Western District of Arkansas

Fayetteville, Arkansas - Conner Eldridge, United States Attorney for the Western District of Arkansas, announced that Charles Edward Elliott and Nicholas Krug, both of Mountain Home, Arkansas, were sentenced today on one count of Conspiracy to Commit Wire Fraud. Elliot, 81 years old was sentenced to 42 months of probation with the first 36 months being home confinement. Krug, age 64, was sentenced to 42 months in prison followed by three years of supervised release. Elliot and Krug were also ordered to pay restitution in the amount of $539,000.00 jointly and severally. The sentencing took place before the Honorable Timothy L. Brooks in the United States District Court for the Western District of Arkansas in Fayetteville.

United States Attorney Eldridge commented, “These two defendants swindled investors out of their hard-earned money, a crime that will not be tolerated in the Western District of Arkansas. With today’s sentence, justice has been served, and these two defendants have been held accountable for their abhorrent conduct. We remain committed to investigating and prosecuting fraudulent schemes that are designed to defraud unknowing victims.”

“Today's sentences demonstrate our resolve to put an end to fraud schemes such as those perpetuated by Elliot and Krug,” states David T. Resch, Special Agent in Charge, Little Rock Federal Bureau of Investigation, “We appreciate our partnership with the United States Attorney’s Office and will continue to work together to aggressively investigate and prosecute such violations.”

According to evidence presented at the trial, in early 2007, a California woman was approached by Elliott, who was a partner with Krug in a business called “Sovereign International”, regarding an investment opportunity. They claimed to be raising money for a trading program involving a large group of investors stating that the investment would pay interest of 10% per month for one year, and at the end of the year investors would get their principal investment back. The California woman, after receiving instructions, wired $500,000 to Sovereign International’s checking account. Bank records confirm that prior to that deposit, the account held only $201.26. With that deposit, Elliott and Krug made numerous payments to other investors and wrote a $50,000 check to Krug International, another company of Elliott and Krug’s. On April 19, 2007, only $9,232.23 remained in the Sovereign International account. On April 20, 2007, an individual from Mountain Home, who was solicited by Krug for the same investment opportunity, gave Sovereign International $100,000 check that was subsequently deposited into the Sovereign International account. Elliott and Krug used the Mountain Home person’s money to send the first 10% interest check to the California woman. Approximately $10,000 was sent to the California woman a year later. The principal investment amount of $500,000 was never returned.

Elliott and Krug were originally indicted by a Federal Grand Jury on October 30, 2013. They were convicted by Jury Trial on October 7, 2014.

This case was investigated by the Federal Bureau of Investigations. Assistant U.S. Attorneys’ Candace Taylor and Brandon Carter prosecuted the case for the United States.

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Related court documents may be found on the Public Access to Electronic Records website @ www.pacer.gov

Fayetteville, Arkansas - Conner Eldridge, United States Attorney for the Western District of Arkansas, announced that Leonel Padilla, Andres Diaz and Jonni Diaz were sentenced yesterday in Northwest Arkansas to a total of over 32 years in federal prison for drug trafficking offenses. Padilla, age 27, of Springdale, was sentenced to 87 months in prison followed by four years of supervised release for Distribution of Methamphetamine; Andres Diaz, age 49, of Barstow, California, was sentenced to 180 months in prison followed by three years of supervised release for Distribution of Methamphetamine; and Jonni Diaz, age 47, of Barstow, California, was sentenced to 120 months in prison followed by three years of supervised release for Aiding and Abetting the Distribution of Methamphetamine. The Honorable Timothy L. Brooks presided over the sentencing hearings in the United States District Court in Fayetteville.

United States Attorney Eldridge commented, “These sentences handed down represent significant prison time for those that brought methamphetamine onto our streets and into our communities. Drug trafficking and the violence it brings will not be tolerated in Northwest Arkansas, or anywhere across the Western District. We remain steadfast in our commitment to keeping our children and our communities safe from drugs and other illegal activities by assuring that those responsible for this type of criminal behavior will be brought to justice.”

“Methamphetamine brings turmoil into the lives of those who are addicted to or live around it,” stated David Downing, Assistant Special Agent in Charge of DEA’s Little Rock District Office. “The sentences imposed in this case should be a warning to anyone thinking of polluting our communities with this addictive substance. DEA, along with our law enforcement partners are committed to investigating illegal organizations that profit from the distribution of methamphetamine and other illegal and dangerous narcotics,” said Downing.

According to court records, investigators with the Drug Enforcement Administration (DEA) were conducting an ongoing narcotics investigation known as “West End Gambler” into an organization that was involved in distributing large quantities of methamphetamine in Northwest Arkansas when they determined Leonel Padilla to be a suspect. During the investigation, DEA agents arranged a controlled purchase of approximately one ounce of methamphetamine on August 9, 2013 in Siloam Springs, Arkansas from Padilla in exchange for $1,500.00. DEA agents recovered the methamphetamine and sent it to the DEA Crime Laboratory where testing confirmed the substance contained actual methamphetamine. Padilla entered a plea of guilty to one count of Distribution of Methamphetamine on April 7, 2014.

Agents from the Drug Enforcement Administration began another investigation in March of 2014 after learning that large quantities of methamphetamine were being distributed out of the Springdale, Arkansas area by an individual named Andres Diaz. DEA agents utilized a confidential informant to conduct a recorded conversation with Diaz on March 11, 2014, where Diaz agreed to meet with the informant’s friend who was looking to obtain large quantities of methamphetamine. As a result, a Task Force Officer with the DEA, acting in an undercover capacity, placed several phone calls and exchanged text messages with Diaz where Diaz agreed to meet with the undercover officer and provide him or her with an ounce of methamphetamine in exchange for $1,400.00. A few days later, agents with the DEA watched and listened as the undercover officer met with Diaz at a local business in Springdale, Arkansas where Diaz provided the undercover officer with approximately one ounce of methamphetamine in exchange for $1,400.00. Diaz then provided an additional two ounces of methamphetamine to the undercover officer with the agreement that the undercover officer would pay Diaz at a later date. The methamphetamine was sent to the DEA Crime Laboratory where it was determined that the substance sold did contain actual methamphetamine. Andres Diaz was arrested on April 18, 2014, and at that time agreed to provide a statement to officers regarding his drug trafficking activities. During the interview, Andres Diaz admitted to the distribution of methamphetamine in Springdale, Arkansas. Andres Diaz pleaded guilty to one charge of Distribution of Methamphetamine on September 22, 2014.

While investigating Andres Diaz, and as a result of the same recorded conversation that took place on March 11, 2014, a Task Force Officer with the DEA, acting in an undercover capacity, placed several phone calls and exchanged text messages with Andres Diaz. Through the text messages, Diaz agreed to meet with the undercover officer on March 26, 2014, and provide him or her with two ounces of methamphetamine in exchange for $2,400.00. On March 26, 2014, other agents with the DEA watched and listened as the undercover officer went to a local business in Springdale, Arkansas to meet with Andres Diaz. Once there, the officer noticed Diaz’s vehicle in the parking lot. Andres Diaz was driving the vehicle and Jonni Diaz was sitting in the front passenger seat. During the transaction, Andres Diaz placed two ounces of methamphetamine onto Jonni Diaz’s purse, which was sitting in her lap. Jonni Diaz then picked up the methamphetamine and handed it to the undercover officer. The undercover officer then paid Andres Diaz for the methamphetamine. The substance was sent to the DEA Crime Laboratory where it was determined the substance did contain actual methamphetamine. Jonni Diaz was arrested on April 18, 2014, and agreed to provide a statement regarding her drug trafficking activities. During the interview, Jonni Diaz then admitted to aiding and abetting in the distribution of methamphetamine. Jonni Diaz pleaded guilty to one charge of Aiding and Abetting the Distribution of Methamphetamine on July 31, 2014.

These cases were investigated by the Drug Enforcement Administration, the Benton County Sheriff’s Office, the Washington County Sheriff’s Office, the Springdale Police Department, and the Fayetteville Police Department. Assistant United States Attorney Clay Fowlkes prosecuted the cases for the United States.

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Related court documents may be found on the Public Access to Electronic Records website @ www.pacer.gov

Fayetteville - Conner Eldridge, United States Attorney for the Western District of Arkansas, announced that Craig Goettsch, 53, of Rogers, Arkansas was sentenced today to 60 months in prison followed by five years of supervised release for Possession of Child Pornography. The sentencing took place before the Honorable Timothy L. Brooks in the United States District Court in Fayetteville.

U. S. Attorney Eldridge commented, “Today’s sentence is a reminder that we will not rest in our efforts to identify, investigate, and prosecute those who commit crimes against our children. Every time a video or image involving sexual abuse of children is downloaded or viewed, those children are re-victimized. We appreciate the hard work of law enforcement to bring these sexual predators to justice.”

According to court records, in May 2013, members of the Northwest Arkansas Internet Crimes Against Children taskforce identified a computer that was engaging in the distribution of child pornography via an internet file sharing program. A subsequent investigation revealed that the subscriber information related to the suspect internet user account returned to a residence in Rogers, Arkansas, and a subscriber name of Craig Goettsch. In response, law enforcement obtained a search warrant for the Goettsch’s residence. The warrant was executed in January of 2014, at which time law enforcement seized numerous computers and other digital storage devices. Goettsch was later interviewed and admitted to using the internet to download and view child pornography. A subsequent forensic examination of the confiscated items revealed thousands of images of child pornography. On October 2, 2014, Goettsch pleaded guilty in Federal Court to possessing child pornography. At sentencing, the Government presented the Court with evidence that some of the minors depicted in the images were as young as 8 years old.

This case was investigated by Homeland Security Investigations and Internet Crimes Against Children Task Force. Assistant United States Attorney Dustin Roberts prosecuted the case for the United States.

The case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and their Criminal Division Child Exploitation and Obscenity Sections (CEOS), Project Safe Childhood marshals federal, state, and local resources to better locate, apprehend, and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.

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Related court documents may be found on Public Access to Electronic Records Website @www.Pacer.gov

Fayetteville, Arkansas – Conner Eldridge, United States Attorney for the Western District of Arkansas, announced that James Ray King Jr., age 57, of Springdale, was sentenced today to 60 months in prison with three years of supervised release for being a felon in possession of a firearm. United States District Judge Timothy L. Brooks presided over the sentencing in the United States District Court in Fayetteville.

United States Attorney Eldridge commented “Felons in possession of firearms pose a serious threat of harm to police officers and citizens in our communities. Our office, along with local authorities, will continue to relentlessly investigate and prosecute these types of cases in order to keep communities throughout the Western District of Arkansas safe from senseless violence.”

According to court records, on March 26, 2014, officers with the Springdale Police Department were dispatched to a disturbance at Johnson Meadows Apartments in Springdale. Upon arrival, officers observed King outside of his apartment in possession of a firearm. King was taken into custody at that time, and officers determined that the firearm was stolen. At King’s residence, officers located pipes, digital scales, and numerous plastic baggies used for packaging drugs. Outside of King’s apartment, officers located 14 grams of methamphetamine in yard debris near the location where King was taken into custody. King has previously been convicted of two felony drug charges coming out of Howard County, Arkansas, and as a prior felon is prohibited from possessing firearms. The stolen firearm in King’s possession was determined to have been manufactured outside the state of Arkansas. On July 8, 2014, King pleaded guilty to one count of being a felon in possession of a firearm.

This case was investigated by the Springdale Police Department and the Bureau of Alcohol, Tobacco, Firearms and Explosives. Assistant U.S. Attorney David Harris prosecuted the case for the United States.

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Related court documents may be found on the Public Access to Electronic Records website @ www.pacer.gov

Law Enforcement Seeking Assistance From Potential Victims

Harrison, AR - Conner Eldridge, United States Attorney for the Western District of Arkansas, announced that Travis Allen Blount, Jr., aka Travis Allen, or Allen Blount, age 56, of Kirbyville, Missouri, appeared in United States Magistrate Court in Springfield, Missouri for an initial appearance before United States Magistrate Judge David P. Rush on a complaint for charges of three counts of Mail Fraud, one count of Wire Fraud, and two counts of Money Laundering. The charges stem from a scheme to defraud involving classic and vintage cars. Blount previously lived in Harrison and Hot Springs, Arkansas and is formerly from Louisiana.

U.S. Attorney Eldridge stated, “As alleged, this case involves a fraudulent scheme designed for personal gain. In a case such as this where multiple aliases are used in multiple areas, it is difficult to identify all of the victims. For that reason, we are reaching out to try to identify these victims so that justice can be done for all that may have been affected, and ask that you contact Law Enforcement at the phone number below with any pertinent information. Our office remains dedicated to pursuing fraud cases and holding accountable those who swindle honest and vulnerable people out of their hard-earned money by their deceitful schemes.”

According to the complaint, Blount operated two car lots, Corvettes and Classics in Harrison, Arkansas and Al’s Hot Rod’s in Kirbyville, Missouri. Blount would tell victims he would sell their classic and vintage vehicles on consignment, but he would frequently sell a car and not pay the owner, or he would accept payment from a buyer and then not deliver the vehicle or the title to the buyer. Please contact Special Agent Tim Arsenault at 479-571-9763 if you have any information in this case.

This case is being investigated by the Financial Crimes Task Force in the Western District of Arkansas, the Internal Revenue Service - Criminal Investigation Division, Homeland Security Investigations, the Fayetteville Police Department, and the Harrison Police Department. Assistant U.S. Attorney Kyra Jenner is prosecuting the case for the United States.

The charges in the complaint are only allegations. A person is presumed innocent unless or until he or she is proven guilty beyond a reasonable doubt in a court of law.

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Texarkana, Arkansas - Conner Eldridge, United States Attorney for the Western District of Arkansas, announced that Cletus Davis, age 39, of Hot Springs, was sentenced today to 70 months imprisonment and three years of supervised release on two counts of Distribution of a Controlled Substance, Crack Cocaine.  The sentencing took place before the Honorable Susan O. Hickey in the United States District Court for the Western District of Arkansas in Texarkana.

U.S. Attorney Eldridge commented, “Those who bring illegal drugs onto our streets threaten our communities and the families that live in them.  Hot Springs, one of Arkansas’s most beautiful cities, has been plagued by violence escalated by this criminal activity. We will remain focused on investigating and prosecuting these crimes and hold those involved accountable.”

According to court records, during the course of an ongoing investigation, on two separate occasions in August, 2013, detectives with the Hot Springs Police Department Street Crimes Unit arranged for a controlled purchase of crack cocaine from Cletus Davis in exchange for U.S. currency.  On each occasion after the exchange, the suspected substance was field tested and showed to be positive for cocaine.  The substance was then sent to the Arkansas State Crime Lab where it was confirmed to be cocaine base. Davis pleaded guilty to two counts of Distribution of a Controlled Substance, Crack Cocaine on August 15, 2014. He was previously convicted of 3 felony drug offenses between 1997 and 2007.

This case was investigated by the Hot Springs Police Department. Assistant United States Attorney David Harris prosecuted the case for the United States.

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Related court documents may be found on the Public Access to Electronic Records website @ www.pacer.gov

Fort Smith, Arkansas - Conner Eldridge, United States Attorney for the Western District of Arkansas, announced that Robert Joseph Butler, age 27, of Clayton, New Jersey, was sentenced today to 120 months in federal prison and five years of supervised release for each count of Transporting a Minor in Interstate Commerce with the Intent to Engage in Sexual Activity and Sexual Assault. The sentences will run concurrent with each other. The Honorable P.K. Holmes III in the United States District Court for the Western District of Arkansas in Fort Smith presided over the sentencing.

U.S. Attorney Eldridge commented, “There is no higher priority in our office than cases involving crimes against children. The AMBER Alert system, which Arkansas implemented in 2001, was a critical instrument in the successful recovery of this young victim, as were the efforts of our partnering agencies in the investigation. We remain steadfast in our commitment to identifying and prosecuting those who commit federal crimes targeting children, including those like the defendant who seek to contact children over the internet for sexual purposes.”

Crawford County Sheriff Ron Brown stated, “Fortunately, this case had a good ending. During the investigation it was discovered that the abductor had hidden out in rural Crawford County and disguised the stolen car by painting it a different color because of the AMBER Alerts. This signifies the importance and success of the AMBER Alert System. I commend the Deputy U.S. Marshals and the Sheriff Deputies who were able to locate the victim and apprehend her abductor, and the U.S. Attorney’s office for presenting a solid case of which brought the abductor to this sentencing date.”

“FBI Arkansas commends the work by the U.S. Marshal Service, Crawford County Sheriff’s Office, and the U.S. Attorney’s Office, rescuing this child, apprehending the subject, and prosecuting this offense,” said David T. Resch, Special Agent in Charge at the Little Rock Federal Bureau of Investigation, “Our children are targeted each day, but Arkansans should be proud of the consistent cooperation exhibited as we all work to protect them.”

According to court records, Butler communicated with the fourteen-year-old minor victim through social media and text messaging for over a year before meeting her for the first time at her home in New Mexico in late 2013. The two remained in contact, and on March 31, 2014, Butler made arrangements to meet the minor victim in Albuquerque, New Mexico. At the pre-arranged meeting, the two decided to leave town and began traveling through Texas, Oklahoma, and ultimately the Western District of Arkansas. During their travels, Butler engaged in sexual activity with the minor. On April 17, 2014, deputies with the United States Marshal Service and Crawford County Sheriff’s Office located Butler and the minor victim in Fort Smith, Arkansas and placed Butler under arrest. Later, Butler admitted to an FBI Special Agent that he knew the minor was fourteen years old when he met her. Butler pleaded guilty to the charges on August 29, 2014.

This case was investigated by the Crawford County Sheriff’s Office, the U.S. Marshal’s Service and the FBI. Assistant U. S. Attorney Kyra Jenner prosecuted the case for the United States.

The case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and their Criminal Division Child Exploitation and Obscenity Sections (CEOS), Project Safe Childhood marshals federal, state, and local resources to better locate, apprehend, and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.

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Related court documents may be found on Public Access to Electronic Records Website @www.Pacer.gov