DALLAS— Arslen Ramin Ayeze, a tax return preparer who managed a tax preparation business in Dallas, Texas, appeared last week in federal court in Dallas, before U.S. Magistrate Judge Renee Toliver, and pleaded guilty to one count of aiding and assisting in the preparation of a tax return, announced U.S. Attorney John Parker of the Northern District of Texas.

Ayeze, who was remanded to custody following his guilty plea for a violation of his conditions of pretrial release, faces a maximum statutory penalty of three years in federal prison, a $250,000 fine and restitution. Sentencing is set for October 11, 2017, before U.S. District Judge Ed Kinkeade.

According to the factual resume filed in the case, from 2008 through 2010, Ayeze was a tax preparer doing business under the name of Universal Tax in Dallas, Texas. On January 20, 2010, Ayeze prepared and electronically filed with the IRS, a 2009 U.S. Individual Income Tax Return, Form 1040, on behalf of K.G. which was false and fraudulent. In preparing the tax return, Ayeze deceived the I.R.S. by falsely including a business loss deduction in the amount of $10,575 for a purported sole proprietorship operated by K.G. Ayeze knew K.G. had not incurred the loss and was not entitled to claim the deduction on the tax return. The false deduction of $10,575 resulted in an actual tax loss to the United States in the approximate amount of $2,557.

The investigation was conducted by Internal Revenue Service Criminal Investigation. Assistant U.S. Attorney Christopher Stokes is in charge of the prosecution.

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

BUFFALO, N.Y. - Acting U.S. Attorney James P. Kennedy, Jr. announced today that Diane Cleversley, 68, of Williamsville, NY, pleaded guilty to theft of social security retirement benefits, before U.S. District Judge Richard J. Arcara. The charge carries a maximum penalty of 10 years in prison and a $250,000 fine.

Assistant U.S. Attorney Stephanie Lamarque, who is handling the case, stated that the defendant failed to notify the Social Security Administration of her mother’s death in 2001. As a result, social security checks continued to be issued and deposited into a joint savings account held by Cleversley and her mother.  The defendant transferred funds from the joint savings account into her own checking account. Cleversley, a retired social worker, stole a total of $176,405 between July 2001 and February 2017.

The plea is the result of an investigation by the Office of the Inspector General of the Social Security Administration, under the direction of Special Agent-in-Charge John Grasso. 

Sentencing is scheduled for October 2, 2017, at 12:00 pm before Judge Arcara.

SAN JUAN, P.R. – Psychiatrist Luis Escabi-Pérez was sentenced to five years of probation, 500 hours of community service and ordered to pay a restitution of $230,244,for fraud in the application process for Social Security Administration (SSA) disability insurance benefits in Puerto Rico, announced United States Attorney for the District of Puerto Rico, Rosa Emilia Rodríguez Vélez.

Escabi-Pérez had plead guilty on July 29, 2015 to committing fraud to the Social Security Administration. Escabi-Pérez’ DEA and medical license were revoked without contest.

Defendant Luis Escabi-Pérez submitted Psychiatric Medical Reports to the SSA in support of applications for disability insurance benefits submitted by his patients. Escabi-Pérez charged a fee for the medical visits, typically in the amount of $100.00. In addition, the defendant typically charged a fee in the amount of $500.00, for the preparation and submittal of a Psychiatric Medical Report to the SSA. He would at times also charge additional fees of up to $5,000 to backdate medical records in order to create the appearance of a longer history of medical treatment.

The case was investigated by the Social Security-OIG with the collaboration of the FBI and the Puerto Rico Police Department. Special Assistant United States Attorney Vanessa D. Bonano-Rodríguez prosecuted the case.

# # #

A federal grand jury indicted Gwendolyn Cox-Johnson, 68, of Euclid, for theft of government funds, said David A. Sierleja, Acting United States Attorney for the Northern District of Ohio.

The indictment alleges that over a period of 23 years, Cox-Johnson fraudulently received approximately $335,000 in benefits from the Social Security Administration to which she was not entitled.

The Social Security Administration Office of the Inspector General conducted the investigation. Special Assistant United States Attorney Lisa J. Sanniti is prosecuting the case.

If convicted, the court will determine the defendant’s sentence after a review of 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. In most cases, it will be less than the maximum.

An indictment is only a charge 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.

JULY 3, 2017

FOR IMMEDIATE RELEASE                                                      Contact ELIZABETH MORSE

www.justice.gov/usao/md                                                            at (410) 209-4885

Greenbelt, Maryland – On June 27, 2017, U.S. District Judge George J. Hazel, sentenced Glenn K. Wilcott, age 55, of Gaithersburg, Maryland, to 5 years in prison, followed by 3 years of supervised release for aggravated identity theft and being a felon in possession of firearms and ammunition.

The sentence was announced by Acting United States Attorney for the District of Maryland Stephen M. Schenning; Special Agent in Charge Richard Ingram of the Department of State, Diplomatic Security Service, Washington Field Office; Special Agent in Charge, Daniel L. Board of the Bureau of Alcohol, Tobacco, Firearms and Explosives; Marshal Johnny Hughes of the United States Marshals Service; Special Agent Michael McGill of the Social Security Administration, Office of the Inspector General and the United States Citizenship and Immigration Services.

According to court documents, on or about April 12, 2014, Wilcott submitted via mail a U.S. Department of State passport renewal form to acquire a new passport in the name of Victim A because the original passport was set to expire on May 17, 2014. During the renewal process, passport adjudicators determined that there were several fraud indicators associated with the application, including a death report related to the Social Security number that Wilcott used in the application. This social security number belonged to Victim A, who died March 6, 2012.

According to his plea agreement, when law enforcement executed a search warrant on Wilcott’s residence, they recovered various firearms and ammunition including a .22 caliber pen gun. Wilcott had previously sustained a conviction for an offense punishable by more than one year of imprisonment, which made him ineligible to possess firearms and ammunition.

Acting United States Attorney Stephen M. Schenning commended the Department of State, Diplomatic Security Service, ATF, the Social Security Administration, the United States Marshal’s Office, and ICE. Mr. Schenning thanked Assistant U.S. Attorneys Jennifer Sykes and Thomas Windom who prosecuted the case.

An Akron man was indicted for having fentanyl and a firearm, said David A. Sierleja, Acting U.S. Attorney for the Northern District of Ohio.

Kenneth Gay, 26, was arrested at his residence in Akron during the execution of a search warrant by the Summit County Drug Unit and the Summit County Sheriff’s S.W.A.T. team. Officers found Gay to be in possession of the firearm and fentanyl.

Gay has been previously convicted of improperly handling a firearm in a motor vehicle and trafficking in marijuana.

If convicted, the defendant’s sentence will be determined by the Court after review of 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 violations. In all cases, the sentence will not exceed the statutory maximum and, in most cases, it will be less than the maximum.

The matter is being prosecuted by Assistant U.S. Attorney Mark S. Bennett following an investigation by the Summit County Sheriff’s Office, Akron Police Department, DEA and ATF.

An indictment is only a charge 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.

An Ohio man was indicted trafficking crack cocaine and being a felon in possession of ammunition, said David A. Sierleja, Acting U.S. Attorney for the Northern District of Ohio.

Shamar M. Stevenson was arrested on May 5 and found to have crack cocaine and seven rounds of 9 mm ammunition. He was prohibited from having the ammunition because of prior convictions in Stark County for felonious assault with a firearm and participating in a criminal gang.

The matter is being prosecuted by Assistant United States Attorney Aaron P. Howell following an investigation by the Bureau of Alcohol, Tobacco, Firearms and Explosives and the Canton Police Department.

An indictment is only a charge and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the United States of America’s burden to prove each defendant’s guilt beyond a reasonable doubt.

If convicted, a defendant’s sentence will be determined by the Court after review of factors unique to this case, including the defendants’ prior criminal record, if any, the defendants’ roles in the offense and the characteristics of the violations.

A Cleveland man was indicted for using a firearm while robbing a Family Dollar store, said Acting U.S. Attorney David A. Sierleja.

Donathan Kidd, 21, was indicted on one count of Hobbs Act robbery and one count of using a firearm in a crime of violence.

Kidd robbed the Family Dollar store at 14235 Kinsman Road in Cleveland on April 29. He used a firearm during the robbery, according to the indictment.

If convicted, the defendant’s sentence will be determined by the Court after review of 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 violations. In all cases, the sentence will not exceed the statutory maximum and, in most cases, it will be less than the maximum.

The case is being prosecuted by Assistant U.S. Attorney Brian McDonough following an investigation by the ATF and Cleveland Division of Police.

An indictment is only a charge 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.

ATLANTA – John A. Horn, U.S. Attorney for the Northern District of Georgia, and Brian J. Stretch, U.S. Attorney for the Northern District of California, announced that the United States has settled civil mortgage fraud claims against Prospect Mortgage Company, LLC (“Prospect”) stemming from Prospect’s participation in the Direct Endorsement Lender Program, which is administered by the Federal Housing Administration (“FHA”) and the U.S. Department of Housing and Urban Development (“HUD”).

“To participate in the FHA program, Prospect had to comply with HUD underwriting and quality control requirements and certify that these requirements had been satisfied with respect to each FHA loan it originated,” said John A. Horn, U.S. Attorney for the Northern District of Georgia. “Prospect failed to adhere to these requirements at two Southeastern branches and when many of these loans later defaulted, the United States suffered substantial losses.”

“Prospect’s knowing failure to comply with material HUD loan origination requirements not only resulted in major losses to the public fisc, but also served to undermine the FHA program,” said Brian Stretch, U.S. Attorney for the Northern District of California. “Today’s settlement demonstrates the Department of Justice’s resolve and commitment to hold lenders, large and small, accountable for this type of fraudulent conduct.”

“Ensuring the fiscal integrity of FHA programs is at the core of our mission,” said Acting HUD Inspector General Helen M. Albert. “We will continue to work with our law enforcement partners to identify and root out those that seek to compromise such programs that are directly intended to assist the American public,” he concluded.

In this settlement, Prospect has agreed to pay the United States $4.157 million to resolve an investigation conducted by the U.S. Attorneys’ Offices for the Northern Districts of Georgia and California into whether Prospect violated the False Claims Act by falsely certifying compliance with critical underwriting and quality control (“QC”) requirements when originating loans insured by the FHA and HUD. As revealed by an Atlanta HUD-Office of Inspector General (“OIG”) audit, two Prospect branches – one in Florida and another in North Carolina – originated many of these loans without adhering to the requisite HUD requirements. As a result, the United States suffered substantial losses when the loans defaulted and ripened into claims by Prospect for insurance payments from the United States.

Prospect participated in the FHA insurance program as a Direct Endorsement Lender (“DE Lender”). As a DE Lender, Prospect had the authority to originate, underwrite, and endorse mortgages for FHA insurance. If a DE Lender approves a mortgage loan for FHA insurance, and the loan later defaults, the holder of the loan may submit an insurance claim to the Government to recover its losses on the loan. Under the DE Program, the Government does not review a loan before endorsement for FHA insurance. Instead, FHA and HUD rely upon DE Lenders like Prospect to follow program rules, which require, among other things, that a lender: (1) adhere to HUD underwriting guidelines; (2) maintain a QC program that can identify and correct deficiencies in their underwriting practices; and (3) self-report to HUD materially deficient loans identified by their QC program.

Between December 2007 and December 2009, Prospect had a 12.29 percent default rate – well in excess of the national average – within HUD’s Atlanta Home Ownership Center (“HOC”). HUD determined that approximately 76% of these defaults were attributable to two particular Prospect branches located in Florida and North Carolina. The Government’s investigation revealed that the majority of the audited loans from these branches were not compliant with HUD underwriting requirements relating to Prospect’s assessment of borrower: (1) assets; (2) income; and (3) credit, which are essential considerations in determining whether a loan will be repaid, as opposed to going into default or serious delinquency.

As part of the settlement, Prospect has acknowledged among other things, the following conduct that occurred in the two Prospect branches at issue:

• Prospect endorsed for FHA insurance loans that had not been originated in accordance with HUD requirements concerning a DE Lender’s assessment of assets, income, and credit.

   

• Prospect falsely certified that the non-compliant loans that it originated had been underwritten in accordance with HUD underwriting requirements.

   

• As evidenced by its 12.29% default rate within the Atlanta HOC, and the fact that 76% percent of such defaults were attributable to one branch office in Florida and another in North Carolina, Prospect failed to adhere to HUD quality control guidelines.

The investigation of this case was a coordinated effort between the U.S. Attorneys’ Offices for the Northern Districts of Georgia and California, HUD, and HUD-OIG.

This resolution with Prospect is the latest in a string of civil fraud cases pursued by the United States in recent years alleging fraudulent lending practices by residential mortgage lenders.

Assistant U.S. Attorney Paris A. Wynn handled this matter for the U.S. Attorney’s Office for the Northern District of Georgia.

For further information please contact the U.S. Attorney’s Public Affairs Office at USAGAN.PressEmails@usdoj.gov or (404) 581-6016. The Internet address for the home page for the U.S. Attorney’s Office for the Northern District of Georgia Atlanta Division is http://www.justice.gov/usao/gan/.

DALLAS— Tasha Lashaun Wilson, of Dallas, was sentenced last Friday by Chief U.S. District Judge Barbara M. G. Lynn to serve a prison sentence of 12 months and one day for theft of government funds, announced U.S. Attorney John Parker of the Northern District of Texas.

Wilson pleaded guilty in July 2015 to one count of theft of government money. Chief Judge Lynn ordered that Wilson be immediately remanded into federal custody at the conclusion of the sentencing hearing. Wilson was also order to pay back the loss to the government, none of which Wilson had attempted to pay back prior to the sentencing hearing.

According to documents filed in the case, on October 24, 2012, the United States Department of Housing and Urban Development (HUD) Office of Inspector General (OIG) received information about a Housing Choice Voucher Program (HCV) tenant believed to have a financial interest in the residence where she was living in Frisco, Texas.

A review of Wilson’s Dallas Housing Authority (DHA) tenant file revealed that she had been a HCV program participant since 2003. It was also determined that Wilson received United States Department of Agriculture (USDA) Supplemental Nutrition Assistance Program (SNAP) benefits and Medicaid assistance.

In 2010, Wilson was looking for a place to live while she was a participant in the HCV program. Wilson’s friend agreed to sign up to be an approved landlord in the HCV program so Wilson could live in his house in Frisco, Texas while she remained in the HCV program. As part of the process to be approved as a landlord, Wilson’s friend submitted a direct deposit form into which DHA would deposit money to subsidize Wilson’s rent. This direct deposit form listed a bank account to which both Wilson and her friend were signatories, but the submitted form did not disclose Wilson as a signatory to the account. Wilson told investigators that prior to submitting the direct deposit form, she told her friend that disclosing Wilson as a signatory to the joint bank account would be a problem because it would get her kicked out of the HCV program. Wilson’s friend told her that he would make sure Wilson’s name did not appear on the direct deposit form.

In September of 2010, Wilson completed and submitted an application to have her HCV rental subsidy transferred to her friend’s house in Frisco, Texas. From 2010 through into 2014, DHA deposited money into the joint bank account believing that it was sending money to Wilson’s landlord to subsidize her rent. Instead, Wilson accessed and spent the money at retailers and restaurants. Wilson was required to go through an annual re-certification process through which she was required to report income; Wilson did not disclose to DHA or HUD that she had access to, and was spending money from, the joint bank account. When confronted by law enforcement, Wilson admitted that she actively concealed the joint bank account because she knew that if she had reported it, she would have been kicked out of the HCV program.

An analysis of Wilson’s DHA HAP payments history from November 1, 2010, through February 28, 2014, revealed losses to DHA/HUD totaling $60,073.00. Similarly, an analysis of Wilson's SNAP benefit payments and Medicaid payments made during the same time period reveal losses to the government totaling $7,370.00 and $9,836.37, respectively.

HUD investigated the case. Assistant U.S. Attorney Jamie L. Hoxie prosecuted.

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            WASHINGTON – Two men, both from Washington, D.C., have been sentenced to 47-year prison terms for their roles in a gun battle in Northeast Washington in which two people were killed, including a 15-year-old innocent bystander, announced U.S. Attorney Channing D. Phillips and Peter Newsham, Chief of the Metropolitan Police Department (MPD).

            Sequarn Tibbs, 25, and Earl Jackson, 24, were found guilty by a jury in November 2016 of two counts of second-degree murder while armed, three counts of assault with intent to kill, two counts of aggravated assault, and related weapons offenses. The verdicts followed a trial in the Superior Court of the District of Columbia. They were sentenced on June 30, 2017, by the Honorable Michael Ryan.

            Tibbs and Jackson had pled guilty in 2013 to voluntary manslaughter and other charges, but the pleas were subsequently reversed by the District of Columbia Court of Appeals. That led to the trial and the jury’s verdict. Additionally, a third co-defendant, Antonio Barnes, 25, pled guilty in September 2016 to voluntary manslaughter and other charges. He was sentenced in November 2016 to a 13-year prison term, to be followed by five years of supervised release.

            According to the government’s evidence, Tibbs and Jackson were part of a group, known as “Young Savage,” associated with the 37^th Street/37^th Place neighborhood of Southeast Washington. The violence came after the discovery on Oct. 12, 2009 that a burglary took place in the home of Jackson’s mother, located in the Clay Terrace area of Northeast Washington. A .38-caliber revolver, belonging to a juvenile co-conspirator, was stolen during the burglary.

            Late Oct. 12, 2009 and early Oct. 13, 2009, Jackson and others, including Tibbs’s brother, Daquan Tibbs, 18, decided that Clay Terrace residents were responsible for the burglary. The group decided to travel to the home of Jackson’s mother in Clay Terrace to identify and find the people responsible and get the property back - with force, if necessary.

            They rode to Clay Terrace in a taxicab, while armed with a .45-caliber semi-automatic pistol, a .40-caliber pistol and a .9-mm pistol. Once there, they decided to confront Clay Terrace individuals who were outside in the neighborhood. They demanded the .38-caliber revolver, and, although it remains unclear if money was taken in the burglary as well, also asked for cash.

            A male from the Clay Terrace group advised that they did not know who was responsible for the theft, but opined that it was probably a “young’un.” Later, an older Clay Terrace resident came to the Jacksons’ house, and asked about the situation. This person also speculated it was probably “one of the little young’uns,” and left. The older man later came back and returned the gun, not saying where he got it. He said that he did not know anything about the missing money.

            Sequarn Tibbs, meanwhile, joined the group in Clay Terrace. Throughout the day, several members of the group smoked marijuana. At one point, Jackson and the juvenile co-conspirator discussed whether they should wait until school was over to see if they could find the “young’uns” responsible for the theft/burglary.

            Shortly before 4 p.m. on Oct. 13, 2009, the defendants and others in the group left the house. The group took their guns with them, which included a .45-caliber pistol, a .40-caliber pistol, a .38-caliber revolver, and a .9-mm pistol. They headed to a courtyard known in Clay Terrace as “Briscoe Court,” in the 300 block of 53^rd Street NE. A gun battle soon began, with Sequarn Tibbs firing the first shot. During the gunfire, Daquan Tibbs was shot to death by a weapon fired by the juvenile co-conspirator. A 15-year-old boy, Davonta Artis – an innocent bystander – was shot and also killed. Three others were wounded.

            In August of 2010, Tibbs and Jackson learned that warrants had been issued for their arrests, and they fled the Washington, D.C. area to avoid being apprehended. Tibbs was captured on Sept. 21, 2010 in New York, and Jackson was captured on Jan. 13, 2012, in North Carolina.

            In announcing the sentences, U.S. Attorney Phillips and Chief Newsham commended the work of the detectives, officers and mobile crime scene technicians who investigated the case for the Metropolitan Police Department and the U.S. Park Police. They acknowledged the efforts of those who worked on the case from the U.S. Attorney’s Office, including Assistant U.S. Attorney Deborah Sines; former Assistant U.S. Attorneys Reagan Taylor, Sean Tonolli, J.P. Cooney, Sharad Khandelwal and Heather Carlton; Liaison and Operations Manager Linda McDonald; Paralegal Specialists Zekiah Wright, Debra Joyner, Kendra Johnson, Alesha Matthews-Yette, Kwasi Fields, Kelly Blakeney, Sharon Newman, Fern Rhedrick, and Marian Russell; Litigation Technology Specialists Leif Hickling, William Henderson, and Joshua Ellen; Victim/Witness Advocates Marcia Rinker and Katina Adams-Washington, former Investigative Analyst Larry Grasso, and Investigative Analysts Zachary McMenamin, Durand Odom, and John Marsh. Finally, they praised the work of Assistant U.S. Attorneys Laura Bach and Nebiyu Feleke and Special Assistant U.S. Attorney Veronica Noonan, of the District of Columbia Office of the Attorney General, who prosecuted the case.

Jackson, TN – Marvin Steinberg, 38, was sentenced to 110 months in federal prison for possession with intent to distribute methamphetamine and being a felon in possession of firearms. Lawrence J. Laurenzi, Acting U.S. Attorney for the Western District of Tennessee, announced the sentence today.

According to information presented in court, on November 6, 2015, members of the Henry County Sheriff’s Office executed a search warrant at Steinberg’s home in Paris, Tennessee, because of suspected methamphetamine and firearm possession.

Upon execution of the warrant, officers located six firearms, ammunition, and a loaded AK magazine. Officers also found methamphetamine along with digital scales, pipes, a "bong" and a gas mask. Steinburg, who was present, admitted to officers that the methamphetamine and some of the firearms were his.

On June 29, 2017, the Honorable J. Daniel Breen sentenced Steinberg to nearly 10 years’ confinement and received a total of 3 years supervised release to begin after his incarceration.

This case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives; Henry County Sheriff’s Office; and the U.S. Attorney’s Office, who have all worked jointly to address gun-related crimes through aggressive investigation and prosecution. Assistant U.S. Attorney Taylor Eskridge prosecuted this case on the government’s behalf.

LITTLE ROCK—Patrick C. Harris, Acting United States Attorney for the Eastern District of Arkansas, and Jeffrey B. Reed, Resident Agent-in-Charge of the Little Rock Field Office of the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), announced today that a Complaint has been filed against Ricky L. Hampton, 25, of Memphis, Tennessee, for felon in possession of a firearm in violation of 18 U.S.C. 922(g)(1).

The complaint alleges that on June 25, 2017, Ricky L. Hampton, aka “Finese2Tymes” was at Club Envy in Forrest City, Arkansas. As Hampton, a Memphis rapper, was leaving the club, he began screaming at a person in a car that he believed was blocking his way. As Hampton got into his car, he continued screaming at the person to move out of his way. Hampton became impatient with that person in the other vehicle and pointed an AK-style pistol at that person. As that person drove away, Hampton fired a shot that shattered the rear window and struck the driver of the other vehicle in the neck. The weapon Hampton used, a Century Arms, model RAS 47, 7.62 caliber pistol, has been recovered by law enforcement.

Hampton was convicted in Tennessee of felony aggravated robbery, for which he was sentenced to eight (8) years in prison.

Acting U.S. Attorney Patrick C. Harris and Jeffrey B. Reed, Resident Agent-in-Charge jointly stated that, “Through the collaborative efforts of the Bureau of Alcohol, Tobacco, Firearms and Explosives, the United States Marshals Service, the Federal Bureau of Investigation, the Forrest City Police Department, the First Judicial Circuit States Attorney’s Office, and the United States Attorney’s Office, this alleged violent offense will proceed through the judicial process. The U.S. Attorney’s Office and ATF are committed to working with federal, state and local partners to address violent firearm offenses within the state of Arkansas.”

This investigation is being conducted by the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), U.S. Marshals Service, and the Federal Bureau of Investigation. The case is being prosecuted by Assistant United States Attorneys Angela Jegley and Cameron McCree.

###

DALLAS— Following a one-week trial in Dallas, Texas, before U.S. District Judge Sidney A. Fitzwater, a federal jury has convicted Daryl Glenn Pawlak, 39, of Burleson, Texas, of two counts of child pornography offenses. The announcement was made today by U.S. Attorney John Parker of the Northern District of Texas.

Specifically, late Friday afternoon, the jury convicted Pawlak of one count of receipt of child pornography and one count of access with intent to view material containing child pornography involving a prepubescent minor. Pawlak faces a maximum statutory penalty of 20 years in federal prison for each count and a $250,000 fine. Following the verdict, Judge Fitzwater remanded Pawlak into custody. Sentencing is set for October 20, 2017.

This case arose from an FBI undercover operation involving an illegal member-only hidden-services website called Playpen. Playpen was dedicated to the advertisement and distribution of child pornography. Because Playpen operated as a hidden-services site, it was only available to users of the TOR network. The TOR network allows users and hidden-services sites anonymity by concealing the actual IP addresses of users and hidden-services sites.

Playpen categorized posts containing child pornography within forums and sub-forums according to the victim child’s age, gender, and type of sexual abuse endured, such as “Girls HC,” “Incest,” and “Toddlers.” Many of these posts displayed a preview image of child pornography, a link to download more child pornography, and a password to open the downloaded files. The website itself required a username and password to enter. Approximately 417,000 usernames were registered on Playpen at the time it was removed from the Internet.

Through the course of its investigation, the FBI discovered that the Playpen website was being run from within the United States. The FBI seized the server hosting the Playpen website and made the decision to conduct a limited, monitored, authorized two-week operation to catch individuals who had logged onto the site and clicked on certain posts within the site.

Pawlak was one of the individuals caught as a result of the FBI’s operation. Pawlak registered the username “notsoslow” with Playpen in September 2014 and had spent approximately 14.6 hours logged into the website prior to the FBI’s two-week operation.

The government presented evidence at trial showing on the morning of March 4, 2015, the last day of the FBI’s operation, Pawlak logged onto the Playpen site as user “notsoslow,” using his work computer at his house in Burleson, Texas. After clicking on a post within the site, the FBI deployed a network investigative technique (NIT) to “notsoslow’s” computer. The NIT instructed “notsoslow’s” computer to send to the FBI certain identifying pieces of information, including the actual IP address that was connecting the computer to the Internet, the MAC address of the network interface card of the computer, the name of the computer, and the username logged onto the computer.

Computer data captured as a result of the NIT showed that the MAC address, computer name, and username were consistent with having come from a computer that was provided to Pawlak by his employer (Employer One). The actual IP address resolved to Pawlak’s home address in Burleson, Texas. Forensic artifacts from this work computer showed that user “d.pawlak” had logged onto the computer earlier that morning and downloaded WinZip, a program that could be used to decompress files similar to many that were contained in Playpen.

Computer data collected during the FBI’s operation showed that a few minutes after the NIT deployed, user “notsoslow” navigated and clicked on two posts containing prepubescent child pornography, both of which were hosted in the “Pre teen Photos” “Girls HC” section of Playpen. Data from the Playpen server reflected that “notsoslow” had spent approximately 90 minutes logged into the site during the FBI’s two-week operation.

The government also presented evidence that two different work computers that had been assigned to Pawlak by two different employers both contained prepubescent child pornography in files associated with Pawlak’s computer usernames. The computer assigned to Pawlak by Employer One had forensic artifacts reflecting that the TOR browser had been installed, deleted, and reinstalled several times while the computer was assigned to Pawlak. The FBI also found forensic artifacts associated with the Playpen site, as well as file names consistent with child pornography. The jury heard testimony at trial that it appeared that Pawlak had undertaken some efforts to delete evidence of child pornography before returning the computer to Employer One.

On Pawlak’s second work computer, which had been assigned to him for merely three months, the FBI found over 800 images of child pornography and videos of child pornography depicting prepubescent children. Forensics also revealed that software used to wipe a computer’s hard drive was downloaded onto the computer shortly before Pawlak’s employer sent it to the FBI.

The FBI spoke with Pawlak as a part of its investigation. Pawlak confessed that he had been using his work computers to look at child pornography. He told the FBI that he began looking at child pornography sometime in 2012, he used TOR to find child pornography, and estimated that he had spent, on average, approximately half an hour a week on child pornography. Pawlak told the FBI that he preferred child pornography that depicted girls between the ages of 7-11 years old.

As a result of the FBI’s operation, at least 350 U.S.-based individuals have been prosecuted nationwide. At least 55 American children who were subjected to sexual abuse have been successfully identified or rescued, including at least four in the North Texas area. This case was prosecuted as a part of the U.S. Department of Justice’s Project Safe Childhood Initiative, which is aimed at protecting children from sexual abuse and exploitation. For more information about Project Safe Childhood, please visit www.justice.gov/psc.

The FBI investigated this case. Assistant U.S. Attorneys Jamie L. Hoxie and Paul Yanowitch are in charge of the prosecution.

# # #

SAN FRANCISCO – Prospect Mortgage Company, LLC (“Prospect”) has agreed to pay the United States $4.157 million to resolve allegations that that the company committed civil mortgage fraud in connection with its participation in the Direct Endorsement Lender Program announced U.S. Attorney for the Northern District of California Brian J. Stretch, and U.S. Attorney for the Northern District of Georgia John A. Horn.   

The Direct Endorsement Lender Program, is administered by the Federal Housing Administration (“FHA”) and the U.S. Department of Housing and Urban Development (“HUD”).    Prospect participated in the FHA insurance program as a Direct Endorsement Lender (“DE Lender”).  As a DE Lender, Prospect had the authority to originate, underwrite, and endorse mortgages for FHA insurance.  In this settlement, Prospect has agreed to pay the United States $4.157 million to resolve an investigation conducted by the U.S. Attorneys’ Offices (USAO) for the Northern District of California and the Northern District of Georgia into whether Prospect violated the False Claims Act by falsely certifying compliance with critical underwriting and quality control (“QC”) requirements when originating loans insured by the FHA and HUD.

“Prospect’s knowing failure to comply with material HUD loan origination requirements not only resulted in major losses to the public fisc, but also served to undermine the FHA program,” said U.S. Attorney Stretch.  “Today’s settlement demonstrates the Department of Justice’s resolve and commitment to hold lenders, large and small, accountable for this type of fraudulent conduct.” 

“To participate in the FHA program, Prospect had to comply with HUD underwriting and quality control requirements and certify that these requirements had been satisfied with respect to each FHA loan it originated,” said U.S. Attorney Horn.  “Prospect failed to adhere to these requirements at two Southeastern branches and when many of these loans later defaulted, the United States suffered substantial losses.”  

“Ensuring the fiscal integrity of FHA programs is at the core of our mission,” said Acting HUD Inspector General Helen M. Albert.  “We will continue to work with our law enforcement partners to identify and root out those that seek to compromise such programs that are directly intended to assist the American public,” he concluded.

Under the DE Program, if a DE Lender approves a mortgage loan for FHA insurance, and the loan later defaults, the holder of the loan may submit an insurance claim to the Government to recover its losses on the loan.  The Government does not review a loan before endorsement for FHA insurance; instead, FHA and HUD rely upon DE Lenders like Prospect to follow program rules.  The rules require, among other things, that a lender: (1) adhere to HUD underwriting guidelines; (2) maintain a QC program that can identify and correct deficiencies in their underwriting practices; and (3) self-report to HUD materially deficient loans identified by their QC program.  As revealed by an Atlanta HUD-Office of Inspector General (“OIG”) audit, two Prospect branches – one in Florida and another in North Carolina – originated many of these loans without adhering to the requisite HUD requirements.  As a result, the United States suffered substantial losses when the loans defaulted and ripened into claims by Prospect for insurance payments from the United States.

Between December 2007 and December 2009, Prospect had a 12.29 percent default rate – well in excess of the national average – within HUD’s Atlanta Home Ownership Center (“HOC”).  HUD determined that approximately 76% of these defaults were attributable to two particular Prospect branches located in Florida and North Carolina.  The Government’s investigation revealed that the majority of the audited loans from these branches were not compliant with HUD underwriting requirements relating to Prospect’s assessment of borrower: (1) assets; (2) income; and (3) credit, which are essential considerations in determining whether a loan will be repaid, as opposed to going into default or serious delinquency.  

As part of the settlement, Prospect has acknowledged, among other things, the following conduct that occurred in the two Prospect branches at issue:

• Prospect endorsed for FHA insurance loans that had not been originated in accordance with HUD requirements concerning a DE Lender’s assessment of assets, income, and credit.
• Prospect falsely certified that the non-compliant loans that it originated had been underwritten in accordance with HUD underwriting requirements.  
• As evidenced by its 12.29% default rate within the Atlanta HOC, and the fact that 76% percent of such defaults were attributable to one branch office in Florida and another in North Carolina, Prospect failed to adhere to HUD quality control guidelines. 

The investigation of this case was a coordinated effort between the USAO for the  Northern District of California, the USAO for the Northern District of  Georgia, and HUD, including HUD’s Office of Inspector General.

This resolution with Prospect is the latest in a string of civil fraud cases pursued by the United States in recent years alleging fraudulent lending practices by residential mortgage lenders.

Assistant U.S. Attorney Douglas K. Chang handled this matter for the U.S. Attorney’s Office for the Northern District of California, with the assistance of Tina Louie.
 

Oklahoma City, Oklahoma– DANIELLE DANA LAYMAN, 37, of Ponca City, Oklahoma,has been charged by criminal complaint with soliciting someone to murder her former husband with ricin, announced Mark A. Yancey, United States Attorney for the Western District of Oklahoma.

According to the complaint and supporting affidavit, filed July 1, 2017, Layman used craigslist to locate someone interested in a "10 day gig overseas." On May 9, 2017, she met in Ponca City with a person who responded to the craigslist post. According to the affidavit, Layman gave that person written instructions on traveling to Tel Aviv, Israel, and using ricin to poison a specific taxi driver in exchange for $4,000 plus expenses. The affidavit states that Layman also gave the person a baggie that she claimed contained the ricin to be used in the murder. Ricin is an extremely hazardous substance derived from castor beans. According to the complaint, the taxi driver in Tel Aviv appears to be Layman’s former husband.

On June 30, 2017, the FBI executed a search warrant at Layman’s residence in Ponca City. The affidavit states that agents found castor beans in the kitchen, along with a mortar and pestle with residue that could be remnants of ground castor beans. According to the affidavit, agents also found instructions on how to make ricin. Layman was arrested late the same day. She appeared before U.S. Magistrate Judge Charles Goodwin this afternoon and will remain in federal custody pending further proceedings.

If convicted of using a facility of interstate commerce to solicit murder, Layman could be sentenced to ten years in prison, three years of supervised release, and a fine of $250,000.

Reference is made to the complaint affidavit and court record for further information. The public is reminded that Layman is presumed innocent unless and until proven guilty beyond a reasonable doubt.

This case is the result of an investigation by the Federal Bureau of Investigation and is being prosecuted by Assistant U.S. Attorneys David P. Petermann and Ashley Altshuler.

A Rocky River man was charged with laundering more than $100,000 from investors and using at least some of it for personal expenses, said David A. Sierleja, Acting U.S. Attorney for the Northern District of Ohio.

Mark Dulik, 31, was charged via criminal information with four counts of money laundering.

Dulik owned and operated Rework, Inc., based in Rocky River, which allegedly provided cloud-based software services. Dulik convinced several individuals to invest in Rework by convincing them that it was a legitimate, on-going business – when in fact Dulik converted the investors’ funds for his own personal use to pay for his lavish lifestyle, according to the information.

Investigators determined that Dulik used new investors’ money to pay dividends/interest payments back to older investors, representing to the earlier investors that the money represented profits from the company, when in fact it operated more like a Ponzi scheme, according to court documents.

Dulik took approximately $101,500 of investors’ money from Rework’s business account that he either used for his own use or falsely representing the funds were returns on earlier investments derived from profits of Rework.

If convicted, the court will determine defendant’s sentence after review of 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 violations. In all cases, the sentence will not exceed the statutory maximum and, in most cases, it will be less than the maximum.

The matter is being prosecuted by Assistant United States Attorney Mark S. Bennett following an investigation by the Internal Revenue Service’s Criminal Investigation.

An information is only a charge 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.

HARRISBURG - The United States Attorney’s Office for the Middle District of Pennsylvania announced today that Penn National horse trainer Murray Rojas, 51, Grantville, Pennsylvania, was convicted of 14 felony counts of misbranding prescription drugs on race day and conspiracy. The crimes involved Rojas directing veterinarians to administer drugs to her horses on race day in violation of track rules and state law. The jury found her not guilty of seven counts of wire fraud and conspiracy to commit wire fraud. The jury returned the verdicts on June 30, 2017, after one day of deliberation, and after an eight-day jury trial in Harrisburg before United States District Court Judge Sylvia H. Rambo.

According to United States Attorney Bruce D. Brandler, the conspiracy took place between 2002 and 2014, and involved 58 races. Rojas was convicted of conspiring with three veterinarians to have the drugs administered to horses on the day they were entered to race.

The evidence presented during the trial showed that steps were taken to conceal this conduct by backdating invoices for the sale and administration of drugs to the horses on race day, as well as the submission of fraudulent veterinarian treatment reports to the Pennsylvania Horse Racing Commission.

The United States Attorney’s Office prosecuted several other individuals as part of this investigation in federal and state court, including:

• Danny Robertson, the official clocker, charged with wire fraud, sentenced to one year probation and ordered to pay a $2,500 fine;

• Craig Lytel, a racing official, charged with wire fraud, sentenced to four months in prison and ordered to pay a $1,000 fine;

• Renée Nodine, veterinarian, charged with misbranding and conspiracy, awaiting sentencing;

• Kevin Brophy, veterinarian, charged with misbranding and conspiracy, awaiting sentencing;

• Fernando Motta, veterinarian, charged with misbranding and conspiracy, awaiting sentencing;

• David Wells, owner and trainer, charged with rigging a publicly exhibited contest, sentenced on February 23, 2015, to three months’ imprisonment;

• Patricia Rogers, trainer, charged with rigging a publicly exhibited contest, received an ARD in Dauphin County Court of Common Pleas;

• Samuel Webb, trainer, charged with rigging a publicly exhibited contest, received an ARD in Dauphin County Court of Common Pleas.

The case was investigated by the by the Federal Bureau of Investigation, the Pennsylvania Department of Agriculture’s Horse Racing Commission and the Food and Drug Administration, Office of Criminal Investigations. Assistant United States Attorney William A. Behe prosecuted the case.

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A Boardman man was sentenced to nearly five years in prison for defrauding investors out of nearly $1.2 million and related tax violations, said Acting U.S. Attorney David A. Sierleja, Stephen D. Anthony, Special Agent in Charge of the FBI and Ryan L. Korner, Special Agent in Charge, IRS Criminal Investigation, Cincinnati Field Office

George N. Krinos was sentenced to 57 months in prison. U.S. District Judge Dan Aaron Polster ordered Krinos to pay $1.1. million in restitution to the victims and $177,000 in restitution to the IRS.

Krinos previously pleaded guilty to a one count each of engaging in a securities fraud scheme and willfully failing to collect and pay taxes for his employees.

Krinos, through his various companies known as Krinos Holdings, engaged in a securities fraud scheme in which he sold through false and deceptive practices securities to numerous victims in Ohio. These securities consisted of debenture notes and private placement memoranda that were not properly registered with the Securities and Exchange Commission. Because the securities were not registered with and therefore subject to greater scrutiny by the SEC, Krinos was limited to selling them to “accredited investors” who were generally individuals having a net worth in excess of $1 million or who met specific, high-dollar income thresholds, according to court documents.

From 2011 through 2014, Krinos sold these unregistered securities to at least 10 investors in Ohio, causing them financial losses. Krinos sold the securities under the pretense that his investors’ funds would be used for legitimate business purposes, including to provide venture capital to various client companies seeking funding from Krinos Holdings. Rather than use these funds for their intended uses, Krinos instead used the money for personal expenses and to engage in unauthorized foreign currency transactions. To entice his victims, Krinos made promises that their initial investments of $.10 per share would rise in value to as much as $5 or $6 per share. Krinos also falsely told investors and others that he managed approximately $600 million in an investment account when he in fact had only $5 in the account, according to court documents.

Krinos submitted falsified letters and statements to reflect high balances in his accounts. Krinos also falsely told investors that they were making high returns on their investments and that his relationships with the client companies was on good terms. Contrary to his representations to his investors, Krinos actually used their funds on for his own personal use at restaurants, bars, casinos, adult entertainment clubs and hotels. Rather than disclose these personal expenses, Krinos later characterized them as “sales and marketing” costs in a budget given to his shareholders at a meeting in Boardman, in 2013, according to court documents.

Krinos also improperly withheld taxes, including federal income taxes and Federal Insurance Contribution Act taxes from his employees without paying over those taxes to the IRS. Over the course of approximately two years, Krinos improperly withheld and kept approximately $91,495 of his employees’ tax contributions from the IRS, according to court documents.

“This defendant lied to investors as means to funding a lavish lifestyle for himself,” Sierleja said.

“George Krinos left several investors in financial peril and created a recipe for devastation that could last a lifetime,” Korner said. "Additionally, employment tax fraud results in the loss of tax revenue to the United States government and the loss of future Social Security or Medicare benefits for the employees."

This case is being prosecuted by Assistant U.S. Attorneys Om Kakani and Robert J. Patton, following an investigation by the Federal Bureau of Investigation and the Internal Revenue Service – Criminal Investigations.

United States Attorney Randolph J. Seiler announced today that a former executive board member of the Sisseton-Wahpeton Sioux Tribe was sentenced in federal court to 20 months of imprisonment.

Thomas Adams, 46, and of the Old Agency District, was also ordered to pay restitution in the amount of $151,477, and to serve three years of supervised release after serving his prison sentence.

According to court documents, beginning on or about January 20, 2011, and continuing through March 9, 2013, in the District of South Dakota and elsewhere, Thomas Adams formed an agreement with others to embezzle, steal, and knowingly convert to their own use, funds from the Old Agency District of the Sisseton Wahpeton Oyate Sioux Tribe ("Tribe"), an Indian tribal organization. Adams joined the agreement knowing its illegal purpose. The Old Agency District ("District") is a subdivision of the Tribe.

Adams, among others, were elected executive board members of the District. During the relevant time period, the District's executive board members were entitled to receive a monthly stipend for their service. From approximately January 2011 through March 2013, Adams and others stole money from the District by writing checks to themselves for payroll, stipends, assistance, travel, and other miscellaneous reasons. As part of his plea agreement, Adams stated that his co-defendants stole a total of $415,499 from the District. The Defendant received $164,477 of the stolen funds and used the funds for his own purposes.

The investigation is being conducted by the Federal Bureau of Investigation and the United States Attorney’s Office. Assistant U.S. Attorney Ann M. Hoffman is prosecuting 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 United States 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 United States 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.