Northern District of Illinois

CHICAGO — A federal judge has sentenced a convicted felon to eight years in prison for illegally possessing a handgun, which he used to intimidate his ex-girlfriend.

JOSEPH RILEY, 44, of Chicago, possessed the Sig Sauer P229 .40-caliber pistol on at least four occasions in 2015, according to his written plea agreement. During one of those occasions, Riley brandished the gun and used it to intimidate his ex-girlfriend, according to the plea agreement.

Riley was not lawfully allowed to possess the gun because he had prior felony convictions, including two felonies for illegally possessing firearms.

Riley pleaded guilty earlier this year to one count of illegal possession of a firearm by a felon. U.S. District Judge John J. Tharp Jr. on Tuesday imposed the 96-month sentence in federal court in Chicago.

The sentence was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; and Celinez Nunez, Special Agent in Charge of the Chicago Field Division of the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives. The Chicago Police Department provided valuable assistance.

“Each instance in which defendant possessed the gun was dangerous and threatening,” Assistant U.S. Attorney Matthew L. Kutcher argued in the government’s sentencing memorandum. The government’s memorandum noted Riley’s prior firearm convictions and the seriousness of the current offense, and it requested that the Court impose the 96-month sentence, which was significantly above the advisory guideline range.

CHICAGO — Federal authorities have arrested a west suburban musician for allegedly enticing underage girls to produce sexually explicit videos of themselves.

AUSTIN JONES, 24, of Bloomingdale, chatted with two underage girls on Facebook and enticed them to produce pornographic videos of themselves and send them to him, according to a criminal complaint and affidavit filed in federal court in Chicago. Jones is a musician with a significant following on social media sites such as Facebook and Twitter, the complaint states. His music videos have been viewed millions of times on the Internet, including on YouTube, the complaint states.

The complaint charges Jones with two counts of producing child pornography. Jones was arrested on Monday at O’Hare International Airport in Chicago. He made his initial court appearance this afternoon before U.S. Magistrate Judge Michael T. Mason. Judge Mason ordered Jones to remain in federal custody until a detention hearing on June 14, 2017, at 2:30 p.m.

The complaint was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; and James M. Gibbons, special agent-in-charge of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) in Chicago. The Illinois Attorney General’s Office’s Internet Crimes Against Children Task Force and the Bloomingdale Police Department participated in the investigation.

According to the complaint, Jones chatted with one victim in August 2016, and with the other victim last month. The victim from last August stated in a Facebook chat with Jones that she was his biggest fan, the complaint states. Jones repeatedly told her that she was “lucky” to have his attention, and that she needed to “prove” that she was his biggest fan by producing the sexually explicit videos and sending them to him, the complaint states.

The public is reminded that a complaint is not evidence of guilt. The defendant is presumed innocent and entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.

Each count of production of child pornography is punishable by a minimum sentence of 15 years in prison and a maximum of 30 years. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory U.S. Sentencing Guidelines.

HSI led the investigation. The government is represented by Assistant U.S. Attorney Katherine Neff Welsh.

If you believe you are a victim of sexual exploitation, you are encouraged to call the ICE Tip Line at 1-866-DHS2-ICE (1-866-347-2423) or the National Center for Missing and Exploited Children at 1-800-843-5678. The hotlines are available 24 hours a day, seven days a week.

ROCKFORD — A Suburban Chicago physician was sentenced Monday by U.S. District Judge Frederick J. Kapala to 30 months in federal prison, to be followed by a term of supervised release of one year, for bribery concerning health care programs receiving federal funds.

 

NEIL SHARMA, 37, of Lemont, who pleaded guilty to the charge on Feb. 2, 2017, has been a licensed Illinois physician since March 2011. Between September 2013 and March 2015, he was the Medical Director of a company identifed in court records as "Company A," a managed care services company that contracted to provide health care services to Medicare and Medicaid patients. As stated in a plea agreement, the State of Illinois contracted with Company A to provide skilled nursing services to patients located in certain facilities. These patients were covered by Medicare, Medicaid, or both. In early 2015, Company A subcontracted with three other companies to provide skilled nursing services. Sharma admitted that from Feb. 13, 2015 to March 13, 2015, he corruptly solicited bribes from an owner of one of the three subcontractors.

 

In exchange for the bribes, Sharma stated that he would provide the subcontractor with more skilled nursing patients and with additional Medicaid and Medicare patients through Company A’s anti-depressant monitoring program and hospital re-admission program. As stated in the plea agreement, the additional business Sharma promised in exchange for the bribes would bring in millions of dollars to the subcontractor. Sharma accepted cash payments of $2,500 and $7,500 from the owner of the subcontractor before being arrested by FBI agents.

 

The sentence was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; and Michael J. Anderson, Special Agent-in-Charge of the Chicago office of the Federal Bureau of Investigation.

 

The government is represented by Assistant U.S. Attorney Scott R. Paccagnini.

CHICAGO — A convicted felon admitted in federal court today that he illegally possessed a handgun at a suburban shooting range and then obstructed a law enforcement investigation into the matter.

LABAR SPANN, 38, also known as “Bro Man,” possessed and discharged the handgun in a firing range at Midwest Sporting Goods in Lyons on Sept. 14, 2014, according to a written plea agreement. Spann went to the range with two other individuals, and he posted numerous videos and photographs of the visit on his Instagram profile, the plea agreement states. One photograph depicted the silhouette of a person as the shooting target, with holes in the head and chest. According to the plea agreement, Spann posted a caption for the photograph that read: “y’all know I had to go first just to show my [expletive] how this [expletive] work lmao I do this [expletive].”

Spann had previously been convicted of a felony and was not lawfully allowed to possess a firearm.

Spann, of Chicago, pleaded guilty to one count of illegal possession of a firearm by a felon, three counts of obstruction of justice, and one count of possession of a controlled substance with intent to distribute. The conviction carries a maximum sentence of 70 years in prison. U.S. District Judge John J. Tharp Jr. scheduled sentencing for Sept. 5, 2017.

The guilty plea was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; Michael J. Anderson, Special Agent-in-Charge of the Chicago office of the Federal Bureau of Investigation; Celinez Nunez, Special Agent in Charge of the Chicago Field Division of the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives; and Eddie T. Johnson, Superintendent of the Chicago Police Department. The investigation was conducted in conjunction with the High Intensity Drug Trafficking Area Task Force (HIDTA).

The obstruction charges stemmed from Spann’s efforts to influence and impede a witness’s testimony before the federal grand jury that was investigating the incident at the firing range. The witness had initially stated truthfully to law enforcement that she accompanied Spann to the firing range and saw Spann load the gun and fire it, the plea agreement states. Soon thereafter, Spann communicated with the witness and others, intending to cause the witness to withhold truthful testimony from the grand jury.

When the witness was called before the grand jury on Jan. 29, 2015, she falsely testified that Spann did not shoot the gun at the range, the plea agreement states. In subsequent text messages between Spann and the witness, Spann asked if she could obtain the grand jury transcript of her testimony to give to him, the plea agreement states.

The government is represented by Assistant U.S. Attorneys Peter Salib, Timothy Storino, Tobara Richardson and William Dunne.

CHICAGO – The Justice Department today announced an agreement with the City of Des Plaines to resolve allegations that the City violated the Religious Land Use and Institutionalized Persons Act of 2000 (RLUIPA) when it denied a rezoning application to allow The Society of American Bosnians and Herzegovinans (SABAH), a Bosnian Muslim religious organization, to use a vacant building as a mosque.

 

The agreement resolves a lawsuit the Department filed in September 2015, after conducting an investigation into the City’s zoning and land use practices. A separate agreement resolving a similar lawsuit brought by SABAH has also been reached.

 

“Religious freedom is a fundamental right, and we will not tolerate the unlawful use of zoning or land use restrictions to infringe on that right,” said Joel R. Levin, Acting United States Attorney of the Northern District of Illinois. “The U.S. Attorney’s Office will continue to safeguard the rights of religious groups to establish houses of worship without fear of discriminatory zoning or land use practices.”

 

“Religious freedom is a fundamental right that belongs to all persons and religious groups in the United States,” said Acting Assistant Attorney General Tom Wheeler of the Justice Department’s Civil Rights Division. “The Department of Justice’s Civil Rights Division will remain vigilant in its enforcement of federal law protecting the rights of religious communities to build and use property for religious worship.”

 

The United States’ complaint alleged that the City discriminated against SABAH on the basis of religion or religious denomination by treating land use applications by non-Muslim religious groups better than it treated SABAH’s application on the basis of parking requirements and tax-exempt status, and that the City departed from its normal practices and procedures in the treatment and denial of SABAH’s request. The United States also alleged that the City’s denial imposed a substantial burden on SABAH’s religious exercise without serving a compelling governmental interest using the least restrictive means and that the City treated SABAH on less than equal terms with similarly situated non-religious groups, including a school and cultural center.

 

On Feb. 26, 2017, the U.S. District Court for the Northern District of Illinois ruled that the United States’ claims could proceed to trial. The Court found that the City misapplied its zoning laws by imposing higher parking standards on SABAH than on non-Muslim religious groups, and that the City did not use the least restrictive means to address purported concerns it had with SABAH’s request.

 

As part of the settlement agreement, the City of Des Plaines will abide by RLUIPA in its determinations involving religious land use requests. The City has agreed to provide training on the requirements of RLUIPA to its officials and employees, and to publicize its non-discrimination policies, among other remedial measures.

 

RLUIPA prohibits discrimination on the basis of religion in land use and zoning decisions. Persons who believe they have been subjected to such discrimination in land use or zoning decisions may contact the Department of Justice’s Civil Rights Division at (800) 896-7743. In the Northern District of Illinois, they may also call the U.S. Attorney’s Office's Civil Rights Hotline at (855) 281-3339.

CHICAGO — A Chinese businessman was sentenced today to ten years in federal prison for attempting to provide military equipment to a Peruvian terrorist organization.

GUAN YING LI, also known as “Henry Li,” pleaded guilty in 2014 to one count of attempting to provide material support and resources to Shining Path, a terrorist organization whose original goal was to overthrow the government of Peru and replace it with a Maoist socialist system. In 2011 Li brokered several deals with a purported Chicago-area businessman to provide military equipment to Shining Path, knowing that the equipment was to be used to kill Peruvian and U.S. government personnel. Unbeknownst to Li, the purported Chicago-area businessman was actually an undercover law enforcement agent.

U.S. District Judge Joan Humphrey Lefkow imposed the 120-month prison term at a sentencing hearing in federal court in Chicago.

The sentence was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; James M. Gibbons, Special Agent-in-Charge of the Chicago office of the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations; and Ryan Reihms, Special Agent-in-Charge of the Central Field Office of the Defense Criminal Investigative Service of the U.S. Department of Defense’s Office of Inspector General.

Li, 50, of Hong Kong, acquired and sold to the undercover agent five thermal batteries designed for use in the man-portable air-defense system known as MANPAD. These surface-to-air missiles would allow Shining Path members to shoot down helicopters, including those carrying U.S. personnel. According to Li’s plea agreement, Li caused the batteries to be shipped from Hong Kong to an address in Central America provided by the undercover agent.

Li also sold eight Paratrooper Assault Harnesses, eight Paratrooper backpacks, eight shovels, two VHF radios and four night-vision systems, the plea agreement states. Li caused this equipment to be shipped from China to an address in Elmhurst, Ill., provided by the undercover agent.

Pursuant to his plea agreement, Li agreed to cooperate in any matter in which he is called upon by the U.S. Attorney’s Office for the Northern District of Illinois.

The government is represented by Assistant U.S. Attorney Matt Hiller.

CHICAGO — A Lake County woman was sentenced today to four years in federal prison for defrauding the State of Illinois out of nearly $7 million in unemployment benefits.

LETICIA GARCIA assisted hundreds of individuals, mostly undocumented immigrants, in preparing and filing unemployment insurance claims that Garcia knew contained false information, such as invalid Social Security numbers, false assertions of U.S. citizenship, and phony dependents. As a result of the fraudulent claims, the Illinois Department of Employment Security paid out approximately $6.8 million in unemployment benefits to hundreds of ineligible claimants.

Garcia, 54, of Round Lake Beach, pleaded guilty earlier this year to three counts of mail fraud. U.S. District Judge Edmond E. Chang imposed the sentence in federal court in Chicago.

The sentence was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; and James Vanderberg, Special Agent-in-Charge of the U.S. Department of Labor’s Office of Inspector General in Chicago. The Illinois Department of Employment Security and the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations provided valuable assistance.

“Defendant committed wholesale fraud against a state program designed to help some of the most vulnerable state residents get back on their feet after an unexpected job loss,” Assistant U.S. Attorney Nicholas Eichenseer argued in the government’s sentencing memorandum. “Her crime diminished the resources available to eligible UI claimants who played by the rules.”

“Garcia defrauded taxpayers of millions of dollars by assisting hundreds of ineligible workers in their efforts to receive unemployment insurance benefits intended for Americans who were out of work,” said Special Agent-in-Charge Vanderberg. “The Office of Inspector General will continue to work with our law enforcement partners to investigate those who attempt to fraudulently obtain money from Department of Labor Programs.”

Many of Garcia’s clients were Mexican-born immigrants without lawful immigration status or U.S. work permits, making them ineligible for unemployment insurance benefits. From 2006 through May 2012, Garcia operated an office out of a converted garage in her home, where she and her employees saw as many as 15 clients per day. It was understood that Garcia would not ask clients for immigration papers.

Garcia charged each client $300 to $400 to prepare and file a claim online, with half of the fee due upfront and the balance owed when the client received the benefits. Through her fraud, Garcia made tens of thousands of dollars, which she hid in bank accounts in her daughter’s name.

The government is represented by Mr. Eichenseer.

CHICAGO — A Chicago trader has been sentenced to a year and a day in federal prison for stealing his employer’s proprietary trading code.

 

Over a five-month period in late 2013 and early 2014, DAVID J. NEWMAN downloaded and stole all of the proprietary computer code and trading software belonging to his employer, Chicago-based WH Trading LLC. Newman downloaded more than 400,000 electronic files to multiple USB thumb drives. He resigned from the company in March 2014 after establishing his own trading firm – NTF LLC – through which he intended to use the stolen trade secrets to compete directly with WH Trading.

 

Newman, 34, pleaded guilty last year to one count of theft of trade secrets. U.S. District Judge Manish S. Shah imposed the sentence on Thursday in federal court in Chicago. Judge Shah also fined Newman $100,000 and entered an order prohibiting him from using or disclosing the stolen trade secrets.

 

The sentence was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; and Michael J. Anderson, Special Agent-in-Charge of the Chicago office of the Federal Bureau of Investigation.

 

WH Trading is a proprietary securities trading firm that acts as a market maker and engages in both open outcry and electronic trading of futures contracts and options on exchanges in Chicago, New York, London, Frankfurt, and Singapore. The intellectual property stolen by Newman had taken WH Trading’s mathematicians, statisticians, software developers and traders more than 15 years to develop, at a cost of more than $20 million. WH Trading’s proprietary codes are used for, among other things, pricing futures and options contracts, executing trades on various exchanges, analyzing the risk of trades, and interpreting exchange market data.

 

Newman had worked for the company since 2004 prior to his resignation.

 

The government is represented by Assistant U.S. Attorney William R. Hogan Jr. of the Securities and Commodities Fraud Section of the U.S. Attorney’s Office in Chicago.

A Chicago man was sentenced to serve nine years in prison, and four years supervise for conspiring with his cousin and his cousin’s girlfriend to kill a U.S. citizen at an Indonesian resort in 2014.

Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division, Acting U.S. Attorney Joel R. Levin of the Northern District of Illinois and Special Agent in Charge Michael J. Anderson of the FBI’s Chicago Division made the announcement.

Robert Ryan Justin Bibbs, 26, of Chicago, was sentenced before U.S. District Judge Rebecca R. Pallmeyer of the Northern District of Illinois.  On Dec. 13, 2016, Bibbs pleaded guilty to one count of conspiracy to commit the foreign murder of a U.S. national.

According to admissions made in connection with his plea agreement, in 2014, Bibbs’s cousin Tommy Schaefer informed Bibbs that Heather Mack, Schaefer’s girlfriend, had offered Schaefer approximately $50,000 to kill her mother, Sheila Von Wiese.  In approximately late July or early August 2014, Mack told Bibbs that she wished her mother was dead and she asked Bibbs whether he knew someone who would kill her mother in exchange for money.  Bibbs knew that Von Wiese was wealthy and that she and Mack were taking a vacation in Indonesia in early August 2014.  Schaefer had conveyed to Bibbs that Mack was planning to kill her mother while they were overseas and that Schaefer intended to travel to Indonesia to join Mack.

According to the plea agreement, while Schaefer waited for his flight to depart O’Hare International Airport, he exchanged text messages with Bibbs, which Bibbs understood to mean that Von Wiese’s murder was imminent, that Schaefer expected to receive millions of dollars as a result of the murder, and that Schaefer would spend some of this money on Bibbs.  According to the plea agreement, after Schaefer arrived in Bali, he informed Bibbs that Mack had unsuccessfully attempted to kill Von Wiese.  Bibbs then provided advice to Schaefer via text message on alternative ways to kill Von Wiese, including by drowning or suffocation.     In addition, Bibbs admitted that he counseled Schaefer that he should murder Von Wiese as long as no cameras were present, that he counseled Schaefer to be careful, and that he further encouraged his cousin to kill Von Wiese.

A short time later, Schaefer bludgeoned Von Wiese to death, then, with Mack, stuffed Von Wiese’s body into a suitcase, placed the suitcase into a taxi cab and fled the resort.  Schaefer and Mack were subsequently arrested and convicted in Indonesian court, and are serving respective 18-year and 10-year sentences in prison.

Deputy Chief Hope Olds and Trial Attorney Christine Duey of the Criminal Division’s Human Rights and Special Prosecutions Section and Assistant U.S. Attorney Bolling Haxall of the Northern District of Illinois prosecuted the case.  The FBI investigated the case.  The Criminal Division’s Office of International Affairs provided substantial assistance in this matter as well.

CHICAGO — A Chicago man was sentenced today to nine years in federal prison for aiding his cousin and Heather Mack in the 2014 killing of Mack’s mother at an Indonesian resort.

 

ROBERT RYAN JUSTIN BIBBS, also known as “Ryan Bibbs,” admitted in a plea agreement last year that he advised his cousin, Tommy Schaefer, and Mack about how to kill Mack’s mother, Sheila A. Von Wiese. Von Wiese, 62, was bludgeoned to death in her hotel room at the St. Regis Bali resort on Aug. 12, 2014.

 

Bibbs acknowledged in his plea agreement that he was aware of the couple’s plot to carry out the murder, and he counseled Schaefer on how to get away with it. Bibbs believed Schaefer would gain access to Von Wiese’s estate through Mack, and that Schaefer would share a portion of the inheritance with him, according to the plea agreement.

 

Bibbs, 26, pleaded guilty to one count of conspiracy to commit the foreign murder of a U.S. national. U.S. District Judge Rebecca R. Pallmeyer imposed the nine-year sentence in federal court in Chicago.

 

The sentence was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division; and Michael J. Anderson, Special Agent-in-Charge of the Chicago office of the Federal Bureau of Investigation. Indonesian law enforcement provided valuable assistance.

 

“Repeatedly, the prospect of Von Wiese’s killing was broached and defendant elected to push the plot forward, rather than stop it or extricate himself from it,” Assistant U.S. Attorney Bolling Haxall argued in the government’s sentencing memorandum. “When Schaefer stood at the precipice, defendant provided a push forward.”

 

Evidence revealed that Bibbs, Schaefer and Mack discussed the murder during a meeting in Bibbs’ Chicago home prior to Mack and Schaefer traveling to Indonesia. Mack and her mother shared a hotel room in Bali, and Schaefer arrived at the resort on the morning of the murder. Soon after his arrival, Schaefer sent a text message to Bibbs, who was in the United States. The message stated that Mack had unsuccessfully attempted to kill Von Wiese, Bibbs’ plea agreement states. Bibbs replied with advice about alternative ways to carry out the murder, including by drowning, the plea agreement states.

 

Later that morning Schaefer sent a text message to Bibbs, stating, in part, “She wants me to right now… While she snoozing,” which Bibbs understood to mean that Mack had asked Schaefer to help her kill Von Wiese, the plea agreement states. Bibbs texted back to Schaefer, “Go sit on her face wit a pillow then,” according to the plea agreement. Bibbs intended this message to mean that Schaefer should go and suffocate Von Wiese, the plea agreement states. Subsequent messages from Bibbs encouraged Schaefer to kill Von Wiese but to be careful while doing so, the plea agreement states.

 

A short time later, Schaefer entered the hotel room occupied by Mack and Von Wiese and bludgeoned Von Wiese to death, Bibbs’ plea agreement states. Schaefer and Mack subsequently stuffed Von Wiese’s body into a suitcase, placed the suitcase in a taxicab and fled the resort, the plea agreement states.

 

Schaefer and Mack were arrested the following day by police in Indonesia. An Indonesian court in 2015 convicted Schaefer and Mack of charges related to Von Wiese’s murder. Schaefer was sentenced to 18 years in an Indonesian prison, while Mack was sentenced to ten years.

 

The government in Bibbs’ case is represented by Mr. Haxall, as well as Christine Duey, a trial attorney in the U.S. Department of Justice’s Human Rights and Special Prosecutions Section.

CHICAGO — Three men crashed a stolen Jeep Wrangler through the front of a Livingston County gun store last summer and stole 20 firearms, according to a federal indictment announced today.

ROMEO BLACKMAN, RASHAD ANCHANDO and KEITH GULLENS are charged with conspiring to steal firearms from South Post Guns in Streator. The trio stole a black Jeep Wrangler in Spring Valley on June 21, 2016, and used it the following day to smash through the front of the gun shop, according to the indictment. Once inside the store, the defendants smashed the glass casing where the firearms were displayed and took 18 handguns, one rifle and one shotgun, the indictment states.

The indictment was returned on May 25, 2017, in U.S. District Court in Chicago. In addition to the conspiracy count, the trio is also charged with possession of stolen firearms and burglary of a federally licensed firearms business. Blackman and Gullens each face an additional count of illegal possession of firearms by a convicted felon.

Anchando, 22, of Chicago, and Gullens, 27, of Streator, are currently in the custody of the Illinois Department of Corrections, while Blackman, 21, of Chicago, is in the custody of the LaSalle County Sherriff’s Office. Arraignments for Anchando and Gullens are scheduled for June 13, 2017, at 10:00 a.m., before U.S. Magistrate Judge M. David Weisman in Chicago. Arraignment for Blackman is set before Judge Weisman on June 15, 2017, at 10:00 a.m.

The indictment was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; and Michael J. Anderson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation. The Livingston County Sheriff’s Office provided substantial assistance.

According to the indictment, the defendants and others agreed to meet at a house in Streator after the burglary. The defendants and others recorded videos of themselves holding the stolen firearms and posted them online, the indictment states. The defendants and others cut off the price tags from the stolen guns and took them to Chicago, where they conspired to either sell them, use them, or threaten to use them against others, the indictment states.

The public is reminded that an indictment is not evidence of guilt. The defendants are presumed innocent and entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.

The conspiracy count is punishable by up to five years in prison, while the other counts carry a maximum sentence of ten years. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.

The government is represented by Assistant U.S. Attorneys Albert Berry and Ankur Srivastava.

CHICAGO — More than 45 members or associates of the Gangster Two-Six Nation street gang are facing federal or state charges for their alleged roles in dealing guns and drugs on Chicago’s South Side and surrounding suburbs.

 

The joint federal and state investigation, dubbed “Operation Bunny Trap,” spanned more than two years and resulted in the seizures of approximately 118 firearms, including several assault rifles and shotguns, 25 rounds of ammunition, two ballistic vests, more than 800 grams of cocaine, more than 250 grams of fentanyl, and more than 280 grams of crystal meth. Authorities uncovered the alleged criminal activity through the use of undercover narcotics purchases and extensive surveillance. The probe was led by the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives, and conducted under the umbrella of the Organized Crime Drug Enforcement Task Force (OCDETF), with assistance from the High Intensity Drug Trafficking Area Task Force (HIDTA).

 

Twenty-one defendants were charged in federal court, and most of them were arrested Thursday. Some of the federal defendants made initial court appearances Thursday before U.S. Magistrate Judge Jeffrey Cole, while others will appear today.

 

Twenty-seven defendants are facing state charges. They will be making court appearances in Cook County Criminal Court.

 

The charges were announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; Kimberly M. Foxx, Cook County State’s Attorney; Celinez Nunez, Special Agent-in-Charge of the Chicago Field Division of ATF; and Eddie T. Johnson, Superintendent of the Chicago Police Department. The officials recognized the valuable assistance of the Chicago Field Division of the U.S. Drug Enforcement Administration, the Chicago office of the U.S. Marshals Service, and the Chicago office of the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations.

 

Federal and local law enforcement agencies since late 2014 have been investigating alleged criminal activities by members and associates of the Gangster Two-Six Nation street gang. The gang is national in scope but particularly prevalent on the South Side of Chicago and the surrounding suburbs, as well as Indiana, Wisconsin, Texas, Georgia and Kansas.

 

The investigation uncovered numerous illegal gun transactions, including two deals in January 2017 that occurred in the parking lot of a grocery store in the South Loop neighborhood of Chicago. EDUARDO CASTRO sold three handguns to a confidential source who was cooperating with law enforcement, the complaints state. Castro was under law enforcement surveillance when he sold the firearms, the complaints state. Castro, 30, of Chicago, is charged with illegal possession of a firearm by a felon and dealing firearms without a license.

 

The investigation further revealed gun and drug transactions inside a pizza parlor in the Brighton Park neighborhood of Chicago. ANTHONY LOPEZ sold cocaine and a handgun to a confidential source who was cooperating with law enforcement, the complaints state. The deals occurred in a bathroom of the pizza parlor in January and February 2015, the complaints state. Lopez, 34, of Chicago, is charged with illegal possession of a firearm by a felon.

 

The charges describe illegal firearm transactions in several other neighborhoods on Chicago’s South Side, including Chicago Lawn, Clearing, Chatham and Englewood, as well as the suburbs of Berwyn, Homewood and Alsip.

 

In addition to Castro and Lopez, the federal complaints charge 17 other defendants: JULIAN ALEJANDRO, 25, of Chicago: illegal possession of a firearm by a felon; VINCENT AVILA, 45, of Alsip: illegal possession of a firearm by a felon and possession of a controlled substance with intent to distribute; HERIBERTO BALDERAS, 49, of Chicago: possession of a controlled substance with intent to distribute; JOSEPH BUSTOS, 36, of Chicago: illegal possession of a firearm by a felon; JOSEPH CARDENAS, 43, of Chicago: possession of a controlled substance with intent to distribute; FRANCISCO CARDOZA, 36, of Chicago: possession of a controlled substance with intent to distribute; JAMES CORTEZ, 39, of Chicago: dealing firearms without a license; ARBNOR GASHI, 24, of Chicago: illegal possession of a firearm by a felon; JAMES KACHIROUBAS, 20, of Chicago: dealing firearms without a license; JUAN OCHOA, 58, of Alsip: possession of a controlled substance with intent to distribute; JAMES PELIKAN, 29, of Chicago: illegal possession of a firearm by a felon; REY BENITEZ, 33, of Chicago: illegal possession of a firearm by a felon; JOHN REPEL, 37, of Chicago: possession of a controlled substance with intent to distribute and illegal possession of a firearm by a felon; ALEXANDER RIVERA, 26, of East Chicago, Ind.: illegal possession of a firearm by a felon; TARA ZAMBRANO, 24, of Griffith, Ind.: illegal possession of a firearm by a felon; JOSE CORTEZ, 39, of Orland Hills: knowingly possessing a firearm with an obliterated serial number; FRANCISCO SANCHEZ, 50, of Chicago: illegal possession of a firearm by a felon.

 

Two other federal defendants were previously indicted in federal court in Chicago as part of this investigation: RICHARD GACHO, 43, of Burbank: illegal possession of a firearm by a felon; and DAVID SANTIAGO, 35, of Kansas: illegal possession of a firearm by a felon and possession of a controlled substance with intent to distribute. Gacho and Santiago have pleaded not guilty and are awaiting trial.

 

The investigation was conducted under the umbrella of the OCDETF program, a partnership between federal, state and local law enforcement agencies. The principal mission of OCDETF is to identify, disrupt and dismantle the most serious drug trafficking, weapons trafficking and money laundering organizations.

 

The public is reminded that complaints contain only charges and are not evidence of guilt. The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt. Illegal possession of a firearm by a felon is punishable by up to ten years in federal prison. Dealing firearms without a license and knowingly possessing a firearm with an obliterated serial number are each punishable by up to five years in federal prison. The maximum federal penalties vary for possession of a controlled substance with intent to distribute. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory U.S. Sentencing Guidelines.

 

Assistant U.S. Attorneys Eric Pruitt, Timothy Storino, Andrew Dixon and Allison Ray are representing the government in the federal cases. The Cook County State’s Attorney’s Office is representing the government in the state cases.

CHICAGO — The Secretary-Treasurer of a local labor union put his wife on the union’s payroll while lowering his own salary in a scheme to fraudulently qualify for early retirement benefits from the Social Security Administration, according to a federal indictment returned in Chicago.

 

JOHN A. MATASSA JR. served as the Secretary-Treasurer of the Independent Union of Amalgamated Workers Local 711, a labor organization with members in Illinois, Wisconsin and Indiana. In February 2013, Matassa placed his spouse on the Local 711 payroll, even though she had no intended role or job function, while lowering his own salary, the indictment states. In his capacity as Secretary-Treasurer, Matassa personally signed his spouse’s paychecks, and caused them to be deposited into a bank account jointly controlled by the couple, according to the indictment. Two months later, Matassa applied for early retirement benefits from the Social Security Administration’s Old-Age Insurance program, listing his reduced salary amount in the application, according to the indictment. The Social Security Administration approved the application, and Matassa began receiving Social Security benefits, the indictment states.

 

The indictment was returned Thursday in U.S. District Court in Chicago. It charges Matassa, 65, of Arlington Heights, with two counts of wire fraud, two counts of theft of government funds, four counts of embezzlement from a labor organization, and two counts of making false entries in union records required to be in accordance with federal labor laws. Arraignment is set for June 1, 2017, before U.S. District Judge Matthew F. Kennelly.

 

The indictment was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; James Vanderberg, Special Agent-in-Charge of the Chicago Region of the U.S. Department of Labor’s Office of Inspector General - Office of Investigations; Michael J. Purcell, District Director of the Chicago District Office of the U.S. Department of Labor - Office of Labor Management Standards; and Tracy Thanos, Special Agent-in-Charge of the Chicago Social Security Administration’s Office of Inspector General.

 

According to the charges, Matassa falsified the minutes of a Local 711 meeting to reflect that the union’s Executive Board had authorized the hiring of Matassa’s spouse. After the Social Security Administration approved his application for Old-Age Insurance benefits, Matassa caused the agency to wire payments to a bank account jointly controlled by Matassa and his spouse, the indictment states.

 

The public is reminded that an indictment is not evidence of guilt. The defendant is presumed innocent and entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.

 

Wire fraud is punishable by a maximum penalty of 20 years’ imprisonment. Theft of government funds is punishable by up to ten years’ imprisonment. Embezzlement from a labor organization is punishable by up to five years’ imprisonment. Making false entries in records submitted to the U.S. Department of Labor is punishable by up to one year’s imprisonment. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory U.S. Sentencing Guidelines.

 

The government is represented by Assistant U.S. Attorneys Richard M. Rothblatt and Terry Kinney.

CHICAGO — The former chief financial officer of a public computer-services company admitted in federal court today that he participated in a scheme to defraud a global telecommunications provider out of at least $3 million.

ANTHONY ROTH, 52, of Upton, Mass., pleaded guilty to one count of wire fraud. The conviction carries a maximum sentence of 20 years in prison. U.S. District Judge Amy J. St. Eve did not immediately set a sentencing date.

The guilty plea was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; and Michael J. Anderson, Special Agent-in-Charge of the Chicago office of the Federal Bureau of Investigation. The U.S. Securities and Exchange Commission provided valuable assistance.

Roth served as the chief financial officer of ContinuityX Solutions Inc., a computer-services company based in Metamora, Ill. Roth stated in a plea agreement that he and ContinuityX’s former chief executive officer, DAVID GODWIN, approached certain companies to buy services from an international telecommunications firm that the companies did not need or intend to use. Godwin and Roth promised these companies that they would not have to pay for the services because he had arranged separate side deals with other companies to fund and use the services, according to Roth’s plea agreement. Roth and Godwin then created false financial information to fraudulently inflate the financial condition of the companies, the plea agreement states. They did all of this so that the telecommunications firm would approve the sales to these companies and pay ContinuityX hundreds of thousands of dollars in commissions for purportedly having brought new customers to the telecommunications company, the plea agreement states.

In 2011 and 2012 Roth and Godwin fraudulently caused ContinuityX to receive approximately $3 million in commission payments from the telecommunications company, according to Roth’s plea agreement. The commissions were paid upfront, and Godwin provided some of the money to the companies that signed up for the services, the plea agreement states.

Godwin, 55, of Germantown Hills, Ill., and a third defendant, former ContinuityX sales representative JOHN COLETTI, 56, of Canyon Country, Calif., are also charged in the case. Godwin has pleaded not guilty to 14 counts of wire fraud, while Coletti has pleaded not guilty to five counts of wire fraud and one count of making false statements to the FBI. Godwin and Coletti are scheduled for a jury trial on Sept. 25, 2017.

The public is reminded that charges are not evidence of guilt. Godwin and Coletti are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.

The government is represented by Assistant U.S. Attorneys Steven Dollear, Brian Wallach and John Mitchell.

ROCKFORD — A Loves Park man was sentenced in federal court today before U.S. District Judge Philip G. Reinhard for producing child pornography.

 

ZACHARY RODRIGUEZ, 26, who pleaded guilty on Oct. 14, 2016, was sentenced to 210 months, to be followed by eight years of supervised release.

 

According to a written plea agreement, Rodriguez admitted that on Nov. 6, 2014, he persuaded and enticed a minor female victim to engage in sexually explicit conduct for the purposes of having the minor victim use a cell phone to take photographs of the sexually explicit conduct and then having the minor victim text the images to Rodriguez by cell phone from Iowa to Loves Park. According to the plea agreement, the female victim was 14 years of age at the time the pictures were produced and transmitted.

 

Rodriguez further admitted that between Aug. 9, 2014, and Jan. 20, 2015, he similarly persuaded four other minor female victims, who were between the ages of 14 and 17, to do the same. The minor victims resided in Ohio, Arizona, Connecticut and Wisconsin. Each time, Rodriguez persuaded the victims to text the photographs to him in Illinois.

 

The sentencing was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; and Michael J. Anderson, Special Agent-in-Charge of the Chicago office of the Federal Bureau of Investigation. The Loves Park Police Department assisted in the investigation.

 

The government is represented by Assistant U.S. Attorney Michael D. Love.

CHICAGO — The former owner of the Chicago Rush football franchise was sentenced today to more than three years in federal prison for concealing debts in his personal bankruptcy case and overstating his net worth when acquiring the football team.

In his 2013 bankruptcy filing, DAVID STARAL did not disclose that he was on probation for theft and that he was subject to a restitution order of $250,000. He also failed to disclose several bank accounts. During his efforts to purchase the Chicago Rush in February 2013, Staral provided the Arena Football League with a personal balance sheet that falsely represented his net worth as more than $5 million. In reality, Staral at that time had a negative net worth and had recently filed the bankruptcy petition.

Based on the false representation about his net worth, he defrauded the AFL into selling the Chicago Rush to him. A few months later the league took over the team from him. The Rush disbanded after the conclusion of its 2013 season.

Staral, 38, of Chicago, pleaded guilty last year to one count of bankruptcy fraud and one count of wire fraud. U.S. District Judge Ronald A. Guzman imposed the 41-month sentence in federal court in Chicago.

The sentence was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; and Michael J. Anderson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation. The Chicago office of the U.S. Trustee Program provided valuable assistance.

“Given the defendant’s total lack of financial ability to operate the Rush, his ownership of the team was predictably brief and disastrous,” Assistant U.S. Attorney Matthew F. Madden argued in the government’s sentencing memorandum. “The defendant caused significant harm to the team’s and league’s brand and reputation.”

In addition to the bankruptcy fraud and his deception in acquiring the Rush, Staral also admitted in his plea agreement that he swindled two individuals out of a combined $89,000. In January 2010, Staral promised a woman that he would invest $39,000 of her money in a restaurant venture. Instead, Staral converted the money to his own benefit. In September 2012, Staral promised another woman that if she gave him $50,000, he would invest it and generate a monthly return of $2,000 to $3,000. Staral instead used her money to, among other things, pay his criminal restitution obligation.

CHICAGO — A federal jury has convicted a Chicago dermatologist on fraud charges for billing health-insurance programs for purported pre-cancerous treatments that were not medically necessary.

From 2007 to 2013, Dr. OMEED MEMAR, 48, of Chicago, submitted claims to multiple health-insurance programs, falsely claiming that his treatments were medically necessary to treat actinic keratosis, a pre-cancerous condition that he knew many of his patients did not actually have. Memar documented the false claims by including in his patients’ charts fictitious diagnoses of actinic keratosis that were not based on the patients’ actual signs and symptoms.

After a seven-day trial in federal court in Chicago, the jury on Wednesday convicted Memar on all 16 counts of the indictment. The conviction includes eight counts of health care fraud and eight counts of making false statements in a health care matter. U.S. District Judge Harry D. Leinenweber set sentencing for Sept. 28, 2017.

The verdict was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; Michael J. Anderson, Special Agent-in-Charge of the Chicago office of the Federal Bureau of Investigation; Lamont Pugh III, Special Agent-in-Charge of the Chicago Region of the U.S. Department of Health and Human Services Office of Inspector General; and James Vanderberg, Special Agent-in-Charge of the U.S. Department of Labor’s Office of Inspector General in Chicago.

Evidence at trial revealed that Memar owned and operated a clinic in Chicago called the Academic Dermatology & Skin Cancer Institute. Law enforcement agents in 2013 conducted a Court-authorized search of Memar’s offices and seized multiple boxes of materials, including patient files and billing records. The files showed multiple instances in which patients were said to have actinic keratosis lesions and had received intense-pulse light treatments that were billed as the destruction of actinic keratosis lesions.

Multiple patients, however, testified at trial that they were never told they had actinic keratosis lesions and that they believed the intense-pulse light treatments were for reasons different from how they were billed. Three of Memar’s former employees who performed the intense-pulse treatments testified at trial that they followed Memar’s instructions to create patient charts that made it appear the treatments had destroyed large numbers of actinic keratosis lesions on patients’ faces, even though the treatments had been identical to cosmetic treatments and Memar usually had not examined the patient during the visits.

In one example cited at trial, evidence showed that Memar billed one patient’s insurance provider for more than 15 such treatments from September 2010 through January 2013, even though Memar did not examine the patient at all during this period. Records presented at trial showed that another dermatologist had seen this patient multiple times during that period and never diagnosed any actinic keratosis lesions.

The conviction is punishable by a maximum sentence of 120 years in prison. The Court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.

The government is represented by Assistant U.S. Attorneys Stephen Chahn Lee and Kartik K. Raman.

CHICAGO — A Chicago-based scrap iron refining business and its president admitted in federal court today that they concealed from the Internal Revenue Service more than $11.6 million in cash wages paid to employees.

ACME REFINING CO., which does business as Acme Refining Scrap Iron & Metal Co., and its president, LAURENCE C. BARON, each pleaded guilty to impairing and impeding the IRS. Acme and Baron admitted in plea agreements that from 2009 to 2013 they paid cash wages of more than $11.6 million to at least 50 employees, but failed to report the payments to the IRS. Acme and Baron also acknowledged that they willfully failed to withhold for the government the required amounts for FICA taxes and Medicare.

As part of their plea agreements, Baron and Acme agreed to pay restitution of $5,878,327 to the IRS and the state of Illinois, with Acme paying $4,545,243 and Baron paying $1,333,084.

The guilty pleas were announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; and Gabriel L. Grchan, Special Agent-in-Charge of the Internal Revenue Service Criminal Investigation Division in Chicago.

Impairing and impeding the IRS is punishable by up to three years in prison. Baron, 70, of Burr Ridge, also pleaded guilty to a separate count of willfully filing a false individual income tax return, which carries the same maximum penalty. U.S. District Judge Harry D. Leinenweber set sentencing for Sept. 14, 2017.

The cases against Acme and Baron are part an ongoing federal investigation of cash transactions in the Chicago-area scrap metal industry that has resulted in several previous convictions.

According to the plea agreements, Baron directed Acme employees to issue multiple vouchers for cash payments due to suppliers that exceeded $10,000, using nominee or fictitious payees as the purported seller. Between 2009 and 2013 the company and Baron obtained approximately $152 million in cash from two currency exchanges, then used the money to pay 85 separate scrap metal suppliers in order to assist those suppliers in underreporting their income and taxes.

Acme – at the direction of Baron – also spent at least $1.6 million to fund construction of a personal residence in Wisconsin that had no business-related purpose, the plea agreements state. The company falsely recorded this expenditure as “cost of goods sold,” in order to reduce Acme’s tax liability and conceal the payment on behalf of its corporate officers. The bogus records included phony invoices that fraudulently identified the payments as purchases of scrap steel.

Baron also admitted filing false individual income tax returns for tax years 2011 and 2012. The fraudulent returns resulted in a total federal and state tax loss of approximately $208,875, the plea agreement states.

The government is represented by Assistant U.S. Attorney Patrick King.

ROCKFORD — Two bank officers and a bank customer were charged Tuesday by a federal grand jury in Rockford with fraud and falsifying statements to the Small Business Administration, an agency of the United States.

 

RYAN COLE, 45, of Garland, Tex., JAMES GRABER, 57, of Rockton, Ill., and KRISTIN KING, 44, of South Beloit, Ill., were charged with wire fraud in connection with a loan application made to the SBA. Cole was also charged with two counts of making false statements to the SBA on a loan application. Graber and King were each charged with one count of making false statements to the SBA on a loan application.

 

As charged in the indictment, the SBA provides financial assistance to small businesses, in part, through loan guarantees to local banks. If the SBA approves a loan, it guarantees the lender that if the borrower defaults the SBA will repay part of the loan, thereby transferring the risk of borrower non-payment from the bank to the SBA, up to the amount of the guaranty. The local bank must disclose to the SBA whether the loan will reduce the exposure of the bank, disclose if the loan will be used to repay a debt already due to the bank, and disclose any relationships between the small business, its associates, and the lender.

 

According to the indictment, SunLee Development owned a commercial building at 4001 North Perryville Rd., in Loves Park, Ill. SunLee had three loans totaling more than $3 million at a local bank where Graber was employed as a Vice President and King was employed as a Vice President and Government Guaranteed Lending Specialist. Cole, a member of SunLee, was a guarantor of the three loans in the event of a default. SunLee was constantly behind on making its loan payments to the bank because tenants at 4001 North Perryville were not paying their rent.

 

The indictment alleges that Cole organized a group of the tenants at 4001 North Perryville to apply for an SBA guaranteed loan and to purchase the building from SunLee. The group of tenants and Cole became known as the Perryville Investment Group. The indictment alleges that on March 16, 2012, Cole, Graber and King submitted a $3,980,000 loan application to the SBA for the Perryville Investment Group that contained false statements and concealed material facts. Shortly after closing, the Perryville Investment Group had trouble making payments on the SBA loan and ultimately defaulted on the SBA loan.

 

Each count of wire fraud and making false statements and concealing material facts to the SBA carries a maximum penalty of up to 30 years in prison, a fine of up to $1 million, and restitution. If convicted, the Court must impose a reasonable sentence under federal sentencing statutes and the advisory United States Sentencing Guidelines. Graber and King are scheduled to appear for arraignment on May 12, 2017, at 2:00 p.m. in federal court in Rockford, before U.S. Magistrate Iain D. Johnston. Cole’s arraignment date has yet to be set.

 

The public is reminded that an indictment contains only charges and is not evidence of guilt. The defendants are presumed to be innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.

 

The indictment was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; Lawrence Valett, Associate Inspector General of Investigations for the Federal Reserve Board - Office of Inspector General; and Talmadge Gaylor, Special Agent-in-Charge of the Central Regional Office of the SBA - Office of Inspector General.

 

The government is represented by Assistant U.S. Attorney Scott R. Paccagnini.

CHICAGO — A Chicago trader was sentenced today to nine years in federal prison for defrauding investors out of more than $9 million.

NICK WURL, 27, the founder of Chicago-based Ludiera Capital LLC, fraudulently raised approximately $11.2 million from more than 60 investors. From January 2012 through May 2015, Wurl falsely portrayed Ludiera as a successful trading firm that was earning extraordinary profits from the buying and selling of commodities such as corn and soybeans. Wurl created phony bank records and false account statements to fraudulently represent that Ludiera was generating large profits and that investors’ funds were safe.

In reality, Wurl had lost or misappropriated more than $8 million, and he spent another $900,000 on business and personal expenses, including a Corvette and a luxury sport-utility vehicle.

Wurl, of Chicago, pleaded guilty last year to one count of mail fraud. U.S. District Judge John Z. Lee imposed the 108-month sentence in federal court in Chicago. Judge Lee also ordered Wurl to pay restitution of approximately $9.2 million. The government was able to freeze for victims approximately $3.4 million in Ludiera and Wurl assets that had been misappropriated and stashed in trading accounts.

The sentence was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; and Michael J. Anderson, Special Agent-in-Charge of the Chicago office of the Federal Bureau of Investigation. Substantial assistance was provided by the Kansas City office of the U.S. Commodity Futures Trading Commission, and the Chicago office of the U.S. Securities and Exchange Commission.

“Wurl’s investors suffered significant financial harm and emotional distress as a result of this scheme,” Assistant U.S. Attorneys Jacqueline Stern and Kaarina Salovaara argued in the government’s sentencing memorandum. “Wurl specifically promised investors that their funds were safe, because that was a key issue to the investors, but Wurl’s promise was a flat out lie.”

Wurl received investment funds from clients all over the United States, including California, New Jersey, Iowa, and Wisconsin. Several victims submitted letters to the Court prior to the sentencing hearing, describing how they were duped by Wurl. One of these victims and his mother invested a total of $550,000, only to learn later that Wurl had lied to them. Another victim described how Wurl’s scam had jeopardized his retirement plans and his daughter’s college financing.

Ludiera is now defunct.

CHICAGO — A former associate clerk in the Cook County Circuit Court Clerk’s Office lied under oath to a federal grand jury when she denied selling tickets for the Clerk’s campaign fundraisers to other employees in the office, according to a federal indictment announced today.

BEENA PATEL sold fundraiser tickets to colleagues in the Clerk’s office and knew that other employees did the same, the indictment states. The fundraisers were held several times each year by an entity that raises money for the Clerk’s campaign fund. When asked about it during testimony before a federal grand jury on or about Oct. 15, 2015, Patel said she never sold tickets to employees of the Clerk’s office, and that she knew of no other employees who collected money or handed out tickets to the fundraisers, according to the indictment. The indictment states that both statements were false.

The indictment was returned Thursday in U.S. District Court in Chicago. It charges Patel, 55, of Chicago, with three counts of making false declarations before a grand jury. Each count carries a maximum sentence of five years in prison. The Court has not yet scheduled an arraignment hearing.

The indictment was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; Kimberly M. Foxx, Cook County State’s Attorney; Patrick M. Blanchard, Cook County Inspector General; and Michael J. Anderson, Special Agent-in-Charge of the Chicago office of the Federal Bureau of Investigation.

“Perjury before a grand jury is a serious offense and fundamentally undermines the investigative process of the grand jury,” said Acting U.S. Attorney Levin. “Witnesses who testify before federal grand juries must be held accountable if they violate the oath they take to tell the truth.”

According to the indictment, the grand jury was conducting an investigation of possible criminal violations in connection with the purchasing of jobs and promotions within the Clerk’s office. Patel testified before the grand jury on or about Oct. 15, 2015, and on or about July 14, 2016, and the indictment alleges that Patel lied during both sessions.

In addition to the false statements about the fundraiser tickets, the indictment also charges Patel with providing false statements to the grand jury about two other matters. Patel allegedly lied when she denied knowing that another employee in the Clerk’s office had spoken to law enforcement and testified in the grand jury. The indictment further alleges that she falsely denied having knowledge of efforts made to assist another Clerk’s office employee with a promotion and pay increase. The same employee had received two prior raises and promotions after the employee’s brother contributed approximately $10,000 to the entity that raises money for the Clerk’s campaign fund, the indictment states.

The public is reminded that an indictment contains only charges and is not evidence of guilt. The defendant is presumed innocent and is entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.

The government is represented by Assistant U.S. Attorneys Heather McShain and Ankur Srivastava.

CHICAGO — BARBARA BYRD-BENNETT was sentenced today to more than four years in federal prison for using her position in charge of the Chicago Public Schools to guide lucrative no-bid contracts to her former employer in exchange for bribes and kickbacks.

While serving as the Chief Executive Officer of CPS, Byrd-Bennett steered no-bid contracts worth more than $23 million to two education-consulting firms, THE SUPES ACADEMY LLC and SYNESI ASSOCIATES LLC. In exchange, Byrd-Bennett expected to receive cash kickbacks from the companies, as well as a consulting job at SUPES upon her retirement from CPS. Byrd-Bennett admitted in a plea agreement that the kickbacks were to be paid to her in the form of a “signing bonus” on the first day of her new employment.

Byrd-Bennett, 67, of Solon, Ohio, pleaded guilty in 2015 to one count of wire fraud. In addition to the 54-month prison sentence, U.S. District Judge Edmond E. Chang also fined Byrd-Bennett $15,000 and ordered that she and her co-defendants jointly share in a $254,000 restitution payment to CPS. Byrd-Bennett was ordered to report to prison no later than Aug. 28, 2017.

The sentence was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; Michael J. Anderson, Special Agent-in-Charge of the Chicago office of the Federal Bureau of Investigation; and Nicholas J. Schuler, Inspector General for CPS.

“Byrd-Bennett agreed to cheat and deceive CPS from the get-go, to eliminate any opposition to her efforts to expand contracts for the SUPES entities within CPS, and to line her pockets with money obtained from a cash-strapped school district through her fraud,” Assistant U.S. Attorneys Megan Cunniff Church and Lindsay C. Jenkins argued in the government’s sentencing memorandum. “She corrupted the process entirely.”

Byrd-Bennett had previously worked as a consultant for SUPES and Synesi before moving to CPS in May 2012. In addition to the expected kickback from the contracts, Byrd-Bennett admitted in her plea agreement that the companies provided her with numerous other benefits while she was CEO, including meals and tickets to sporting events. She resigned as CEO on June 1, 2015.

All five defendants charged in the case have now been convicted and sentenced. The Wilmette-based SUPES and the Evanston-based Synesi, as well as their former owners, GARY SOLOMON, 49, of Wilmette, and THOMAS VRANAS, 36, of Glenview, pleaded guilty to federal criminal charges last year. Solomon admitted that he maintained a line item within the companies’ internal financial statements to set aside Byrd-Bennett’s kickback money, which would be paid in the form of a one-time signing bonus on her first day back. Solomon told Byrd-Bennett in a 2012 email, “If you only join for the day, you will be the highest paid person on the planet for that day. Regardless, it will be paid out on day one.”

Judge Chang today sentenced Vranas to 18 months in prison. Solomon was sentenced last month to seven years in prison.

CHICAGO — Federal authorities today announced criminal charges against three Chicago-area defendants for a variety of alleged tax frauds. Although Tax Day has recently come and gone, the prosecutions serve as a warning for citizens to comply with their tax obligations.

Two Chicago-area tax preparers were charged with assisting clients in obtaining thousands of dollars in fraudulent refunds. The preparers fraudulently reduced their clients’ tax liabilities by misrepresenting their eligibility to claim tax credits, such as dependent exemptions, education expenses, real estate and child credits.

In addition, an Illinois attorney was charged with filing fraudulent individual income tax returns that willfully omitted more than $637,000 in income he received from his law firm.

“It is imperative to remind the public that criminal tax prosecutions occur throughout the year,” said Joel R. Levin, Acting United States Attorney for the Northern District of Illinois. “Tax preparers and individuals who willfully file false returns will be held accountable.”

“The IRS Criminal Investigation Division is committed to ensuring that all taxpayers pay their fair share,” said Gabriel L. Grchan, Special Agent-in-Charge of the IRS Criminal Investigation Division in Chicago. “We are aggressively serving the American people by investigating criminal violations of the Internal Revenue Code. Tax fraud does not know a season – IRS special agents pursue criminals year round, not only at tax time.”

In addition to criminal penalties, including incarceration, fines and the costs of prosecution, tax evaders remain responsible for all taxes and interest due, as well as civil penalties, the officials noted. Individuals making false claims against the government may be required to pay restitution and could be sued civilly for an amount greater than the fraudulent claims.

In an indictment returned earlier this month, LAURIE HELFER, 55, was charged with preparing and filing false and fraudulent income tax returns. Helfer, a professional tax preparer who owned Northlake-based “The Tax Lady Laurie,” filed the returns on behalf of clients for the tax years 2008 through 2010, according to the indictment. The returns claimed false credits for earned income, education and child care expenses, the indictment states. The government in Helfer’s case is represented by Assistant U.S. Attorneys Rick D. Young and Carol A. Bell.

Another professional tax preparer, LONNIE BLAKNEY, who owned Chicago-based “Blakney Tax Associates,” was charged earlier this month with preparing and filing individual income tax returns that he knew contained false and fraudulent information. Blakney, 63, of Normal, Ill., filed the returns on behalf of various taxpayers for the tax years 2010 and 2011, according to the indictment. The false information included invalid credits for real estate taxes, charitable donations, child and dependent care costs, and education expenses, according to the indictment. The government in Blakney’s case is represented by Assistant U.S. Attorney John D. Mitchell.

The attorney, TIMOTHY K. LIOU, was charged earlier this month with filing fraudulent individual income tax returns for the tax years 2010, 2011 and 2012. Liou, 50, of Wheaton, willfully omitted approximately $637,380 in gross income he had received from his firm, “The Liou Law Firm,” according to the indictment. Assistant U.S. Attorney Brian Netols represents the government in Liou’s case.

The public is reminded that charges are not evidence of guilt. The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt. If convicted, the Court must impose reasonable sentences under federal statutes and the advisory U.S. Sentencing Guidelines.

For tips and guidelines to assist taxpayers in choosing a reputable tax professional or preparing their own taxes, visit the official IRS website: https://www.irs.gov/help-resources.

ROCKFORD — A suspended physician was sentenced today by U.S. District Judge Frederick J. Kapala on charges of federal health care fraud.

CHARLES S. DEHAAN, 62, of Belvidere, was sentenced to nine years in federal prison, to be followed by three years of supervised release.  He was also ordered to pay restitution of $2,787,054.

 

DeHaan pleaded guilty on May 20, 2016, to two counts of health care fraud in connection with a scheme to defraud Medicare that included overbilling and billing Medicare for treatment of patients that were already deceased.

 

According to a written plea agreement, DeHaan during the course of the scheme was a physician licensed in Illinois.  Between January 2009 and January 2014, DeHaan primarily billed Medicare for in-home patient visits and certifications for patients he deemed homebound. DeHaan admitted in the plea agreement that he knew Medicare authorized payment for home visits and physician services only if those services were actually provided and were medically necessary because of disease, infirmity, or impairment. The plea agreement further states that DeHaan billed Medicare for medical services purportedly provided to patients, when he knew he did not provide any reimbursable medical service. This included DeHaan billing Medicare at the highest reimbursement levels for routine, non-complex visits with new and established patients, even though DeHaan knew the visit did not qualify for the highest levels of reimbursement, and further included billing Medicare for patients DeHaan never actually treated. According to the plea agreement, some of the patients DeHaan billed for had died prior to the date of the alleged visit.

 

The sentencing was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; Michael J. Anderson, Special Agent-in-Charge of the Chicago Office of Federal Bureau of Investigation; and Lamont Pugh III, Special Agent-in-Charge of the Chicago Regional Office of the U.S. Department of Health and Human Services Office of Inspector General. The Illinois Department of Financial and Professional Regulation assisted in the investigation.

 

The government was represented by Assistant U.S. Attorneys Scott R. Paccagnini and Talia Bucci.

CHICAGO — A north suburban chiropractor and his brother and father have been sentenced to federal prison terms in connection with a phony billing scheme that bilked insurance carriers out of more than $10.8 million.

DR. VLADIMIR GORDIN JR., VLADIMIR GORDIN SR., and ALEXSANDER GORDIN, operated Gordin Medical Center S.C., a chiropractic clinic in Wheeling. The trio used the company to falsely bill the carriers for medical services that were either not provided or not medically necessary, and they attempted to cover up the scam by fabricating patients’ medical records. In some cases, patients knew of the overbilling and were incentivized to participate by having their deductibles met at no cost to them, or by sharing in a portion of the overbilling proceeds via checks provided to them by Gordin Jr. and Gordin Sr.

From 2006 to approximately November 2012, Gordin Medical Center and an ultrasound service that was part of the scheme submitted false bills totaling $28,775,000, causing a loss to the five carriers of $10,847,000. The loss includes medical claims administered on behalf of several union health and welfare funds in the Chicago area.

The three Gordins pleaded guilty earlier this year to healthcare fraud. U.S. District Judge Edmond E. Chang imposed the prison sentences Monday in federal court in Chicago. Vladimir Gordin Jr., 46, of Northbrook, was sentenced to seven years; Vladimir Gordin Sr., 70, of Riverwoods, was sentenced to two and a half years; and Alexsander Gordin, 34, of Northbrook, was sentenced to two years.

The sentencings were announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; Michael J. Anderson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation; James Vanderberg, Special Agent-in-Charge of the U.S. Department of Labor’s Office of Inspector General in Chicago; and E.C. Woodson, Inspector in Charge of the U.S. Postal Inspection Service in Chicago.

“As a result of the scheme, the Gordins created a medical center whose focus, for both the chiropractors and the employees, was not patient care,” Assistant U.S. Attorneys Heather K. McShain and Sarah E. Streicker argued in the government’s sentencing memorandum. “Rather, GMC was a front for false billing; patient care was an afterthought.”

Two other defendants convicted in the case were also sentenced this week. MICHELLE KOBRAN, who owned and operated Ultrasound Mobile Service Ltd., in Vernon Hills, pleaded guilty last year to healthcare fraud. Kobran, 69, of Vernon Hills, admitted falsely billing insurance companies for ultrasounds that were performed on patients referred to her by Gordin Jr. Kobran kicked back a portion of her insurance proceeds to the Gordins. Judge Chang on Tuesday sentenced Kobran to nine months in prison.

ALINA LEVIT, 46, of Vernon Hills, worked for Gordin Medical Center as the office manager. In pleading guilty last year to misdemeanor embezzlement, Levit admitted creating phony “sign in” sheets to falsely represent that patients were physically present and received certain health-care services on a given day, when, in fact, no such treatment was rendered. Judge Chang on Tuesday sentenced Levit to 18 months of probation, including 90 days of intermittent incarceration on weekends.

To report health care fraud, logon to: StopMedicareFraud.gov.

CHICAGO — A former dispatch supervisor for the Chicago Police Department was sentenced today to more than three years in prison for providing government information to her boyfriend in an effort to help smuggle contraband into Cook County Jail.

 

STEPHANIE LEWIS used her position in the City of Chicago Office of Emergency Management and Communications to access law enforcement databases to locate the personal information of a corrections officer at the jail. Lewis provided the information to her boyfriend, an inmate in the jail who had schemed with the officer and others to sneak in the contraband to sell to other inmates. Lewis admitted in a plea agreement that she knew her boyfriend and the others used the information to threaten the officer with physical harm unless he continued with the scheme and smuggled additional contraband into the jail.

 

Lewis, 43, of Chicago, pleaded guilty earlier this year to one count of conspiracy to commit extortion. U.S. District Judge Charles R. Norgle imposed the 41-month sentence in federal court in Chicago.

 

The sentencing was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; Cook County Sheriff Thomas J. Dart; and Michael J. Anderson, Special Agent-in-Charge of the Chicago office of the Federal Bureau of Investigation.

 

Lewis is one of five defendants convicted in the case. The prior convictions include the corrections officer, JASON MAREK, who admitted delivering contraband, including marijuana, tobacco and alcohol, to a jail inmate after tucking it into sandwiches and sneaking it past security. Marek was assigned to a maximum-security tier of the jail when he smuggled in the goods in May and June of 2013. Marek is awaiting sentencing.

 

Two other defendants, including Lewis’ boyfriend, PRINCE JOHNSON, of Chicago, have pleaded not guilty and are awaiting trial.

 

The government is represented by Assistant U.S. Attorney Megan Cunniff Church.

CHICAGO — Federal authorities have arrested a Bolingbrook man for allegedly using social media to entice an underage boy to produce sexually explicit images and engage in sex acts with him.

RONALD GOBENCIONG, 44, posed online as three separate individuals – an escort, an escort’s manager, and a client – in order to recruit and entice the underage boy to produce pornographic images and engage in sexual relations with him, according to a criminal complaint and affidavit filed in federal court in Chicago. As part of online and text communications with the boy, Gobenciong requested and received pornographic photos and at least one video of the boy, whom Gobenciong knew was only 17 years old at the time, the complaint states. In February, Gobenciong engaged in sexual acts with the boy at a hotel in Burr Ridge, for which he gave the boy money, the complaint states. Gobenciong later threatened to distribute the pornographic images unless the boy continued to have sex with him, according to the complaint.

Gobenciong, also known as “David Marco,” “Steve John,” and “Joe,” was arrested on Thursday. The complaint charges him with one count of producing child pornography. A detention hearing is scheduled for April 24, 2017, at 3:00 p.m., before U.S. Magistrate Judge Maria Valdez in Chicago.

The complaint was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; Michael J. Anderson, Special Agent in Charge of the Chicago office of the Federal Bureau of Investigation; and Cook County Sheriff Thomas J. Dart. Valuable assistance was provided by the Child Exploitation Unit of the Cook County Sheriff’s Police and the Bolingbrook Police Department.

The public is reminded that a complaint is not evidence of guilt. The defendant is presumed innocent and entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.

Production of child pornography is punishable by a minimum sentence of 15 years in prison and a maximum of 30 years. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory U.S. Sentencing Guidelines.

The government is represented by Assistant U.S. Attorney Eric S. Pruitt.

If you believe you are a victim of sexual exploitation, you are encouraged to call the National Center for Missing and Exploited Children at 1-800-843-5678. The hotline is available 24 hours a day, seven days a week.

CHICAGO — The United States Attorney’s Office today announced a settlement with the Board of Election Commissioners for the City of Chicago to ensure accessibility of polling sites to persons with disabilities.

The agreement requires the Board of Elections to ensure that every polling site is accessible to persons with disabilities by the Nov. 6, 2018, election. The Board will provide training to all precinct coordinators on how to install and maintain any temporary equipment and accessibility items, such as wheelchair ramps, accessible parking or the placement of mats over thresholds. On Election Day and during early-voting periods the Board must maintain in working order all facilities and equipment, including lifts, elevators and ramps, that are needed to make polling sites accessible to individuals with disabilities.

The Board cooperated with the U.S. Attorney’s Office to voluntarily reach the settlement agreement without the need for a lawsuit.

The settlement agreement, which became effective on April 11, 2017, was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois.

“The right of individuals to participate in our democratic system of government includes full and equal access to polling sites,” said Acting U.S. Attorney Levin. “This agreement represents an important step toward guaranteeing voting access to all of our citizens.”

In 2016 the Board oversaw 1,452 polling sites that housed 2,069 precincts, and also operated 50 additional sites for early voting in the 40 days leading up to the election. Pursuant to the ADA and Illinois law, all polling places must be accessible to voters with disabilities. In the spring of 2016 the Department of Justice reviewed more than 100 polling places in Chicago and concluded that many have architectural barriers that make them inaccessible to voters who use wheelchairs or have mobility impairments, or voters who are blind or have vision impairments.

In response to the Department’s initial findings, the Board expressed its commitment to making all polling locations accessible to voters with disabilities, and it retained Equip for Equality, the federally funded protection and advocacy system for persons with disabilities in Illinois, to inspect an additional 1,000 Chicago polling sites. In the November 2016 election, Equip for Equality found additional polling sites that were not accessible to voters with disabilities. Pursuant to the settlement agreement, the Board will continue to engage Equip for Equality or some other third-party expert as a consultant to review polling sites and determine whether alternative locations should be used.

Although the United States agreed not to presently institute a civil action alleging discrimination under the ADA, it may review the Board’s compliance with the settlement at any time during the duration of the agreement. If the United States believes the agreement has been violated, it reserved the right to institute a civil action in the appropriate U.S. District Court to enforce the agreement.

The United States is represented by Assistant U.S. Attorney Patrick W. Johnson.

Title II of the ADA prohibits public entities, such as the Board of Election Commissioners for the City of Chicago, from discriminating against people with disabilities in their programs, services and activities. With respect to polling places, public entities are required to select and use polling places that are accessible. To learn more about the ADA and other laws protecting the rights of voters with disabilities, log on to www.ada.gov/ta-pubs-pg2.htm or call the Justice Department's toll-free ADA Information Line at (800) 514-0301 or (800) 514-0383 (TDD).

CHICAGO — A Lynwood man has been sentenced to 18 months in federal prison for pocketing bribes in exchange for allowing food service workers to bypass sanitation certification training and testing mandated by the state of Illinois and city of Chicago.

 

ERNEST GRIFFIN, 71, took bribes from individuals who wanted to obtain Sanitation Certificates from the Illinois Department of Public Health without attending a 15-hour course and taking an exam. In exchange for an approximately $175 bribe, Griffin submitted false certifications and false test results to IDPH to make it appear that a bribe payer had completed the course, passed the exam, and was entitled to the certification. Griffin’s bribery scheme lasted from approximately 2008 until January 2015, when he was confronted by agents of the Federal Bureau of Investigation.

 

Griffin pleaded guilty last year to one count of federal program bribery. U.S. District Judge Manish S. Shah imposed the 18-month sentence Wednesday in federal court in Chicago. Judge Shah also fined Griffin $5,000.

 

The sentence was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; and Michael J. Anderson, Special Agent-in-Charge of the Chicago Office of the FBI.

 

“Defendant’s certificates-for-bribes scheme was a serious abuse of the public trust,” Assistant U.S. Attorney Maureen E. Merin argued in the government’s sentencing memorandum. “Defendant’s scheme not only potentially caused physical harm to members of the public, but also chipped away at the confidence that the public has in the ability of our government to enforce laws and regulations designed to protect the public health."

 

The state of Illinois and the city of Chicago require that food service establishments have a person on site at all times who holds an Illinois Food Service Sanitation Manager Certificate. In order to obtain the certificate, the IDPH required that individuals take an IDPH-approved 15-hour course and pass an IDPH exam. The course included instruction on food-borne illnesses, personal hygiene, food safety, pest control, proper cleaning and sanitizing procedures, and the prevention of food contamination. Griffin was authorized by the IDPH to teach the course and to administer the exam.

CHICAGO — Two men from a north suburb of Chicago were arrested today on a federal complaint charging them with conspiring to provide material support to the Islamic State.

 

JOSEPH D. JONES, also known as “Yusuf Abdulhaqq,” 35, of Zion, and EDWARD SCHIMENTI, also known as “Abdul Wali,” 35, of Zion, are charged with conspiring to knowingly provide and attempt to provide material support and resources to the Islamic State of Iraq and al-Sham (ISIS). Jones and Schimenti were arrested this morning. They are scheduled to make an initial appearance today at 3:00 p.m. before U.S. Magistrate Judge M. David Weisman in Chicago.

 

Also today, authorities executed a search warrant at Jones’ residence in Zion.

 

The complaint and arrests were announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; Mary B. McCord, Acting Assistant Attorney General for National Security; and Michael J. Anderson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation. The case was investigated by the Chicago Joint Terrorism Task Force, which is comprised of FBI personnel and representatives from numerous federal, state and local law enforcement agencies. The Zion Police Department provided valuable assistance.

According to a complaint and affidavit filed in U.S. District Court in Chicago, Jones and Schimenti pledged their allegiance to ISIS and advocated on social media for violent extremism in support of the terrorist group. In the fall of 2015 the pair befriended three individuals whom Jones and Schimenti believed were fellow ISIS devotees. Unbeknownst to Jones and Schimenti, two of the individuals were undercover FBI employees and the third individual was cooperating with law enforcement and was not an ISIS supporter, the complaint states.

Over the next several months Jones and Schimenti met the undercover FBI employees and the cooperating source on numerous occasions, during which Jones and Schimenti discussed their devotion to ISIS and their commitment to Islamic State principles, the complaint states. Some of the meetings took place in Waukegan, Zion, Bridgeview, North Chicago, Highland Park and Chicago.

At one point, Jones and Schimenti shared photographs of themselves holding the Islamic State flag at the Illinois Beach State Park in Zion, according to the complaint. In a recorded conversation with the cooperating source, Schimenti commented that Schimenti would like to see the ISIS flag “on top of the White House,” the complaint states.

Earlier this year Schimenti engaged in physical training exercises with the cooperating source at a gym in Zion, the complaint states. Schimenti believed the cooperating source intended to travel overseas to fight for ISIS, and Schimenti commented that the exercises would “make you good, you know, in the battlefield,” according to the complaint.

Last month the pair furnished several cellular phones to the cooperating source, believing they would be used to detonate explosive devices in ISIS attacks, the complaint states. On April 7, 2017, Jones and Schimenti drove the cooperating source to O’Hare International Airport in Chicago with the understanding that the source would be traveling to Syria to fight with ISIS, the complaint states. Schimenti told the source to “drench that land with they, they blood,” according to the complaint.

The public is reminded that a complaint is not evidence of guilt. The defendants are presumed innocent and entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.

The charge in the complaint is punishable by up to 20 years in prison. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory U.S. Sentencing Guidelines.

The government is represented by Assistant U.S. Attorneys Barry Jonas and Rajnath Laud of the Northern District of Illinois, and Trial Attorney Lolita Lukose of the National Security Division’s Counterterrorism Section.

Joseph D. Jones, also known as “Yusuf Abdulhaqq,” 35, and Edward Schimenti, also known as “Abdul Wali,” 35, both of Zion, Illinois, were arrested today on a federal complaint charging them with conspiring and attempting to provide material support and resources to the Islamic State of Iraq and al-Sham (ISIS). Jones and Schimenti were arrested this morning. They are scheduled to make an initial appearance at on April 12 at 3:00 p.m. CDT (4:00 p.m. EDT) before U.S. Magistrate Judge M. David Weisman in Chicago, Illinois. Authorities also executed a search warrant at Jones’ residence in Zion today.

The complaint and arrests were announced by Acting Assistant Attorney General for National Security Mary B. McCord, Acting U.S. Attorney Joel R. Levin for the Northern District of Illinois and Special Agent in Charge Michael J. Anderson of the FBI’s Chicago Office.

According to a complaint and affidavit filed in U.S. District Court in Chicago, Jones and Schimenti, both U.S. citizens, pledged their allegiance to ISIS and advocated on social media for violent extremism in support of the terrorist group. In the fall of 2015, the pair befriended three individuals whom Jones and Schimenti believed were fellow ISIS devotees. Unbeknownst to Jones and Schimenti, two of the individuals were undercover FBI employees and the third individual was cooperating with law enforcement and was not an ISIS supporter.

 

Over the next several months, as part of the conspiracy, Jones and Schimenti allegedly took steps to assist the cooperating source with plans to travel overseas to join ISIS. The defendants met the undercover FBI employees and the cooperating source on numerous occasions, during which Jones and Schimenti discussed their devotion and commitment to ISIS, according to the complaint.  Some of the meetings took place in Waukegan, Zion, Bridgeview, North Chicago, Highland Park and Chicago, in Illinois.

 

At one point, Jones and Schimenti shared photographs of themselves holding the ISIS flag at the Illinois Beach State Park in north suburban Zion, according to the complaint. In a recorded conversation with the cooperating source, Schimenti commented that Schimenti would like to see the ISIS flag “on top of the White House,” the complaint states.

 

Earlier this year, Schimenti engaged in physical training exercises with the cooperating source at a gym in Zion, the complaint states. Understanding that the cooperating source intended to travel overseas to fight for ISIS, Schimenti commented that the exercises would “make you good, you know, in the battlefield,” according to the complaint.

 

According to the complaint, last month, the pair furnished several cellular phones to the cooperating source, believing they would be used to detonate explosive devices in ISIS attacks overseas. On April 7, Jones and Schimenti drove the cooperating source to O’Hare International Airport in Chicago with the understanding that the source would be traveling to Syria to join and fight with ISIS. Schimenti told the source to “drench that land with they, they blood.”

 

A complaint is not evidence of guilt. The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.

 

The charge in the complaint is punishable by up to 20 years in prison. The maximum statutory sentence is prescribed by Congress and is provided here for informational purposes. If convicted of any offense, the sentencing of the defendant will be determined by the court based on the advisory Sentencing Guidelines and other statutory factors.

The case was investigated by the Chicago Joint Terrorism Task Force, which is comprised of FBI personnel and representatives from numerous federal, state and local law enforcement agencies. The Zion Police Department also provided valuable assistance. The government is represented by Assistant U.S. Attorneys Barry Jonas and Rajnath Laud of the Northern District of Illinois, and Trial Attorney Lolita Lukose of the National Security Division’s Counterterrorism Section.

CHICAGO — An Illinois attorney has been indicted by a federal grand jury for fraudulently obtaining loans related to the purchase, maintenance and sale of properties on Chicago’s South Side.

 

JESSICA ARONG O’BRIEN fraudulently caused lenders to issue and refinance approximately $1.4 million in mortgage and commercial loans by making false representations and concealing material facts in documents submitted to the lenders, according to an indictment returned in federal court in Chicago. O’Brien used the fraudulently obtained mortgage loan proceeds to purchase an investment property in the 600 block of West 46th Street in Chicago, and fraudulently refinanced the mortgage on the property as well as on a second investment property in the 800 block of West 54th Street in Chicago, the indictment states. O’Brien then fraudulently obtained a commercial line of credit to maintain the properties, before selling them to co-defendant MARIA BARTKO and a straw buyer whom O’Brien knew would fraudulently obtain mortgage loans, according to the indictment.

 

The indictment charges O’Brien, 49, of Chicago, and Bartko, 49, of Chicago, with one count of mail fraud affecting a financial institution. O’Brien is also charged with one count of bank fraud. Arraignment is set for April 20, 2017, at 10:00 a.m., before U.S. Magistrate Judge Sheila M. Finnegan.

 

The indictment was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; Michael J. Anderson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation; and Catherine Huber, Special Agent in Charge of the Midwest Region of the Federal Housing Finance Agency, Office of Inspector General.

 

At the time of the alleged scheme, O’Brien was employed full time as a Special Assistant Attorney General for the Illinois Department of Revenue, while also owning a real estate company, O’Brien Realty LLC, and working part time as a loan officer for Amronbanc Mortgage Corp. in Lincolnwood, the indictment states. It was at Amronbanc where O’Brien met Bartko, who was employed there as a loan officer.

 

The public is reminded that an indictment is not evidence of guilt. The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.

 

Mail fraud affecting a financial institution and bank fraud are each punishable by a maximum penalty of 30 years in prison. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.

 

The government is represented by Assistant U.S. Attorneys Matthew F. Madden and Tyler C. Murray.

CHICAGO — Federal authorities have seized more than 190 kilograms of heroin as part of an investigation that disrupted a Mexico-to-Chicago narcotics pipeline and resulted in drug charges against 19 defendants.

 

The investigation, dubbed “Operation Over the Top,” spanned more than a year and included a seizure last month of 80 kilograms of heroin from a residence in Hanover Park. As part of the investigation, authorities shut down a heroin stash house in Bensenville and removed an additional 85 kilograms of heroin and cocaine from warehouses in St. Charles and Sugar Grove, and from a vacant lot on the West Side of Chicago. Law enforcement uncovered the alleged criminal activity through the use of wiretapped cellular phones, undercover narcotics purchases and extensive surveillance. The probe was led by the U.S. Drug Enforcement Administration and conducted under the umbrella of the Organized Crime Drug Enforcement Task Force (OCDETF).

 

The investigation resulted in drug charges against 19 defendants in federal court in Chicago. Several of the defendants were arrested within the past two weeks, including one this past weekend. Others were charged and arrested earlier in the investigation, including five defendants who recently pleaded guilty to federal drug charges.

 

The charges were announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; Dennis A. Wichern, Special Agent in Charge of the Chicago Field Division of the DEA; and James M. Gibbons, Special Agent-in-Charge of the Chicago Office of the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations. Substantial assistance was provided by the San Antonio, Texas, office of the Federal Bureau of Investigation.

 

“This investigation is an example of the extraordinary determination and cooperation among our law enforcement partners,” said Acting U.S. Attorney Levin. “Our office remains committed to halting the stream of heroin and other dangerous narcotics into our communities.”

 

“Too many lives are lost to heroin and too many families forever scarred,” said DEA Special Agent in Charge Wichern. “I'm proud of the work done by these agents, officers and prosecutors who have worked tirelessly to achieve these results, and I’m confident that with our continued partnership, we will have increasing success.”

 

“These charges and seizures are an example of how successful partnerships among law enforcement agencies can be in removing drug traffickers from our community,” said HSI Special Agent in Charge Gibbons. “Our agents will continue to be relentless in their pursuit to target criminal enterprises that threaten public safety.”

 

The charges describe various narcotics-distribution organizations operating in the Chicago area. Last month, JULIO CESAR FLORES SAENZ, 29, of Hanover Park, was arrested with approximately 80 kilograms of heroin hidden in his residence and a vehicle compartment. In October 2016, Flores Saenz distributed four kilograms of heroin to RAMON GARCIA, 30, of Riverside, Calif., and two kilograms of heroin to VICTOR MANUEL VAZQUEZ-MORALES, 33, of Philadelphia, Penn., according to criminal complaints and affidavits filed in U.S. District Court in Chicago. In December 2016, NOEL MIRANDA, 36, of Chicago, sold a kilogram of heroin to a buyer outside the Ford City Mall in Chicago, and a few weeks later attempted to obtain an additional seven-and-a-half kilograms of heroin, according to the charges. The deals were allegedly set up by Noel Miranda’s cousin, LUIS MIRANDA, 30, of Chicago, who was arrested last month with a kilogram of heroin in his possession, the complaints state. Flores Saenz, Noel Miranda and Luis Miranda are each charged with conspiracy to possess with intent to distribute and distribution of a controlled substance.

 

JUAN CONTRERAS, 35, of Aurora, and JESUS ALBERTO MARTINEZ-REYES, 39, of Schiller Park, allegedly led a separate faction of narcotics dealers who unloaded heroin at warehouses in Naperville, Sugar Grove and St. Charles. The heroin had been shipped to Chicago from Mexico in secret compartments of semi-tractor trailers. Juan Conteras’ brother, DAVID CONTRERAS, 39, of Aurora, and Juan Contreras’ nephew, EDGAR RODRIGUEZ CONTRERAS, 32, of Aurora, along with Martinez-Reyes and HEDILBERTO VEGA-ROCHA, 47, of Schiller Park, pleaded guilty earlier this year to their roles in the distribution conspiracy. In written plea agreements, David Contreras, Martinez-Reyes, Edgar Contreras and Vega-Rocha admitted that they conspired with Juan Contreras and each other to distribute heroin that had been shipped from Mexico. After the heroin was unloaded, the secret compartments were stuffed with cash proceeds from the drug sales, and the trucks would return to Mexico, according to the plea agreements. David Contreras, Martinez-Reyes, Edgar Contreras and Vega-Rocha are awaiting sentencing. Juan Contreras is charged with conspiracy to possess with intent to distribute and distribution of a controlled substance. His case is set for trial on Oct. 16, 2017, before U.S. District Judge Amy J. St. Eve.

 

The charges also identify a Bensenville man who ran a stash house where heroin and cash from drug sales were stored. JESUS SALGADO, 24, ran the Bensenville stash house and sold narcotics in the Chicago area, according to the complaints and an indictment returned in federal court in Chicago. Jesus Salgado’s drug-dealing operation was overseen by his father, LORENZO SALGADO, 54, who resides in Mexico but communicated with his son via phone, according to the charges. U.S. law enforcement last year obtained court authorization to surreptitiously record conversations between the father and son, during which the pair discussed selling narcotics, according to the complaints.

 

The charges describe instances in which Jesus Salgado and his girlfriend, RUBY JOY BUENAVENTURA, 26, of Chicago, delivered drugs to customers in the Chicago area after having the deal arranged remotely from Mexico by Jesus Salgado’s father. One of the deals occurred in the parking lot of a Bensenville strip mall in May 2016 when Jesus Salgado delivered two kilograms of heroin to SERGIO AREVALO-GOMEZ, 22, of Chicago. Arevalo-Gomez pleaded guilty earlier this year to distribution of a controlled substance. He is scheduled to be sentenced by U.S. District Judge John Z. Lee on May 2, 2017.

 

An indictment also identifies JOSE LUIS RIVERA JR., 39, of Lawton, Okla., as an alleged courier who traveled to New Jersey, Arizona & Mexico on behalf of the Salgado family. Jesus Salgado, Lorenzo Salgado and Rivera Jr. are each charged with conspiracy to possess with intent to distribute and distribution of a controlled substance. Lorenzo Salgado is considered a fugitive, while Jesus Salgado and Rivera Jr. are in federal custody and scheduled to appear for a status hearing on May 3, 2017, before U.S. District Judge Robert Blakey.

 

Also charged with various narcotics offenses are ALEXANDER LAGUNAS, 26, of Midlothian; SYLVIA JIMENEZ-CELEDON, 37, of Eagle Pass, Texas; WILLIE G. POWELL JR., 47, of Sandstone, Minn.; and MONIQUE FORTNEY, 37, of Dearborn Heights, Mich.

 

The investigation was conducted under the umbrella of the OCDETF program, a partnership between federal, state and local law enforcement agencies. The principal mission of OCDETF is to identify, disrupt and dismantle the most serious drug trafficking, weapons trafficking and money laundering organizations.

 

The public is reminded that complaints and indictments contain only charges and are not evidence of guilt. The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.

 

The government is represented by Assistant U.S. Attorneys Kelly Greening, Misty Wright and John Cooke.

CHICAGO — A former high-ranking commander in the Mexican Federal Police has been charged in federal court in Chicago with conspiring with others to corruptly impede a U.S.-based narcotics investigation.

IVAN REYES ARZATE, also known as “La Reina,” conspired with others to warn members of a Mexican drug cartel that they were the targets of an investigation being carried out by the U.S. Drug Enforcement Administration, according to a criminal complaint and affidavit filed in U.S. District Court in Chicago. Reyes had acquired the information through his position as a commander in the Mexican Federal Police, which was working with the DEA and the U.S. Attorney’s Office in Chicago to investigate an international drug trafficking and money laundering organization, the complaint states. Reyes and his co-conspirators tipped off cartel members when the DEA had obtained judicial authorization to intercept their phones, and leaked the identity of a cooperating source who was covertly working with the DEA to gather evidence against the cartel, the complaint states.

The complaint was filed Feb. 10, 2017, and ordered unsealed today. It charges Reyes, 45, of Mexico City, with conspiracy to corruptly obstruct, influence, and impede an official proceeding. Reyes was ordered detained in U.S. custody after making an initial appearance last week before U.S. Magistrate Judge Sheila M. Finnegan in Chicago. The case is next up before Judge Finnegan on April 13, 2017.

The complaint was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; and Dennis A. Wichern, Special Agent in Charge of the Chicago Field Division of the DEA.

The investigation is being conducted through the Organized Crime Drug Enforcement Task Force (OCDETF) Strike Force. Valuable assistance has been provided by the U.S. Attorney’s Office for the Southern District of California, the Chicago Police Department, the Illinois Department of Corrections, the Illinois State Police, and the U.S. Department of Homeland Security.

“The United States and Mexico have a long history of close cooperation in combatting transnational organized crime,” said Acting U.S. Attorney Levin. “The criminal complaint announced today is the first step in holding Mr. Reyes accountable for attempting to impede that bilateral cooperation by allegedly obstructing a significant investigation for personal gain. We remain steadfast in the unwavering commitment to disrupt and dismantle drug trafficking organizations and fight against corruption at all levels; our bilateral efforts will continue.”

According to the complaint, U.S. and Mexican authorities over the past year have been working together to investigate certain narcotics traffickers in Mexico. The investigation revealed that a network of high-level cartel members transported multiple tons of cocaine from Colombia to Mexico, and ultimately on to the United States.

Reyes was the principal point of contact for information being shared between U.S. law enforcement and the Mexican Federal Police. He first drew the attention of U.S. authorities in September 2016 while the investigation was active and ongoing, the complaint states. A member of the conspiracy sent a law enforcement surveillance photograph to an alleged Mexican drug trafficker and notified the man that he was a principal target of an investigation, the complaint states. In a conversation intercepted by law enforcement, a member of the conspiracy further informed the alleged trafficker that a confidential source cooperating with U.S. law enforcement was present at the meeting and “sitting with you the day of the picture,” according to the complaint.

Reyes’s name also surfaced the following month in additional intercepted conversations between members of the alleged Mexico-based transnational drug trafficking organization that was targeted in a joint investigation with U.S. Attorney’s Offices in Chicago and San Diego. The members of the organization discussed obtaining law enforcement information about the investigation, prompting one of the alleged Mexico City-based traffickers to identify the source of the information as “Ivan,” the complaint states. The alleged trafficker went on to say that “Ivan” previously leaked law enforcement information to a different Mexican cartel.

“Who is Ivan?” the alleged head of the transnational drug cartel asked in the intercepted conversations, according to the complaint. The alleged Mexico City trafficker responded, “The boss,” in an apparent reference to Reyes’ position as a high-ranking officer in the Mexican Federal Police. According to the complaint, in November 2016 Reyes met in person with the head of the cartel in Mexico City and discussed the leaked surveillance photograph.

The public is reminded that a complaint is not evidence of guilt. The defendant is presumed innocent and is entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.

The conspiracy charge carries a maximum sentence of five years in prison. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.

The government is represented by Assistant U.S. Attorneys Katherine Sawyer, Michael Ferrara and Devlin Su.

CHICAGO — An Indiana man has been sentenced to two years in federal prison for unlawfully dealing firearms on the West Side of Chicago.

 

In the fall of 2013 WILLIE LEE BILES JR. made multiple trips on a Megabus to Chicago from his home in Indianapolis, each time bringing handguns with him. Biles had legally purchased at least 29 firearms from licensed dealers in Indiana. Once in Chicago, Biles sold the firearms to individuals on the West Side for more than two times the price that Biles had paid for them.

 

Biles never asked any of the individuals for identification, and he failed to verify whether they could legally possess firearms. At least one of the individuals to whom Biles sold four firearms was a convicted felon who could not legally possess a firearm. Twelve of the firearms Biles sold were later recovered by law enforcement.

 

A jury last year convicted Biles, 44, of willfully dealing firearms without a license. U.S. District Judge Sara L. Ellis imposed the 24-month sentence Thursday in federal court in Chicago.

 

The sentence was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; and Celinez Nunez, Special Agent in Charge of the Chicago Field Division of the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives.

 

“The defendant conducted no background checks on his ‘customers,’ required no waiting period, and kept no records,” Assistant U.S. Attorneys Christopher V. Parente and Elizabeth R. Pozolo argued in the government’s sentencing memorandum. “These firearms have been used in attempted murders, recovered from documented gang members, convicted felons, and hidden inside drug stash houses.”

 

The convicted felon to whom Biles sold guns was previously sentenced in the case. OTTO LEWELLEN, of Bellwood, pleaded guilty in 2015 to being a felon in possession of a firearm. Lewellen stated in a plea agreement that he met Biles on multiple occasions in Chicago and Bellwood in the fall of 2013. During these meetings, Lewellen observed Biles holding a bag of firearms and selling the weapons to various individuals, according to Lewellen’s plea agreement. Lewellen admitted that he purchased four firearms from Biles. Authorities recovered two of them, but Lewellen said he sold the other two to a man he knew as “Red.” Officials have not been able to locate Red or the two guns. Judge Ellis in 2015 sentenced Lewellen to 18 months in prison.

 

The investigation was conducted with the Chicago High Intensity Drug Trafficking Task Force (HIDTA). Substantial assistance was provided by the Illinois State Police, Chicago Police Department, Bellwood Police Department and ATF Indianapolis Field Office.

CHICAGO — A federal judge today sentenced a Park Forest man to 57 years in prison for leading a crew of armed robbers that targeted cell phone stores in the Chicago suburbs.

ERIC CURTIS recruited several individuals to join the crew and armed them with firearms to carry out the robberies. The crew stole hundreds of cell phones while terrorizing store employees and customers at gunpoint. After the robberies, Curtis helped to sell the phones and divide the profits among the thieves.

The robberies occurred in 2013 in cell phone stores in Addison, Norridge, Deerfield and Woodridge.

A jury last year convicted Curtis, 32, on one count of conspiracy to commit robbery, three counts of robbery, one count of being a felon in possession of a firearm, and three counts of using a firearm in a crime of violence. U.S. District Judge Charles P. Kocoras imposed the sentence in federal court in Chicago.

The sentence was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; and Michael J. Anderson, Special Agent in Charge of the Chicago Office of the Federal Bureau of Investigation. Police departments from Chicago, Woodridge, Deerfield, Joliet, Norridge, Addison and East Peoria provided substantial assistance in the investigation.

“The defendant’s crew terrorized dozens of victims during their crime spree and these victims will likely suffer from the trauma the defendant and his crew caused them for at least as long as any sentence this Court imposes on the defendant,” Assistant U.S. Attorneys Christopher V. Parente and Allison A. Ray argued in the government’s sentencing memorandum. “The defendant’s repeated reckless actions during this crime spree endangered the lives of many everyday citizens who were out on a shopping trip, or just showing up for work trying to earn an honest living.”

Evidence at trial revealed that Curtis’ crew conducted takeover-style robberies. Crew members would enter a store, brandish firearms and order employees and customers to the back of the store at gunpoint. The robbers would take as many cell phones as they could stuff into their duffel bags.

Seven other members of the crew previously pleaded guilty. The prior convictions include another top leader, ERIC ROGERS of Hazel Crest. Rogers stated in a plea agreement that the crew also robbed cell phone stores in Joliet and downstate East Peoria, as well as a store in La Porte, Ind. Eric Rogers is awaiting sentencing.

CHICAGO — A Chicago father and his twin boys have been sentenced to federal prison terms for recruiting vulnerable minors to engage in sex acts for money.

NATHAN NICHOLSON groomed his sons to become pimps in a family sex trafficking operation. Nicholson used the twins, TYRELLE LOCKETT and MYRELLE LOCKETT, to recruit minor girls from Chicago-area malls by promising them money for going on dates. Once the girls expressed interest, Nicholson brought them to an abandoned house, photographed them partially clothed, and then “tested” them by requiring them to have sex with the twins. Soon thereafter Nicholson and his sons caused the girls to perform commercial sex acts for money, with Nicholson keeping the proceeds.

The twins also recruited their own girls and young women, and expanded their prostitution business by finding victims outside of Chicago. The brothers traveled to Indiana several times to bring victims, including minors, to Chicago to work for them. The twins forcibly brought one woman from Minnesota to Nicholson’s home in Chicago, but she managed to escape and call the police.

Nicholson, 45, of Chicago, pleaded guilty last year to one count of sex trafficking of a minor. U.S. District Judge Joan Humphrey Lefkow on Tuesday sentenced Nicholson to 16 years and eight months, and ordered him to pay $68,400 to two victims.

Tyrelle Lockett, 24, of Chicago Heights, and Myrelle Lockett, 24, of Chicago Heights, each pleaded guilty last year to one count of transportation of a minor with intent to engage in prostitution. Judge Lefkow on Wednesday sentenced Tyrelle Lockett to 17 years and eight months, and ordered him to pay $9,050 to three victims. Judge Lefkow on Thursday sentenced Myrelle Lockett to 17 years and eight months, and ordered him to pay $75,600 to one victim.

The sentencings were announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; Michael J. Anderson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation; and Cook County Sheriff Thomas J. Dart. Valuable assistance was provided by the Indianapolis Office of the FBI, Cook County State’s Attorney’s Office, Cook County Human Trafficking Task Force, Chicago Police Department, Alsip Police Department, Dolton Police Department, Calumet Park Police Department, Lansing Police Department, Muncie, Ind., Police Department, and Rochester, Minn., Police Department.

Four of the defendants’ victims testified at the sentencing hearings. They described their ordeals of how the defendants coerced them into prostitution.

“The length and breadth of defendant’s conduct, which was driven by his greed and perverse sexual desires, affected numerous victims, inflicted violence on others, and sexually exploited minors and otherwise vulnerable victims,” Assistant U.S. Attorneys Renai S. Rodney and Shoba Pillay argued in the government’s sentencing memorandum in Tyrelle Lockett’s case. “The ripple effects of his conduct will be felt for years to come.”

CHICAGO — Members of a Chicago street gang and a Mexican supplier are among eleven individuals charged for their alleged roles in the distribution of heroin and cocaine on the city’s West Side.

 

The joint federal and state investigation, dubbed “Operation Shut Travel Down,” spanned more than a year and resulted in the seizures of ten firearms, more than 3,500 grams of heroin, more than 550 grams of cocaine and crack cocaine, and more than 2,000 grams of methamphetamine. Authorities uncovered the alleged criminal activity through the use of wiretapped cellular phones, undercover narcotics purchases and extensive surveillance. The probe was conducted under the umbrella of the Organized Crime Drug Enforcement Task Force (OCDETF), with assistance from the High Intensity Drug Trafficking Area Task Force (HIDTA).

 

The investigation resulted in charges against eleven defendants in federal court and more than 40 defendants in state court. Law enforcement officers arrested several of the defendants this morning. Authorities today also executed search warrants at two alleged drug stash houses, including a barbershop in the 900 block of South Western Avenue in Chicago.

 

The charges were announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; Kimberly M. Foxx, Cook County State’s Attorney; Dennis A. Wichern, Special Agent in Charge of the Chicago Field Division of the Drug Enforcement Administration; James D. Robnett, Special Agent-in-Charge of the Chicago Office of the Internal Revenue Service Criminal Investigation Division; and Eddie T. Johnson, Superintendent of the Chicago Police Department. The United States Marshals Service provided valuable assistance.

 

The federal complaints describe a narcotics-distribution organization in the North Lawndale neighborhood overseen by members of the Traveling Vice Lords street gang. The organization utilized street-level distributors to sell cocaine and heroin at multiple open-air drug markets near the intersection of California Avenue and Lexington Street, according to the complaints. Traveling Vice Lords members used the barbershop to stash the drugs and facilitate distribution. The barbershop’s owner, TYRONE HUNTER, 38, of Chicago, is a ranking member of the gang who is described in the complaints as a drug supplier and a supervisor of the sales.

 

The complaints identify the operation’s other supervisor as ANTHONY WILLIAMS, 32, of Chicago. Anthony Williams is a Traveling Vice Lord whom law enforcement observed conducting numerous drug transactions, the complaints state. Anthony Williams also sold narcotics to an undercover officer on multiple occasions during the course of the investigation, according to the complaints.

 

Also charged in the federal complaints are CALVIN WILLIAMS, 41, of Chicago, a Traveling Vice Lord who oversaw the distribution of cocaine and heroin near the intersection of California Avenue and Harrison Street; and several Traveling Vice Lords who sold cocaine and heroin at street level: DEMETRIUS YANCY, 24, of Chicago; RICKY BROOKS, 39, of Chicago; JEROME CHOICE, 46, of Chicago; TERRANCE BROOKS, 34, of Chicago; and ATKINS WILLIAMS, 53, of Chicago.

 

In addition, two alleged suppliers of the drugs were also charged in the complaints. SIR CHARLES BLAND, 38, of Bolingbrook, and SALVADOR ROJAS-SANTOS, 63, of Mexico, supplied heroin and cocaine to Williams and Hunter for distribution on the West Side of Chicago, according to the charges.

 

The eleventh federal defendant, JOHN ANTHONY, 40, of Chicago, distributed heroin to undercover officers in North Lawndale on multiple occasions last year, according to the complaints.

 

Seven of the federal defendants are charged with conspiracy to possess with intent to distribute and distribution of a controlled substance; two are charged with distribution of a controlled substance; one is charged with possession with intent to distribute, and possession of a weapon by an illegal alien; and one is charged with attempted possession with intent to distribute a controlled substance. The federal defendants will begin making initial court appearances this afternoon before U.S. Magistrate Judge Sidney I. Schenkier in Chicago.

 

The state defendants will appear later in Cook County Criminal Court.

 

The investigation was conducted under the umbrella of the OCDETF program, a partnership between federal, state and local law enforcement agencies. The principal mission of OCDETF is to identify, disrupt and dismantle the most serious drug trafficking, weapons trafficking and money laundering organizations.

 

The public is reminded that complaints contain only charges and are not evidence of guilt. The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.

 

The U.S. Attorney’s Office in Chicago is representing the government in the federal cases. The cases are being prosecuted by Assistant U.S. Attorney Jordan Matthews of the Violent Crimes Section, and Assistant U.S. Attorney Nani Gilkerson of the Narcotics Section.

CHICAGO — A Chicago chiropractor with a clinic in the West Lawn neighborhood has been indicted on federal fraud charges for allegedly submitting at least $10 million in bogus claims to Medicare and private insurers.

HENRY POSADA submitted the fraudulent claims for purported physical therapy and chiropractic services that were never provided, according to the indictment. In some instances Posada was out of the state on the dates he claimed to have provided chiropractic services, while other times he used his patients’ names without their knowledge to create wholly fictitious claim forms, the indictment states. From 2008 to 2016, Posada submitted at least $10 million in fraudulent claims to Medicare and private insurers, causing those programs to pay at least $5.1 million to Posada and his clinic, Spine Clinics of America S.C., which does business as Associated Back Care and Rehabilitation. The clinic is located in the 4300 block of West 63rd Street in Chicago.

The indictment was returned March 16, 2017, in federal court in Chicago. It charges Posada, 54, of Clarendon Hills, with 18 counts of health care fraud. He pleaded not guilty at his arraignment Tuesday afternoon before U.S. District Judge Edmond E. Chang. A status hearing was scheduled for May 30, 2017.

The indictment was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; Michael J. Anderson, Special Agent in Charge of the Chicago Office of the Federal Bureau of Investigation; and Lamont Pugh III, Special Agent-in-Charge of the Chicago Regional Office of the U.S. Department of Health and Human Services Office of Inspector General. The U.S. Office of Personnel Management’s Office of Inspector General provided valuable assistance.

The indictment seeks forfeiture of the $5.1 million, as well as $850,000 in cashier checks, a 2013 Lexus LX 570 automobile, and a property in Watseka, Ill.

The public is reminded that an indictment is not evidence of guilt. The defendant is presumed innocent and is entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.

Health care fraud is punishable by up to ten years in prison. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.

The government is represented by Assistant U.S. Attorney Nathalina Hudson.

CHICAGO — A convicted felon from Chicago pleaded guilty today to federal firearm offenses, admitting that he brokered more than 70 illegal gun transactions.

JOHN THOMAS, 33, also known as “Batman,” pleaded guilty to two counts of being a felon in possession of a firearm, and one count of dealing firearms without a license. The conviction carries a maximum sentence of 25 years in prison. U.S. District Judge Andrea R. Wood scheduled a sentencing hearing for June 30, 2017, at 10:00 a.m.

The case against Thomas arose out of a larger federal investigation that has removed more than 100 illegal guns from the streets of Chicago. The federal probe involved controlled firearm sales to cooperating individuals.

The guilty plea was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; and Celinez Nunez, Special Agent in Charge of the Chicago Field Division of the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives.

“Illegally brokering the sale of guns on the streets of Chicago poses a tremendous danger to the community,” said Acting U.S. Attorney Levin. “Prosecuting firearms offenses is a top priority in our office, and we will continue our efforts to disrupt the availability of illegal guns in our city.”

Thomas admitted in a plea agreement that he brokered the sale of 77 illegal guns, including rifles, shotguns and handguns. Some of the guns had obliterated serial numbers or had previously been reported stolen. Thomas either obtained the firearms himself and then sold them to individuals, or he arranged for the owner of the firearms to sell the guns to individuals in exchange for a fee for setting up the transaction, the plea agreement states. Unbeknownst to Thomas, the individuals who purported to purchase the guns were cooperating with law enforcement.

Thomas was previously convicted of a felony and was not legally authorized to possess any firearms.

One of the sales occurred on July 23, 2014, when Thomas arranged a meeting between a man identified in court records as Individual A, along with JAMEL DAVIS and a cooperating individual. The transaction, which took place in Davis’ garage in the 7600 block of South Seeley Avenue in Chicago, involved the sale of two .38-caliber revolvers. A federal jury last year convicted Davis of illegal possession of a firearm by a felon. Davis faces up to ten years in prison when he is sentenced later this month.

The government is represented by Assistant U.S. Attorneys Nicole Kim and Carol Bell.

CHICAGO — A Willowbrook woman has been sentenced to a year and a day in federal prison for scheming to help a contractor falsely satisfy its female hiring requirement for city of Chicago construction projects.

As the owner of a certified Women’s Business Enterprise, ELIZABETH PERINO allowed her company to be claimed as a subcontractor on city projects so that the general contractor could satisfy its requirement to assign a portion of the work to female-owned businesses. Perino falsified paperwork to conceal the fact that her business, Perdel Contracting Co., would perform no actual work on the projects. As a result of Perino’s fraud, Perdel expected to receive payment equivalent to a percentage of the work that Perdel fraudulently claimed to have performed.

A jury last year convicted Perino, 62, of Willowbrook, on three counts of wire fraud and one count of mail fraud. U.S. District Judge Gary Feinerman imposed the sentence Thursday in federal court in Chicago.

The conviction was announced by Brian Hayes, Chief of the Criminal Division of the United States Attorney’s Office for the Northern District of Illinois; Michael J. Anderson, Special Agent in Charge of the Chicago Office of the Federal Bureau of Investigation; Thomas Ullom, Special Agent-in-Charge of the U.S. Department of Transportation Office of Inspector General in Chicago; James Vanderberg, Special Agent-in-Charge of the Chicago Region of the U.S. Department of Labor’s Office of Inspector General, Office of Labor Racketeering and Fraud Investigations; and Joseph M. Ferguson, Inspector General for the City of Chicago.

A city of Chicago ordinance establishes an overall goal of awarding at least 5% of total annual funding of all city contracts to WBEs. For contracts with values exceeding $10,000, each contractor has to commit a certain percentage of labor to WBEs, either as a joint venture or subcontractor, or by purchasing goods or services from a WBE. In addition to being a WBE, Lockport-based Perdel, which specialized in concrete and carpentry work, also qualified to participate in city projects as a certified Disadvantaged Business Enterprise.

Evidence at Perino’s trial revealed that Perino and a co-worker agreed to act as a “pass-through” WBE/DBE on two city projects, meaning that Perdel’s employees would perform no work and Perdel’s equipment would not be used. For one of the projects – at O’Hare International Airport – Perino agreed to place the general contractor’s employees on Perdel’s payroll to perform the work that would be credited to Perdel. Perino also entered into a sham contract to “purchase” street sweepers from the general contractor and title them in Perdel’s name while the general contractor’s workers performed the street sweeping as purported employees of Perdel. Perino and the general contractor further agreed that, at the conclusion of the O’Hare project, the street sweepers would be returned to the general contractor for $1 per machine, and Perdel would receive 18% on top of the labor costs and $20 per hour for the street sweepers.

The government was represented by Assistant U.S. Attorneys Megan Cunniff Church and Matthew Kutcher.

CHICAGO — Two businessmen have been convicted on bank fraud charges for falsifying loan documents to prevent foreclosure on a nearly $2 million parcel of land in Aurora. The fraud left one couple out of $450,000, and an elderly couple out of $300,000.

KEVIN LEBEAU, 55, of Aurora, was found guilty of three counts of bank fraud and four counts of making false statements to a federally insured bank. BRIAN BODIE, 66, of Chicago, was convicted on three counts of bank fraud and three counts of making false statements to a federally insured bank. Each count carries a maximum sentence of 30 years in prison.

The jury returned the verdicts on Thursday after an eight-day trial in federal court in Chicago. U.S. District Judge Robert W. Gettleman has not yet scheduled sentencing hearings.

The convictions were announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; and Michael J. Anderson, Special Agent in Charge of the Chicago Office of the Federal Bureau of Investigation.

Evidence at trial revealed that LeBeau and Bodie orchestrated a fraud scheme involving a $1.9 million loan from Amcore Bank. The bank in 2004 mortgaged a 10.4-acre property in Aurora to LeBeau and Bodie after the pair executed a full personal guarantee for the loan. By the fall of 2005 LeBeau and Bodie had failed to make the required loan payments, and foreclosure became imminent. In an effort to delay foreclosure, LeBeau and Bodie submitted fraudulent and fabricated information about the progress of efforts to develop the property.

Eventually the foreclosure occurred, and the property was sold in 2010 at a significant loss to the bank and several individual investors who had pledged their own money into the project. LeBeau and Bodie told the individual investors that their money would be used to develop a mixed-use development on the property. The individual victims included a couple that lost $450,000, and an elderly couple who lost $300,000. LeBeau and Bodie used some of the elderly couple’s money for business expenses and to make payments to the bank.

The government is represented by Assistant U.S. Attorneys Kartik K. Raman and Amarjeet S. Bhachu.

CHICAGO — A jury has convicted a South Korean businessman on multiple fraud charges for deceiving U.S. municipalities into spending federal stimulus money on his company’s foreign-made products.

 

HEON SEOK LEE, Chief Executive Officer and President of KTURBO and KTURBO USA, secured contracts to supply numerous municipalities across the United States with wastewater-treatment aeration blowers that Lee falsely represented had been manufactured in the United States. The false representations entitled Lee’s companies to win contracts funded through the stimulus package that the federal government provided to municipalities under the American Recovery and Reinvestment Act of 2009. In reality, Lee knew that KTURBO fully assembled its aeration blowers in South Korea and shipped them in final form to the United States, with the intention of obtaining in excess of $1.3 million from the fraudulently obtained contracts.

 

After an eight-day trial in federal court in Chicago, the jury on Wednesday found Lee, 50, of Seoul, South Korea, guilty of five counts of wire fraud and three counts of fraudulent importation of goods into the United States. Each count is punishable by up to 20 years in prison.

 

U.S. District Judge Sharon Johnson Coleman has not yet scheduled sentencing.

 

The conviction was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; James M. Gibbons, Special Agent-in-Charge of the Chicago Office of the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations; and Joseph Gonzales, Special Agent-in-Charge of the U.S. Environmental Protection Agency Office of Inspector General. The U.S. Department of Health and Human Services Office of Inspector General also provided assistance.

 

Congress passed ARRA to combat the Great Recession of 2008. Billions of dollars in stimulus funds went into the U.S. economy, including funds provided to municipalities and other local governments for the construction and renovation of wastewater treatment facilities. In order to receive ARRA funding, municipalities had their general contractors and engineering firms confirm that the contractors, subcontractors and vendors provided manufactured goods that complied with the “Buy American” provision in ARRA, which required that manufactured goods be “substantially transformed” in the United States.

 

Evidence at trial revealed that South Korea-based KTURBO, under Lee’s leadership and direction, in 2010 placed phony placards on its equipment stating that it was “Assembled in USA.” The fully assembled equipment – with placards – was then shipped from South Korea to the United States, for distribution to several municipalities across the country.

 

Law enforcement in 2011 searched KTURBO’s local facility in suburban Batavia, seizing blowers that had been fully manufactured in South Korea, as well as other relevant evidence. Lee was extradited to the United States in 2015.

 

The government is represented by Assistant U.S. Attorneys Patrick Otlewski and Megan Cunniff Church.

CHICAGO — A Chicago trader defrauded more than a dozen clients out of at least $1.5 million by pocketing their money instead of investing it, according to an indictment returned in federal court in Chicago.

RANDALL RYE, the owner of Faster Than Light Trading LLC, told investors that they would earn substantial profits from his proprietary trading program. Rye claimed that he would invest their money in options and futures contracts using a computer algorithm. In reality, Rye misappropriated the investors’ funds for his own personal expenses, such as air and hotel travel costs, including vacations to St. Lucia and Bali, tickets to sporting events, including the World Series and the Masters golf tournament, and on other luxury items and large cash withdrawals, according to the indictment.

As a result of the scheme, Rye fraudulently misappropriated at least $1.5 million from at least 15 investors, the indictment states.

The indictment was returned Wednesday in federal court in Chicago. It charges Rye, 26, of Chicago, with six counts of wire fraud. Arraignment is scheduled for March 21, 2017, at 1:15 p.m., before U.S. Magistrate Judge Michael T. Mason in Chicago.

The indictment was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; and Michael J. Anderson, Special Agent-in-Charge of the Chicago office of the Federal Bureau of Investigation.

According to the indictment, Rye falsely represented to investors that their money was generating substantial returns from his purported algorithmic trading program. Rye sent his investors numerous false account statements that appeared to be from established financial services companies, stating that all of the investors’ principal and profits were invested and profitable, the indictment states. However, Rye knew when he prepared the bogus statements that the documents were false and that investors’ funds were not actually maintained at the financial services companies.

Rye also used newer investors’ funds to make Ponzi-type payments to earlier investors.

Rye was arrested last month and he remains in federal custody. At the time of the arrest, law enforcement searched his home and office, seizing his business records and several expensive watches.

The public is reminded that an indictment contains only charges and is not evidence of guilt. The defendant is presumed innocent and is entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.

Each count of wire fraud carries a maximum penalty of 20 years in prison. If convicted, the Court must impose a reasonable sentence under federal sentencing statutes and the advisory U.S. Sentencing Guidelines.

The government is represented by Assistant United States Attorney Sunil Harjani.

CHICAGO — Zachary T. Fardon, United States Attorney for the Northern District of Illinois since 2013, today announced his resignation from the Office, effective immediately. First Assistant U.S. Attorney Joel R. Levin has assumed the position of United States Attorney on an acting basis.

 

Mr. Fardon served as United States Attorney since Oct. 23, 2013, following his appointment by President Barack Obama. Under Mr. Fardon’s leadership the Office achieved significant convictions in the areas of public corruption, terrorism, gang crimes and narcotics, among many others.

 

Mr. Fardon created a specialized unit within the Criminal Division to address violent crime, while increasing the Office’s prosecutions of illegal firearms to its highest in more than a decade. His tenure was also distinguished by the creation of a new section to prosecute securities and commodities fraud, which resulted in a first-of-its-kind conviction for financial spoofing.

 

Mr. Fardon served on the U.S. Attorney General’s Advisory Committee since 2014. A select number of U.S. Attorneys are appointed to the AGAC to advise the Attorney General on policy, management and operational issues impacting U.S. Attorneys’ offices across the country.

 

“It has been the privilege of a lifetime to lead the U.S. Attorney’s Office in Chicago,” said Mr. Fardon. “I want to thank all of the talented men and women of the Office for their hard work and dedicated public service during my term.”

 

“Zach has served the citizens of the Northern District of Illinois and the United States with marvelous distinction,” said Mr. Levin. “I want to thank Zach for his service and his friendship, and I look forward to all that he will achieve in the future.”

 

Mr. Levin served as the First Assistant U.S. Attorney since 2014. He previously worked as an Assistant U.S. Attorney in the Eastern District of Wisconsin and the Northern District of California. In 1997 he joined the U.S. Attorney’s Office in Chicago, where he was part of the trial team, along with Mr. Fardon, that successfully prosecuted former Illinois Governor George Ryan on corruption charges.

 

Mr. Levin worked in private law practice from 2008 until returning to the U.S. Attorney’s Office as the First Assistant in 2014. Mr. Levin is a member of the American College of Trial Lawyers and an Adjunct Professor of Law at Northwestern University Pritzker School of Law. He is a graduate of Yale University and Harvard Law School.

ROCKFORD — A McHenry County man pleaded guilty today before U.S. District Judge Frederick J. Kapala to four charges of robbery.

 

SHAWN M. RANK, 47, of Woodstock, pleaded guilty to the robberies of Heartland Bank and Trust Company, 327 W. Main St., Genoa, on Jan. 15, 2016; the Cash Store, 1479 N. State St., Belvidere, on April 1, 2016; Harvard Savings Bank, 58 N. Ayer St., Harvard, on May 6, 2016; and Alpine Bank, 600 S. State St., Belvidere, on June 13, 2016.

 

According to the written plea agreement, Rank admitted that at 10:30 a.m. on Jan. 15, 2016, he walked directly to a teller’s station at the Heartland Bank and Trust Company in Genoa, pushed a blue zippered bank bag across the counter and told the teller to fill it with $50s and $100s. Rank opened his jacket and showed a gun to the teller. The teller placed $1,250 in the bank bag.

 

In addition, Rank admitted in the plea agreement that in the Cash Store robbery he walked up to an employee standing at the counter and told the employee it was a robbery. The employee placed $1,232 in a blue bank bag.

 

Rank further admitted in the plea agreement that he similarly robbed Harvard Savings Bank when he placed a blue zippered bag on the counter, displayed a gun, and demanded that the teller give him money. The teller handed $2,700 to Rank.

 

Rank also admitted that he robbed Alpine Bank in Belvidere, again using a blue zippered bag. When Rank demanded money, the teller then gave him $1,790 from her drawer.

 

On each count Rank faces a maximum sentence of 20 years’ imprisonment, a term of supervised release of up to 3 years following imprisonment, and a fine of up to $250,000, and restitution. The actual sentence will be determined by the United States District Court, guided by the Sentencing Guidelines. Sentencing is set for June 29, 2017, at 2:30 p.m.

 

The guilty plea was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; and Michael J. Anderson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation. The DeKalb County Sheriff’s Office and the Harvard, Genoa, and Belvidere Police Departments assisted in the investigation.

 

The government is represented by Assistant U.S. Attorney Margaret J. Schneider.

CHICAGO — Two convicted felons from the Chicago area were sentenced to federal prison terms today for illegally possessing semiautomatic weapons.

THADDEUS JIMENEZ, 38, of Des Plaines, was sentenced to nine years and two months for illegally possessing a loaded .380-caliber semiautomatic pistol. Jimenez admitted in a plea agreement that he used the gun to shoot a man once in each leg. The shooting occurred on Aug. 17, 2015, in the 3500 block of West Belle Plaine Avenue in the Irving Park neighborhood of Chicago.

At the time of the shooting Jimenez was sitting in the driver’s seat of his Mercedes convertible, and in the passenger seat was JOSE ROMAN, 24, of Chicago. Roman was armed with a loaded .22-caliber semiautomatic rifle. After the shooting Jimenez and Roman sped off, but Chicago Police officers apprehended them nearby. The wounded man survived.

Roman was sentenced to seven years and one month for illegally possessing the rifle. Both Jimenez and Roman had previously been convicted of a felony.

U.S. District Judge Harry D. Leinenweber imposed the sentences in federal court in Chicago.

The sentencings were announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Celinez Nunez, Special Agent-in-Charge of the Chicago Field Division of the U.S. Bureau of Alcohol, Tobacco, Firearms & Explosives; Michael J. Anderson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation; and Eddie Johnson, Superintendent of the Chicago Police Department. The Cook County Sheriff’s Office provided valuable assistance.

The government is represented by Assistant U.S. Attorneys Kathryn Malizia and Michelle Petersen.

CHICAGO — More than 65 defendants are facing federal or state narcotics charges for their alleged roles in distributing heroin, cocaine and fentanyl on Chicago’s West Side.

 

The joint federal and state investigation, dubbed “Operation Sweet Dreams,” spanned more than a year and resulted in the seizures of more than a dozen firearms, including an assault rifle and semiautomatic pistol, more than three kilograms of heroin, three kilograms of cocaine, and more than $380,000 in cash. Authorities uncovered the alleged criminal activity through the use of wiretapped cellular phones, undercover narcotics purchases and extensive surveillance. The probe was conducted under the umbrella of the Organized Crime Drug Enforcement Task Force (OCDETF), with assistance from the High Intensity Drug Trafficking Area Task Force (HIDTA).

 

Law enforcement officers began arresting several of the defendants this morning.

 

The charges describe an extensive network of drug distribution, based predominantly in the Garfield Park, Homan Square and North Lawndale neighborhoods on the city’s West Side. Two of the defendants were charged with federal firearm violations as part of criminal complaints filed earlier this week in U.S. District Court and unsealed after the arrests.

 

The federal defendants will begin making initial court appearances this afternoon before U.S. Magistrate Judge M. David Weisman in Chicago. The state defendants were charged in separate complaints and will appear at a later time in Cook County Criminal Court.

 

The charges were announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Kimberly M. Foxx, Cook County State’s Attorney; Dennis A. Wichern, Special Agent in Charge of the Chicago Field Division of the Drug Enforcement Administration; Eddie T. Johnson, Superintendent of the Chicago Police Department; and James D. Robnett, Special Agent-in-Charge of the Chicago Office of the Internal Revenue Service Criminal Investigation Division. The officials recognized the valuable assistance of the U.S. Marshals Service and the Illinois State Police.

 

The investigation uncovered numerous drug deals, including one that occurred last October in an alley in the 1800 block of North Leavitt Street in the Bucktown neighborhood of Chicago. A defendant purchased two kilograms of heroin in exchange for $132,800 in cash, the complaint states. The defendant was under law enforcement surveillance when he picked up the cash from a Near West Side house, the complaint states. The money was wrapped in a red and white Target shopping bag.

 

The investigation further revealed that one of the defendants agreed to sell his Chevrolet conversion van to a buyer he met in an online marketplace in exchange for a kilogram of cocaine. Unbeknownst to the defendant, the purported buyer was an undercover law enforcement officer. During an afternoon meeting last August at Diversey and Austin Avenues in the Belmont Cragin neighborhood of Chicago, the undercover officer gave the defendant a black bag containing a kilogram of sham cocaine in exchange for the van, according to the complaint. The deal was surreptitiously recorded by law enforcement.

 

The investigations were conducted under the umbrella of the OCDETF program, a partnership between federal, state and local law enforcement agencies. The principal mission of OCDETF is to identify, disrupt and dismantle the most serious drug trafficking, weapons trafficking and money laundering organizations.

 

The public is reminded that complaints contain only charges and are not evidence of guilt. The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.

 

Assistant U.S. Attorneys Jeremy Daniel and Jeannice Appenteng are representing the government in the federal cases. The Cook County State’s Attorney’s Office is representing the government in the state cases.

CHICAGO — The owner of a sports memorabilia company admitted in federal court today that he conducted a fraud scheme using forged documents and phony sports memorabilia, including a doctored Heisman Trophy and fake baseball cards that he used as collateral on loans.

JOHN ROGERS, 44, of North Little Rock, Ark., pleaded guilty to one count of wire fraud. The conviction carries a maximum sentence of 20 years in prison. U.S. District Judge Thomas M. Durkin scheduled a sentencing hearing for Sept. 12, 2017, at 10:00 a.m.

The guilty plea was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; and Michael J. Anderson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation.

Rogers admitted in a plea agreement that he carried out a fraud scheme between 2009 and 2014 through his two Arkansas-based businesses, Sports Card Plus and Rogers Photo Archive LLC, resulting in losses of more than $9.5 million to investors, customers and financial institutions.

In order to obtain money from investors, Rogers falsely represented that he had secured contracts to purchase certain collections of sports memorabilia and newspaper photograph archives his company would sell at a profit, according to the plea agreement. Rogers showed the investors contracts for collections and archives even though he knew the deals never actually existed because the contracts were forgeries that Rogers created to deceive them.

Rogers also admitted in the plea agreement that he sold various sports memorabilia that he knew was not authentic because he had either created the item himself or altered it to make it appear legitimate. For example, in February 2012 Rogers paired an altered Heisman Trophy with phony certifications to secure a $100,000 loan from an investor, according to the plea agreement.

Rogers also used other fraudulent contracts and fake sports memorabilia to secure more than $4 million in loans from multiple financial institutions in Arkansas, the plea agreement states. Rogers admitted in the plea agreement that he used fraud proceeds he received from investors and financial institutions to repay customers who detected his sale of fraudulent sports memorabilia. Rogers provided customers with fraudulent certificates of authenticity, as well as fraudulent hologram stickers from a major auction house, the plea agreement states.

The government is represented by Assistant United States Attorney Derek Owens.

ROCKFORD — A Lake County man pleaded guilty today before U.S. District Judge Frederick J. Kapala for his role in a conspiracy to manufacture and distribute marijuana.

 

JUSTIN T. PAGLUSCH, 35, of Ingleside, pleaded guilty to conspiracy to manufacture 1,000 or more marijuana plants and to distribute marijuana between November 2014 and Jan. 6, 2015, at a warehouse at 1916 11th St. in Rockford.

 

Sentencing is set for June 23, 2017, at 2:30 p.m.

 

The guilty plea was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Celinez Nunez, Special Agent in Charge of the Chicago Field Division of the Bureau of Alcohol, Tobacco, Firearms & Explosives; Derek Bergsten, Chief of the Rockford Fire Department; and Anthony Scarpelli, Chief of the Skokie Police Department. The Winnebago County Sheriff’s Department Narcotics Unit and the Rockford Police Department Narcotics Unit assisted in the investigation.

 

On Oct. 6, 2015, in a superseding indictment, a federal grand jury in Rockford charged Paglusch and six other individuals with conspiring to manufacture, possess and distribute 1,000 or more marijuana plants. The indictment alleges that between Jan. 2, 2013, and Jan. 6, 2015, the defendants conspired to illegally grow and store marijuana in the warehouse, which was destroyed by fire on Jan. 6, 2015.

 

According to Paglusch's written plea agreement, in November 2014 Paglusch’s cousin, JEREMIAH N. CLEMENT, 39, formerly of Des Plaines, asked Paglusch to work with others in a marijuana growing operation at the warehouse. When Paglusch arrived at the warehouse in November 2014, over 1,000 marijuana plants growing on the fourth floor were almost ready to be harvested. There was also a smaller room on the fourth floor that housed the baby or "clone" marijuana plants. As stated in the plea agreement, Paglusch and Clement, along with three other co-defendants, started harvesting the crop of finished marijuana plants in December 2014. The harvested marijuana was weighed and packaged into one pound amounts and vacuum sealed. The processed marijuana was stored in a vault at the warehouse and had a combination lock. Paglusch admitted that during the period of the conspiracy, he was aware that Clement kept a .357 Ruger revolver at the warehouse for protection.

 

On Jan. 6, 2015, while at a hotel in Rockford, Paglusch learned that the warehouse had burned down in the early morning hours.

 

Clement previously pleaded guilty to the same charge as Paglusch. Clement was sentenced last year to ten years in prison.

 

Paglusch faces a mandatory minimum sentence of ten years in prison, a maximum sentence of life imprisonment, a maximum fine of $4 million, and a term of supervised release following imprisonment of at least five years and up to life. The sentence will be determined by the United States District Court, guided by the Sentencing Guidelines.

 

The government is represented by Assistant U.S. Attorney Joseph C. Pedersen.