Southern District of Florida

Brian J. Garrahan, 42, and Kelly A. Spillman, 35, both of Delray Beach, Florida, were ordered to pay over $4 million for their participation in a conspiracy to defraud federal agencies and federal contractors by issuing fraudulent bonds to insure government contracts.

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, and Paul Brezinski, Acting Special Agent in Charge, United States Environmental Protection Agency (EPA), Office of the Inspector General (OIG), Atlanta Field Office, made the announcement.

Garrahan and Spillman previously pled guilty to one count of conspiracy to commit mail and wire fraud, in violation of Title 18, United States Code, Section 371.  On September 16, 2016, U.S. District Judge Kenneth A. Marra sentenced Garrahan and Spillman, and scheduled a later hearing to determine restitution.  Judge Marra sentenced Garrahan to 30 months’ imprisonment, to be followed by two years of supervised release.  Garrahan was also ordered to forfeit over $1 million.  Judge Marra sentenced Spillman to time served, to be followed by two years of supervised release to include twelve months of home detention.  Spillman was ordered to forfeit approximately $130,000. 

Today, Judge Marra issued Amended Judgments as to Garrahan and Spillman.  Judge Marra ordered Garrahan and Spillman to pay $4,414,847.19 in restitution to fourteen federal agencies and two federal contracting companies.  The federal agencies included, among others:

          a.       The United States Army;

          b.       The United States Department of Energy;

          c.       The United States Environmental Protection Agency;

          d.       The United States Department of Housing and Urban Development;

          e.       The United States Department of State;

          f.        The United States Department of Veterans Affairs; and

g.       The United States General Services Administration.

The restitution as well as the forfeiture previously ordered is joint and several as to Garrahan, Spillman, and co-conspirator Alex Xavier (Case No. 15-80149-Cr-Marra).  Xavier previously pled guilty and is scheduled to be sentenced on November 4, 2016. 

According to court documents, from approximately June 2008 through June 2013, Garrahan and Spillman conspired with each other and others to obtain payments from government contractors for issuing fraudulent bonds, that is, insurance, for large government contracts.  The fraudulent bonds were individual surety bonds, usually signed by Garrahan and two other co-conspirators, a relative of Garrahan, and Alex Xavier, who had prior experience with government bonds. 

Individual surety bonds require collateral.  The collateral used was land or cash or cash equivalent assets held in bank accounts.  However, Garrahan and Spillman knew that the claims of ownership of land were false and the claims of possessing funds were false.  Also, the supporting documents related to these assets were fraudulent.

Garrahan, Spillman and their co-conspirators issued a large number of bonds dealing with over 100 contractors and over ten federal agencies, and other entities.  Often contracts had “modifications,” that is, contract expansions, that led to more bonds being issued. 

Mr. Ferrer commended the investigative efforts of EPA-OIG and the U.S. Department of Veterans Affairs-OIG, together with the Criminal Investigation Command of the U.S. Army; U.S. Department of Defense-OIG, Defense Criminal Investigative Services; U.S. Department of Energy-OIG; U.S. General Services Administration-OIG; U.S. Department of Housing and Urban Development-OIG; and U.S. Department of State-OIG.  This case is being prosecuted by Assistant U.S. Attorney Ana Maria Martinez.

Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.

Two Broward County residents were sentenced to 12 and 11 years in prison for their participation in a stolen identity tax fraud scheme involving the personal identifying information of deceased individuals.

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, Kelly R. Jackson, Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI), and George L. Piro, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, made the announcement.

Maurice Exavier, 36, of Lauderhill, was sentenced to 145 months in prison, to be followed by three years of supervised release. Carline Maurice, 36, was sentenced to 132 months in prison, to be followed by three years of supervised release. The defendants were ordered to pay joint and several restitution in the amount of $1,265,611.  Exavier and Maurice were previously convicted by a trial jury of one count of conspiracy to commit wire fraud, in violation of Title 18, United States Code, Section 1349, one count of conspiracy to commit identity fraud, in violation of Title 18, United States Code, Section 1028(f), fifteen counts of wire fraud, in violation of Title 18, United States Code, Section 1343, and five counts of aggravated identity theft, in violation of Title 18, United States Code, Section 1028A. 

According to evidence presented at trial, Exavier and Maurice acquired and used the names, dates of birth, and Social Security numbers of deceased individuals to file false tax returns with the IRS that contained fraudulent claims for refunds. Exavier and Maurice sought payment of the refunds as Refund Anticipation Checks (RACs), checks issued by a bank for the amount of a claimed refund minus deductions for tax preparation and other service fees, if applicable. The RACs were then printed locally at a tax preparation company where a particular defendant had access or control. The refund checks were then deposited into a bank account controlled by defendants Exavier and Maurice so the funds could be used for the personal benefit and use of the conspirators.

Mr. Ferrer commended the investigative efforts of IRS-CI and the FBI. The case was prosecuted by Assistant U.S. Attorney Karen E. Rochlin.

Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.

A South Florida resident was arrested and charged with stealing clients’ money for his own personal benefit.

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, Mark Selby, Special Agent in Charge, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (ICE-HSI), and Drew J. Breakspear, Commissioner, Florida Office of Financial Regulation, made the announcement. 

Benjamin Crozier, 39, of Coral Springs, Florida, has been arrested and charged with conspiracy to commit wire fraud, in violation of Title 18, United States Code, Section 1349, and four counts of wire fraud, in violation of Title 18, United States Code, Section 1343.

According to the indictment, between June 2011 and June 2012, Crozier was the manager and registered agent for Capital Finance Group, LLC (“Capital Finance”). Crozier and others falsely represented to individuals that Capital Finance was a company that would secure loans for its clients to finance business projects in return for a small advanced payment, generally between $5,000 and $10,000. In furtherance of the scheme, Crozier and others represented that Capital Finance had contacts with financial lenders interested in providing funding for various business projects of Capital Finance’s clients.  The indictment further alleges that Crozier misled prospective borrowers by promising them that the advance fees were fully refundable at the clients’ option if Capital Finance did not obtain financing for its clients within one year and that, in fact, Crozier and his co-conspirators used the clients’ money for their own personal benefit.

In furtherance of the scheme, the indictment alleges that Crozier and others sent individuals a document from “Santander Lending LLC” that purported to be issued by Banco Santander and used registered trademarks of Banco Santander without the bank’s knowledge or permission.

Mr. Ferrer commended the investigative efforts of ICE-HSI and the Florida Office of Financial Regulation.  The case is being prosecuted by Assistant United States Attorney Brooke Watson.

An indictment is only an accusation and a defendant is presumed innocent unless and until proven guilty.

Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.

A West Palm Beach, Florida, resident pleaded guilty today to multiple criminal charges in connection with a sophisticated global cell phone fraud scheme that involved compromising cellphone customers’ accounts and “cloning” their phones to make fraudulent international calls.

U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida, Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and Special Agent in Charge George L. Piro of the FBI’s Miami Field Office made the announcement. 

          Jose Santana, aka Octavio Perez, 53, pleaded guilty to one count of conspiracy to commit wire fraud, access device fraud, the use, production or possession of modified telecommunications instruments and the use or possession of hardware or software configured to obtain telecommunications services; one count of wire fraud and one count of aggravated identity theft.  Sentencing will be scheduled for a later date before Senior U.S. District Judge Daniel T.K. Hurley of the Southern District of Florida.

          According to the plea agreement, Santana and his co-conspirators participated in a scheme to steal access to and fraudulently open new cellphone accounts using the personal information of individuals around the United States. 

          Santana admitted that his role in the scheme included operating a “call site” from his residence in West Palm Beach using the alias Octavio Perez.  He admitted that he would receive telecommunication identifying information associated with customers’ accounts from his co-conspirators and use that data, as well as other software and hardware, to reprogram cellphones that he controlled.  According to the plea agreement, Santana’s co-conspirators would then transmit thousands of international calls over the internet to Santana’s residence, where he would route them through the re-programmed cellphones to Cuba, Jamaica, the Dominican Republic and other countries with high calling rates.  The calls were billed to the customers’ compromised accounts, he admitted. 

In addition, Santana admitted that from December 2010 through October 2011, co-conspirators sent him more than 1,000 emails containing telecommunications identifying numbers associated with cellphone account holders around the United States.  According to the plea agreement, Santana was personally responsible for than $150,000 in loss resulting from the scheme.

Santana is the second defendant to plead guilty in the case.  On Aug. 29, 2016, Edwin Fana pleaded guilty to similar charges in this matter, and is scheduled to be sentenced on Dec. 22, 2016.

The FBI investigated the case, dubbed Operation Toll Free, which is part of the bureau’s ongoing effort to combat large-scale telecommunications fraud.  Senior Counsel Matthew A. Lamberti of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorney Jared M. Strauss of the Southern District of Florida are prosecuting the case.

Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.

A West Palm Beach, Florida, resident pleaded guilty today to multiple criminal charges in connection with a sophisticated global cell phone fraud scheme that involved compromising cellphone customers’ accounts and “cloning” their phones to make fraudulent international calls.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida and Special Agent in Charge George L. Piro of the FBI’s Miami Field Office made the announcement. 

Jose Santana, aka Octavio Perez, 53, pleaded guilty to one count of conspiracy to commit wire fraud, access device fraud, the use, production or possession of modified telecommunications instruments and the use or possession of hardware or software configured to obtain telecommunications services; one count of wire fraud and one count of aggravated identity theft.  Sentencing will be scheduled for a later date before Senior U.S. District Judge Daniel T.K. Hurley of the Southern District of Florida.

According to the plea agreement, Santana and his co-conspirators participated in a scheme to steal access to and fraudulently open new cellphone accounts using the personal information of individuals around the United States. 

Santana admitted that his role in the scheme included operating a “call site” from his residence in West Palm Beach using the alias Octavio Perez.  He admitted that he would receive telecommunication identifying information associated with customers’ accounts from his co-conspirators and use that data, as well as other software and hardware, to reprogram cellphones that he controlled.  According to the plea agreement, Santana’s co-conspirators would then transmit thousands of international calls over the internet to Santana’s residence, where he would route them through the re-programmed cellphones to Cuba, Jamaica, the Dominican Republic and other countries with high calling rates.  The calls were billed to the customers’ compromised accounts, he admitted. 

In addition, Santana admitted that from December 2010 through October 2011, co-conspirators sent him more than 1,000 emails containing telecommunications identifying numbers associated with cellphone account holders around the United States.  According to the plea agreement, Santana was personally responsible for than $150,000 in loss resulting from the scheme.

Santana is the second defendant to plead guilty in the case.  On Aug. 29, 2016, Edwin Fana pleaded guilty to similar charges in this matter, and is scheduled to be sentenced on Dec. 22, 2016.

The FBI investigated the case, dubbed Operation Toll Free, which is part of the bureau’s ongoing effort to combat large-scale telecommunications fraud.  Senior Counsel Matthew A. Lamberti of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorney Jared M. Strauss of the Southern District of Florida are prosecuting the case.

Yesterday, a Kissimmee, Florida resident was sentenced to more than seventeen years in prison, after having been convicted at trial of wire fraud.

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, and George L. Piro, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, made the announcement.  

Michael John Alcocer Roa, 34, of Kissimmee, Florida, was previously convicted at trial by a jury of five counts of wire fraud, in violation of Title 18, United States Code, Section 1343.  U.S. District Court Senior Judge Patricia A. Seitz sentenced Alocer to 210 months’ imprisonment, to be followed by 3 years of supervised release.  A restitution hearing is scheduled for December 13, 2016 at 10:00 a.m.

According to the court record, including testimony and evidence presented at trial, Alcocer set up a Florida corporation called Inovatrade Inc. (“Inovatrade”) in October 2008.  Between 2008 and 2011, Alcocer told people that they could trade foreign currencies at Inovatrade, set up managed accounts in which others could trade foreign currencies on their behalf, or earn guaranteed interest payments of approximately 15% per year or greater.  Alcocer also represented that Inovatrade maintained all of its clients’ accounts segregated, safeguarded, and protected in a trust account. 

Evidence at trial showed that based on those and other representations, approximately 300 individuals and entities sent Inovatrade over $7 million.  Many of those individuals and entities received documents from Inovatrade purporting to show their account balances, as well as trading activity in their accounts or monthly interest and other promotional payments earned.  But when individuals requested to withdraw their money from Inovatrade, many were unable to do so.  Alcocer and Inovatrade provided various, and often inconsistent, excuses, and after some time, many of the individuals and entities received no more communications, nor did they receive their money.

Financial summaries of bank records associated with Inovatrade and Alcocer introduced at trial showed that little to no actual trading took place in the Inovatrade accounts, the vast majority of the money that entered the Inovatrade accounts came from individuals and entities rather than from business revenue, and Alcocer cashed out and transferred millions of dollars of that money from the Inovatrade accounts to personal accounts in the United States and in Panama.

Mr. Ferrer commends the investigative efforts of the FBI.  The case was prosecuted by Assistant U.S. Attorneys John P. Gonsoulin and Vanessa S. Snyder.

Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.

Eight men have been arrested and charged by indictment with two separate conspiracies involving the April 2, 2016 theft of over 23,000 Apple iPhones valued at approximately $6,791,636.81 from the Miami International Airport, LAN Storage facility. 

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, George L. Piro, Special Agent in Charge, Federal Bureau of Investigation (FBI), and Mark Selby, Special Agent in Charge, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (ICE-HSI) made the announcement.

Yoan Perez, 34, of Miami, Leonel Padron Bello, 35, of Miami, Emilio Herrera, 41, of Miami, Ricardo Gonzalez, 52, of Miami, Rasiel Perez, 45, of Miami, Eloy Garcia, 42, of Miami Springs, Misael Cabrera Ruiz, 37, of Miami, and Rodolfo Urra, 36, of Cutler Bay, were indicted on charges related to their involvement in a conspiracy to steal and unlawfully sell Apple iPhones.

According to court records, on April 2, 2016, Yoan Perez and Leonel Padron Bello, took part in a conspiracy and stole over 23,000 Apple iPhones valued at approximately $6,791,636.81 from the Miami International Airport, LAN Cargo storage facility.  According to the indictment, an unknown co-conspirator drove a tractor and trailer to the LAN Cargo facility and purported to be a driver from a shipping company, used fictitious documents, and left the airport with the stolen iPhones.  The indictment further charges that on various dates from May 2016 through September 2016, Yoan Perez, Leonel Padron Bello, Emilio Herrera, Ricardo Gonzalez, Rasiel Perez, Eloy Garcia, Misael Cabrera Ruiz, and Rodolfo Urra conspired together and orchestrated a series of sales of the stolen Apple iPhone 5S and 6S devices.

The United States Attorney’s Office warns all consumers to be cautious when purchasing Apple iPhones from unauthorized individuals, as such individuals may be selling stolen iPhones.  If members of the community have additional information related to the crimes charged in this indictment, they are encouraged to contact the FBI.

Mr. Ferrer commended the investigative efforts of the FBI, ICE-HSI, and the Miami Dade Police Department Airport Investigative Unit.  The case is being prosecuted by Assistant U.S. Attorney Cary O. Aronovitz. 

An indictment is only an accusation and a defendant is presumed innocent unless and until proven guilty.

Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, announced today that Assistant United States Attorney (AUSA) Harry Wallace, of the Miami Office, will lead the U.S. Attorney’s Office efforts in connection with the Justice Department’s nationwide Election Day Program for the upcoming November 8, 2016, general elections.  AUSA Wallace has been appointed to serve as the District Election Officer (DEO) for the Southern District of Florida, and in that capacity is responsible for overseeing the District’s handling of complaints of election fraud and voting rights abuses in consultation with Justice Department Headquarters in Washington.      

United States Attorney Wifredo Ferrer said, “Every citizen must be able to vote without interference or discrimination and to have that vote counted without it being stolen because of fraud.  The Department of Justice will act promptly and aggressively to protect the integrity of the election process.”

The Department of Justice has an important role in deterring election fraud and discrimination at the polls, and combating these violations whenever and wherever they occur.  The Department’s long-standing Election Day Program furthers these goals, and also seeks to ensure public confidence in the integrity of the election process by providing local points of contact within the Department for the public to report possible election fraud and voting rights violations while the polls are open on election day. 

Federal law protects against such crimes as intimidating or bribing voters, buying and selling votes, altering vote tallies, stuffing ballot boxes, and marking ballots for voters against their wishes or without their input.  It also contains special protections for the rights of voters and provides that they can vote free from acts that intimidate or harass them.  For example, actions of persons designed to interrupt or intimidate voters at polling places by questioning or challenging them, or by photographing or videotaping them, under the pretext that these are actions to uncover illegal voting may violate federal voting rights law.  Further, federal law protects the right of voters to mark their own ballot or to be assisted by a person of their choice.

          The franchise is the cornerstone of American democracy.  We all must ensure that those who are entitled to the franchise exercise it if they choose, and that those who seek to corrupt it are brought to justice.  In order to respond to complaints of election fraud or voting rights abuses on November 8, 2016, and to ensure that such complaints are directed to the appropriate authorities, United States Attorney Wifredo Ferrer stated that AUSA/DEO Harry Wallace will be on duty in this District while the polls are open.  AUSA Wallace can be reached by the public at the following telephone number: (305) 961-9001.

          In addition, the FBI will have special agents available in each field office and resident agency throughout the country to receive allegations of election fraud and other election abuses on election day.  The local FBI field office can be reached by the public at (754) 703-2000.

          Complaints about ballot access problems or discrimination can be made directly to the Civil Rights Division’s Voting Section in Washington at 1-800-253-3931 or (202) 307-2767, or by fax at (202) 307-3961, by email to voting.section@usdoj.gov or by complaint form at http://www.justice.gov/crt/complaint/votintake/index.php.

United States Attorney Wifredo Ferrer said, “Ensuring free and fair elections depends in large part on the cooperation of the American electorate.  It is imperative that those who have specific information about discrimination or election fraud make that information available immediately to my Office, the FBI, or the Civil Rights Division.”

Ten owners of Miami-Dade assisted living facilities have been charged with participating in a health care fraud scheme and for receiving kickbacks, in violation of Title 18, United Sates Code, Section 1347 and Title 42, United States Code, Section 1320.  

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, Pam Bondi, Florida Attorney General, Shimon R. Richmond, Special Agent in Charge, U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG), and George L. Piro, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, made the announcement.

          Marlene Marrero, 60, of Miami, Blanca Orozco, 69, of Miramar, Norma Casanova, 67, of Miami Lakes, Yeny De Erbiti, 51, of Miami, Rene Vega, 57, of Miami, Maribel Galvan, 43, of Miami Lakes, Dianelys Perez, 34, of Miami Gardens, Osniel Vera, 47, of Hialeah, Alicia Almeida, 56, of Miami Lakes, and Jorge Rodriguez, 57, of Hialeah, are charged in a 30-count indictment for receiving cash kickbacks and bribes in return for referring individuals residing in their assisted living facilities to the former owner of Florida Pharmacy Inc., a Miami-Dade company, for prescription medications and durable medical equipment paid for by Medicare and Florida Medicaid.

The indictment also charges these ten individuals with health care fraud for allegedly participating in a scheme where they signed and submitted Non-Institutional Medicaid Provider Agreements wherein they falsely represented to Medicaid that they would comply with state and federal laws and all agency rules contained in the Florida Medicaid Provider Handbook which prohibits the solicitation and receipt of kickbacks.  As a result of the defendants’ submission of these false and fraudulent documents Medicaid renewed their provider numbers which allowed them to continue to submit claims for services purportedly rendered to eligible Medicaid beneficiaries.  The defendants caused their assisted living facilities to submit false claims to Medicaid.  As a result of these false and fraudulent claims, Medicaid made payments to the assisted living facilities owned and operated by the defendants. 

“The U.S. Attorney’s Office and our law enforcement partners remain committed to prosecuting members of the South Florida assisted living community who fraudulently use the Medicare and Medicaid benefits of their residents to obtain illegal bribes and kickbacks,” stated U.S. Attorney Wifredo Ferrer.

Attorney General Pam Bondi stated, “We will not allow anyone to take advantage of seniors to defraud the Medicaid program.  Thanks to the joint investigative efforts of my Medicaid Fraud Control Unit and our federal partners, this scheme has been stopped and those responsible will be held accountable.”

“No matter what the scheme or how elaborately disguised, the FBI and our law enforcement partners will investigate and prosecute Medicare fraud to the fullest extent of the law,” said George L. Piro, Special Agent in Charge, FBI Miami. 

          The case is being investigated by the FBI, HHS-OIG, and the State of Florida’s Medicaid Fraud Control Unit and was brought as part of the Medicare Fraud Strike Force, under the supervision of U.S. Attorney’s Office for the Southern District of Florida.  The case is being prosecuted by Special Assistant United States Attorney Hagerenesh Simmons. 

          Since their inception in March 2007, Medicare Fraud Strike Force operations in nine cities have charged more than 2,180 defendants who collectively have falsely billed the Medicare program for more than $6.5 billion.  In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

An indictment is only an accusation and a defendant is presumed innocent unless and until proven guilty.

Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.

Four individuals, including a former Miami-Dade County procurement employee pled guilty in a $5,000,000 fraud and kickback scheme.

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida and George L. Piro, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, made the announcement. 

Roy Jesus Bustillo, 37, Rolando Perez, 57, and Jose Barroso, 51, all of Miami, pled guilty to a one-count Information charging them with conspiracy to commit mail fraud and wire fraud, in violation of Title 18, United States Code, Section 371.  Bustillo, Perez, and Barroso will be sentenced on January 6, 2017 at 9:00 a.m. before U.S. District Judge Robert N. Scola, Jr. Bustillo, Perez, and Barroso face a statutory maximum term of imprisonment of 5 years and a fine of up to $250,000. Ygnacio Valdez, 45, of Miami, a former employee in the Procurement Section of the Miami-Dade County Aviation Department, pled guilty to misprision of a felony, in violation of Title 18, United States Code, Section 4.  Valdez will be sentenced on December 20, 2016 at 11:30 a.m. before U.S. District Judge Ursula Ungaro.  Ygnacio Valdez faces a statutory maximum term of imprisonment of 3 years and a fine of $250,000.

According to the court record, including a stipulated statement of facts, Bustillo was the exclusive area representative in South Florida for the sale of certain LED light fixtures.  In or about 2010, Ivan Valdes, a co-conspirator who previously pled guilty for his involvement in the scheme, told Barroso that he would request that the Miami-Dade County Aviation Department purchase the light fixtures represented by Bustillo, if he was paid a share of the proceeds.  Valdes and Barroso agreed and during the period of 2010 through and including 2015, the Miami-Dade County Aviation Department issued approximately twenty requests for Invitations to Quote for the purchase of millions of dollars of LED light fixtures.  Bustillo provided a quote to each of the vendors interested in competing for the Invitation to Quote.  Global Electrical & Lighting Supplies, Inc., owned by Rolando Perez, submitted bids and was awarded the contracts for each and every Invitation to Quote issued.  Perez and Bustillo had a secret agreement wherein Perez would be the only vendor who knew the actual price that Bustillo had agreed upon with the lighting manufacturer for the light fixtures and that a fake mounting accessory was included in the Invitations to Quote.  Knowing the additional profit that was to be received from each of the contracts, Bustillo and Perez were able to win the Invitation to Quote by keeping Perez’ bid price low.  In order to help ensure that Perez was awarded each of the contracts, Ivan Valdes paid thousands of dollars in cash to Ygnacio Valdez, whose duties in the procurement section in the Miami-Dade County Aviation Department, included collecting and tallying the bids and declaring the lowest responsive bidder on the Invitations to Quote.

On two occasions, Ivan Valdes instructed Barroso to direct Perez to bid on an Invitation to Quote for light fixtures, but he further instructed that the light fixtures should not be ordered from the lighting manufacturer.  Instead, on one occasion the conspirators used light fixtures already in stock at the Miami-Dade County Aviation Department to satisfy the purchase.  On the other occasion, no light fixtures were ever provided, not even from those already in stock.  Perez bid and won the contracts and he and his co-conspirators were paid approximately $500,000 for light fixtures that were never provided to Miami-Dade County Aviation Department.

During the course of the conspiracy, the co-conspirators defrauded the Miami-Dade County Aviation Department of approximately $5,250,000.  Barroso and Ivan Valdes split fraudulent proceeds of approximately $2.2 million.  Bustillo, through his companies, received fraudulent proceeds of approximately $764,000.  Perez received fraudulent proceeds of approximately $1.8 million.  

Mr. Ferrer commended the investigative efforts of the FBI and the Miami-Dade County State Attorney’s Office and its Public Corruption Unit in connection with the investigation of this matter.  The case is being prosecuted by Assistant U.S. Attorney Jeffrey N. Kaplan.

Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.

WASHINGTON – Life Care Centers of America Inc. (Life Care) and its owner, Forrest L. Preston, have agreed to pay $145 million to resolve a government lawsuit alleging that Life Care violated the False Claims Act by knowingly causing skilled nursing facilities (SNFs) to submit false claims to Medicare and TRICARE for rehabilitation therapy services that were not reasonable, necessary or skilled, the Department of Justice announced today.  Life Care, based in Cleveland, Tennessee, owns and operates more than 220 skilled nursing facilities across the country.

 

“This resolution is the largest settlement with a skilled nursing facility chain in the department’s history,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “It is critically important that we protect the integrity of government health care programs by ensuring that services are provided based on clinical rather than financial considerations.”

 

This settlement resolves allegations that between Jan. 1, 2006 and Feb. 28, 2013, Life Care submitted false claims for rehabilitation therapy by engaging in a systematic effort to increase its Medicare and TRICARE billings.  Medicare reimburses skilled nursing facilities at a daily rate that reflects the skilled therapy and nursing needs of their qualifying patients.  The greater the skilled therapy and nursing needs of the patient, the higher the level of Medicare reimbursement.  The highest level of Medicare reimbursement for skilled nursing facilities is for “Ultra High” patients who require a minimum of 720 minutes of skilled therapy from two therapy disciplines (e.g., physical, occupational, speech), one of which has to be provided five days a week.   

 

The United States alleged in its complaint that Life Care instituted corporate-wide policies and practices designed to place as many beneficiaries in the Ultra High reimbursement level irrespective of the clinical needs of the patients, resulting in the provision of unreasonable and unnecessary therapy to many beneficiaries.  Life Care also sought to keep patients longer than was necessary in order to continue billing for rehabilitation therapy, even after the treating therapists felt that therapy should be discontinued.  Life Care carefully tracked the minutes of therapy provided to each patient and number of days in therapy to ensure that as many patients as possible were at the highest level of reimbursement for the longest possible period.  The settlement also resolves allegations brought in a separate lawsuit by the United States that Forrest L. Preston, as the sole shareholder of Life Care, was unjustly enriched by Life Care’s fraudulent scheme.

 

“Billing federal healthcare programs for medically unnecessary rehabilitation services not only undermines the viability of those programs, it exploits our most vulnerable citizens,” said U.S. Attorney Nancy Stallard Harr for the Eastern District of Tennessee. “We are committed to working with our federal partners to protect both.”

 

“The resolution announced today demonstrates the commitment of the U.S. Attorney’s Office to aggressively pursue providers who utilize fraudulent practices to knowingly put their own financial self-interest over a duty to patients,” said U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida.  “It is imperative that providers make healthcare decisions based upon a patient’s need for services rather than a self-serving desire to maximize financial profit.  Our office will continue to investigate fraud allegations, in order to ensure that providers do not compromise the integrity of our public health care programs.”

 

As part of this settlement, Life Care has also entered into a five-year chain-wide Corporate Integrity Agreement with the Department of Health and Human Services Office of Inspector General (HHS-OIG) that requires an independent review organization to annually assess the medical necessity and appropriateness of therapy services billed to Medicare.  

 

“Therapy provided in skilled nursing facilities must be medically reasonable and necessary, and we will continue to vigorously investigate companies that subject their residents to needless and unreasonable therapy,” said HHS Inspector General Daniel R. Levinson.  “The corporate integrity agreement with Life Care is designed to ensure that it only provides therapy based on the individual needs of each resident.”

 

The settlement, which was based on the company’s ability to pay, resolves allegations originally brought in lawsuits filed under the qui tam, or whistleblower, provisions of the False Claims Act by Tammie Taylor and Glenda Martin, former Life Care employees.  The act permits private parties to sue on behalf of the government for false claims for government funds and to receive a share of any recovery.  The government may intervene and file its own complaint in such a lawsuit, as it has done in this case.  The whistleblower reward in this case will be $29 million.

 

The settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services.  The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.  One of the most powerful tools in this effort is the False Claims Act.  Since January 2009, the Justice Department has recovered a total of more than $31.6 billion through False Claims Act cases, with more than $19.2 billion of that amount recovered in cases involving fraud against federal health care programs.

 

This matter was handled by the Civil Division’s Commercial Litigation Branch, the U.S. Attorneys’ Offices for the Eastern District of Tennessee and the Southern District of Florida, and the HHS-OIG, with assistance from the U.S. Attorneys’ Offices for the District of Colorado, the Middle District of Florida, the Northern District of Georgia, the District of Massachusetts and the District of South Carolina and NCI/AdvanceMed, a Medicare Zone Program Integrity Contractor.

 

The two qui tam cases are docketed as United States ex rel. Taylor v. Life Care Centers of America, Inc., No. 1:12-cv-64 (E.D. Tenn) and United States ex rel. Martin v. Life Care Centers of America, Inc., No. 1:08-cv-251 (E.D. Tenn).  The case against Forrest L. Preston is captioned United States v. Preston, No. 1:16-cv-113 (E.D. Tenn).  The claims resolved by the settlement are allegations only; there has been no determination of liability.

 

16-1239

 

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Yesterday, a Vero Beach couple was sentenced for their roles in making and selling homemade immigration and identification documents, by U.S. District Court Judge Robin L. Rosenberg in Ft. Pierce, Florida.

Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida, and Mark Selby, Special Agent in Charge, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (ICE-HSI), made the announcement.

Leynadier Rodriguez Velasquez, 45, of Vero Beach, was sentenced to two years’ imprisonment, followed by 2 years’ supervised release.  He also faces deportation proceedings upon release.  Vanesa Fonseca, 27, of Vero Beach, was sentenced to 12 months’ house arrest and two years’ probation.  Rodriguez Velasquez previously pled guilty to possession with the intent to use unlawfully and to transfer unlawfully, five or more false identification documents, in violation of Title 18, United States Code, Section 1028(a)(3); and immigration document fraud, in violation of Title 18, United States Code, Section 1546(a).  Fonseca previously pled guilty to possession with the intent to use unlawfully and to transfer unlawfully, five or more false identification documents, in violation of Title 18, United States Code, Section 1028(a)(3).

According to court records, including stipulated facts supporting the guilty pleas, in December 2014, Rodriguez arranged to sell an undercover agent five sets of fraudulent immigration documents, each with a Legal Permanent Resident and Social Security card, for a total of ten documents for $1,500 in Vero Beach.  The documents were later delivered by Fonseca.  In April 2016, an undercover agent purchased four sets of documents, each with a Legal Permanent Resident and a Social Security card, for a total of eight documents for $1,500, directly from Rodriguez in Vero Beach.   Pursuant to the investigation, on June 16, 2016, HSI agents executed a federal search warrant at the residence of Rodriguez and Fonseca.  An HSI Computer Forensic Agent located over 400 false identification documents on the computer hard drives and cellular phone of Rodriguez, including Social Security, Legal Permanent Resident and Florida identification cards, some of which dated back to 2011.  The documents included some of the items that had been sold to the undercover agent. Additionally, law enforcement discovered Rodriguez’s computer, printer, laminating plastic and the machine used to produce the fraudulent documents.  Agents also found papers with driver’s licenses and a fraudulent Social Security card with Rodriguez’s name and photo.

Mr. Ferrer commended the investigative efforts of ICE-HSI, Florida Alcohol, Tobacco, and Business Regulation and United States Customs and Border Protection for their work on this case. The case was prosecuted by Assistant U.S. Attorney Carmen Lineberger.

Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.

A South Florida tobacco importer was arrested and charged with fraudulently evading $13 million in federal taxes on imported cigars.

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, Tom Crone, Assistant Administrator for Field Operations, Alcohol and Tobacco Tax and Trade Bureau (TTB), and Thomas M. Jankowski, Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI), Washington, DC Field Office, made the announcement.

Gitano Pierre Bryant, Jr., 55, of Palmetto Bay, was charged by criminal complaint with violations of the Internal Revenue Code, including: keeping or making any false or fraudulent record, return, report, or inventory, in violation of Title 26, United States Code, Section  5762(a)(2); refusing to pay Federal Tobacco Excise Tax on large cigars, and attempting to evade or defeat the tax or payment thereof, in violation of Title 26, United States Code, Section  5762(a)(3); and willfully attempting to evade or defeat Federal Tobacco Excise Tax on large cigars, in violation of Title 26, United States Code, Section  7201. Each of these offenses carries a maximum penalty of five years’ imprisonment and a $250,000 fine.

Bryant was also charged with willfully aiding or assisting in the preparation or presentation of a fraudulent or false document, in violation of Title 26, United States Code, Section  7206(2): an offense punishable by up to three years’ imprisonment and a $250,000 fine.

According to the complaint, Bryant was the owner of Havana ’59 Cigar Company (“Havana 59”).  Between 2008 and 2014, Havana 59 was a licensed importer of tobacco products, including “large cigars” weighing more than three pounds per 1,000 cigars.

The complaint alleges that Bryant consistently underpaid the Federal Tobacco Excise Tax due on imported large cigars and, in an attempt to cover up the scheme, altered documents to conceal the price he paid for foreign-made cigars.

According to the complaint, Bryant continued to underpay taxes on imported cigars after May of 2015, when he was convicted and placed on Federal probation for evading Federal Tobacco Excise Tax due on cigarettes.

The complaint further alleges that, between January of 2012 and June of 2016, Bryant evaded over $13 million in Federal Tobacco Excise Tax.

A pre-trial detention hearing for Bryant, on these charges, is scheduled before United States Magistrate Judge Jonathan Goodman for October 21, 2016, in Miami.

Mr. Ferrer commended the investigative efforts of the TTB and IRS-CI.  The case is being prosecuted by Assistant United States Attorney Christopher B. Browne.

A complaint is only an accusation and a defendant is presumed innocent unless and until proven guilty.

Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.

Palm Beach County resident pleads guilty to production of child pornography and enticement of a minor to engage in unlawful sexual activity.           

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, and George L. Piro, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, made the announcement. 

Frank Earle Noyes, III, 51, of Palm Beach County, pled guilty on October 19, 2016, before U.S. District Judge Kenneth A. Marra in West Palm Beach, Florida, to one count of production of child pornography, in violation of Title 18, United States Code, Section 2251 and one count of enticing a minor to engage in an illegal sexual activity, in violation of Title 18, United States Code, Section 2422(b).  Noyes is scheduled to be sentenced on January 20, 2017.  At sentencing, Noyes faces a statutory mandatory minimum sentence of 15 years and a maximum term of up to 30 years in prison on the production of child pornography count and a statutory mandatory minimum sentence of 10 years and a maximum term of up to life in prison on the enticement of a minor count.

According to documents filed with the court, Noyes entered into an online chat with a 12-year old minor female who lived in Minnesota.  During the chat, Noyes sent the minor child pornographic images that he produced of a 5-year old minor engaged in illegal sexual conduct.  Noyes was arrested and law enforcement found additional child pornographic images that he produced on his phone of a 3-year old minor female engaged in illegal sexual conduct.  During the chat session with the 12-year old child, Noyes repeatedly enticed her to send him pornographic images of herself.

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 United States Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section (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.

Mr. Ferrer commended the investigative efforts of the FBI, Plymouth Police Department, Minnesota, the FBI Safe Streets Task Force, and the South Florida Minor Vice Task Force.  The case is being prosecuted by Assistant U.S. Attorneys Lothrop Morris and Ellen Cohen.

Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov

Following a seven-day trial before United States District Court Judge Donald L. Graham, a jury convicted three defendants for their participation in a stolen identity tax fraud scheme.

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, Kelly R. Jackson, Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI), and Steve Steinberg, Chief, Aventura Police Department, made the announcement.

Wolf Obin, 32, and Stanley Moscova, 28, both of Miami-Dade, and Rosny Muller, 29, of Broward County, were convicted of one count of conspiracy to defraud the government with respect to claims, in violation of Title 18, United States Code, Section 286, and one count of possession of fifteen or more unauthorized access devices, in violation of Title 18, United States Code, Section 1029(a)(3). Obin and Moscova were also convicted of three counts of aggravated identity theft, in violation of Title 18, United States Code, Section 1028A. Sentencing for the defendants is scheduled for January 4, 2017, before Judge Donald L. Graham. At sentencing for their respective convictions, the defendants face up to ten years in prison for each of the conspiracy and access device charges, and two years’ imprisonment, consecutive to any other prison term, for the aggravated identity theft charges.

According to evidence presented at trial, beginning in October 2011, Obin, Moscova, and Muller fraudulently obtained Electronic Filing Identification Numbers (EFINs) in the names of other individuals who acted as “straw” EFIN holders which allowed the defendants to submit tax returns in the names of other individuals. The defendants then used those EFINs, as well as EFINs in their own names, to file fraudulent federal income tax returns with the IRS using the stolen personal identifying information (PII) of other individuals without their knowledge and authority. During a search warrant of the defendants’ Aventura apartment, law enforcement discovered the PII of more than 1,600 individuals. Through their tax filings, the defendants claimed approximately $2,300,000 in fraudulent federal tax refunds from the IRS.

Mr. Ferrer commended the investigative efforts of the IRS-CI and the Aventura Police Department. The case is being prosecuted by Assistant U.S. Attorneys Matthew J. Langley and Luis M. Perez.

Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.

A former Division Director of the Miami-Dade County Aviation Department pled guilty for his involvement in a $5,000,000 fraud and kickback scheme.

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, and George L. Piro, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, made the announcement.

Ivan Valdes, 46, of Miami, pled guilty to a one-count criminal Information charging him with theft in programs receiving federal funds, in violation of Title 18, United States Code, Section 666.  Valdes is scheduled to be sentenced on January 5, 2017, at 10:30 a.m., before United States District Judge Darrin P. Gayles.  Valdes faces a statutory maximum term of 10 years’ imprisonment and fines of up to $250,000. 

According to the court record, including a stipulated statement of facts, Valdes, a former Miami-Dade County Aviation Department Division Director was involved in a $5,000,000 fraud and kickback scheme.  During in or about 2010, Valdes arranged with a co-conspirator to request that the Miami-Dade County Aviation Department purchase light fixtures for the Miami International Airport, in exchange for Valdes being paid a share of the proceeds.  Between 2010 and 2015, the Miami-Dade County Aviation Department issued approximately twenty requests for Invitations to Quote for the purchase of over 9,000 LED light fixtures which cost Miami-Dade County millions of dollars.  Valdes was paid in cash by a co-conspirator, with whom he split approximately $2.2 million in fraudulent proceeds from the scheme. Valdes used some of the fraudulent proceeds to pay an employee in the procurement section of the Miami-Dade County Aviation Department, who assisted with the fraud.

On two occasions, Valdes instructed a co-conspirator to bid on an Invitation to Quote for light fixtures, but he further instructed that the light fixtures should not be ordered from the lighting manufacturer.  The co-conspirator bid and won the contracts.  As a result, Valdes and his co-conspirators were paid approximately $500,000 for light fixtures that were never provided to the Miami-Dade County Aviation Department.

Mr. Ferrer commended the investigative efforts of the FBI and the Miami-Dade County State Attorney’s Office and its Public Corruption Unit in connection with the investigation of this matter.  The case is being prosecuted by Assistant U.S. Attorney Jeffrey N. Kaplan.

Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.

A Belle Glade man was sentenced yesterday to 20 years in federal prison for drug and firearm offenses. 

Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida, Brandt Schenken, Acting Special Agent in Charge, Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), Miami Field Division, and Ric Bradshaw, Sheriff, Palm Beach County Sheriff’s Office (PBSO), made the announcement.

David G. Trevino, 38, of Belle Glade, was sentenced by U.S. District Senior Judge Daniel T.K. Hurley to 240 months in federal prison, to be followed by ten years of supervised release.  Trevino was prosecuted under the federal Armed Career Criminal Act (ACCA), which provides for an enhanced sentence for persons with at least three prior felony convictions for violent felonies or serious drug trafficking crimes.

In April 2016, a federal trial jury convicted Trevino of possessing a firearm during a drug trafficking offense, possession of cocaine with intent to distribute, obstruction of justice, and being a felon in possession of a firearm. According to the court record, including evidence presented at trial, in June 2013, PBSO deputies were on patrol in Pahokee, Palm Beach County, Florida and observed a large quantity of marijuana packaged for sale and partially concealed on the floor of Trevino's 700 series BMW, which was parked outside a local nightclub. When deputies attempted to make contact with Trevino, he fled on foot and discarded a loaded revolver on the ground.  A deputy deployed his taser when Trevino failed to comply with orders to stop.  During the course of the investigation, law enforcement recovered the loaded firearm, 49.3 grams of marijuana, and $3,896.

 According to the court record, during a separate incident in November 2013, PBSO deputies were on patrol in Belle Glade, when they stopped a suspicious vehicle in the rear of a local business, in an area plagued by drug trafficking.  As deputies approached the vehicle, Trevino, the sole occupant, threw two paper bags out of the driver’s side window that contained cocaine and marijuana packaged for sale. Trevino then drove off, fleeing the area.

This case was brought as part of Project Safe Neighborhoods (PSN).  PSN is a Department of Justice nationwide initiative that combines traditional law enforcement activities with community-based support and intervention programs. The two primary goals of the PSN initiative are to reduce and prevent violent crimes and to help past offenders adjust and re-enter the community.  This program emphasizes and facilitates cooperative federal, state and local prosecution of firearm crimes, violent criminals, repeat violent offenders and gang related criminal activity.

Mr. Ferrer commended the investigative efforts of the ATF and PBSO.  The case was prosecuted by Assistant U.S. Attorney John McMillan and Special Assistant U.S. Attorney Aaron Papero from the Palm Beach County State Attorney’s Office.

Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.

Former firearms and ammunition dealers were sentenced today to prison for violating the National Firearms Act.

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, Carlos A. Canino, Special Agent in Charge, Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), Miami Field Office, Mark Selby, Special Agent in Charge, U.S. Immigration and Customs Enforcements Homeland Security Investigations (ICE-HSI), Miami Field Office, and Rick Ramsay, Sheriff, Monroe County Sheriff’s Office, made the announcement.

Jarvis Nelson Osorio, 37, of Miami Lakes, Thomas Joseph Willi, 52, of Key West, and Outbreak Ordnance, LLC, a federally licensed firearms dealer located in Big Pine Key, each previously pled guilty to one count of knowingly receiving and possessing an unregistered .38 caliber firearm (a “cane gun”), a weapon or device capable of being concealed on the person from which a shot can be discharged through the energy of an explosive, in violation of Title 26, United States Code, Sections 5841, 5861(d), and 5871.    

On October 13, 2016, U.S. District Court Judge Jose E. Martinez sentenced Osorio and Willi to 30 months’ imprisonment, to be followed by 3 years of supervised release and imposed a $500,000 fine on Outbreak Ordnance, LLC.  The Court also ordered that Willi and Outbreak Ordnance, LLC must surrender their federal firearms licenses, which are required in order to engage in the business of dealing in firearms

According to court documents, Osorio and Willi owned and operated co-defendant Outbreak Ordnance, LLC, a firearms and ammunition retail store. Outbreak Ordnance, LLC was licensed to deal in National Firearms Act (“NFA”) weapons. The National Firearms Act of 1934 regulates the manufacture, sale, and transfer of certain specially dangerous and concealable weapons, including short-barreled shotguns, short-barreled rifles, any weapon or device capable of being concealed on the person from which a shot can be discharged through the energy of an explosive, machineguns, silencers, and destructive devices.

According to court documents and information disclosed during court proceedings, on July 16, 2015, ATF agents executed a search warrant at Outbreak Ordnance, LLC’s retail store, after Willi and Osorio sold firearms to a convicted felon and a minor. ATF agents discovered records showing that the defendants unlawfully acquired fifteen unregistered NFA weapons, including a .38 caliber “cane gun.” ATF agents subsequently recovered the unregistered weapons, several of which had been advertised for sale on Outbreak Ordnance, LLC’s publicly accessible Facebook page.

Mr. Ferrer commended the investigative efforts of the ATF, ICE-HSI, and the Monroe County Sheriff’s Office.  The case was prosecuted by Assistant U.S. Attorneys Christopher Browne and Adam Fels.

Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov

Yesterday, a Martin County resident was convicted of violating the conditions of his bail bond, after he failed to appear for sentencing on federal charges.    

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, and George L. Piro, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, made the announcement.

On March 22, 2016, Mark Alan Yoder, 55, of Hobe Sound, was convicted by a federal trial jury on charges related to his participation in bank and mail fraud schemes.  Following his conviction, Yoder was released on bail pending sentencing.  Yoder failed to appear for sentencing and was subsequently convicted of the sole count of the indictment, failure to appear in court, in violation of Title 18, United States Code, Section 3146.  Yoder faces a statutory maximum sentence of up to 10 years in prison for the bond jumping conviction, to run consecutive to the sentence imposed for the underlying crimes.  Senior United States District Judge Paul C. Huck has not yet scheduled a sentencing date for Yoder in the two pending cases.

According to trial testimony and court documents, Yoder was permitted to remain free on bail pending sentencing, following his trial conviction on charges of bank and mail fraud schemes.  Yoder filed with the court a personal declaration that he refused to recognize the Court’s authority over him and would not be attending any future hearings or comply with any reporting requirements. After multiple notices from the Court and a personal visit from the United States Probation Office, Yoder failed to appear as required at the scheduled hearing in the Fort Pierce Courthouse, for sentencing on the original criminal conviction.  An arrest warrant issued, and the United States Marshals Service took Yoder into custody.

According to testimony in the original fraud trial, on October 18, 2010, Yoder received a traffic citation, for driving without a seat belt, from a Tequesta Police Department Officer.  Yoder objected to the ticket, demanded to speak to a supervisor and denied the officer had any authority for the stop. The officer’s supervisor arrived on the scene to provide assistance.  Beginning in the months following the traffic stop and into early 2011, Yoder sent, by mail, a succession of fraudulent formal demands and notices, claiming the two police officers and the Tequesta Police Department each owed him $150,000 in damages.  Yoder also sent similar demands for large damage payments to officers and executives of the bank that was foreclosing upon his home.  Not long after the final judgment of foreclosure was entered in the state court, Yoder filed a fraudulent mechanic’s lien against the bank’s property, falsely claiming that he was owed thousands of dollars for his maintenance of the home prior to the foreclosure.  Yoder renewed the fraudulent mechanic’s lien, with successive filings, in 2014 and 2015.

Mr. Ferrer commended the investigative efforts of the FBI and the United States Marshals Service.  Mr. Ferrer also thanked the Martin County Sheriff’s Office, the Tequesta Police Department, and the Office of the Clerk of the Circuit Court for Martin County, Florida, for their assistance with this investigation.  The case was prosecuted by Assistant U.S. Attorney Theodore Cooperstein.   

Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.

The former Chief Financial Officer of Cay Clubs Resorts and Marinas (Cay Clubs) was arrested earlier today in Orlando, Florida, on federal bank fraud and criminal tax offense charges. 

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, Kelly R. Jackson, Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI), and Timothy Mowery, Special Agent in Charge, Federal Housing Finance Agency, Office of Inspector General (FHFA-OIG), made the announcement.  

David W. Schwarz, 60, of Orlando, was charged by indictment with conspiracy to commit bank fraud, in violation of  Title 18, United States Code, Section 1349, three counts of bank fraud, in violation of Title 18, United States Code, Section 1344, three counts of false statements to a financial institution, in violation of Title 18, United States Code, Section 1014, and one count of interference with the administration of the IRS, in violation of Title 26, United States Code, Section 7212(a) (Case No. 16-10039-CR-Moore).  If convicted, Schwarz faces a statutory maximum of 30 years in prison for each of the conspiracy and bank fraud offenses, and 3 years in prison for the tax offense.  The matter is assigned to Chief United States District Judge K. Michael Moore in Key West.

According to the indictment, Schwarz was the Vice President and Chief Financial Officer of Cay Clubs, which operated purported luxury resorts in the Florida Keys, Clearwater, Orlando, Las Vegas, and elsewhere.  The indictment alleges that Schwarz and co-conspirator Fred Davis Clark, Jr., a/k/a Dave Clark, who was the two-thirds owner, began Cay Clubs in late 2004 with fraudulent sales of Cay Clubs units to insiders, using money from Cay Clubs’s bank accounts to fund the cash to close for purchases while obtaining mortgage financing from lending institutions.  These fraudulent sales were used in marketing materials to falsely show demand for Cay Clubs units and to inflate prices, as Cay Clubs was in reality purchasing units from itself.  Proceeds of these sales were diverted to Schwarz and Clark.

The indictment further alleges that as Cay Clubs faced dwindling sales due to its failure to upgrade the dilapidated properties in 2006, Schwarz, Clark, and others engaged in additional fraudulent sales of Cay Clubs units to insiders, including Clark’s family members.  The indictment alleges that the loan documents used to obtain these mortgages included falsified signatures and false notary attestations, and had Clark acting as the seller while Schwarz provided the cash to close so that mortgage loans could be obtained to fund the sales.

Furthermore, according to the indictment, during 2004 through 2008, the years Cay Clubs operated, Clark and Schwarz obtained more than $28 million in proceeds from the business.  However, Schwarz and Clark did not file any corporate tax returns for the Cay Clubs entities.  In addition, they did not file any individual tax returns until after an investigation of Cay Clubs by the U.S. Securities and Exchange Commission (SEC).   In 2010 and 2011, Schwarz filed false individual tax returns for tax years 2004, 2005 and 2006, in which he substantially underreported his income and concealed his receipt of millions of dollars in proceeds.

On December 11, 2015, Dave Clark, 59, formerly a resident of Tavernier, was convicted by a federal jury in connection with related bank fraud charges and obstruction of the SEC.  Former Cay Clubs sales executives Barry Graham, 59, and Ricky Lynn Stokes, 54, both formerly of Ft. Myers, previously pled guilty to conspiracy to commit bank fraud, in related cases. 

Mr. Ferrer commended the investigative efforts of the IRS-CI and FHFA-OIG, and the extensive assistance provided by the SEC’s Miami Regional Office.  The matter is being prosecuted by Assistant U.S. Attorneys Jerrob Duffy and Alison Lehr. 

Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.

A Colombian national pled guilty to unlawfully injecting silicone into victim’s bodies for aesthetic enhancements, without a medical license or approval by the U.S. Food and Drug Administration.

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, and Justin Green, Special Agent in Charge, Miami Field Office, and U.S. Food & Drug Administration, Office of Criminal Investigations (FDA-OCI), made the announcement.

Juan David Acosta, 44, of Hallandale Beach, pled guilty today to two counts of receipt in interstate commerce of a misbranded device and delivery for pay with intent to defraud or mislead, in violation of Title 21, United States Code, Sections 331(c) and 333(a)(2).  Acosta faces a maximum statutory sentence of three years in prison as to each count. 

According to court record, Acosta engaged in the business of administering injections of polydimethylsiloxane, commonly referred to as silicone, into the bodies of other individuals.  Acosta was paid thousands of dollars for this service.  Specifically, on July 29, 2015 and again on August 9, 2015, Acosta, at his residence in the Southern District of Florida, injected silicone into the buttocks of two victims in order to affect the size, contour, and structure of that portion of the human body for aesthetic purposes.  The injection of silicone into the human body in this manner, regardless of whether such injection was dispensed and administered by a licensed practitioner, requires an FDA-approved application.  Acosta did not advise the victims that silicone was being injected into their bodies.  Acosta is not a licensed medical practitioner and he had not received FDA approval to administer the injections. 

Mr. Ferrer commended the investigative efforts of the FDA-OCI, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, Palm Beach County Sherriff’s Office Narcotics Unit, and Miami-Dade Police Department’s Medical Crimes Unit.  The case is being prosecuted by Assistant United States Attorney Randy Katz.

Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.

A South Florida resident pled guilty for his involvement in an identity theft scheme involving the cashing of over $140,000 in altered tax refund checks.

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, Kelly R. Jackson, Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI), and Brian Swain, Special Agent in Charge, U.S. Secret Service (USSS), Miami Field Office, made the announcement.

Contreas Faison, 44, pled guilty to one count of theft of government funds, in violation of Title 18, United States Code, Section 641. As part of his plea agreement, Faison agreed to restitution in the amount of $140,000.

According to court documents, in 2013 and 2014, Faison obtained U.S. Treasury tax refund checks that had been fraudulently altered so that the taxpayer's name did not appear on the check. Instead, the check contained the name of the defendant's company or the name of another bank account holder. Faison deposited these checks into bank accounts in his name or in the name of other people, and then Faison used the proceeds for his own benefit. In total, the defendant cashed over $140,000 from fifteen different altered U.S. Treasury tax refund checks that were stolen or otherwise fraudulently obtained.

Faison is scheduled to be sentenced on December 9, 2016 before United States District Judge Cecilia M. Altonaga.  At sentencing, the defendant faces up to ten years in prison.

Mr. Ferrer commended the investigative efforts of the IRS-CI and the USSS.  The case is being prosecuted by Assistant United States Attorney Vanessa S. Snyder.

Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.

A Palm Beach County resident was sentenced to 48 months in prison, to be followed by two years of supervised release, and was ordered to pay restitution in the amount of $188,570 for his participation in a stolen identity tax refund fraud conspiracy involving students and other individuals’ personal identifying information (PII).

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, Kelly R. Jackson, Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI), and Terry L. Rhodes, Executive Director, Florida Highway Patrol (FHP), made the announcement.

Oniel Winston Scarlett, 27, of Belle Glade, previously pled guilty to one count of conspiracy to commit wire fraud, to retain and conceal monies stolen from the United States, and to commit identity theft, all in violation of Title 18, United States Code, Section 371; one count of wire fraud, in violation of Title 18, United States Code, Section 1343; and one count of aggravated identity theft, in violation of Title 18, United States Code, Section 1028A. 

According to court documents, Scarlett and his co-conspirators fraudulently obtained and exchanged amongst themselves the PII of other individuals, filed fraudulent income tax returns with the IRS using the stolen PII, and directed fraudulent refunds to be deposited onto pre-paid debit cards in the names of other individuals using the stolen PII.

Scarlett was in possession of stolen PII during a traffic stop on September 20, 2011. During the traffic stop, the FHP trooper conducted a consent search of Scarlett’s vehicle and found 92 Wal-Mart pre-paid debit cards; printouts of hundreds of peoples’ PII; pre-paid debit card information and money amounts for the cards; more than fifty Palm Beach County School Board’s mainframe database printouts with students’ names, Social Security numbers, and dates of birth; two laptop/notebook computers with accessories; two memory sticks; a cell phone; and a phone book for the Belle Glade, Florida area. The trooper also found bank account information, where it was later determined that nearly $77,000 in federal tax refunds were direct deposited from fifty-two separate fraudulent tax returns filed with the IRS.

Scarlett admitted he had been recruited to help register pre-paid debit cards that were to be used to accept the fraudulent IRS refunds.  He also admitted his role in agreeing to accept money for his role in helping complete the crime.  Some of the PII was also used to file false tax returns with the IRS.  On the computer, law enforcement found 228 separate login user identifications used to file false income tax returns claiming approximately $290,000.

Mr. Ferrer commended the investigative efforts of IRS-CI and the FHP. The case is being prosecuted by Assistant U.S. Attorney Stephen Carlton.

Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.

The United States Attorney’s Office for the Southern District of Florida is committed to supporting and promoting strong relationships between law enforcement and the individuals, families and communities we serve and protect every day.  Community policing – public safety efforts built on resilient bonds of mutual trust and respect between local police officers and neighborhood residents – is an essential component of law enforcement work. Community policing is a fundamental part of the public safety mission shared by our law enforcement partners, local community leaders, and youth advocates.  In support of this mission, October 3-7, 2016, had been designated as the inaugural National Community Policing Week. 

During Community Policing Week, the U.S. Attorney’s Office, law enforcement, community organizations, stakeholders and concerned citizens, will come together to host and participate in events and engagement activities that support our commitment to effective and impactful community policing.   Members of the community are invited and encouraged to participate.  Our collective efforts will continue to help us make our diverse, vibrant local neighborhoods safer, stronger, and more united. 

“Throughout the upcoming week, you will see that by bringing together law enforcement and the communities we protect, we are breaking down barriers, bridging divides, building trust and working toward universal support and respect,” stated U.S. Attorney Wifredo A. Ferrer for the Southern District of Florida.  “We encourage you to join our efforts and become part of the solution, as we unite to make our South Florida community safer and more resilient.”

Throughout the week, our partners in the Southern District of Florida will host a variety of Community Policing events, including:

Youth and Cops Basketball Tournament:  On Monday, October 3, 2016, an all-day Youth and Cops Basketball Tournament will be held at the Betty T. Ferguson Recreational Complex, located at 3000 NW 199th St, Miami Gardens, FL 33056.  Teams made up of local youth (ages 12 to 17) and law enforcement officers will come together for the friendly competition.

Local Children Will Be Police Chiefs for A Day: Throughout the week, participating law enforcement agencies will invite a child from the local community to shadow the Police Chief for the day.  The children will experience “a day in the life of law enforcement” by participating in activities that include: roll call, tours of the dispatch areas, community patrol, mock crime scene scenarios, management meetings, and K-9 patrol reviews. 

Coral Gables Police Department

Coral Springs Police Department

Doral Police Department

Golden Beach Police Department

Lauderhill Police Department

Margate Police Department

Medley Police Department

Miami-Dade Police Department

Miami-Dade Schools Police Department

Miami Gardens Police Department

Miami Police Department

Miami Springs Police Department

Seminole Police Department

Sunny Isles Beach Police Department

Sunrise Police Department

Surfside Police Department

National Night Out Events: -- During National Night Out events, citizens who benefit from the hard work and dedication of our police forces are encouraged to join in the fight against crime.  Law enforcement cannot combat crime without the help of the community and, now more than ever, they need the support of the communities they protect and serve.  National Night Out events heighten crime and drug prevention awareness, generate support for and participation in local anticrime efforts, strengthen neighborhood spirit and police-community partnerships, and send a message to those who victimize and poison our communities with their criminal conduct that South Florida residents are taking back their neighborhoods. The events are typically organized by block watches, non-for-profit organizations, companies, and police departments. These events can be as simple as backyard cookouts to full-blown festivals.  Police Departments, including those listed below, will be holding National Night Out events during Community Policing week:

Coral Gables Police Department October 4th

South Miami Police Department - October 4th

West Miami Police Department - October 4th

Palm Beach Gardens Police Department - October 7th

Community Resource Fair and Freed Food Distribution Program: On Thursday, October 6, 2016, a Community Resource Fair and Farm Share Free Food Distribution Program will be held from 10:00 a.m. to 2:00 p.m. at the Phichol Williams Community Center, located at 951 SW 4th Street, Homestead, FL 33030.  The program is being held in collaboration with the Homestead Police Department.

For more information regarding National Community Policing Week and to learn how you can get involved with local programming, please call (305) 961-9134 or visit usafls.vrp@usdoj.gov.

Scheme Caused the Collapse and Failure of One of Puerto Rico’s Largest Banks

The former chairman and CEO of a multinational pharmaceutical company was charged in an indictment unsealed today in connection with a fraud scheme that caused over $100 million in losses and led to the collapse and failure of Westernbank Puerto Rico (Westernbank), once one of Puerto Rico’s largest banks. 

U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida, Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Rosa Emilia Rodriguez-Vélez of the District of Puerto Rico, Acting Inspector General Fred W. Gibson of the Federal Deposit Insurance Corporation’s Office of Inspector General (FDIC-OIG), Special Agent in Charge Kelly R. Jackson of the Internal Revenue Service-Criminal Investigation (IRS-CI) Miami Field Office, Acting Special Agent in Charge Ricardo Mayoral of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) San Juan and Special Agent in Charge Douglas A. Leff of the FBI’s San Juan Division made the announcement.  

Jack Kachkar, 53, of Key Biscayne, Florida, was charged with eight counts of wire fraud in an indictment filed on Aug. 4, 2016, in the Southern District of Florida.  Kachkar was arrested and made his initial appearance today.

According to the indictment, from 2005 to 2007, Kachkar served as chairman and CEO of Inyx Inc., which was publicly traded on the Nasdaq Over-the-Counter Bulletin Board.  Beginning in early 2005, Kachkar and others allegedly caused Westernbank to enter into a series of agreements to provide loans and lines of credit to Inyx and its subsidiaries in exchange for a security interest in the assets of Inyx and its subsidiaries. 

The indictment alleges that Kachkar caused false and fraudulent customer invoices to be submitted as collateral for loans from Westernbank; made false and fraudulent representations to Westernbank executives about purported imminent repayments of the Inyx loans and the value of assets he pledged as a guarantee for these loans; and misappropriated and embezzled the fraud proceeds for his personal use and benefit.  During the course of the scheme, Kachkar allegedly misappropriated approximately $25 million in fraudulent proceeds to his personal bank accounts and also misappropriated an additional $9.6 million in fraudulent proceeds to a bank account in the name of his associate.  Kachkar also allegedly used the proceeds from the scheme to pay for, among other things, multiple high-end real estate properties in Miami, luxury vehicles and a private jet. 

The charges and allegations contained in an indictment are merely accusations.  The defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law. 

The FDIC-OIG, IRS-CI, HSI and FBI investigated the case.  Trial Attorney Michael N. Berger and Senior Litigation Counsel John Michelich of the Criminal Division’s Fraud Section are prosecuting the case. 

Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.

Scheme Caused the Collapse and Failure of One of Puerto Rico’s Largest Banks

The former chairman and CEO of a multinational pharmaceutical company was charged in an indictment unsealed today in connection with a fraud scheme that caused over $100 million in losses and led to the collapse and failure of Westernbank Puerto Rico (Westernbank), once one of Puerto Rico’s largest banks. 

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida, U.S. Attorney Rosa Emilia Rodriguez-Vélez of the District of Puerto Rico, Acting Inspector General Fred W. Gibson of the Federal Deposit Insurance Corporation’s Office of Inspector General (FDIC-OIG), Special Agent in Charge Kelly R. Jackson of the Internal Revenue Service-Criminal Investigation (IRS-CI) Miami Field Office, Acting Special Agent in Charge Ricardo Mayoral of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) San Juan and Special Agent in Charge Douglas A. Leff of the FBI’s San Juan Division made the announcement. 

Jack Kachkar, 53, of Key Biscayne, Florida, was charged with eight counts of wire fraud in an indictment filed on Aug. 4, 2016, in the Southern District of Florida.  Kachkar was arrested and made his initial appearance today.

According to the indictment, from 2005 to 2007, Kachkar served as chairman and CEO of Inyx Inc., which was publicly traded on the Nasdaq Over-the-Counter Bulletin Board.  Beginning in early 2005, Kachkar and others allegedly caused Westernbank to enter into a series of agreements to provide loans and lines of credit to Inyx and its subsidiaries in exchange for a security interest in the assets of Inyx and its subsidiaries. 

The indictment alleges that Kachkar caused false and fraudulent customer invoices to be submitted as collateral for loans from Westernbank; made false and fraudulent representations to Westernbank executives about purported imminent repayments of the Inyx loans and the value of assets he pledged as a guarantee for these loans; and misappropriated and embezzled the fraud proceeds for his personal use and benefit.  During the course of the scheme, Kachkar allegedly misappropriated approximately $25 million in fraudulent proceeds to his personal bank accounts and also misappropriated an additional $9.6 million in fraudulent proceeds to a bank account in the name of his associate.  Kachkar also allegedly used the proceeds from the scheme to pay for, among other things, multiple high-end real estate properties in Miami, luxury vehicles and a private jet. 

The charges and allegations contained in an indictment are merely accusations.  The defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law. 

The FDIC-OIG, IRS-CI, HSI and FBI investigated the case.  Trial Attorney Michael N. Berger and Senior Litigation Counsel John Michelich of the Criminal Division’s Fraud Section are prosecuting the case. 

Clients were promised large tax refunds from a fictitious government program

Two return preparers are charged with filing false tax returns for their clients by promising large federal tax refunds through a fictitious United States government program called the “Black Investment Tax.''

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, Kelly R. Jackson, Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI), and Timothy Camus, Deputy Inspector General for Investigations, Treasury Inspector General for Tax Administration (TIGTA), made the announcement.

Shirley Ann Womble and Tiffany Dawn Williams are each charged with one count of conspiracy to defraud the government with respect to claims, in violation of Title 18, United States Code, Section 286. Womble and Williams are also charged with eight counts and two counts, respectively, of filing false claims with the IRS, in violation of Title 18, United States Code, Section 287.  If convicted, the defendants face a maximum statutory sentence of ten years’ imprisonment for the conspiracy charge, and a maximum statutory sentence of five years’ imprisonment for each of the false claims charges.

According to the indictment, Womble and Williams worked as independent tax preparers and solicited clients for their tax preparation business by promising large federal tax refunds through a fictitious United States government program called the “Black Investment Tax'' that provided reparations for slavery to African Americans, and/or other government grants. The defendants knew that a government program called the “Black Investment Tax'' did not actually exist.

Womble and Williams prepared and filed false federal income tax returns with false IRS forms for their clients claiming a $40,000 tax credit from the IRS. None of the clients actually provided the defendants with any documentation or other information to support claiming this tax credit based on any investment in the “Black Investment Tax.” The clients who received a refund from the IRS paid Womble and/or Williams approximately $10,000 as a fee for their services.

We encourage anyone who was solicited to receive a refund related to the fictitious “Black Investment Tax,'' that allegedly provided reparations for slavery to African Americans, to contact IRS-CI at (305) 982-5151.

Mr. Ferrer commended the investigative efforts of IRS-CI and TIGTA.  The case is being prosecuted by Assistant U.S. Attorney Joseph M. Schuster.

An indictment is merely an allegation and every defendant is presumed innocent unless and until proven guilty in a court of law.

Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov

Two male Miami Gardens residents have been arrested and charged by criminal complaint with conspiracy to commit Hobbs Act robberies, Hobbs Act robberies, and brandishing firearms in furtherance of crimes of violence.

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, and George L. Piro, Special Agent in Charge, Federal Bureau of Investigation (FBI), made the announcement.

Javon Antwan Lee and Kimani Mario Brown, both 18, of Miami Gardens, Florida, were charged by complaint with engaging in a conspiracy to lure users of internet-based classified advertisement services to an abandoned house and then rob the victims at gunpoint. 

According to court records, Lee and Brown, together with other unknown individuals, engaged in multiple armed robberies beginning as early as February of 2016 and continuing through June of 2016, by posting advertisements on internet classified services for the sale of smartphones or other electronic devices.  Victims would arrange to meet with the seller in Miami Gardens to purchase the advertised item only to be attacked at gunpoint by three to four men at a time. 

The United States Attorney’s Office and the Federal Bureau of Investigation caution all users of internet-based classified advertisement services to be cautious when purchasing items from individuals they do not know.  If members of the community have been victimized in a similar scheme, or have information related to the crimes charged in this complaint, they are encouraged to contact the FBI.

Mr. Ferrer commended the investigative efforts of the FBI and the Miami Gardens Police Department.  The case is being prosecuted by Assistant U.S. Attorney Benjamin Widlanski. 

A complaint is only an accusation and a defendant is presumed innocent until proven guilty.

Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.

On September 26, 2016, three individuals were sentenced to prison for their participation in a long-running marriage fraud conspiracy.

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, and Mark Selby, Special Agent in Charge, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (ICE-HSI), made the announcement.

On July 19, 2016, a Miami federal jury convicted Odalys Marrero, 51, of Kendall, Rolando Mulet, 62, of Kendall and Javier Manejias, 51, of Antioch, Tennessee, of conspiring to defraud the United States.  Marrero and Mulet were also convicted of additional counts of unlawfully encouraging an alien to reside in the United States.  On September 26, 2016, United States District Court Judge Joan A. Lenard sentenced both Marrero and Mulet above the guideline range, to 48 months’ imprisonment, to be followed by 3 years of supervised release.  Judge Lenard sentenced Manejias to 8 months’ imprisonment, to be followed by 1 year of supervised release.  

“It is a federal criminal offense to enter into a marriage for the purpose of evading our nation’s immigration rules and regulations,” stated U.S. Attorney Ferrer.  “In committing this act, perpetrators exploit the lawful immigration status that the United States has granted.  Such conduct thwarts the very objectives of our immigration laws and services, which are predicated on the honesty of the people who apply for immigration benefits.  The U.S. Attorney’s Office is grateful for the ongoing efforts of ICE-HSI and USCIS to identify for prosecution those individuals who perpetrate this and other types of immigration fraud.”  

“The defendants in this investigation defrauded the government and undermined the integrity of our nation’s legal immigration system” said Mark Selby, special agent in charge of HSI Miami.  “These arrests by HSI should send a clear message that we will continue to target those who try to obtain immigration benefits fraudulently.”

“Marriage fraud is a bold violation of our nation’s immigration laws,” said Acting District Director Nicholas Colucci of the USCIS Miami District. “We thank our partners in the U.S. Attorney’s Office and ICE for the opportunity to work together to ensure that these conspirators were brought to justice.”

At trial, the evidence showed that from December 2009 and July 2014, organizers Marrero and Mulet recruited Cuban citizens to enter into fraudulent marriages with undocumented aliens for the purpose of evading the immigration laws of the United States.  Manejias was one such Cuban citizen, who, in exchange for receipt of approximately $10,000 cash, participated in the conspiracy by agreeing with Marrero and Mulet to marry a Venezuelan citizen in order to secure her lawful permanent residency in the United States.

The evidence at trial also established that Marrero and Mulet charged these aliens tens of thousands of dollars in cash to arrange the fraudulent marriages, notarize marriage licenses, complete the necessary immigration paperwork, and prepare the co-conspirators for their marriage interviews with United States Citizenship and Immigration Services (“USCIS”).  This preparation included Marrero and Mulet directing the couples to conduct a falsified wedding ceremony and submit supporting documents such as joint utility bills and bank statements to make it appear that they couple lived together, though in fact they did not.  As part of the scheme, these contrived photos and documents were provided to USCIS.

Mr. Ferrer commended the investigative efforts of ICE-HSI.  Mr. Ferrer also recognized USCIS for the significant and valuable support the agency provided the investigation.  The case was prosecuted by Assistant United States Attorney Anne P. McNamara and Special Assistant United States Attorney Michele Vigilance.

Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.

Two residents of the Dominican Republic charged with bulk cash smuggling.

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, Mark Selby, Special Agent in Charge, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (ICE-HSI), Miami Field Office, and Diane J. Sabatino, Director, Office of Field Operations, U.S. Customs and Border Protection, Miami Field Office, made the announcement.

Javier Enrique Santos Castillo, 42, and David Hernandez Guirola, 44, both of the Dominican Republic, were charged in a criminal complaint with conspiracy to commit bulk cash smuggling, in violation of Title 31, United States Code, Section 5332(a)(1) and Title 18, Untied States Code, Section 371.  If convicted, the defendants face a statutory maximum sentence of five years in prison and forfeiture of the seized cash.  The defendants made their initial appearance yesterday, before U.S. Magistrate Judge Patrick A. White, and are being held without bond pending further court proceedings.

On September 26, 2016, CBP Miami International Airport, Outbound Enforcement Team  conducted routine examinations of international passengers boarding American Airlines flight 987, destined for Santo Domingo, Dominican Republic.  Federal travel restrictions require passengers traveling abroad, from the United States to report if they are in possession of more than $10,000 in cash.  During CBP questioning, passenger Santos Castillo advised he was carrying approximately $1,000.  A preliminary search of Santos Castillo’s outer garment of clothing revealed that he was carrying more than the amount disclosed, as he was in possession of eight envelopes, each estimated to contain $5,000 to $10,000.  Santos Castillo advised CBP officers that he was carrying the money for a friend, Hernandez Guirola, who when questioned, confirmed the same.  The investigation revealed that Hernandez Guirola was traveling domestically to LaGuardia Airport, in New York and had Santos Castillo traveling to the Dominican Republic with the discovered cash.  Further examination revealed a total of 17 envelopes in Santos Castillo’s clothing, containing $69,000.  An examination of Santos Castillo’s carry-on luggage revealed an additional 13 envelopes, containing $122,340.  CBP seized a total of $191,340. 

Mr. Ferrer commended the investigation efforts of  ICE-HSI and CBP.  This case is being prosecuted by Assistant United States Attorney Gregory Schiller.

A complaint is merely an accusation and a defendant is presumed innocent unless and until proven guilty. 

Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.

A Miami resident pled guilty for his involvement in an identity theft tax fraud scheme involving the sale of a tax refund check.

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, George L. Piro, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, and Kelly R. Jackson, Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI), made the announcement.  

Torrace Wilson, 32, pled guilty to one count of theft of government funds, in violation of Title 18, United States Code, Sections 641 and 2.

According to court documents, on August 27, 2014, Wilson met with a cooperating defendant. During the meeting, Wilson sold a United States Treasury tax refund check in the name of another individual in the amount of $4,443 to the cooperating defendant for a negotiated price of $1,800. Wilson endorsed the back of the check with the name of the victim. He knew that the victim did not authorize him to possess or sell the check.

Wilson is scheduled to be sentenced on November 30, 2016 before United States District Judge Darrin P. Gayles.  At sentencing, the defendant faces up to ten years in prison.

Mr. Ferrer commended the investigative efforts of the FBI and IRS-CI. The case is being prosecuted by Assistant United States Attorney Vanessa S. Snyder.

Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.

A Miami grand jury indicted thirteen people for their participation in two telephone sales room (“boiler room”) fraud schemes that targeted investors throughout the nation and defrauded them out of approximately $23 million.  The fraud schemes operated out of Miami Lakes, Florida, and Marina Del Ray, California.

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, George L. Piro, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, and Eric I. Bustillo, Director, U.S. Securities and Exchange Commission (SEC), Miami Regional Office, made the announcement.

Craig Sizer, 48, of Miami, Keith Houlihan, 48, of Boca Raton, Miguel Mesa, 56, of Miami Lakes, Charles K. Topping, 39, of North Bay Village, Anita Sgarro, 49, of Marina Del Ray, California, Jack Willard Sini, 57, of Miami and Boynton Beach, Juan M. Perez Ortega, 46, of Miami Lakes, Charles David Smigrod, 41, of Coconut Grove, Matthew William Wheeler, 32, of Miami, Martin Miller, 74, of Miami Beach, Jason David Hershberger, 39, of Fort Lauderdale, James Wayne Long, 60, of Miramar, and Shawna Leigh Lynch, 44, of Fort Lauderdale, were charged with conspiracy to commit mail fraud and substantive count(s) of mail fraud.  Sizer, Houlihan, Mesa, Topping and Sgarro were also charged with a substantive count of wire fraud. 

“Those who operate locally or from afar to target unsuspecting investors will continue to be prosecuted,” stated U.S. Attorney Wifredo A. Ferrer.  “We implore the community to be cautious about solicitations that promise unsubstantiated returns and to report all suspected fraudulent schemes to law enforcement.” 

“This group of cross country scam artists bilked hundreds of unsuspecting investors out of over $21 million dollars and will now be held accountable for their devious actions,” said George L. Piro, Special Agent in Charge, FBI Miami.  “If you are an individual investor, exercise due diligence before you invest your first dime.  Do not fall prey to fantastic claims from investment sales people.  Ask yourself: Does it seems too good to be true?  If the answer is ‘Yes,” then it probably is!”

“We allege that Sizer and Mesa fraudulently touted Sanomedics and Fun Cool Free stocks as profitable investments while in fact only Sizer and Mesa and the sales agents were profiting at the expense of investors, many of whom were seniors,” said Eric I. Bustillo, Director of the SEC’s Miami Regional Office.

The indictment charges two, overlapping mail fraud conspiracies involving the fraudulent sale of stock shares for two companies, Sanomedics International Holdings, Ince. (“Sanomedics”) and Fun Cool Free (“FCF”).  

According to the indictment, from April 2009 to August 2015, Sizer, Houlihan, Mesa, Topping, Sgarro, Sini, Ortega, Smigrod, Wheeler, Hershberger, and Lynch used false and fraudulent claims to solicit investors throughout the United States to buy  shares of stock in Sanomedics, a company that sold non-contact infrared thermometers for home healthcare and for dogs.   In 2009, Sizer and Houlihan allegedly hired Mesa to run a boiler room that sold restricted shares of Sanomedics stock.  Mesa and Sizer prepared scripts for the sales agents that worked under Mesa, in the telephone sales room.  Mesa later hired Sgarro to operate her own boiler room in California, selling Sanomedics stock.   Sizer and Houlihan also sold Sanomedics stock directly to investors.  In order to conceal their true identities and to further the fraud scheme, several of the co-conspirator sales agents used false names and aliases.  The sales agents used sales pitches that included several materially false statements, including, but not limited to, that: stock sales did not include commissions or fees; sales agents were compensated with stock or paid by the hour; the sales agents worked directly for Sanomedics; stock purchases were safe and secure; and famous and wealthy invididuals, such as a former CEO of Apple Inc., PepsiCo, and IVAX Corp., and the “Dog Whisperer,” were either heavily invested in the company or were company representatives.  In truth, the co-conspirator sales agents worked for Mesa and Sgarro, not for Sanomedics. Approximately 80% of investor proceeds were used by the co-conspirators to cover commissions and fees.    The co-conspirators were not paid by the hour and did not receive stock options, but were in fact paid hefty commissions.  Additionally, there were no actual endorsements by celebrities or wealthy individuals.  The investors relied on the fraudulent statements.  As a result of the scheme, the co-conspirators defrauded over 700 people out of approximately $21 million.

The indictment also charges that from August 2014 to December 2105, Sizer, Mesa, Topping, Sini, Perez, Smigrod, Wheeler, Miller, Long, and Lynch used a fraud scheme, similar to the one described above, to sell shares of stock in FCF, a company that claimed to own a smartphone gaming portfolio with over 500 gaming applications.   Mesa oversaw the boiler room that was utilized to facilitate the fraudulent scheme.   The co-conspirators used false claims, including assertions that they worked directly for the company, to defraud over 70 other investors out of $1.5 million.  

On September 26, 2016, the SEC filed similar civil charges against Sizer and Mesa in federal district court in Miami.  

An indictment is only an accusation and a defendant is presumed innocent unless and until proven guilty.  

Mr. Ferrer commended the investigative efforts of the FBI and the assistance of FINRA. Mr. Ferrer also that the SEC’s Miami Regional Office and Florida’s Office of Financial Regulation.  This case is being prosecuted by Assistant U.S. Attorney Roger Cruz, and Trial Attorneys Rebecca D. Ryan and Kevin B. Hart from the Antitrust Division of the Department of Justice.

Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.

The Miami-Dade County Aviation Department Division Director and four others were charged in a $5,000,000 fraud and kickback scheme.

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, Katherine Fernandez Rundle, State Attorney for Miami-Dade County, and George L. Piro, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, made the announcement. 

Ivan Valdes, 46, of Miami, the Division Director for the Aviation Terminal Building Maintenance for the Miami-Dade County Aviation Department, was charged in an Information with theft in programs receiving federal funds, in violation of Title 18, United States Code, Section 666. A separate Information charges Roy Jesus Bustillo, 37, Rolando Perez, 57, and Jose Barroso, 51, all of Miami, with conspiracy to commit mail fraud and wire fraud, in violation of Title 18, United States Code, Section 371.  Another Information charges Ygnacio Valdez, 45, of Miami, an employee in the Procurement Section of the Miami-Dade County Aviation Department, with misprision of a felony, in violation of Title 18, United States Code, Section 4. 

“Taxpayers deserve to have their hard-earned monies fund local government, not the pockets of individuals who deprive South Florida residents of the benefit of honest services,” stated U.S. Attorney Ferrer. “Corruption by those who hold the public’s trust corrodes the practice of fair business dealings.  The U.S. Attorney’s Office, the FBI and our partners at the State Attorney’s Office will continue to target for prosecution all corrupt officials, regardless of their position.”

“To most people, Ivan Valdes would have been a “Great American Success Story” as he rose from a simple worker to an upper level manager of one of America’s most dynamic airports,” commented Miami-Dade State Attorney Katherine Fernandez Rundle.  “Instead, pure greed and a misplaced sense of self-entitlement led him to believe that he had a right to pocket taxpayer’s money. He was wrong.  My public corruption prosecutors, federal prosecutors from the U.S. Attorney’s Office, the Miami-Dade Police department and the FBI are constantly working to arrest and convict any public official who steals from the public.”

“When corrupt officials put self-interest and personal enrichment ahead of their obligation to be good stewards of taxpayer dollars, they breach the public's trust,” said George L. Piro, Special Agent in Charge, FBI Miami.  “The FBI will continue to investigate and hold accountable any public official who utilizes their position for personal gain.  We encourage anyone who may have information about corruption to come forward and report it. This information is vital to our work.”

As set forth in the charging documents, Bustillo was the exclusive area representative in South Florida for the sale of certain LED light fixtures.   In or about 2010, Ivan Valdes told Barroso that he would request that the Miami-Dade County Aviation Department purchase the light fixtures represented by Bustillo, if he was paid a share of the proceeds.  Valdes and Barroso agreed and during the period of 2010 through and including 2015, the Miami-Dade County Aviation Department issued approximately twenty requests for Invitations to Quote for the purchase of millions of dollars of LED light fixtures.   Bustillo provided a quote to each of the vendors interested in competing for the Invitation to Quote.  Global Electrical & Lighting Supplies, Inc., owned by Rolando Perez, submitted bids and was awarded the contracts for each and every Invitation to Quote issued.  Perez and Bustillo had a secret agreement wherein Perez would be the only vendor who knew the actual price that Bustillo had agreed upon with the lighting manufacturer for the light fixtures and that a fake mounting accessory was included in the Invitations to Quote.  Knowing the additional profit that was to be received from each of the contracts, Bustillo and Perez were able to win the Invitation to Quote by keeping Perez’ bid price low.   In order to help ensure that Perez was awarded each of the contracts, Ivan Valdes paid thousands of dollars in cash to Ygnacio Valdez, whose duties in the procurement section in the Miami-Dade County Aviation Department, included collecting and tallying the bids and declaring the lowest responsive bidder on the Invitations to Quote.

On two occasions, Ivan Valdes instructed Barroso to direct Perez to bid on an Invitation to Quote for light fixtures, but he further instructed that the light fixtures should not be ordered from the lighting manufacturer.  Instead, on one occasion the conspirators used light fixtures already in stock at the Miami-Dade County Aviation Department to satisfy the purchase.  On the other occasion, no light fixtures were ever provided, not even from those already in stock.  Perez bid and won the contracts and he and his co-conspirators were paid approximately $500,000 for light fixtures that were never provided to Miami-Dade County Aviation Department.

During the course of the conspiracy, the co-conspirators defrauded the Miami-Dade County Aviation Department of approximately $5,250,000.  Barroso and Ivan Valdes split fraudulent proceeds of approximately $2.2 million.  Bustillo, through his companies, received fraudulent proceeds of approximately $764,000.  Perez received fraudulent proceeds of approximately $1.8 million.  

If convicted, the defendants face a range of statutory penalties.  Ivan Valdes faces a statutory maximum term of imprisonment of 10 years and fines of up to $250,000.  Bustillo, Perez, and Barroso face a statutory maximum term of imprisonment of 5 years and a fine of up to $250,000.  Ygnacio Valdez face a statutory maximum term of imprisonment of 3 years and a fine of $250,000.

Mr. Ferrer commended the investigative efforts of the FBI and the Miami-Dade County State Attorney’s Office and its Public Corruption Unit in connection with the investigation of this matter.  The case is being prosecuted by Assistant U.S. Attorney Jeffrey N. Kaplan.

An Information is only an accusation and a defendant is presumed innocent unless and until proven guilty.  

Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.

This week, a Vero Beach husband and wife pleaded guilty to conspiracy to import controlled substances, commonly referred to as “bath salts” and “molly,” from China into the United States.

Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida, Mark Selby, Special Agent in Charge, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (ICE-HSI), Antonio J. Gomez, Inspector in Charge, U.S. Postal Inspection Service (USPIS), Miami Division, and Adolphus P. Wright, Special Agent in Charge, U.S. Drug Enforcement Administration (DEA), Miami Field Division, made the announcement. 

On September 19, 2016, Julius Andrew Reason, III, 32, from Vero Beach, pled guilty to conspiracy to import a controlled substance- Dibutylone HCI, in violation of Title 21, United States Code, §§ 952(a) and 963; and conspiracy to manufacture, distribute, and possess with intent to manufacture and distribute a controlled substance- Dibutylone HCI, in violation of Title 21, United States Code, §§ 846 and 841(a)(1).  

On September 21, 2016, Julius Reason’s wife, Venteria Leanet Reason, 28, also from Vero Beach, pled guilty to conspiracy to import a controlled substance- Dibutylone HCI, in violation of Title 21, United States Code, §§ 952(a) and 963. 

On March 28, 2016, codefendant Nathasha Thames, 28, also from Vero Beach, pled guilty to conspiracy to import a controlled substance- Dibutylone HCI, in violation of Title 21, United States Code, §§ 952(a) and 963; and conspiracy to manufacture, distribute, and possess with intent to manufacture and distribute a controlled substance- Dibutylone HCI, in violation of Title 21, United States Code, §§ 846 and 841(a)(1); and possession with intent to distribute a controlled substance- Dibutylone HCI,  in violation of Title 21, United States Code, § 841(a)(1).

The defendants face a maximum statutory penalty of twenty years in prison and a lifetime of supervised release.  The defendants are scheduled to be sentenced on December 8, 2016, before U.S. District Court Judge Robin L. Rosenberg.

According to Court records, in January of 2016, U.S. Customs and Border Protection (CBP) officers conducted a  border search of an international mail parcel shipped from Shanghai, China, destined for a U.S. Post Office (P.O.) Box located in Vero Beach, Florida, and  found the parcel to contain approximately one kilogram of Dibutylone HCI, a synthetic cathinone, a/k/a “bath salts,” a schedule I controlled substance.  USPIS records showed that Thames had applied and paid for the P.O. Box.  On January 14, 2016, Julius Reason contacted the Vero Beach Post Office, inquiring about the whereabouts of two parcels.  On January 15, 2016, Julius Reason was notified that his packages were ready for pickup.  Thames then visited the post office and picked up the packages, before meeting Julius Reason and turning over the parcels.  When Julius Reason saw law enforcement he fled from the scene, throwing both parcels. 

During the course of the investigation, law enforcement seized items including, a loaded 9mm firearm from Julius Reason’s vehicle and electronic devices, wire transfer records, Chinese chemical company business cards, and $10,168.00 in U.S. currency from his residences.

The investigation further revealed that between June 2014 and January 2016, Julius reason and his wife Venteria Reason sent wire transfers to China exceeding $59,000.  Julius Reason, Venteria Reason, and Thames, exchanged communications with Chinese chemical company representatives discussing prices and ordering synthetic cathinones, including Dibutylone and Ethylone, Schedule I controlled substances.  The defendants also communicated by text message regarding the local delivery and sales of another controlled substance, commonly referred to as “molly.”

Between June 2014, and January 18, 2016, at least 20 parcels were shipped from China to U.S. P.O. Boxes and addresses linked to Reason and Venteria Reason, in the Southern District of Florida.  Five of those parcels were seized by law enforcement and thirteen parcels were delivered. 

Mr. Ferrer commended the investigative efforts of ICE-HSI, the USPIS and DEA.  Mr. Ferrer also thanked the Indian River Sheriff’s Office for their assistance with this matter.  This case is being prosecuted by Assistant U.S. Attorney Carmen Lineberger.

Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.

An additional stock promoter and a registered securities representative were charged with conspiracy to commit securities fraud in connection with a scheme to fraudulently register shell companies with the U.S. Securities and Exchange Commission (SEC), issue shares in the companies that they and other conspirators secretly controlled, and sell the shares to the investing public at a profit.  To date, six defendants have been charged in connection with this fraudulent scheme.

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, George Piro, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, and Eric I. Bustillo, Director, U.S. Securities and Exchange Commission (SEC), Miami Regional Office, made the announcement.  

Sheldon R. Rose, 77, of Sarasota, Florida, and Ian C. Kass, 45, of Ft. Lauderdale, Florida, were charged by criminal information with one count of conspiracy to commit securities fraud, in violation of 15 U.S.C. §§ 78j(b) and 78ff(a), and 17 C.F.R. § 240.10b-5, all in violation of 18 U.S.C. § 371 (Case No. 16-CR-20706).  Rose and Kass face a maximum statutory sentence of five years in prison and a fine up to $250,000 or double the proceeds of the offense.  The case is assigned to U.S. District Judge Jose E. Martinez in Miami. 

Daniel McKelvey, 49, of Foster City, California, and Jeffrey L. Lamson, 51, formerly of El Dorado Hills, California, previously pled guilty for their participation in the securities fraud conspiracy (Case No. 16-20546-CR-RNS).  McKelvey is scheduled to be sentenced on December 15, 2016 and Lamson on September 8, 2016, before U.S. District Judge Robert N. Scola Jr. 

Steven Sanders, 73, of Lake Worth, Florida, and Alvin S. Mirman, 78, of Sarasota, Florida, previously pled guilty for their participation in the securities fraud conspiracy (Case No. 16-20572-CR-CMA).  They are scheduled to be sentenced before U.S. District Judge Cecilia M. Altonaga on October 27, 2016. 

According to court documents, co-conspirators Sanders, Mirman, Rose, McKelvey, and Lamson would recruit individuals to serve as straw chief executive officers (CEOs) for shell companies.  Specifically, Rose acted as a stock promoter and recruiter, and would inform the straw CEO that they would have no further role with the company and would only be paid when the business was later sold.  Sanders, Mirman, Rose, McKelvey, and Lamson would prepare corporate documents for the shell companies, such as board meeting minutes, stock certificates and shareholder lists, all of which were false and fraudulent.  The conspirators would submit these documents, as well as other false information, to the SEC on Form S-1 in order to register securities offerings in the name of the shell companies.  The false filings would include representations as to the role of the straw CEO in the company and the intent and purpose of the company itself.

Once a company’s registration was effective, Sanders, Mirman, Rose, McKelvey, and Lamson would recruit individuals to serve as nominee shareholders, to make it appear that there was a group of shareholders that were unaffiliated with the company.  This was done in order to create a class of unrestricted shares that could later be publicly traded.  In reality, these nominee shareholders were promised a fixed amount of money once the company was ready to be sold, in exchange for allowing their names to be used as shareholders on subscription agreements.  By obtaining control of all or nearly all of the purportedly unrestricted shares of the company without disclosure to the SEC or the public, the conspirators were in a position to subsequently sell or transfer the shares to others, or to the investing public, while avoiding the SEC’s prohibitions against insider trading or undisclosed trading by persons who exercise control over a public company. 

The conspirators would also solicit broker-dealers, including Kass, a registered securities representative who worked for various broker-dealers, to provide false information to the Financial Industry Regulatory Authority (FINRA) to obtain authorization for the company’s shares to be publicly traded (“over the counter”).  The conspirators would then seek buyers who would acquire control of the shell companies as well as the secretly controlled unrestricted shares.  The buyer’s acquisition of the company would typically take the form of a “reverse merger,” and be publicly disclosed to the SEC and the investing public on a Form 8-K.  The secretly controlled unrestricted shares would typically be transferred to a third party or other account designated by the buyer, and would not be disclosed to the SEC or the public.

The conspirators would also obtain the assistance of attorneys who would provide false and fraudulent opinion letters indicating that the shares held in the names of the straw shareholders, or the conspirators, were not owned or controlled by “affiliates” of the companies, and thus could be considered “free-trading” and not considered restricted.   Thereafter, with the assistance of Kass, the conspirators would engage in fraudulent trading activity, including prearranged matched trades, with the shell buyers, in order to profit from the scheme, transfer ownership of the free-trading shares to the shell buyers, and avoid SEC reporting requirements pertaining to stock trades involving company insiders or 5% shareholders.  In this way, the shell buyer would be in a position immediately to engage in stock swindles or other manipulation schemes. 

According to court documents, Sanders, Mirman, Rose, McKelvey, Lamson and Kass collectively created at least 36 fraudulent shell companies between 2007 and 2014, and reaped more than $10 million in proceeds from the scheme.

Mr. Ferrer commended the investigative efforts of the FBI.  Mr. Ferrer also thanked the U.S. Securities and Exchange Commission’s Miami Regional Office, which today filed a civil enforcement action against Rose and previously charged several others for their involvement in the scheme.  The matter is being prosecuted by Assistant U.S. Attorneys Jerrob Duffy and Alison Lehr.

An Information is merely an allegation and a defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.

A Jamaican national was sentenced to 33 months in prison, to be followed by three years of supervised release for his participation in a Jamaica based lottery fraud scheme.

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, and Antonio J. Gomez, Inspector in Charge, U.S. Postal Inspection Service (USPIS), Miami Division, made the announcement.

Joseph Conroy Smith, 28, a Jamaican National formerly of Lauderhill, previously pled guilty to one count of conspiracy to commit mail and wire fraud, in violation of Title 18, United States Code, Section 1349.   Smith was also ordered to pay approximately $100,000 in restitution and ordered to surrender to U.S. Immigration and Customs Enforcement upon completion of his term of incarceration. 

According to documents and information presented in court, beginning in or about March 2010, Smith’s co-conspirators contacted elderly victims in the United States and falsely informed them that they had won a lottery.  These co-conspirators told victims they had to pay several thousand dollars in taxes and fees in order to collect their purported lottery winnings. The co-conspirators then instructed the victims on how to send this money, and to whom, including directing that the funds be sent to Smith.

Smith used the aliases of “Brandon Ross,” “Janice Davis,” “Richard Hunt,” and “Calvin Edwards,” to receive money from victims via United States Postal Service Express mail in Broward County, Florida.  Smith also recruited others to receive victims’ money via money transfer services and United States Postal Service Express mail.  On occasion, Smith also recruited others to send the victims’ money via electronic money transfer services.

Mr. Ferrer commended the investigative efforts of USPIS.  Mr. Ferrer also thanked Homeland Security Investigations, the U.S. Marshals Service, Broward County Sheriff’s Office Narcotics Interdiction Task Force and the Miami-Dade Police Department Economic Crimes Unit, for their assistance with this matter.  The case was prosecuted by Assistant United States Attorney Bertha R. Mitrani.

Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.

On September 15, 2016, a former United States Immigration and Customs Enforcement Deportation Officer pled guilty to bulk cash smuggling.

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, Mark Selby, Special Agent in Charge, U.S. Immigration and Customs Enforcement, Homeland Security Investigations (ICE-HSI), Miami Field Office, David P. D’Amato, Special Agent in Charge, U.S. Immigration and Customs Enforcement, Office of Professional Responsibility (ICE-OPR), Jay Donly, Special Agent in Charge, Department of Homeland Security, Office of the Inspector General (DHS-OIG), Brian Swain, Special Agent in Charge, United States Secret Service (USSS), Miami Field Office, Diane J. Sabatino, Director, Field Operation, U.S. Customs and Border Protection, Miami Field Office, and Shimon R. Richmond, Special Agent in Charge, U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG), Miami Region, made the announcement.

Luis De Jesus Alonzo, Jr., 44, of Miami, Florida, pled guilty before Chief U.S. District Judge K. Michael Moore, in Miami, Florida to charges of bulk cash smuggling, in violation of Title 31, United States Code, Section 5332(a).  Alonzo faces a statutory maximum sentence of five years’ imprisonment.  Alonzo was employed by Immigration and Customs Enforcement as a Deportation Officer until he resigned effective Friday, September 9, 2016, prior to entering his plea of guilty.

According to court records, including a stipulated factual basis in support of Alonzo’s guilty plea, on May 30, 2016, Alonzo travelled from the United States to the Dominican Republic to assist and accompany his co-defendants Mildrey De La Caradid Gonzalez and Milka Yarlin Alfaro when they travelled back to the United States.

On June 4, 2016, Alonzo, Gonzalez, and Alfaro (collectively, the “Defendants”), arrived at Miami International Airport in Miami, Florida from the Dominican Republic.  The Defendants presented at least seven pieces of luggage for entry into the United States.  Alonzo filled out the required United States Customs and Border Protection Form 6059B (the “Declaration Form”) as the “responsible family member” on behalf of the Defendants.  Alonzo declared that he and his co-defendants were not carrying in excess of ten thousand dollars in United States currency.  Alonzo presented the Declaration Form to Passport Control officers. 

However, at the time Alonzo presented the Declaration Form he knew that the Defendants had in excess of ten thousand dollars hidden within their luggage.  Alonzo misrepresented that the Defendants were not carrying in excess of ten thousand dollars in United States currency in order to evade a currency reporting requirement under Title 31, United States Code, Section 5316.  During a subsequent search of the Defendants’ luggage, approximately $2,463,759.00 in United States currency was discovered concealed within the luggage in diapers, baby wipes, makeup pouches, and purses, among other things.

Mr. Ferrer commended the investigative efforts of ICE-HSI, ICE-OPR, DHS-OIG, USSS, CBP and HHS-OIG.  The case is being prosecuted by Assistant U.S. Attorney J. Mackenzie Duane. 

Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.

A City of Miami resident was sentenced to 51 months in prison, to be followed by three years of supervised release, for possessing 242 stolen identities used in unemployment and tax fraud schemes.

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, Kelly R. Jackson, Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI), Rafiq Ahmad, Special Agent in Charge, United States Department of Labor, Office of Inspector General (DOL-OIG), Miami Office, and Steve Steinberg, Chief, Aventura Police Department, made the announcement.

Yordan Gorotiza, 26, was sentenced by U.S. District Judge Paul C. Huck to 51 months in prison, to be followed by three years of supervised release, a $200 special assessment, and $33,608 in restitution, stemming from his conviction on one count of possession of fifteen or more unauthorized access devices (Social Security numbers) with intent to defraud, in violation of Title 18, United States Code, Section 1029(a)(3), and one count of aggravated identity theft, in violation of Title 18, United States Code, Section 1028A. 

According to court documents, during a traffic stop of Gorotiza’s vehicle, law enforcement officers found Gorotiza in possession of (among other items) four Florida unemployment cards in the names of other individuals; 26 Visa gift cards; a Florida driver’s license with Gorotiza’s picture but with another individual’s name; and a book bag containing personal identifying information (PII) of 242 different people, including employment records from a business and patient data sheets from a hospital. Several of the sheets contained handwritten driver's license numbers and markings commonly used to represent tax or unemployment benefits filings.

Records from the Florida Department of Economic Opportunity show that between October 1, 2013 and July 11, 2014, at least 64 of the victims had their personal information used without authorization to obtain unemployment benefits, including the victims whose unauthorized unemployment cards Gorotiza possessed during the traffic stop. The total actual loss to the Florida Department of Economic Opportunity was $33,608, and the total intended loss attributable to Gorotiza was $281,009.

Mr. Ferrer commended the investigative efforts of IRS-CI, DOL-OIG, the Aventura Police Department and the Florida Department of Economic Opportunity.  The case is being prosecuted by Assistant U.S. Attorney Tonya R. Long.

Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.

Former resident of Wilton Manors indicted in Fort Lauderdale today for posting threatening communications on Facebook.

Wifredo A. Ferrer, Unites States Attorney for the Southern District of Florida and George L. Piro, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, and members of the South Florida Joint Terrorism Task Force (JTTF), made the announcement. 

Craig Allen Jungwirth, 50, of Orlando, Florida, is charged by indictment with the interstate transmission of a threatening communication, in violation of Title 18, United States Code, Section 875(c).  If convicted, Jungwirth faces a statutory maximum sentence of five years in prison, three years of supervised release, and up to a $250,000 fine.

According to the allegations contained in the court record, including a previously filed criminal complaint, on August 30, 2016, the FBI’s Miami Division was notified by local law enforcement, other FBI field offices, and members of the public via the public tip line, that alarming threats towards the LGBT community located within Wilton Manors, FL had been posted on Facebook.  Specifically, on August 30, 2016, Jungwirth posting the following during an online written exchange, “My events are selling out ‘cause you faggots are total patsies. None of you deserve to live. If you losers thought the Pulse nightclub shooting was bad, wait till you see what I’m planning for Labor Day . . . You can never catch a genius from MIT and since you faggots aren’t dying from AIDS anymore, I have a better solution to exterminate you losers . . . I’m gonna be killing you fags….  It’s time to clean up Wilton Manors from all you AIDS infested losers.” 

Jungwirth, was previously arrested by the FBI in Orlando and is currently in the custody of the U.S. Marshal’s Service.  On September 12, 2016, a U.S. Magistrate Judge in Orlando ordered Jungwirth removed to the Southern District of Florida to face further legal proceedings.

Mr. Ferrer commended the investigative efforts of the FBI and JTTF.  The case is being prosecuted by Assistant U.S. Attorney Marc S. Anton.

A complaint and indictment are merely accusations and a defendant is presumed innocent unless and until proven guilty in a court of law. 

Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.

A St. Lucie County resident pled guilty yesterday to distributing and possessing child pornography. 

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, George L. Piro, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, and William Snyder, Sheriff, Martin County Sheriff’s Office (MCSO), made the announcement. 

Michael Joseph Roth, 46, of Port St. Lucie, Florida, pled guilty before Chief U.S. Magistrate Judge Frank J. Lynch Jr., in Fort Pierce, Florida to the charges of distribution and possession of material containing visual depictions of sexual exploitation of minors, in violation of Title 18, United States Code, Sections 2252(a)(2) and (b)(1) and 2252 (a)(4)(B) and (b)(2).   Roth faces a mandatory minimum of five years’ up to a twenty-year maximum term of imprisonment and a lifetime of supervised release.  In addition, Roth will be required to register as a sex offender.

According to Court records, including a stipulated factual basis in support of Roth’s guilty plea, on March 7, 2016, an undercover investigator (UC) with the Swiss Federal Police, utilizing a peer to peer file (P2P) sharing network established contact with user “Lindamom76”. “Lindamom76” shared material in four encrypted folders with the Swiss UC, by providing his password during a chat conversation.  As a result, the Swiss UC was able to download picture and video files depicting child pornography.  Law enforcement traced the internet protocol (IP) address of “Lindamom76” to Roth in Port Saint Lucie, Florida.

On May 20, 2016, law enforcement officers executed a federal search warrant at Roth’s residence and seized a laptop computer and a tower PC, containing the P2P software.  During an interview, Roth admitted that he used the P2P software and user name “Lindamom76.”

A forensic examination of the computer revealed Roth’s communications with the Swiss UC on March 7, 2016.  Additional chats were found wherein Roth, using an assumed identify of a mother of two teenage daughters, requested child pornography depicting incest, young girls, and pregnant teens.  In discovered chats with other P2P users, Roth discussed password requests in order to distribute, receive and trade images of child pornography.

Mr. Ferrer commended the investigative efforts of the FBI, MCSO and the Swiss Federal Police for their work on this case.  The case is being prosecuted by Assistant U.S. Attorney Carmen Lineberger.

Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.

Two Broward County residents pled guilty for their involvement in an identity theft tax fraud scheme involving the trafficking in, use, and possession of unauthorized debit card account numbers. 

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, Kelly R. Jackson, Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI), George L. Piro, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, and Dan Giustino, Chief, Pembroke Pines Police Department, made the announcement.  

Wilna Joseph, 36, and Maraldy Necker Jean, 39, both of Broward County, each pled guilty to one count of trafficking in and using one or more unauthorized access devices, in violation of Title 18, United States Code, Section 1029(a)(2), and one count of aggravated identity theft, in violation of Title 18, United States Code, Section 1028A(a)(1).

According to court documents, fraudulent tax returns were filed using the names and Social Security numbers of individuals without their permission.  On February 6, 2014, the defendants drove to a Wells Fargo Bank in Pembroke Pines and Joseph attempted to withdraw cash from the ATM using a debit card encoded with an account number belonging to one of the tax return victims.  The defendants then drove to a Citibank, located in Pembroke Pines, where Joseph made four withdrawals, totaling approximately $1,200.00, using a debit card encoded with an account number belonging to another one of the tax return victims. 

At the time of their arrest, on February 6, 2014, the defendants had fifteen unauthorized debit cards registered in the names of other persons. The debit cards had been funded with fraudulently obtained federal income tax refunds totaling approximately $76,249.20.

Joseph and Jean are scheduled to be sentenced on November 18, 2016 before United States District Judge William J. Zloch.  At sentencing, the defendants face up to ten years in prison for the access device charge, and two years’ imprisonment, consecutive to any other prison term, for the aggravated identity theft charge.

Mr. Ferrer commended the investigative efforts of IRS-CI, the FBI, and the Pembroke Pines Police Department. The case is being prosecuted by Assistant United States Attorneys Daya Nathan and Jonathan K. Osborne and Special Assistant United States Attorney Tyler Jett. 

Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.

The former Chief Executive Officer of Essex Holdings, Inc., was charged with two separate fraud schemes totaling more than $30 million.  The first scheme involved nearly 100 investors who purportedly purchased interests in sugar transportation and iron ore mining in Chile.  The second scheme involved unlawfully obtaining economic development funds from the State of South Carolina.

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, and George L. Piro, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, made the announcement. 

Navin Shankar Subramaniam Xavier, a/k/a "Navin Xavier," a/k/a "Dr. Navin Xavier" (Xavier), 44, of Miramar, is charged by Indictment with fifteen counts of wire fraud, in violation of Title 18, United States Code, Section 1343.  Xavier faces a maximum statutory sentence of twenty years in prison for each count and a fine up to $250,000.  The case is assigned to U.S. District Judge Darrin P. Gayles in Miami. 

According to the Indictment, from September 2010 through May 2014, Xavier operated Essex Holdings, Inc., (“Essex Holdings”) from an office in Miami Gardens, and raised more than $29 million from nearly 100 investors for supposed investments in sugar transportation and shipping, as well as iron ore mining in Chile.  Xavier used a false financial statement, forged documents, and false promises of fixed rates of return, to induce investors to invest with Essex Holdings.  Most of the money was used for purposes other than what was promised, including to support lavish spending by Xavier and his wife for expensive jewelry, luxury vehicles, wedding expenses, and cosmetic surgery.  Eventually, Xavier used new investor money to pay old investors in a Ponzi-like fashion before the scheme collapsed.

The second scheme involved Xavier using Essex Holdings to obtain $1.2 million in payments and approximately $1.5 million worth of commercial real estate from the South Carolina Coordinating Council for Economic Development (“SCCCED”), a division of the South Carolina state government, that was supposed to be used to develop a dilapidated industrial property into a diaper plant and rice packaging facility.  According to the indictment, Xavier provided false financial documentation to SCCCED in order to obtain the contract, and later provided fake contractor invoices and fake bank statements in order to get paid under the contract.   As with the investment fraud scheme, Xavier spent the development money for his personal living expenses, and wired some of it to the same overseas accounts used in the investment fraud. 

Mr. Ferrer commended the investigative efforts of the FBI, the Miami Regional Office of the U.S. Securities and Exchange Commission, and the South Carolina Office of Inspector General, for assisting with this matter.  The matter is being prosecuted by Assistant U.S. Attorneys Jerrob Duffy and Allison Lehr. 

A criminal indictment is merely an allegation and a defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.

The former Opa Locka City Manager pled guilty this morning to accepting bribes in furtherance of an illegal municipal corruption scheme.

Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida, and George L. Piro, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, made the announcement. 

David Chiverton pled guilty to participating in a conspiracy against the laws of the United States, that is, Federal programs bribery and extortion under color of official right, in connection with his official duties as Opa Locka’s Assistant City Manager, and subsequently as City Manager, in violation of Title 18, United States Code, Section 371.

“In open court today, a former Opa Locka City Manager admitted under oath that he sold away his commitment to fairly administer the city’s services - for a personal profit,” stated U.S. Attorney Wifredo Ferrer. “It is imperative that public officials abide by the rules, policies and legal practices that are in place to prohibit any abuse of the public’s trust.  Otherwise, corrupt officials will continue to find themselves the target of law enforcement prosecutions that seek federal penalties for their misconduct.”

“Corrupt officials – either elected or appointed - are on notice; if they breach the public’s trust through stealing or accepting bribes in the course of their official duties, they will be vigorously investigated,” said William J. Maddalena, Assistant Special Agent in Charge, FBI Miami.  “The FBI will continue to investigate and hold accountable any public official who utilizes their position for personal again.  We encourage anyone who may have information about corruption to come forward and report it. This information is vital to our work.”

According to the court record and statements made in open court, between March 2014 and March 2016, Chiverton agreed with an unnamed Opa Locka elected official (“Public Official A”), former Opa Locka Assistant Public Works Director Gregory Harris, and others, to use their official positions and authority with the City of Opa Locka to solicit, demand, and obtain thousands of dollars in illegal cash payments from businesses and individuals in exchange for taking official actions to assist and benefit those businesses and individuals in their dealings with the City of Opa Locka.

As explained in open court at the guilty plea, Public Official A would direct Chiverton, Harris, and other City of Opa Locka employees to assist the paying businesses and individuals by issuing occupational licenses; waiving, removing, and settling code enforcement matters and liens; initiating, restoring and continuing water service; and assisting with zoning issues.  Public Official A would pay Chiverton, and also would tell the paying businesses and individuals to pay Chiverton directly in exchange for these official actions.  Chiverton also directly and indirectly solicited and obtained illegal cash payments in exchange for official actions assisting businesses and individuals with the same types of issues as described above.

As admitted in open court at the guilty plea, over the course of a number of months, Chiverton, in conjunction with Public Official A and another co-conspirator, accepted over $5,000 in illegal cash payments from one Opa Locka business owner in connection with the issuance of an occupational license and the resolution of three code enforcement fines and $63,000 in liens that had been placed on the business owner’s property.  In addition, Chiverton, at the direction and on behalf of Public Official A, accepted an illegal $2,500 cash payment from another Opa Locka businessman as partial payment for resolving the licensing and zoning issues connected with that individual’s business. 

Chiverton is scheduled to be sentenced on November 21, 2016, in front of U.S. District Court Judge Cecilia M. Altonaga.  He faces a maximum sentence of 5 years’ imprisonment and 3 years’ supervised release.  The court may also impose a maximum fine of $250,000. 

Mr. Ferrer commended the investigative efforts of the FBI Miami Area Corruption Task Force.  This case is being prosecuted by Senior Litigation Counsel Edward Stamm and Assistant United States Attorney Kimberly Selmore.

Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.

Seventh and Final Defendant Pled Guilty to Participating in a $36 Million Fraud Scheme Involving Fourteen Low-Income Housing Developments

The last of seven defendants pled guilty today to participating in a scheme to defraud the United States government of $36 million in funding intended for the construction of low-income housing developments.

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, George L. Piro, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, Nadine Gurley, Special Agent in Charge, U.S. Department of Housing and Urban Development, Office of Inspector General (HUD-OIG), and Kelly R. Jackson, Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI), made the announcement.

“The defendant and his co-conspirators stole $36 million dollars in federal monies that would otherwise have been used to provide affordable housing to hundreds of needy residents throughout the State of Florida,” stated U.S. Attorney Ferrer.  “As a result of a steadfast commitment to justice, forged between the U.S. Attorney’s Office and our law enforcement partners, to date we have recovered over $20 million of these stolen funds and will continue to prosecute those who compromise a public service program designed to aid the poor, elderly and homeless.”

“Stealing money from the federal government is not a victimless crime.  In this case, 36 million in taxpayer dollars intended for low-income housing developments never reached the needy but instead lined the pockets of Lloyd Boggio and his co-conspirators,” said William J. Maddalena, Assistant Special Agent in Charge, FBI Miami.  “The FBI is committed to rooting out this type of fraud and reclaiming money that was dishonestly obtained.”

“These defendants took advantage of a tax credit intended to help Florida residents in need of affordable housing,” stated Kelly R. Jackson, Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI). “IRS-CI will continue to commit resources to hold individuals accountable who create false tax returns in order to steal from the government.”

Lloyd Boggio, 70, of Coconut Grove, pled guilty before U.S. District Judge Ursula Ungaro to one count of money laundering, in violation of Title 18, United States Code, Section 1957.  Boggio is scheduled to be sentenced on December 9, 2016 at 1:30 p.m. before United States Ursula Ungaro.  As part of the plea agreement, Boggio agreed to forfeit to the United States approximately $2 million in seven frozen bank accounts. In addition, Boggio agreed to forfeit a multi-million dollar luxury home in Coconut Grove and to the entry of a forfeiture money judgment of $7,174,357.  The defendant faces a maximum statutory sentence of 10 years’ imprisonment.

In addition to Boggio, the following individuals were charged criminally and previously pled guilty for their participation in these and other fraudulent schemes to steal funds intended for the construction of low-incomes housing.  These individuals are: 

• Matthew Greer, 38 of Miami Beach, a former CEO of Carlisle Development Group (“CDG”), a former low-income housing developer in Miami, Florida;
• Michael Runyan, 67 of Lighthouse Point, the CEO of BJ&K Construction, Inc. (“BJ&K Construction”), a general contractor in Fort Lauderdale, Florida;
• Gonzalo DeRamon, 52 of Coral Gables, a co-founder of Biscayne Housing Group (“BHG”), a former low-income housing developer in Miami, Florida;
• Michael Cox, 48 of Miami, a co-founder of BHG;
• Rene Sierra, 58 of Southwest Ranches, a founder of Siltek Affordable Housing LLC, a former general contractor in Planation; and
• Arturo Hevia, 64 of Miramar, a founder of Design Management and Builders Construction, a general contractor in Doral.

 

According to court records, including the agreed upon factual proffers in support of the defendants’ pleas, from 2006 to 2012, Boggio and Greer served, at alternating times, as the Chief Executive Officer of CDG.  During this period, CDG applied for federal tax credits and federal grant monies to build low-income housing developments through a program administered by the Florida Housing Finance Corporation (“FHFC”).  To obtain these federal funds, FHFC required developers to submit proposed development costs, including a construction contract signed by the developer and contractor. 

The court record, including the defendants’ factual proffers, indicates that Boggio and Greer, of CDG, conspired with Runyan of BJ&K Construction to unjustly enrich themselves by submitting fraudulently inflated low-income housing construction contracts to FHFC’s representatives in order to obtain excess federal tax credits and grant monies to which they were not entitled, and then to use the proceeds for their personal use and benefit.  Boggio, Greer, and Runyan caused the submission of fraudulently inflated construction contracts on at least eight different low-income housing developments, which resulted in the allocation of at least $26 million in excess federal tax credits and grant monies. With these excess federal funds, Runyan made kickback payments for the benefit of Boggio and Greer, including an $8.7 million wire transfer to Boggio’s bank account in the name of Caesar and Cleopatra on March 23, 2011. 

According to the factual proffers, Boggio and Greer also conspired with Cox and DeRamon of BHG to steal government money intended to build low-income housing developments.  BHG employed the same contract inflation scheme of submitting fraudulently inflated contracts to FHFC for the receipt of excess federal tax credits and grant monies on two low-income housing developments jointly developed by CDG and BHG.  In or around May 2010, Boggio and Greer agreed with Cox and DeRamon to share approximately $3.7 million in excess government funds for these two joint venture developments. 

Court documents further indicate that as a result of the defendants’ fraudulent schemes to inflate low-income housing construction contracts, FHFC allocated more than $36 million in excess tax credits and grant monies for fourteen low-income housing developments.  Both during and after construction of the developments, the contractors made periodic kickback payments of the fraudulent contract inflation monies for the benefit of the CDG and BHG principals, including more than $26 million in kickbacks from Runyan for the benefit of Greer and Boggio; more than $6.2 million in kickbacks from Sierra for the benefit of DeRamon, Cox, Greer, and Boggio; and more than $1 million in kickbacks from Hevia for the benefit of DeRamon and Cox.     

During the course of this investigation, through seizure warrants and voluntary payments by the defendants, the United States has collected over $20 million in proceeds connected to the thefts of government funds.  

Mr. Ferrer thanked the FBI, HUD-OIG, and IRS-CI for their work on this case.  This and all related cases are being prosecuted by Assistant U.S. Attorneys Michael R. Sherwin, Michael N. Berger, Karen Rochlin, Evelyn Sheehan, and Eloisa Fernandez.  

Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.

Following a trial before United States District Court Judge William P. Dimitrouleas, a jury convicted a Broward County resident for his participation in a stolen identity tax fraud scheme.

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, and Kelly R. Jackson, Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI), made the announcement.

Clifford Blain, 28, was convicted of one count of uttering a forged United States Treasury check, in violation of Title 18, United States Code, Section 510(a)(2), one count of bank fraud, in violation of Title 18, United States Code, Section 1344, and one count of aggravated identity theft, in violation of Title 18, United States Code, Section 1028A. The defendant was remanded into custody following his conviction.

According to evidence presented at trial, Blain deposited a United States Treasury check containing a forged endorsement and signature of another individual into a bank account he controlled. An image of the defendant making the deposit was captured by ATM cameras and introduced during the trial proceedings.

Sentencing is scheduled for November 18, 2016 before Judge William P. Dimitrouleas.  At sentencing, Blain faces up to ten years in prison for the uttering a forged Treasury check charge, thirty years in prison for the bank fraud charge, and two years’ imprisonment, consecutive to any other prison term, for the aggravated identity theft charge.

Mr. Ferrer commended the investigative efforts of IRS-CI. The case is being prosecuted by Assistant U.S. Attorney Russell Killinger.

Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.

A medical device saleswoman was convicted yesterday on charges of conspiring to transport stolen medical devices in interstate commerce, money laundering and other charges. 

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, and Robert J. West, Special Agent in Charge, United States Food and Drug Administration (FDA), Office of Criminal Investigations, Miami Field Office, made the announcement. 

Kerri L. Kaley, 50, of Cold Spring Harbor, New York, was convicted by a jury in Miami on seven felony counts in a criminal case arising out of a Miami-based FDA investigation. Operation Miami Device has led to convictions in over twenty cases of medical device theft and has resulted in forfeitures, fines, and restitution totaling more than $5 million.

Kaley was adjudicated guilty by the U.S. District Judge Darrin P. Gayles for her role in a conspiracy to transport and sell in interstate commerce various stolen prescription medical devices, the actual transport and sale of stolen medical devices, and money laundering associated with that activity.  Kaley is scheduled for sentencing on December 2, 2016 at 9:30 a.m.  She faces a term of imprisonment of up to 5 years on the conspiracy charge, a maximum sentence of up to 10 years on each of the 5 substantive counts of transporting stolen property, and up to 20 years on the money laundering conviction.  In addition to the period of incarceration, Kaley is also subject to fines on each of the 7 counts of up to $250,000 per count, or twice the intended gain or loss caused by the relevant conduct.  In lieu of facing a forfeiture hearing before the same jury, Kaley agreed to forfeit $500,000 to the United States, payable before her sentencing date.  Kaley also faces sentencing based on a November 2014 conviction arising in the same matter for obstruction of justice, which carries a potential sentence of 10 years’ imprisonment and a fine of $250,000.

According to court records and testimony presented at trial, from approximately 1995 through February 2005, Kaley participated in a conspiracy with a group of individuals based in Long Island, New York.  The entire group, including Kaley, were medical device sales representatives for subsidiaries of Johnson & Johnson. The Miami-based conspirator solicited sales representatives and other employees of medical device manufacturers, seeking to purchase medical devices for re-sale.  According to evidence presented in court, it was part of the conspiracy for Kaley and others working with her, to secure possession of significant quantities of prescription medical devices from hospitals they serviced for their employer, which were then forwarded to a conspirator in Delray Beach, Florida.  These devices were often state-of-the-art equipment used for minimally invasive surgery and the suture materials used throughout hospitals. According to three of Kaley’s co-conspirators who testified at trial, the devices were acquired by theft and fraud from their customer medical facilities, which were all New York non-profit hospitals. In the course of the illegal activity, Kaley laundered over $2.2 million in payments through two sham construction corporations and used the funds to pay the coconspirators, a home mortgage, home-renovation expenses, and child care.

Charges remain pending against Brian K. Kaley, but no trial date has been set.

Mr. Ferrer commended the investigative efforts of FDA- Office of Criminal Investigations.  The current case is being prosecuted by Assistant United States Attorneys Thomas Watts-FitzGerald, Brooke Watson, and Alison Lehr.  At the November 2014 trial, the United States was represented by Assistant United States Attorneys Thomas Watts-FitzGerald, Jerrob Duffy, and Alison Lehr.

In the lengthy period between the Superseding Indictment and the most recent trial, this matter was taken to the Eleventh Circuit Court of Appeals twice and later to the Supreme Court of the United States over issues relating to the pre-trial restraint of assets that the Grand Jury had included in the forfeiture allegation of the Indictment.  The government prevailed in that case by a 6 – 3 margin.  The United States was represented before the Eleventh Circuit by Assistant U. S. Attorney Madeleine Shirley of the Appellate Division of the U.S. Attorney’s Office.

Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov

Yesterday, a Venezuelan national was convicted by a federal jury for participating in a marriage fraud conspiracy. 

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, and Mark Selby, Special Agent in Charge, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (ICE-HSI), made the announcement.

Elisabet Kerese Alvarez, 39, of Doral was convicted by a federal jury of conspiring to defraud the United States and marriage fraud.  Kerese Alvarez faces a statutory maximum sentence of five years in prison as to the conspiracy charge and a statutory maximum of five years in prison as to the marriage fraud conviction. 

According to the court record, including evidence presented during the three-week trial, in April 2014, the defendant paid organizers Odalys Marrero and Rolando Mulet of Miami to recruit a Cuban citizen to enter into a fraudulent marriage with her for the purpose of evading the immigration laws of the United States.

The evidence at trial established that Kerese Alvarez paid thousands of dollars in cash for a fraudulent marriage, an agreement which anticipated the completion of an immigration application to be submitted to United States Citizenship and Immigration Services (USCIS) in order for Kerese Alvarez to obtain lawful permanent residency in the United States.

Ten of the co-conspirators in the fourteen-defendant indictment previously pled guilty for their participation in the fraudulent scheme.  Those defendants, included Venezuelan and Colombian nationals, Katiusca Aguilar Navarro, Manuel Andres Gomez, Natacha Perera, Marianelly Auxiliado Rodriguez, and Okyvi Yoll Mesa, who each paid tens of thousands of dollars to enter into fraudulent marriages with co-conspirator Cuban nationals, Carlos Alberto Mederos Paule, Virginia De la Caridad Mederos Paule, Osvaldo Lastre Duran, Rafael Abreu Gonzalez, and Salvador Cabanas.  Organizers Marrero and Mulet along with Cuban national, Javier Manejias were all convicted by a jury on July 18, 2016 and are scheduled for sentencing on September 26, 2016.  Kerese Alvarez is scheduled to be sentenced on November 14, 2016.

Mr. Ferrer commended the investigative efforts of ICE-HSI.  Mr. Ferrer also recognized USCIS for the significant and valuable support the agency provided the investigation.  This case is being prosecuted by Assistant United States Attorney Anne P. McNamara and Special Assistant United States Attorney Michele Vigilance.

Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.

Sixteen defendants have been charged in federal court with participating in a massive insurance fraud scheme.

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, Adolphus P. Wright, Special Agent in Charge, Drug Enforcement Administration (DEA), Miami Field Office, Kelly R. Jackson, Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI), and Michael J. Satz, Broward State Attorney, announced today the filing of a five-count Information. 

A criminal Information charges sixteen defendants for their participation in a complex fraud scheme regarding the manufacture and distribution of compounded medications.  The fraud involved material misrepresentations to health insurance providers and illegal payments to coconspirators and medical professionals, including physicians.  The fraud generated in excess of $175,000,000 in criminal proceeds for the members of the criminal enterprise.

The defendants are charged with varying offenses in the Information.  Clifford Carroll, 36, of Boca Raton, FL, is charged with conspiracy to commit racketeering, in violation of Title 18, United States Code, Section 1962 (Count 1).  Todd Stephens, 52, of West Palm Beach, FL, Tim Clinton, 30, of Delray Beach, FL, Joel McDermott, 41, of Boca Raton FL, Michael Kenna, 30, of Delray Beach, FL, Todd Hanson, 47, of Zephyr Cove, NV, and Lisa Goldberg, 51, of Fort Lauderdale, FL, are charged with conspiracy to commit money laundering, in violation of Title 18, United States Code, Section 1956(h) (Count 2).  Christopher Mucha, 30, of Davie, FL, Ian Flaster, 34, of Delray Beach, FL, Kyle O’Brien, 28, of Boca Raton, FL, Rhett Gordon, 43, of Boca Raton, FL, William Earl, 73, of Boca Raton, FL, Frederick Thomas Giampa, 52, of Sharon, MA, Dr. Peter Williams, 56, of New Port Richey, FL, Dr. John Johnson, 54, of Hollidaysburg, PA, and Dr. Brett Nadel, 48, of Roswell, GA, are charged with conspiracy to commit mail fraud and wire fraud, in violation of Title 18, United States Code, Section 371 (Count 3).  Hanson is also charged with making a materially false statement to federal law enforcement, in violation of Title 18, United States Code, Section 1001 (Count 4).  Carroll is also charged with subscribing to a false federal income tax return, in violation of Title 26, United States Code, Section 7206 (Count 5). 

According to the Information filed today, the defendants participated in a two-year conspiracy, which used various business entities, including Numed Care, LLC, ClinicalCorp, LLC, RX of Boca, and a compounding pharmacy located in Dallas, Texas (hereinafter referred to as “the Texas Compounding Pharmacy”'), to perpetrate a complex fraud on numerous health care insurance providers.  The defendants prepared medications in bulk quantities which were alleged to be compounded medications for specific individualized patient needs.  The defendants falsely represented to the health insurance providers that these medications were prepared in limited quantities for individual patients and were exempted from FDA inspection.

The health insurance providers compensated the defendants for the alleged costs of the ingredients for such medications. The defendants concealed from the health insurance providers that the defendants made illegal kickbacks to physicians for the issuance of the compounded medications.  The defendants unlawfully provided the physicians with pre-printed prescription pads.  In order to facilitate the fraudulent scheme, the defendants used mass marketing techniques and call centers, which made material misrepresentations in order to solicit potential patients. The defendants induced owners of failing pharmacies throughout the United States in order to perpetuate the fraud.  

If convicted, the defendants face a range of statutory penalties.Carroll faces a statutory maximum term of imprisonment of 23 years and a fine of up to $500,000. Hanson faces a statutory maximum term of imprisonment of 15 years and a fine of up to the greater of $500,000 or twice the amount of the criminally derived property.Stephens, Clinton, McDermott, Kenna, and Goldberg face a statutory maximum term of imprisonment of 10 years and a fine of up to the greater of $250,000 or twice the amount of the criminally derived property. Mucha, Flaster, O’Brien, Gordon, Earl, Giampa, Williams, Johnson, and Nadel face a statutory maximum term of imprisonment of 5 years and a fine of up to $250,000.

Mr. Ferrer commended the investigative efforts of the DEA, IRS-CI, and the Broward States Attorney’s Office in connection with the investigation of this matter.  The case is being prosecuted by Assistant U.S. Attorneys Paul F. Schwartz and Jeffrey N. Kaplan.

An Information is only an accusation and a defendant is presumed innocent unless and until proven guilty.  

Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.

Those of us in law enforcement play an important role in reducing crime and protecting our community, and those of us in nonprofit educational work play a similar role in preventing crime by keeping kids on track to graduate. When we combine our efforts, we can make a bigger impact than we can by simply working alone.

In 2011, the U.S. Attorney’s Office for the Southern District of Florida (USAO) created the Violence Reduction Partnership (VRP) to combat violent crime, gang activity and firearms offenses that plague many of our local communities.

For the VRP, the USAO has partnered with federal, state and local law enforcement agencies, nonprofit and private entities, faith-based organizations, community leaders and educational institutions to break the cycle of violence. Now, the USAO is joining forces with City Year Miami, the Miami branch of the national, education-focused nonprofit, to add momentum to the prevention of violence in our schools and community.

Low literacy levels strongly correlate with poverty, crime and unemployment. As part of the VRP’s Pre-K Reading Program, members of the USAO staff, federal and local law enforcement officers/agents, employees of the law firm Jones Day and other community volunteers go to schools in select violence-plagued communities once a month and read to 900 pre-kindergarten and elementary school students.

Following every reading session, volunteers give the children books to take home. Since 2014, the program has given out more than 11,000 books; sadly, for many of the children, this is the first and only book they have ever owned. Now, through this new partnership, City Year Miami will be committing its entire professional staff team to adopting a number of schools for the reading program and sponsoring the books at one school.

The goals of the reading program are to instill in the students excitement for reading, provide mentorship, prevent academic failure and derail the school-to-prison pipeline. The reading program has expanded to 21 schools throughout the Southern District of Florida, including Miami-Dade, Broward, Palm Beach, and St. Lucie counties.

Partnerships such as the VRP generate tremendous power by collectively building safer, stronger, more cohesive communities. While teachers are crucial agents of change, called upon to help mold the minds and lives of our children, the task of educating, protecting and mentoring our youth cannot fall upon the shoulders of one person, organization or entity.

In this regard, partnerships like the one forged between the U.S. Attorney’s Office and City Year Miami are critical in making this a community-wide effort that will continue to have a real impact on our children and the community at large.

Within a landscape far too often riddled with violence, loss and grief, we are compelled to create positive interactions and to become powerful storytellers for a future full of possibility that many of these young children cannot yet see.

We invite you to join forces with the USAO, City Year Miami and other partners on our VRP team, so that together we can have a direct, positive impact on the lives of our local students.

Financial investment matters, but getting involved, reading to children and helping them envision a better tomorrow — that’s transformational and it’s how we begin to chip away, child by child, household by household, community by community, at the stigma of low expectations and the lack of options that often lead to future violence.

Wifredo Ferrer is U.S. Attorney for the Southern District of Florida. Keith "Fletch" Fletcher is executive director and vice president of City Year Miami.

To learn more, contact the U.S. Attorney’s Office Community Outreach Team at (305) 961-9134 orusafls.vrp@usdoj.gov. To partner with City Year Miami, contact Keith "Fletch" Fletcher at (305) 778-5579 or kfletcher@cityyear.org. City Year - Miami Herald - Preventing Violence In Our Schools And Commun...

 

 

 

A North Miami check casher was convicted by a federal jury for cashing over $11 million in fraudulent tax refund checks obtained from the filing of stolen identities. 

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, Kelly R. Jackson, Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI), and Mark Selby, Special Agent in Charge, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (ICE-HSI), made the announcement. 

Junior Jean Baptiste, 36 of North Miami, Florida, was convicted on charges of conspiracy to commit money laundering, money laundering, possession of five or more false identification documents, theft of government money, and aggravated identity theft. 

Sentencing is scheduled before U.S. District Judge Jose Martinez on October 31, 2016 at 1:30 p.m.  Baptiste faces possible terms of imprisonment of up to twenty years each for the conspiracy to commit money laundering and money laundering counts, up to ten years each for the theft of government money counts, up to five years each for the false identification documents counts, and a consecutive sentence of two years each on the aggravated identity theft counts. 

According to the evidence presented in court, from 2009 to 2011, the defendant operated a check cashing store called Surveillance Masters LLC in North Miami, Florida.  During this period, trial evidence demonstrated that the defendant knowingly cashed over $11 million from over 2,000 fraudulent tax refund checks that had been issued in the names of dead people, disabled people, and other people who do not typically file tax returns.  Furthermore, trial evidence showed that the defendant typically took a fee of half of the value of the checks and made false identification documents for his files.  Trial evidence demonstrated that, in connection with the cashing of these fraudulent checks, the defendant possessed over 900 false driver’s licenses, work permits, and green cards. 

Finally, the evidence at trial showed that the defendant used the fraudulently obtained funds for, among other things, a cargo ship, multiple vehicles, and rights to an album of a prominent hip-hop artist.  

Mr. Ferrer commended the investigative efforts of IRS-CI and ICE-HSI.  This case is being prosecuted by Assistant U.S. Attorneys Michael N. Berger and Michael B. Nadler. 

Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.