CONTACT: Barbara Burns
PHONE: (716) 843-5817
FAX #: (716) 551-3051

BUFFALO, N.Y. –  The United States has filed a complaint in the Western District of New York against YRC Freight Inc., (YRC); Roadway Express Inc. (Roadway); and Yellow Transportation Inc. (Yellow), alleging that these companies systematically overcharged the government for freight carrier services and made false statements to the government that hid their misconduct, the Justice Department announced today.

The United States filed this lawsuit in U.S. District Court in Buffalo, New York.  The United States alleges that, for more than seven years, the defendants defrauded the Department of Defense by millions of dollars for shipments that were actually lighter, and thus cheaper, than the weights for which the defendants charged the government.  The United States further alleges that the defendants knowingly made or used false statements concealing their overcharging practices to the Department of Defense. 

“When a federal agency, such as the Department of Defense, enters into a service contract with a private corporation or company, the expectation is that the agreement will be administered in good faith,” stated U.S. Attorney James P. Kennedy Jr. for the Western District of New York. “In this case, YRC did not legally fulfill it’s agreed upon obligations to the Defense Department, choosing instead to line its pockets with taxpayer’s dollars. Such actions are fraudulent and illegal. This case should serve as a warning to any organization that enters into a contract with the federal government—if you try to rip us off, be prepared to pay a heavy price.”        

“Those who do business with the government must do so fairly and honestly,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division.  “Knowingly overcharging the government is an affront to American taxpayers, and the Department of Justice will seek to ensure that those who engage in such misconduct are held accountable.”

“This complaint is the result of a successful investigation to identify those who seek to profit by defrauding the Defense Department," stated Leigh-Alistair Barzey, Special Agent-in-Charge, Defense Criminal Investigative Service (DCIS), Northeast Field Office.  "DCIS will continue to investigate procurement fraud allegations, along with its law enforcement partners, in order to protect U.S. military members and the American tax payer."

Specifically, the United States’ lawsuit alleges that the defendants reweighed thousands of shipments and suppressed the results whenever they indicated that a shipment was actually lighter than its original estimated weight.  Thus, instead of charging the Department of Defense for shipments based on the correct weight, the defendants knowingly billed the government (and their other customers) based on weights that they knew to be inflated.  The defendants also allegedly made false statements to induce the Department of Defense to use them as freight carriers and further knowingly made or used false statements to improperly avoid their obligations to correct inflated invoices and return overpayments. 

The original lawsuit in this case was filed by James Hannum under the qui tam, or whistleblower, provisions of the False Claims Act.  Under the act, private citizens can bring suit on behalf of the United States for false claims and share in any recovery.  The act permits the government to intervene in such lawsuits, as it has done here.  Those who violate the act are subject to treble damages and civil penalties. 

This matter was investigated by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the Western District of New York, the Defense Criminal Investigative Service, and the United States Army Criminal Investigation Division Command.

The case is captioned United States ex rel. Hannum v. YRC Freight, Inc.; Roadway Express, Inc.; and Yellow Transportation, Inc., Civil Action No. 08-0811(A) (W.D.N.Y.). 

The claims asserted in the United States’ complaint are allegations only and there has been no determination of liability.  
  
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GREAT FALLS – A citizen of Mexico admitted on Dec. 11 in federal court to being in the United States illegally after Glacier National Park personnel found him walking while on patrol, U.S. Attorney Kurt G. Alme said.

Luis Alejandro Lopez-Solis, 36, of Mexico, pleaded guilty to illegal reentry.

U.S. District Judge Brian M. Morris presided at the hearing. Sentencing is set for Feb. 21, 2019. Lopez-Solis is detained.

Lopez-Solis faces a maximum 10 years in prison, a $250,000 fine and three years of supervised release.

If the case had gone to trial, the government would have presented the following information as evidence:

On Sept. 24 while on routine patrol of the Goat Haunt area of Glacier National Park, park personnel told St. Mary Border Patrol agents of a suspicious person walking south from the Goat Haunt Ranger Station area. Border Patrol agents searched for the person and later identified Lopez-Solis. Agents found him talking to a park law enforcement ranger on a trail south of the ranger station. Lopez-Solis was taken to the ranger station for an interview. Lopez-Solis, who was in wet clothing and shivering, said he had fallen into a nearby creek while trying to cross it.

Agents arrested Lopez-Solis and flew him by helicopter from the ranger station to the St. Mary Border Patrol Station for further investigation. He confirmed he was a citizen of Mexico.

Lopez-Solis told agents he left Mexico on Sept. 21, 2018 and had arrived the same day in Canada. There, he rented a car and traveled to Waterton, Alberta, where on Sept. 24 he started walking south, crossing into the United States, until he got found by the National Park Service rangers. He said his plan was to follow the NPS trail system to Chief Mountain where his girlfriend was going to pick him up.

Lopez-Solis was deported in May 2017 after conviction on passport fraud. He did not have permission to reenter the United States.

Assistant U.S. Attorney Paulette Stewart is prosecuting the case, which was investigated by U.S. Border Patrol and Glacier National Park Law Enforcement.

XXX

CONTACT: Barbara Burns
PHONE: (716) 843-5817
FAX #: (716) 551-3051

BUFFALO, N.Y.—U.S. Attorney James P. Kennedy, Jr. announced today that former New York State Senator Marc Panepinto, 53, of Buffalo, NY, who was convicted of promise of employment, compensation, or other benefit for political activity, was sentenced to serve two months in prison and one year supervised release by U.S. Magistrate Judge Michael J. Roemer.

Assistant U.S. Attorney Paul E. Bonanno, who handled the case, stated that the defendant served as the New York State Senator for the 60th Senate District between January 1, 2015, and December 31, 2016. In that position, Panepinto employed a young woman as a staff member in his district office.

On January 7, 2016, the defendant and the staff member traveled together to New York City to attend a fundraiser for Panepinto. Following the event, the staff member took possession of the donations from the fundraiser. Later that evening, the defendant suggested that he and the staff member go to her hotel room to count the donations together.

While in the staff member’s hotel room, Panepinto made a series of unwanted, verbal, and physical sexual advances which were rebuffed by the staff member. The defendant eventually complied with the staff member’s request that he leave, although he did return to the staffer member’s hotel room during the early morning hours in an unsuccessful attempt to get back into her hotel room. The following morning, Panepinto and the staff member returned to Buffalo together. However, the two did not discuss the events that took place the night before.

Upset by what occurred in her hotel room, the staff member subsequently resigned from her position in Panepinto’s district office. Following her resignation, the New York State Senate conducted an investigation into what had occurred, and, as a result of the investigation, referred the matter to the New York State Joint Commission on Public Ethics (JCOPE) for further investigation.

The defendant was concerned that the JCOPE investigation would jeopardize his 2016 campaign for re-election. As a result, Panepinto directed a senior staff member to meet with the staff member and offer her money and/or new employment if she refused to participate in the JCOPE investigation. It was suggested that the new employment would be political in nature and funded in whole or in part by an Act of Congress. The meeting took place on March 7, 2016, at which time the staff member did not accept or refuse the offer. On March 9, 2016, the senior staff member contacted the staff member to arrange a follow-up meeting but the staff member did not agree to a follow-up meeting. Subsequently, on March 15, 2016, Panepinto announced that he would not be seeking re-election to the New York State Senate.

“The defendant essentially sought to purchase this young woman’s silence,” stated U.S. Attorney Kennedy. “In so doing, he placed his own interests above those of his staff and his constituents; he sought to use his position to benefit himself above all others. His abuse of power cost him his office and bought him a federal criminal conviction.”  

“Panepinto's admitted criminal misconduct -- behavior that he engaged in while he served in public office -- is not acceptable,” said FBI Special Agent-in-Charge Gary Loeffert. “Today's sentencing highlights the importance of rooting out acts of public corruption in our community.”

Today’s sentencing is the result of an investigation by the Buffalo Division of the Federal Bureau of Investigation, under the direction of Special Agent-in-Charge Gary Loeffert, and the New York State Joint Commission on Public Ethics, under the direction of Executive Director Seth H. Agata.

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Tampa, Florida – United States Attorney Maria Chapa Lopez announces that Gabino Peralta-Saucedo, a/k/a “Pony,” (43, Michoacán, Mexico) today pleaded guilty to conspiracy to distribute five kilograms or more of cocaine and a quantity of heroin. Peralta-Saucedo faces a minimum mandatory term of 10 years, and up to life, in federal prison. Peralta-Saucedo was arrested in Mexico in September 2016, and was extradited to the United States in September 2018.

According to the plea agreement, for over a decade, Peralta-Saucedo coordinated the smuggling of thousands of kilograms of cocaine into the United States from Mexico. More than 12,000 kilograms of cocaine were ultimately sold in and around Manatee County on behalf of Peralta-Saucedo, who smuggled and distributed the drugs on behalf of various Mexican drug cartels, including La Familia Michoacán and Los Caballeros Templarios. Peralta-Saucedo also cooperated with other Mexican drug cartels, including the Gulf Cartel and Los Zetas, in order to get drugs across the border into the United States. In addition, coconspirators possessed and distributed heroin in the Tampa Bay area.   

This case was investigated by the Federal Bureau of Investigation and the Manatee County Sheriff’s Office. The Department of Justice’s Office of International Affairs and Attaché’s Office in Mexico City assisted with the extradition process. It is being prosecuted by Assistant United States Attorney Christopher F. Murray.

This case was investigated as part of the Organized Crime Drug Enforcement Task Forces (OCDETF) program. The principal mission of the OCDETF program is to identify, disrupt, and dismantle the most serious drug trafficking and money laundering organizations and those primarily responsible for the nation’s drug supply.

PROVIDENCE, RI –A Providence man arrested for possessing hundreds of videos and images of child pornography pleaded guilty in U.S. District Court today to a charge of possession of child pornography.

Samuel Mendez-Garcia, 42, admitted that he belonged to an online social media group that viewed and exchanged child pornography. Mendez-Garcia also admitted that he sent child pornography via Facebook messenger.

Mendez-Garcia’s guilty plea is announced by United States Attorney Stephen G. Dambruch, Homeland Security Investigations Special Agent in Charge Peter C. Fitzhugh, and Rhode Island State Police Superintendent Colonel Ann C. Assumpico.

According to information presented to the Court, in late March 2018, the National Center for Missing and Exploited Children received information from security personnel at Facebook that a user of their services, with an IP address in Rhode Island, uploaded child pornography. The information was forwarded to the Rhode Island State Police Internet Crimes Against Children (ICAC) Task Force who determined that the IP address and the Facebook account belonged to Mendez-Garcia.

On July 19, 2018, members of the ICAC task force executed a court-authorized search of Mendez-Garcia’s residence and seized a laptop computer and cell phone he owned. Law enforcement officers also seized a cell phone that was in his possession.

A forensic analysis of one of Mendez-Garcia’s cell phones by a member of the ICAC task force revealed more than 600 videos and images containing child pornography, including images involving prepubescent minors and sadistic/masochistic conduct.

Mendez-Garcia, who has been detained in federal custody since his arrest on August 1, 2018, is scheduled to be sentenced on March 14, 2019.

Additionally, an immigration detainer has been lodged against Mendez-Garcia by U.S. Immigration and Customs Enforcement, after it was determined that he entered the United States illegally. It was also determined that Mendez-Garcia was prevented from entering the United States illegally as he attempted to cross the U.S. border from Mexico in 2002.

The case is being prosecuted by Assistant U.S. Attorney John P. McAdams.

United States Attorney Stephen G. Dambruch acknowledges and thanks the Newport Police Department, a member of the ICAC Task Force, for their assistance in the investigation of this matter.

###

TRENTON, N.J. – An insurance broker with an office in Fort Lee, New Jersey, today admitted defrauding Horizon Blue Cross Blue Shield, U.S. Attorney Craig Carpenito announced.

Lawrence Ackerman, 54, a resident of Old Tappan, New Jersey, pleaded guilty before U.S. District Judge Anne E. Thompson in Trenton federal court to a superseding information charging him with one count of health care fraud.

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

Ackerman was the chief operating officer of Atlantic Business Associates (ABA) and Atlantic Medical Associates (AMA), two “shell” companies through which he marketed health insurance nationally to people who were not his employees and therefore ineligible for health coverage. During the month of January 2011, he delivered $481,500 in health care benefits to ineligible participants.

The count of health care fraud to which Ackerman pleaded guilty is punishable by a maximum penalty of 10 years in prison and a fine of $250,000. Ackerman was originally charged in a two-count indictment with conspiracy to defraud Horizon Blue Cross Blue Shield of $5.6 million and the welfare fund of Local 2326 of $1 million in fraudulent health care claims. Under terms of the plea agreement, Ackerman will be responsible for making full restitution to Horizon and to the union’s benefit plan for their losses. Sentencing is scheduled for March 20, 2019.

U.S. Attorney Carpenito credited special agents of the Department of Labor, Office of the Inspector General, under the direction of Special Agent in Charge Michael Mikulka; agents of the Office of Employee Benefit Security Act (EBSA), under the direction of Regional Director Darren Cohen; and agents of the Office of Labor Management Standards (OLMS), under the supervision of Regional Director Andriana Vamvakas.

The government is represented by Senior Litigation Counsel V. Grady O’Malley of the Organized Crime/Gangs Unit and Assistant U.S. Attorney Sammi Malek of the Narcotics/OCDETF unit in Newark.

MISSOULA—A Columbia Falls man accused of stealing government benefits by overstating his disabilities admitted fraud and theft charges in federal court on Dec. 12, U.S. Attorney Kurt G. Alme said.

John Cicero Hughes, 46, pleaded guilty to theft of government money and Social Security disability insurance fraud.

U.S. Magistrate Judge Jeremiah C. Lynch presided and will recommend that Hughes’ plea be accepted by U.S. District Judge Dana Christensen, who is assigned to case.

Hughes faces a maximum 10 years in prison, a $250,000 fine and three years of supervised release. Sentencing is set for April 12, 2019. Hughes is released.

The government intends to seek restitution for the Veterans Administration and the Social Security Administration for an estimated loss totaling $830,061, with the understanding that Hughes will dispute that figure and that a judge ultimately will determine loss and restitution before imposing sentence.

If the case had proceeded to trial, the government would have presented the following information as evidence:

Hughes, a Navy veteran, was determined in 2009 to be 100 percent disabled by the VA based on confirmation of a prior diagnosis that he suffered from multiple sclerosis. Hughes represented he had total loss of both hands and feet in addition to other maladies. From 2009 through July 2018, Hughes received more than $7,000 a month from the VA.

In addition, because the VA had rated Hughes 100 percent disabled, he qualified for SS disability insurance benefits. The Social Security Administration paid Hughes and some of his family members about $1,400 a month from 2009 until the present.

During the nine-year period, Hughes misrepresented the nature and extent of his disabilities to VA doctors and other health professionals by claiming he could not drive or walk more than a few steps, had double vision, had little to no feeling in his left arm and leg, could not shop for himself or prepare his own meals and was essentially bound to either his bed or a motorized wheelchair.

An investigation found that Hughes drastically overstated his symptoms and limitations. In June 2017, the VA and SSA began an investigation into the extent of Hughes’ disability, which culminated in a Compensation and Pension Examination on Jan. 23, 2018 in Helena.

During the examination, Hughes claimed he had not driven since 2008 without adaptive equipment and did not drive to Helena for the appointment. He said he could not walk more than a few steps and chose to remain in a wheelchair during the entire exam. He also said he could not shop for himself, was essentially house-bound, had almost no feeling in his left arm and leg and could not open his left hand because of spasticity caused by MS.

Unbeknownst to Hughes, law enforcement officers surveilled Hughes when he arrived for the appointment, recorded and monitored the entire exam and surveilled him when he left the VA. Officers saw Hughes drive himself to the appointment in a truck with no adaptive equipment and walk into and out of the VA. Hughes then drove himself around Helena, running errands, including walking with a cane around a grocery store and using both hands to play machines at a local casino.

Agents also surveilled Hughes’ activities in the Flathead Valley in 2017. Agents saw Hughes drive a car and a Harley Davidson motorcycle several times, walk distances he had claimed for years he could not cover and do chores, including climbing a ladder during a snowstorm to brush snow off the roof of a recreational vehicle.

On Aug. 1, 2017, Hughes received a direct deposit of $7,056 from the VA into his bank account. The same day, agents observed Hughes drive his motorcycle to and from a car wash and walk about 50 feet without a cane.

When agents interviewed Hughes at his residence in February 2018, he stuck to his story about the extent of his disabilities but admitted to driving a motorcycle in the summer of 2017 and to driving to the VA exam in January. He eventually admitted to making some misrepresentations to the examiner at the VA and told the agents, “If it was wrong, it was wrong.”

Assistant U.S. Attorney Timothy Racicot is prosecuting the case, which was investigated by VA’s and SSA’s Offices of Inspector General.

XXX

SPRINGFIELD, Mo. – A Springfield, Mo., man who worked as a private tutor was sentenced in federal court today for sexually assaulting a former 10-year-old student.

John Paul Sparapani, 30, of Springfield, was sentenced by U.S. District Judge Stephen R. Bough to 30 years in federal prison without parole, which is the maximum statutory penalty for this offense. The court also sentenced Sparapani to a lifetime of supervised release following incarceration.

On Feb. 21, 2018, Sparapani pleaded guilty to using a minor to produce child pornography. He admitted that he took pornographic photos of a student he was tutoring in a private room at a public library.

This investigation began when an officer with the Southwest Missouri Cyber Crimes Task Force identified Sparapani’s computer as sharing child pornography on a peer-to-peer file-sharing network on May 25, 2015.  Officers executed a search warrant at Sparapani’s residence on Dec. 21, 2015, and seized two laptop computers, three hard drives and a cell phone, which contained multiple images and videos of child pornography.
 
    On August 25, 2017, a 12-year-old minor female disclosed that Sparapani had sexually assaulted her when she was 10 and 11 years old and had taken photographs of the assault with his cell phone.  The child victim disclosed that the sexual abuse occurred while she was being tutored by Sparapani in a private room at a public library.

This case was prosecuted by Assistant U.S. Attorney Ami Harshad Miller. It was investigated by the FBI, Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI), and the Southwest Missouri Cyber Crimes Task Force and the Springfield, Mo., Police Department.

Project Safe Childhood
This case 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."

NEWARK, N.J. – An investment manager with an office in Middletown, New Jersey, has been convicted of running a Ponzi scheme, concealing losses, faking investment returns, and stealing more than $10 million in investor money, U.S Attorney Craig Carpenito announced today.

Vicent P. Falci, 59, of Middletown, was convicted of all four counts of a superseding indictment: three counts of wire fraud and one count of securities fraud. He was convicted Dec. 13, 2018, following a two-week trial before U.S. District Judge Anne E. Thompson in Trenton federal court. The jury deliberated for 90 minutes before returning the verdict.

According to the superseding indictment and evidence at trial:

Falci controlled a number of investment funds under the names “Saber Funds” and “Vicor Tax Receivables LLP.” The Saber Funds were a collection of investment funds that Falci created and operated, starting in the early 2000s. Many of his earliest victims were friends, family, and associates. Falci served as a fire chief in Middletown, and some victims were policemen, fireman, and retirement funds for first responders. The Saber Funds grew to have more than 200 investors from whom the defendant raised more than $10 million.

Falci falsely told investors that the Saber Funds were conservatively invested in tax liens – which generated high returns with little risk. In reality, Falci diverted investor money to himself, his family, and to other companies he controlled. Some of the diverted funds were used for riskier ventures, such as day trading and real estate. Falci concealed losses and his own theft from investors. Based on these misrepresentations, investors continued to entrust additional funds to Falci and left previous investments under his control.

In early 2012, Falci started the Vicor Fund, targeting wealthier investors with greater sophistication in financial affairs. The investors in the Vicor Fund included financial industry professionals, and Falci ultimately raised $20 million from these victims. He again falsely represented that he had experience and a track record of success investing in tax liens, and promised that he could produce high rates of return with little risk. In reality, the assets of the Vicor Fund were rapidly depleted by Falci’s theft. 

In order to support his own lifestyle and repay investors the gains he had promised, Falci stole more than $10 million from the Vicor Fund between 2012 and 2016. At the same time, he reported fake investment gains to his investors on monthly statements. Falci concealed his theft in several ways, including by diverting funds to a fake company that he created to steal from investors. He also forged emails and reports, and created fake assets for the fund.

Each charge of wire fraud carries a maximum potential penalty of 20 years in prison and a $250,000 fine. The charge of securities fraud carries a maximum potential penalty of 20 years in prison and a $5 million fine. Sentencing is scheduled for March 21, 2018.

U.S. Attorney Carpenito credited inspectors of U.S. Postal Inspection Service, under the direction of Inspector in Charge James V. Buthorn, with the investigation leading to today’s verdict. He also thanked the N.J. Bureau of Securities in the State Attorney General’s Office, under the direction of Attorney General Gurbir Grewal and Bureau Chief Christopher Gerrold, for its assistance in the investigation.

The government is represented by Assistant U.S. Attorneys Justin Herring, Chief of the Cybercrimes Unit, and Paul A. Murphy, Chief of the Economic Crimes Unit, of the U.S. Attorney’s Office Criminal Division in Newark.

            WASHINGTON – Kelby Gordon, 32, of Washington, D.C., was sentenced today to 37 years in prison for killing an innocent bystander and firing into an occupied bedroom during a broad-daylight shooting in Southeast Washington, announced U.S. Attorney Jessie K. Liu, Peter Newsham, Chief of the Metropolitan Police Department (MPD), and Nancy McNamara, Assistant Director in Charge of the FBI’s Washington Field Office.

            Gordon was found guilty by a jury in July 2018 of second-degree murder while armed, assault with intent to kill while armed, and related firearms offenses. The verdict followed a trial in the Superior Court of the District of Columbia. He was sentenced by the Honorable Milton C. Lee. Following his prison term, he will be placed on five years of supervised release. In sentencing the defendant, Judge Lee called the crime a senseless and foolish act.

            According to the government’s evidence, on March 24, 2016, at approximately 11:15 a.m., the victim, Gabriel Turner, was walking in a cut-through behind the 2600 block of Birney Place SE, headed to a nearby bus stop. Mr. Turner, 46, who had intellectual disabilities and who was working at the FBI as a janitor, had just finished having breakfast with his mother – as he had every morning. Gordon, meanwhile, was in the area and, after seeing another man pull out a large amount of money, decided to rob that man near the mouth of the cut-through.

            However, as Gordon attempted to rob the man, the man began to pull out his own firearm. Gordon, in his own words, gave the man no chance, and pulled his gun out first. The two men began running down the cut-through behind Mr. Turner.

            Unbeknownst to Mr. Turner, Gordon planted his feet and began firing towards the man, who fled in the same direction that Mr. Turner was walking. The man who Gordon was targeting weaved around Mr. Turner and escaped, but a single bullet struck Mr. Turner in the upper back as he ducked. The bullet lodged itself in Mr. Turner’s sinus – killing him almost instantly. Two other bullets flew into an occupied apartment across the street, just missing the head of a second victim as he returned to bed. 

            An investigation led to Gordon’s arrest on April 17, 2016, by the Capital Area Regional Fugitive Task Force. In addition to this case, Gordon has been charged with drug trafficking offenses in a separate matter in the U.S. District Court for the District of Columbia. He pled not guilty to those charges and that case remains pending.

            In announcing the sentence, U.S. Attorney Liu, Chief Newsham, and Assistant Director in Charge McNamara commended the work of those who investigated the case from the Metropolitan Police Department (MPD), as well as the FBI/MPD Safe Streets Task Force and the FBI’s Cellular Analysis Survey Team, which helped identify Mr. Turner’s assailant. They also expressed appreciation for the assistance provided by the United States Park Police, the Capital Area Regional Fugitive Task Force, the United States Marshals Service, and the District of Columbia Department of Corrections.

            They acknowledged the efforts of those who worked on the case from the U.S. Attorney’s Office, including Victim/Witness Service Coordinators La June Thames and Katina Adams-Washington; Victim/Witness Advocate Jennifer Clark; Administrative Services Specialist Sallie Rynas; former Forensic Operation/Program Specialist Benjamin Kagan-Guthrie; Investigative Analyst Zachary McMenamin; Criminal Investigator John Marsh; Paralegal Specialists Lornce Applewhite and Jeffrey Bloom; Litigation Technology Specialist Thomas “Ron” Royal, and Assistant U.S. Attorney Emily A. Miller, who initially investigated the case.

            Finally, they commended the work of Assistant U.S. Attorneys Lindsey Merikas and Monica Trigoso, who investigated and prosecuted the case.

BILLINGS--Billings resident Gregory Adam Kilwein, 50, was sentenced on Thursday to 10 years in federal prison and five years of supervised release for conviction in a drug investigation in which agents found four pounds of methamphetamine in his apartment, U.S. Attorney Kurt G. Alme said.

Kilwein also forfeited the $30,350 seized in case. Kilwein pleaded guilty in July to possession with intent to distribute meth.

U.S. District Judge Susan P. Watters presided at the sentencing.

In March, a Billings Police officer saw Kilwein riding a bicycle on a downtown sidewalk in violation of a city ordinance. In addition, Kilwein was acting suspiciously by watching the officer and then trying to avoid him by going around the block. When the officer pulled behind Kilwein in an alley, Kilwein dropped his bicycle and took off running. While fleeing, he threw a bag he was carrying over a fence.

The officer caught Kilwein after a brief chase and recovered the bag. Lying near the bag in the snow was a package covered in tape that had fallen from the bag. When the officer picked up the bag, he could see a similar taped package and white envelope containing money.

Kilwein was on state probation, and his probation officer authorized a search of Kilwein, his bag and his residence. The bag contained $12,450 and each taped package weighed about 500 grams, or a little more than one pound, of meth. Kilwein was arrested and while being booked at the jail, detention staff found a bag with about four ounces of meth in his underwear.

In monitored jail calls, a drug task force officer listened to Kilwein instruct relatives to clean out his apartment, specifically telling them to get rid of stuff and that there was cash hidden in his apartment and other locations. At Kilwein’s apartment, officers seized an additional four pounds of meth and $3,900 located in a safe. Four pounds of meth is the equivalent of about 14,496 individual doses. Relatives consented to a search and voluntarily turned over $14,000.  In addition, a search of Kilwein’s phone seized at his arrest showed messages to a Mexican phone number belonging to another person under investigation and who was living in Mexico.

Assistant U.S. Attorney Lori Suek prosecuted the case, which was investigated by the FBI task force.

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.

XXX

The U.S. Attorney’s Office announced that the following persons were arraigned this week before U.S. Magistrate judges and indictments handed down by the Grand Jury were unsealed. Indictments are merely accusations and defendants are presumed innocent until proven guilty:

Appearing in Billings before U.S. Magistrate Judge Timothy J. Cavan on Dec. 10 and pleading not guilty were:

Danika Nurea Sanchez, 20, of Lame Deer, on charges of conspiracy to possess methamphetamine with intent to distribute and possession with intent to distribute meth. If convicted of the most serious crime, Sanchez faces a minimum mandatory 10 years to life in prison, a $10 million fine and five years of supervised release. The case was investigated by the Drug Enforcement Administration. Pacer case reference. 18-143.

Romer Jesse Jaure, 27, of Busby, on charges of sexual abuse of a minor and abusive sexual contact. If convicted of the most serious crime, Jaure faces a maximum 15 years in prison, a $250,000 fine and five years of supervised release. The case was investigated by the FBI. Pacer case reference. 18-148.

Appearing in Great Falls before U.S. Magistrate Judge John T. Johnston on Dec. 11 and pleading not guilty were:

Holden Stillsmoking, 26, of Browning, on charges of strangulation and assault resulting in serious bodily injury. If convicted of the most serious crime, Stillsmoking faces a maximum 10 years in prison, a $250,000 fine and three years of supervised release. The case was investigated by the FBI. Pacer case reference. 18-102.

Martin St. Goddard, 32, of Browning, on charges of assault with a deadly weapon and assault resulting in serious bodily injury. If convicted of the most serious crime, Goddard faces a maximum 10 years in prison, a $250,000 fine and three years of supervised release. The case was investigated by the FBI. Pacer case reference. 18-100.

Rand Michael Emineth, 26, of Great Falls, on charges of conspiracy to distribute explosives without a license, possession of stolen explosives and felon in possession of a firearm. If convicted of the most serious crime, Emineth faces a maximum 10 years in prison, a $250,000 fine and three years of supervised release. The case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives and the Great Falls Police Department. Pacer case reference. 18-90.

Mahliani Kataya Red Eagle, 20, of the Fort Peck Reservation, on charges of possession with intent to distribute methamphetamine. If convicted of the most serious crime Red Eagle faces a minimum mandatory 10 years to life in prison, a $10 million fine and five years of supervised release. The case was investigated by the FBI and Fort Peck Criminal Investigation. Pacer case reference. 18-98.

Justin Leonard Sheehan, 43, of Great Falls, on charges of conspiracy to possess with intent to distribute meth, possession with intent to distribute meth and possession of a firearm in furtherance of a drug trafficking crime. If convicted of the most serious drug crime, Sheehan faces a minimum mandatory 10 years to life in prison, a $10 million fine and five years of supervised release. He also faces a minimum mandatory five years to life in prison consecutive to any other sentence on the firearms count. The case was investigated by the Drug Enforcement Administration. Pacer case reference. 18-101.

Gary Girard Sheehan, 67, of Great Falls, on charges of conspiracy to possess with intent to distribute meth, possession with intent to distribute meth and possession of a firearm in furtherance of a drug trafficking crime. If convicted of the most serious drug crime, Sheehan faces a minimum mandatory 10 years to life in prison, a $10 million fine and five years of supervised release. He also faces a minimum mandatory five years to life consecutive to any other sentence on the firearms count. The case was investigated by the Drug Enforcement Administration. Pacer case reference. 18-101.

Lothar Konrad Krauth, 80, Great Falls, on charges of receipt of child pornography. If convicted of the most serious crime, Krauth faces a minimum mandatory five years to 20 years in prison, a $250,000 fine and three years of supervised release. The case was investigated by Homeland Security Investigations. Pacer case reference. 18-99.

Appearing in Missoula before U.S. Magistrate Judge Jeremiah C. Lynch on Dec. 12 and pleading not guilty was:

Candace Hessel Cummings, 65, of Libby, on charges of tax evasion. If convicted of the most serious crime, Cummings faces a maximum five years in prison, a $100,000 fine and three years of supervised release. The case was investigated by the IRS. Pacer case reference. 18-56.

Appearing on Dec. 13 and pleading not guilty was:

Tina Marie Johnstone, 53, of Helena, on charges of theft of public money and concealment of facts impacting Supplemental Security Income. If convicted of the most serious crime, Johnstone faces a maximum 10 years in prison, a $250,000 fine and three years of supervised release. The case was investigated by the Social Security Administration. Pacer case reference. 18-19.

If any of the above cases are of interest to your media organization and the community it serves, we encourage you to monitor the progress of the case regularly through the U.S. District Court calendar and the PACER system.

To establish a PACER account, which will allow you to review documents filed in the case, please go to, http://www.pacer.gov/register.html. To access the district court’s calendar, please go to https://ecf.mtd.uscourts.gov/cgi-bin/PublicCalendar.pl.

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DES MOINES, IA – On December 7, 2018, Raymond Wayne Eugene Hall, age 33, was sentenced on federal child pornography charges to 40 years in federal prison and a life term of supervised release in the U.S. District Court for the Southern District of Iowa.

Hall, who resided in Des Moines, Iowa, pleaded guilty on June 11, 2018, to two counts of sexual exploitation of a minor, otherwise known as production of child pornography. Hall pleaded guilty to making child pornography with a hidden camera, he also admitted to making child pornography of another victim, namely recording himself engaged in various sex acts with the victim. Hall made some of the videos using his cell phone, and stored the child pornography on his personal laptop computer.

Hall’s sentence was enhanced by United States District Court Judge Rebecca Goodgame Ebinger due to his criminal history. He had previously been convicted in 2006 in Polk County, Iowa of sexual exploitation of children for collecting child pornography. As a consequence of the 2006 state court conviction, Hall was required to register on the Iowa Sex Offender Registry. His sentence was enhanced, in part, based on this prior conviction and his status as a registered sex offender.

“Prosecuting people who prey on children is one of the top priorities of our office,” stated United States Attorney Marc Krickbaum. “Raymond Hall is precisely the type of sexual predator we need to take off the street.” Krickbaum added, “we have strong partnerships established with federal, state, and local law enforcement agencies to provide maximum pursuit of child sexual predators. The Wayne County Sheriff’s Office became aware of Hall’s activities, partnered with the Iowa Department of Criminal Investigation, and then got federal authorities involved. This was a total team effort, and will keep the community safer for decades to come.”

The case was a joint federal-state-local effort, involving the Federal Bureau of Investigation’s Child Exploitation Task Force, the Iowa Department of Criminal Investigation’s Internet Crimes Against Children Task Force, the Wayne County Sheriff’s Office, and the Wayne County Attorney’s Office.

The case was prosecuted by the United States Attorney’s Office for the Southern District of Iowa as part of the United States Department of Justice’s “Project Safe Childhood” initiative, which was started in 2006 as a nation-wide effort to combine law enforcement investigations and prosecutions, community action, and public awareness in order to reduce the incidence of sexual exploitation of children.

Any persons having knowledge of a child being sexually abused are encouraged to call the Iowa Sexual Abuse Hotline at 1-800-284-7821.

A Tulsa man entered a guilty plea today for defrauding a bank of nearly $5 million and to bankruptcy fraud, announced U.S. Attorney Trent Shores.

Zealand Benjamin Thigpen III, 68, pleaded guilty in U.S. District Court to defrauding Arvest Bank of $4,754,488 from 2015 to 2017.

As part of his scheme, Thigpen owned and operated Julimar Trading, LLC., which bought and sold refined metal alloys, principally for the production of steel. Julimar’s operations were funded by Avrest Bank and, in part, guaranteed by the Small Business Administration. The bank financing was secured by his company’s inventory and accounts receivable, as well as Thigpen’s personal guarantees. When submitting financial documentation to the bank on October 4, 2016, Thigpen provided false information about the value of Julimar’s inventory and accounts receivable, explaining the inventory was worth $5,816,335. As a result, Arvest and Small Business Administration continued his line of credit under false pretenses. In fact, the accounts receivable and inventory were nearly non-existent.

Later, on November 18, 2016, Thigpen filed pursuant to Chapter 7 in U.S. Bankruptcy Court, and once again lied about Julimar’s inventory, stating that it was worth just over $3.3 million, when he was fully aware it only totaled only a few thousand dollars.

“Mr. Thigpen defrauded Arvest Bank and the federal government of more than $4.7 million. Moreover, he exploited a system set up to provide opportunities to innovative entrepreneurs pursuing legitimate businesses,” stated U.S. Attorney Trent Shores. “Fraudsters like Mr. Thigpen hurt the health of our economy. Our federal prosecutors who focus on white collar crime take great pride in the fact that they help protect the integrity of our financial institutions. I appreciate their diligence and commitment to upholding the rule of law.”

As part of his plea, Thigpen agreed to the entry of a forfeiture money judgment of $4,754,488. U.S. District Judge Claire V. Eagan set sentencing for March 20, 2019. Thigpen faces a maximum penalty of 30 years in prison as to the bank fraud and 5 years in prison as to the bankruptcy fraud.                    

This case resulted from a joint investigation performed by the Offices of Inspectors General of the Department of the Treasury and the Small Business Administration and was prosecuted by Assistant U.S. Attorney Kevin C. Leitch.

PADUCAH, Ky. –  United States Senior District Judge Thomas B. Russell this week sentenced Dana Thomas, age 53, of Paducah, Kentucky, to 27 months in prison followed by 3 years of supervised release, and ordered her to pay restitution of $147,770, announced United States Attorney Russell M. Coleman.

Thomas pleaded guilty to wire fraud on August 21, 2018.

According to a documents before the Court, including a sentencing memo and an Information, beginning in May of 2015, and continuing to in or about December 2017, Thomas, while employed as a bookkeeper at Audiology and Hearing Center, Paducah, Kentucky, exceeded her authorized access by using company credit cards for personal transactions.

Thomas’ crime was recognized after her resignation, when an outside bookkeeper was hired to help with accounting and bill management. The new bookkeeper discovered Thomas had been stealing from the office, in what amounted to $125,570 over the course of her employment. Thomas charged, extravagantly, according to documents spending $5,000 on a condo in Panama City, Florida, and a trip to see the ball drop in New York, New York, among others.

This case was prosecuted by Assistant United States Attorney Madison Sewell, and was investigated by the Federal Bureau of Investigation (FBI).

The United States Attorney’s Office continues a pledge of support to federal, state, and local law enforcement partners in reducing criminal activity in all 53 counties of the Western District of Kentucky, to include the previously underserved Purchase and the Pennyrile Regions which continues to be served through the long term assignment of three Assistant United States Attorneys in Paducah, the most ever in the history of the office.

Hot Springs, Arkansas – Duane (DAK) Kees, United States Attorney for the Western District of Arkansas announced today that Berry Roland Bishop, age 67, of Hot Springs, Arkansas, pleaded guilty to the offense of Knowingly Defrauding Financial Institutions. The Honorable Susan O. Hickey accepted the plea in the United States District Court in Hot Springs.

According to the Information filed by the United States Attorney’s Office and the plea agreement accepted by the District Court, Bishop defrauded two area banks by two separate schemes.  Bishop, president of the Alliance Insurance Group of Arkadelphia, forged the signatures of multiple insurance clients and applied for twenty-seven separate loans in their names with the Bank of Prescott.  Bishop applied for these loans without the authorization or knowledge of those clients and, in the process, defrauded the Bank of Prescott out of over $2.1 million.  As part of his plea, Bishop also admitted that he defrauded Citizens Bank out of $200,000 by misrepresenting the financial condition of his company, specifically the condition of the collateral, to induce Citizens to approve loans to his company that would not have otherwise been authorized.  Bishop applied for these loans from Citizens Bank and the Bank of Prescott to improve the cash flow of his business.  According to the plea agreement, both the Government and Bishop agree that the total loss amount attributed to Bishop’s criminal conduct will exceed $3.5 million dollars.

The defendant’s sentence will be determined by the court at a later date. In this case, Bishop faces a maximum sentence of up to thirty years in prison and a fine up to $ 1 million dollars for the Bank Fraud charge.

The FBI investigated the case and Assistant U.S. Attorney Benjamin Wulff of the Western District of Arkansas is prosecuting the case.

Baltimore, Maryland – A federal grand jury late yesterday returned a second superseding indictment charging 19 Baltimore men for a federal drug conspiracy and related firearms charges.  Charged in the indictment are:

Calvin Matthews, a.k.a. “Billy” and “Wayne,” age 39;
Waymond Richard, a.k.a. “Squirt,” “Slim,” and “Thugga,” age 24;
Branden Jones, a.k.a. “BR,” age 20;
Isadore White, a.k.a. “Hatch” and “Nook,” age 21;
Nelson Adibe, a.k.a. “Rock” and “Rockhead,” age 54;
Shanee Burtwell, age 35;
Murray Ray, a.k.a. “Mario,” age 21;
Randolph Evans, a.k.a. “Buddha” and “Booda,” age 26;
Nol Johnson, a.k.a. “Pookie,” age 28;
Kenneth Jones, a.k.a. “Hammer,” age 26;
Darnell Sullivan, a.k.a. “50,” age 23;
Yaunike Hilton-Bey, a.k.a. “Neek,” age 21;
Elijah Davis, a.k.a. “Gusto,” age 22;
Malik Cauthorne, a.k.a. “Smoke,” age 24;
Arthur Snowden, a.k.a. “Weechy,” age 38;
Devron Towson, age 27;
Rashawn Cooper, age 20;
Deondre Pederson, a.k.a. “Jim,” age 23; and
Daveon Mcfadden, a.k.a. “Dee,” age 20.

The indictment was announced by United States Attorney for the District of Maryland Robert K. Hur; Special Agent in Charge Gordon B. Johnson of the Federal Bureau of Investigation, Baltimore Field Office; and Interim Commissioner Gary Tuggle of the Baltimore Police Department.

“This year, more than twice as many people will die of fentanyl overdoses in Baltimore than of gun violence,” said U.S. Attorney Robert K. Hur.  “Drug dealing and gun violence often go hand in hand.  We will continue to apply federal resources to prosecute those who use guns to distribute drugs – peddling death and despair in our neighborhoods.”

“Today's announcement is a direct result of the hard work and dedication shared between local and federal authorities in our efforts to combat gang members who distribute dangerous drugs like heroin and fentanyl in our communities,” said FBI Baltimore Special Agent in Charge Gordon Johnson. “These charges demonstrate our overall strategy and relentless determination to eradicate the drug-fueled gang violence plaguing our communities.  The FBI and our partners will continue to pursue investigations into individuals and groups who have furthered the scourge of opioids in our communities."

According to the 19-count indictment, the defendants allegedly conspired to distribute more than 100 grams of heroin and 400 grams of fentanyl.  The indictment also alleges that seven of the defendants conspired to use and carry a firearm during and in relation to drug trafficking.  Six of those seven individuals are alleged to be previously convicted felons and therefore prohibited from possessing firearms or ammunition.

If convicted, the defendants all face a mandatory minimum of 10 years and up to life in prison for the drug conspiracy.  Calvin Matthews, Waymond Richard, Isadore White, Murray Ray, Elijah Davis, Devron Towson, and Rashawn Cooper each face a maximum of 20 years in prison for the firearms conspiracy and all but Ray also face a maximum of 10 years in prison for being a felon in possession of a firearm.  Matthews, Richard, Ray, and Cooper face a mandatory minimum of five years and up to life in prison for possession of a firearm in furtherance of a drug trafficking crime.  Finally, Matthews, Richard, Ray, and Cooper each face a maximum of 20 years in prison for distribution and possession with intent to distribute controlled substances.  The defendants have not yet been scheduled for initial appearances on these charges.

An indictment is not a finding of guilt.  An individual charged by indictment is presumed innocent unless and until proven guilty at some later criminal proceedings. 

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.  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.

United States Attorney Robert K. Hur commended the FBI Baltimore Safe Streets Task Force and the Baltimore Police Department for their work in the investigation.  Mr. Hur thanked Assistant U.S. Attorneys David D. Metcalf and Zachary B. Stendig, who are prosecuting the case.

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United States Attorney Ron Parsons announced today that a former treasurer of the Crow Creek District Business Committee was sentenced in federal court on December 13, 2018, in Pierre, South Dakota.  Lana Steele, former treasurer of the Crow Creek District Business Committee, was sentenced for Embezzlement and Theft from an Indian Tribal Organization.

Lana Steele, Age 53, of Chamberlain, South Dakota, was sentenced to 4 years of probation, $11,500 in restitution, and a special assessment to the Federal Crime Victims Fund in the amount of $25.

Between November 2013 and November 2015, Steele willfully and knowingly embezzled, misapplied, and converted to her own use, monies, funds, credits, goods, assets, and other property belonging to the Crow Creek District Business Committee, an Indian Tribal Organization.

The investigation was conducted by the Federal Bureau of Investigation.  Assistant U.S. Attorney Meghan N. Dilges prosecuted the case.

The case was brought pursuant to The Guardians Project, a federal law enforcement initiative to coordinate efforts between participating agencies, to promote citizen disclosure of public corruption, fraud, and embezzlement involving federal program funds, contracts, and grants, and to hold accountable those who are responsible for adversely affecting those living in South Dakota’s Indian country communities.  The Guardians Project is another step of federal law enforcement’s on-going efforts to increase engagement, coordination, and positive action on behalf of tribal communities. Led by the U.S. Attorney’s Office, the participating agencies include: Federal Bureau of Investigation; the Offices of Inspector General for the Departments of Interior, Health and Human Services, Social Security Administration, Agriculture, Transportation, Education, Justice, and Housing and Urban Development; Internal Revenue Service, Criminal Investigation Division; U.S. Postal Inspector Service; U.S. Postal Service, Office of Inspector General.

For additional information about The Guardians Project, please contact the U.S. Attorney’s Office at (605) 330-4400.  To report a suspected crime, please contact law enforcement at the federal agency’s locally listed telephone number.

WASHINGTON, DC – Eric Baird, the former owner and Chief Executive Offer (CEO) of a Florida-based package consolidation and shipping service, has pleaded guilty to one count of felony smuggling and admitted to 166 administrative violations of U.S. export control laws as part of a global settlement with the U.S. Department of Justice (DOJ) and the U.S. Department of Commerce’s Bureau of Industry and Security (BIS).  

On December 12, 2018, Baird’s criminal plea was accepted by a federal judge in the U.S. District Court for the Middle District of Florida, and BIS issued an Order outlining the administrative violations and imposing civil penalties of $17 million, with $7 million suspended, and a 5-year denial of export privileges, of which one year is suspended.  The civil penalty is the largest to be paid by an individual in BIS history. In February 2017, Access USA settled with BIS and agreed to an administrative civil penalty of $27 million, with $17 million suspended. 

As part of the administrative settlement, Baird admitted to violations of the Export Administration Regulations committed from August 1, 2011, through January 7, 2013, during his tenure as CEO of Access USA Shipping, LLC d/b/a MyUS.com (“Access USA”). Baird founded Access USA and developed its business model, which provided foreign customers with a U.S. address that they used to acquire U.S.-origin items for export without alerting U.S. merchants of the items’ intended destinations.  Under Baird’s direction, Access USA developed practices and policies which facilitated concealment from U.S. merchants.  Access USA would regularly change the values and descriptions of items on export documentation even where it knew the accurate value and nature of the items. Among the altered descriptions were some for controlled items listed on the Commerce Control List (CCL).  For example, laser sights for firearms were described as “tools and hardware,” and rifle scopes were described as “sporting goods” or “tools, hand tools.” 

Additionally, Baird established and/or authorized Access USA’s “personal shopper” program.  As part of this program, Access USA employees purchased items for foreign customers from a shopping list while falsely presenting themselves to U.S. merchants as the domestic end-users of the items.  In some cases, Baird directed or authorized Access USA employees to use his personal credit card information, and in others Baird personally asked Access USA employees to apply for and use personal credit cards of their own to make such purchases and have the items sent to their personal addresses.  As a result, in addition to being misled to believe that a domestic customer and end-user was involved when the items were in fact intended for export, the U.S. merchant would be misled to believe that Access USA itself was not involved in the transaction.  

The activities that Baird knowingly authorized and/or participated in resulted in unlicensed exports of controlled items to various countries, as well as repeated false statements on Automated Export System (AES) filings.  As early as September 2011, Baird was made aware that undervaluing violated U.S. export laws, including the EAR.  In fact, Baird received e-mails on this subject from his Chief Technology Officer, who stated, “I know we are WILLINGLY AND INTENTIONALLY breaking the law.”  (Emphasis in original).  In the same email chain, Baird suggested that Access USA could falsely reduce the value of items by 25% on export control documentation submitted to the U.S. government and if “warned by [the U.S.] government,” then the company “can stop ASAP.”

“It was through the outstanding investigative skills and dedication of the special agents of the Department of Commerce and the Department of Homeland Security, that enabled us to protect our country’s national security by detecting, disrupting and prosecuting a complex illegal export scheme led by Access USA’s former owner and CEO, Eric Baird.  The message must be received that individuals, as well as companies, are equally liable for their illegal activities,” said BIS Special Agent-in-Charge Robert Luzzi. “BIS brought this action because of the serious potential harm to national security inherent in a business model where companies consolidating or forwarding packages abroad conceal from U.S. merchants the location of foreign customers and the fact that items are intended for export. As a result of these deceptive practices, U.S. merchants’ compliance programs may be unable to detect potential unlicensed exports and other violations.”

“We expect companies and individuals to adhere to our nation’s strict import and export laws,” said U.S. Attorney Chapa Lopez.  “Shipping and freight forwarding companies must take sufficient steps to ensure that they are always in compliance with United States law, in order to protect our borders and prevent potentially dangerous items from reaching the hands of our adversaries.”

The case was the result of the joint investigation by BIS’ Office of Export Enforcement and the Department of Homeland Security’s Homeland Security Investigations. It was prosecuted by Assistant U.S. Attorney Patrick Scruggs for the Middle District of Florida, and the Department of Commerce’s Office of Chief Counsel. A criminal sentencing date for Baird is pending with the U.S. District Court for the Middle District of Florida.

Abingdon, VIRGINIA – A Wise County man, who claimed to be to be too disabled to work and as a result received over $92,000 in disability benefits from the Railroad Retirement Board, pleaded guilty yesterday in U.S. District Court in Abingdon to making a false statement, United States Attorney Thomas T. Cullen announced.

Jeffrey L. Bates, 59, pleaded guilty yesterday to one count of making a false statement. At sentencing, Bates faces a maximum statutory sentence of up to five years in prison. The defendant has also agreed to pay $92,081 in restitution to the Railroad Retirement Board. Bates will be sentenced April 16, 2019.

“Protecting government-sponsored benefits programs from fraud and abuse is among our top priorities,” U.S. Attorney Cullen stated today.  “False statements in connection with these programs, like the ones the defendant admitted to making in this case, are violations of federal law and will result in criminal prosecution.” 

According to evidence presented at yesterday’s guilty plea hearing by Special Assistant United States Attorney Kathleen Carnell, Bates had been receiving disability benefits from the Railroad Retirement Board since 2001. In 2015, the Railroad Retirement Board received a hotline complaint stating that Bates was self-employed in the lawn care business. The defendant filled out a form, as required by the Railroad Retirement Board, in 2016, wherein he falsely stated his self-employment status and the earnings he received.

The investigation of the case was conducted by the USRRB- OIG. Special Assistant United States Attorney Kathleen Carnell is prosecuting the case for the United States.