met with Ladwig at a pre-determined location in the parking lot of the marina where Ladwig’s houseboat is moored. It is alleged that Ladwig transferred the receiver for a machinegun to the agent in return for $2,800 in cash. Ladwig pointed out the components that allowed for automatic fire, including the auto sear and auto hammer. Ladwig also manipulated the selector switch, explaining how to move from the semi-automatic position to the automatic fire position. Ladwig explained that the firearm was missing certain parts, such as the full auto bolt carrier group, and that he would be getting those parts by mail shortly. He was arrested as he delivered the missing parts to the agent today. 

Prior to leaving the agent’s vehicle, it is alleged that Ladwig told the agent that he hoped that they could do more business together and that he would mail him the missing parts for the machinegun. The machinegun was sent to an ATF lab for further examination. It was determined that many of the parts used to construct the machinegun had been constructed using M16 machinegun parts.

A criminal complaint is merely an allegation and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.

The case is being prosecuted by Assistant U.S. Attorney Milind M. Shah.

Project Safe Neighborhoods (PSN) is the centerpiece of the Department of Justice’s violent crime reduction efforts. PSN is an evidence-based program proven to be effective at reducing violent crime. Through PSN, a broad spectrum of stakeholders work together to identify the most pressing violent crime problems in the community and develop comprehensive solutions to address them. As part of this strategy, PSN focuses enforcement efforts on the most violent offenders and partners with locally based prevention and reentry programs for lasting reductions in crime.

LONDON, Ky.— Dr. Werner Grentz, 69, of London, Kentucky, was sentenced on Wednesday by United States District Judge Gregory F. Van Tatenhove to three years in federal prison, for falsely reporting his income as $0 on tax documents presented to the Internal Revenue Service for tax years 2011-2015, and for corruptly interfering with the IRS’ attempts to administer the tax laws.  Dr. Grentz was also sentenced to an additional year in prison, for violations of the terms of his supervised release on a 2013 tax fraud conviction.  This one-year prison term will run consecutively to Dr. Grentz’s three-year sentence, for a total of four years in prison.

Dr. Grentz was convicted in February 2018, following a jury trial in London.  According to the evidence at trial, Dr. Grentz submitted false Form 1040X and Form 1040NR documents to the IRS, claiming to have received $0 in income during the years 2011, 2012, 2013, 2014, and 2015, when in fact Dr. Grentz earned $726,148 during that time period.  The IRS determined that Dr. Grentz owed taxes of $237,860 on that income which he failed to report or pay.  Dr. Grentz also took steps to impede collection efforts by the IRS and county clerks.

This was not Dr. Grentz’s first conviction for tax crimes.  In 2014, Dr. Grentz was convicted of tax evasion, for willfully failing to pay more than $900,000 in taxes to the IRS.  He was sentenced to 18 months in prison for that tax offense, and while he was on supervised release for the 2014 offense, committed the new tax crimes that resulted in his 2018 conviction.  It was a violation of the terms of his supervised release to commit new federal crimes, and that violation resulted in the additional year of prison time. 

In addition to his prison sentence, Dr. Grentz was ordered to pay restitution to the IRS of $237,860.  He owes more than a million dollars in unpaid taxes to the IRS.            

Under federal law, Grentz must serve 85 percent of his prison sentence; and upon his release, he will be under the supervision of the United States Probation Office for a term of five years.

Robert M. Duncan, Jr., United States Attorney for the Eastern District of Kentucky, and Ryan Lerner, Special Agent in Charge, IRS Criminal Investigation Cincinnati Field Office, jointly made the announcement. 

The investigation was conducted by the IRS Criminal Investigation Division.  The United States was represented by Assistant United States Attorneys Paul McCaffrey and Neeraj Gupta.

WICHITA, KAN. – An EMT in Jackson County, Kan., pleaded guilty Wednesday to stealing morphine from vials, U.S. Attorney Stephen McAllister said.

Colby W. VanWagoner, 33, Mayetta, Kan., pleaded guilty to one count of obtaining a controlled substance by deception and one count of making a false statement during an investigation.

The crimes took place while VanWagoner was working for the Jackson County Emergency Medical Service in Holton, Kan. In his plea, VanWagoner admitted he tampered with vials of morphine sulfate. He replaced morphine with saline solution and put the vials back into narcotic boxes on ambulances and in office stocks. Tests showed the concentration of morphine in vials that had been tampered with was low as 1 percent or less. The concentration of morphine should have been 100 percent.

Sentencing is set for March 12. The parties have agreed to recommend a sentence of five years on federal probation.

McAllister commended the Food and Drug Administration – Office of Criminal Investigations and Assistant U.S. Attorney Debra Barnett for their work on the case.

Albany – The former co-owner of a Donalsonville, Georgia grocery store, along with ten other customers, have pled guilty to charges related to defrauding the federal food stamp program, said Charles “Charlie” Peeler, the United States Attorney for the Middle District of Georgia.  Garland Alford,75, of Donalsonville,the former co-owner of Lake Flea Market & FDR Grocery, a convenience/grocery store located south of Donalsonville, pled guilty to two counts of acquiring Supplemental Nutrition Assistance Benefits (food stamp benefits) by fraud on Tuesday, December 11, 2018. Mr. Alford’s plea subjects him to a maximum sentence of ten (10) years in prison and fines of $500,000.  In addition, ten customers of the store, all of whom redeemed more than $5,000 in food stamp benefits, have each pled guilty to one count of unlawfully transferring food stamp benefits in violation of law. The customers are Jeanie Sheffield, 34, of Colquitt, GA, Kaneesha Wooten, 23, of Bainbridge, GA, Wendy Mitchell Prickett, 44, of Nashville, TN, and Antonio Gardner, 35, Victoria Henry, 47, Jennifer Johnson, 30, Renee Kimble, 41, Crystal Maxwell, 36, Rosanna Roupe, 33, and Kayla Wallace, 26, all of Donalsonville.  Their pleas subject them to maximum sentences of five years in prison and $250,000 in fines.  All pleas were entered before the Honorable Leslie J. Abrams, United States District Judge in Albany. Sentencing is scheduled for February 6, 2019.  

According to the plea agreements, law enforcement officials opened a criminal investigation after learning that Mr. Alford was giving cash for food stamp benefits and allowing SNAP recipients to purchase ineligible items with their benefits.  Numerous undercover transactions confirmed the illegal transactions.  The average food stamp transaction at Mr. Alford’s store was $56.13, while the average transaction at similar stores in Georgia was just $7.42.  Mr. Alford’s store redeemed more than $437,000 in food stamp benefits during a five-year period.  A search warrant executed at the store also revealed that many of the items on the store’s shelves and in the freezers were well past their “sell by” date. 

“The purpose of the food stamp program is to feed low-income families, not enrich people,” said Charles “Charlie” Peeler, the U.S. Attorney. “This office will vigorously prosecute both store owners and food stamp recipients who abuse the system, and attempt to defraud the government. I want to commend the efforts of the Department of Agriculture, the Georgia Department of Human Resources and the Seminole County Sheriff’s Office in helping put an end to this illegal activity.”

The case was investigated by the United States Department of Agriculture, Georgia Department of Human Services-Office of Inspector General and the Seminole County Sheriff’s Office.  Assistant United States Attorney Alan Dasher is prosecuting the case for the Government.

Questions can be directed to Pamela Lightsey, Public Information Officer, United States Attorney’s Office, at (478) 621-2603 or Melissa Hodges, Public Affairs Director (Contractor), United States Attorney’s Office, at (478) 765-2362.

HARRISBURG – The United States Attorney’s Office for the Middle District of Pennsylvania announced today that Travis Jones, age 20, of Oberlin, Pennsylvania, was indicted yesterday by a federal grand jury on drug trafficking and firearms charges.

According to United States Attorney David J. Freed, the indictment alleges that Jones possessed with intent to distribute heroin and fentanyl on April 13, 2017, in Dauphin County.  The indictment also alleges that on February 8, 2018, in Dauphin County, Jones possessed with intent to distribute heroin and possessed a firearm in furtherance of drug trafficking.     

The case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives and the Harrisburg City Police Department.  The case is being prosecuted by Assistant U.S. Attorney Carlo D. Marchioli.

This case is part of Project Safe Neighborhoods (PSN), a program bringing together all levels of law enforcement and the communities they serve to reduce violent crime and make our neighborhoods safer for everyone. The Department of Justice reinvigorated PSN in 2017 as part of the Department’s renewed focus on targeting violent criminals, directing all U.S. Attorney’s Offices to work in partnership with federal, state, local, and tribal law enforcement and the local community to develop effective, locally-based strategies to reduce violent crime.  

This case was also brought as part of a district wide initiative to combat the nationwide epidemic regarding the use and distribution of heroin.  Led by the United States Attorney’s Office, the Heroin Initiative targets heroin traffickers operating in the Middle District of Pennsylvania and is part of a coordinated effort among federal, state and local law enforcement agencies to locate, apprehend, and prosecute individuals who commit heroin related offenses.

Indictments are only allegations. All persons charged are presumed to be innocent unless and until found guilty in court.

A sentence following a finding of guilt is imposed by the Judge after consideration of the applicable federal sentencing statutes and the Federal Sentencing Guidelines.

The maximum penalty under federal law for this offense is imprisonment for life, a term of supervised release following imprisonment, and a fine. Under the Federal Sentencing Guidelines, the Judge is also required to consider and weigh a number of factors, including the nature, circumstances and seriousness of the offense; the history and characteristics of the defendant; and the need to punish the defendant, protect the public and provide for the defendant's educational, vocational and medical needs. For these reasons, the statutory maximum penalty for the offense is not an accurate indicator of the potential sentence for a specific defendant.

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A Detroit man was sentenced to 36 months in prison today for having conspired to engage in mail fraud and being a felon in possession of a firearm, U.S. Attorney Matthew Schneider announced.

Schneider was joined in the announcement by James Vanderberg, Special Agent-in-Charge, Chicago Region, U.S. Department of Labor Office of Inspector General and Wanda M. Stokes, Director of the Talent Investment Agency

According to court records, Charles H. Alexander, 54, of Detroit, participated in a multi-year scheme to fraudulently obtain unemployment insurance benefits. As part of the scheme, Alexander obtained personal identifying information of third parties and caused unemployment benefits to be issued in the names of those third parties—even though those individuals has no legitimate entitlement to such benefits.  Alexander also impersonated others in order to withdraw fraudulently-obtained unemployment insurance benefits.

Alexander, who has prior convictions for illegal weapons activity, drug activity, and aggravated domestic violence, was also sentenced for having illegally possessed a loaded firearm.

“Unemployment insurance fraud hurts honest employers and employees by driving up rates and making it more difficult for legitimate claimants to receive their benefits,” stated United States Attorney Matthew Schneider. “Charles Alexander took that damaging fraud activity and made it even worse when he chose to endanger others through his illicit possession of a loaded gun. “

“Charles Alexander and his co-conspirators defrauded the Michigan Unemployment Insurance Agency by falsely obtaining and using debit cards containing over $330,000 in unemployment insurance benefits issued in the names of claimants who were not entitled to such benefits.  We will continue to work with our law enforcement partners and state workforce agencies to protect the integrity of unemployment insurance benefit programs,” said James Vanderberg, Special Agent-in-Charge, Chicago Region, U.S. Department of Labor Office of Inspector General.

"Stealing unemployment benefits hurts us all," Wanda M. Stokes, Director of the Talent Investment Agency said. "We are vigilant in bringing these criminals to justice and making certain they face stiff penalties for their crime. I commend Regulation Agent Kurt Eggly for his efforts to bring this criminal to justice," Stokes added.

Alexander was sentenced by U.S. District Judge Bernard A. Friedman. Judge Friedman ordered Alexander to pay $330,561 in restitution.

The case was investigated by the Department of Labor, Office of Inspector General and the State of Michigan Unemployment Insurance Agency, and was prosecuted by Assistant United States Attorney Andrew J. Yahkind.

SCRANTON—The United States Attorney’s Office for the Middle District of Pennsylvania, announced that Angel Prado, age 46, of Providence, Rhode Island, was sentenced yesterday to serve 10 years in prison by U.S. District Court Judge Robert D. Mariani for transporting six kilograms of heroin from Chicago to Pennsylvania.

According to United States Attorney David J. Freed, Prado previously pleaded guilty to possession with intent to distribute more than one kilogram of heroin. Six kilograms of heroin is equivalent to approximately 240,000 retail bags of heroin. The heroin were seized from a vehicle Prado was driving on Interstate 80 in Monroe County by members of the Pennsylvania State Police on December 19, 2013.

Judge Mariani also ordered Prado to be placed on five years of supervised release following his prison sentence. Prado also faces possible deportation to the Dominican Republic.  

The case was investigated by the Drug Enforcement Administration and the Pennsylvania State Police. Assistant U.S. Attorneys Francis P. Sempa and Phillip Caraballo prosecuted the case.   

This case was brought as part of a district wide initiative to combat the nationwide epidemic regarding the use and distribution of heroin. Led by the United States Attorney’s Office, the Heroin Initiative targets heroin traffickers operating in the Middle District of Pennsylvania and is part of a coordinated effort among federal, state and local law enforcement agencies to locate, apprehend, and prosecute individuals who commit heroin related offenses.

This case is also part of Project Safe Neighborhoods (PSN), a program bringing together all levels of law enforcement and the communities they serve to reduce violent crime and make our neighborhoods safer for everyone. The Department of Justice reinvigorated PSN in 2017 as part of the Department’s renewed focus on targeting violent criminals, directing all U.S. Attorney’s Offices to work in partnership with federal, state, local, and tribal law enforcement and the local community to develop effective, locally-based strategies to reduce violent crime.

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Seven people from Northeast Ohio were indicted in federal court for their roles in a conspiracy to distribute carfentanil, fentanyl, heroin and cocaine.

Named in the 18-count indictment are: Aaron Reels, 52, of Cleveland; Donnell Bell, 40, of Twinsburg; Henry Williams, 45, of Shaker Heights; William Wheat, Jr., 35, of Cleveland; Andre Thompson, 39, of Brook Park; Otha Short, 66, of Cleveland, and Carl Mileca, 74, of Cleveland.

According to the indictment:

Reels purchased drugs from Bell, Wheat, Williams and others. Reels then sold the drugs for profit to Thompson, Short, Mileca and others.

This took place between September 2017 and April 2018.

If convicted, the defendant's sentence will be determined by the Court after reviewing factors unique to this case, including the defendant's prior criminal record, if any, the defendant's role in the offense and the characteristics of the violation.  In all cases the sentence will not exceed the statutory maximum and in most cases it will be less than the maximum.

This case was investigated by the Drug Enforcement Administration, Lake County Narcotics Agency, Cuyahoga County Sheriff’s Office, Euclid Police Department, Cleveland Heights Police Department, Ashtabula County Sheriff’s Office, Ohio State Highway Patrol, Cleveland Division of Police and Twinsburg Police Department. It is being prosecuted by Assistant U.S. Attorney Marisa T. Darden.

An indictment is only a charge and is not evidence of guilt. Defendants are entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.