Northern District of Illinois

CHICAGO — The head of a Homewood telemarketing company has been sentenced to a year in federal prison for pocketing illegal kickbacks in exchange for referring patients to home health care agencies.

As the owner of Serenity Marketing Inc., which did business as Serenity Living, SUNDAE WILLIAMS used unsolicited phone calls to recruit patients, including Medicare beneficiaries, for home health care services. Williams then referred those patients to several Chicago-area nursing agencies in exchange for payments on a per-patient basis.

 

A jury last year convicted Williams, 47, of South Holland, on one count of conspiracy to solicit and receive remuneration in return for referring Medicare patients, and six counts of soliciting and receiving remuneration in return for referring Medicare patients.

 

U.S. District Judge John J. Tharp Jr. on Wednesday imposed the prison sentence of 12 months and one day. In addition, Judge Tharp ordered Williams to forfeit $599,000, which represents the proceeds of her crimes.

 

The sentence was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; 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; Michael J. Anderson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation; and Kristie Osswald, Special Agent-in-Charge of the Chicago Office of the Railroad Retirement Board Office of the Inspector General.

 

“For at least four years, defendant Sundae Williams helped fuel a system in which skilled nursing agencies and doctors defrauded Medicare by billing for unnecessary services that Medicare beneficiaries did not need or qualify for,” Assistant U.S. Attorney Stephen Chahn Lee argued in the government’s sentencing memorandum. “Defendant’s offense here is serious because it led to the kinds of waste and fraud that the Anti-Kickback Statute was designed to prevent.”

 

Williams is one of several defendants convicted as part of the federal investigation. The prior convictions include JAMES ADEMIJU, a nurse from Matteson who operated two suburban nursing agencies; Dr. ALAN NEWMAN, one of the doctors at Suburban Home Physicians, which did business as Doctor at Home; and DIANA JOCELYN GUMILA, a nurse and manager of Suburban Home Physicians.

Evidence at Williams’ trial revealed that Serenity employees were trained to cold-call Medicare beneficiaries and convince them to accept home health services. If a Medicare beneficiary expressed interest, Serenity employees obtained the beneficiary’s personal information, including their Medicare number, and provided it to certain home health agencies that had agreed to pay Serenity for such referrals.

The investigation is being carried out by the Medicare Fraud Strike Force, which is part of the Health Care Fraud Prevention & Enforcement Action Team, a joint initiative between the U.S. Justice Department and the U.S. Department of Health and Human Services to prevent fraud and to enforce anti-fraud laws around the country. Dozens of defendants have been charged in numerous fraud cases since the strike force began operating in Chicago in 2011.

 

The government is represented Mr. Lee and Cornelius Vandenberg.

CHICAGO — The founder of a northwest suburban tech company has been sentenced to nine years in federal prison for defrauding investors out of more than $9 million.

GREGORY WEBB, 71, the founder and Chief Executive Officer of Elk Grove Village-based InfrAegis Inc., was convicted last year on nine counts of mail and wire fraud for fraudulently raising more than $9 million from more than 200 investors. In written materials and telephone conference calls with investors between 2007 and 2012, Webb falsely portrayed InfrAegis as a successful company with growing stakes in the science and technology field. Among other things, Webb told investors that the company had signed or was on the verge of signing billion-dollar contracts with government agencies and municipalities across the world, including Chicago. The company’s products purportedly could protect the public from terrorist attacks by recognizing individuals on the terrorist watch list and instantaneously detecting biological, chemical and radiological threats on city streets, as well as by identifying harmful bacteria and other threats to the world’s food and water supply.

In reality, InfrAegis was not in a position to deploy any of its products because they had never been fully developed or tested, and the company had never signed contracts or even came close to signing contracts for the deployment of its products. The investors, some of whom included Chicago firefighters and other first responders, never received any return on their investment in the company.

U.S. District Judge Virginia M. Kendall imposed the 108-month sentence Wednesday in federal court in Chicago. In imposing the sentence, Judge Kendall described the offense as “egregious,” and noted it was “heartbreaking” to read letters that victims had submitted to the Court.

The sentence 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 U.S. Securities and Exchange Commission, which filed a civil enforcement action against Webb and InfrAegis, provided valuable assistance.

“Defendant engaged in a multi-year, multi-million-dollar fraud scheme designed to extract as much money as he could from trusting investors by lying to them,” Assistant U.S. Attorneys Kruti Trivedi and Rick D. Young argued in the government’s sentencing memorandum. “Defendant’s actions have had and will continue to have long-term consequences for many of these victims.”

Evidence at Webb’s trial revealed that more than $500,000 was paid to Webb and his spouse between 2007 and 2012. The company also spent more than $800,000 to pay corporate credit cards that were used to charge Webb’s daily living expenses, including charges at restaurants, grocery stores, gas stations, tobacco stores, a movie theatre, a sporting goods store, and an Apple iTunes account.

Webb, of Dallas, Tex., formerly resided in Arlington Heights. InfrAegis is now defunct.

ROCKFORD — A Rockford man pleaded guilty today in federal court before U.S. District Judge Frederick J. Kapala to bank robbery, robbery affecting interstate commerce and a related firearm charge.

 

DAVID J. SANDERS, 33, pleaded guilty to the robbery of BMO Harris Bank, 1480 S. Alpine Rd., Rockford, on May 31, 2016, and the robbery of Rockford Coin and Stamps, 4402 Center Terr., Rockford, on June 11, 2016, and to using and carrying a Remington pistol-grip shotgun in furtherance of the coin store robbery.

 

Sanders, who has been in custody since his arrest on June 14, 2016, is scheduled to be sentenced on June 27, 2017, at 2:30 p.m., before Judge Kapala.

 

The guilty plea was announced by Zachary T. Fardon, 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 Dan O’Shea, Chief of the Rockford Police Department. The investigation was conducted under the auspices of the FBI Safe Streets Task Force, which includes representatives from the FBI; U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives; Loves Park Police Department; Winnebago County Sheriff’s Department; and Rockford Police Department.

 

According to a written plea agreement, on May 31, 2016, Sanders attempted to rob a different BMO Harris Bank branch, located at 2510 South Alpine Rd. in Rockford. Sanders approached the branch manager and pulled a note out of his pocket that stated he had a gun and demanded money. However, when a bank employee came out of an employee door into the lobby, Sanders took the note and walked out of the bank. A short time later, Sanders entered the BMO Harris Bank at 1480 S. Alpine, approached the teller counter and was greeted by the bank manager. Sanders handed the bank manager a note that stated, “I have a gun give me 1000.” The bank manager said she could not give Sanders money, and when she attempted to keep the note, Sanders took it away from the manager and said, “I want $1,000.” The manager opened the teller drawer and gave Sanders $2,260. Sanders then left the bank.

 

Sanders further admitted in the plea agreement that on June 11, 2016, he entered the coin store, walked behind the display counter and obtained a Remington pistol-grip shotgun - with five live shells attached to the side of it - that belonged to the store. Sanders admitted that while holding the shotgun he demanded money from an employee. An employee gave Sanders approximately $500. Sanders then fled with the money and the shotgun.

 

Each count of bank robbery and robbery affecting interstate commerce carries a maximum sentence of up to 20 years in prison and a fine of up to $250,000 or twice the gross gain or gross loss resulting from that offense, whichever is greater, plus full restitution.

 

The charge of using and carrying a firearm in furtherance of a crime of violence carries a mandatory minimum sentence of five years, a maximum sentence of up to life imprisonment, and a fine of up to $250,000. The sentence imposed for this charge must be consecutive to any other sentence imposed.

 

The Court must impose a reasonable sentence under federal sentencing statutes and the advisory United States Sentencing Guidelines.

 

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

ROCKFORD — A Rockford woman was sentenced in federal court today by U.S. District Judge Frederick J. Kapala for making false claims for federal income tax refunds and using other persons’ identification in connection with the fraudulent claims.

 

CRYSTAL S. JACKSON, 29, who pleaded guilty to the charges on Nov. 28, 2016, was sentenced to 51 months in federal prison, to be followed by three years of supervised release. She was ordered to pay $200 in special assessment, and to pay the United States Treasury $99,479 in restitution.

 

According to the written plea agreement, Jackson admitted that between 2011 and 2013, she prepared and filed, both electronically and by mail, 45 false federal individual income tax returns in the names of other individuals without their permission, causing fraudulent claims for refunds to be made against the United States Treasury. The 45 false returns were filed with the IRS for tax years 2010, 2011, and 2012, and requested refunds totaling $189,237. Jackson admitted that as a result of her fraud, the IRS issued refunds in the total amount of $99,479. According to the plea agreement, the refunds were issued in the form of U.S. Treasury checks or credited to debit cards in the names of the individuals in whose names Jackson fraudulently filed the federal income tax returns. Jackson further admitted that she used ATM machines to withdraw the funds placed on the debit cards.

 

The sentencing was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; and James D. Robnett, Special Agent-in-Charge of the Chicago Field Office of the Internal Revenue Service - Criminal Investigation Division.

 

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

ROCKFORD — A Rockford man was indicted today by a federal grand jury on fraud charges.

 

TODD J. FENDLER, 41, was charged with one count of wire fraud and one count of mail fraud in connection with a scheme to defraud former insurance clients of Fendler’s businesses.

 

According to the indictment, Fendler controlled and operated several insurance-related businesses in Rockford, including Surplus Market Solutions LLC, Northern Underwriting Managers Inc., and Northern Illinois Insurance Agency Inc. The indictment alleges that Fendler obtained bank account information from businesses and individuals who had applied for insurance policies through Fendler’s companies, and that Fendler used that information to create fictitious checks purportedly issued by the applicants. Fendler deposited those fictitious checks, the indictment charges, into bank accounts of Surplus Market Solutions. The indictment identified two such checks: a check for $1,447 purportedly drawn upon a bank account of the Hollywood Wax Museum Myrtle Beach LLC, and a check for $5,205.79 purportedly drawn upon a bank account of the Beer Haus LLC.

 

Arraignment has been set for March 8, 2017, at 10:00 a.m., before U.S. Magistrate Judge Iain D. Johnston in Rockford.

 

The indictment was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; and E. C. Woodson, Postal Inspector-in-Charge of the U.S. Postal Inspection Service in Chicago.

 

Each count in the indictment carries a maximum penalty of 20 years in prison, and a maximum fine of $250,000. If convicted, the Court must impose a reasonable sentence under the advisory United States Sentencing Guidelines, as well as restitution. The public is reminded that an indictment is only a charge 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 the defendant’s guilt beyond a reasonable doubt.

 

The government is being represented by Assistant U.S. Attorney John G. McKenzie.

CHICAGO — A Chicago hotel developer was sentenced today to three years in prison for exploiting a federal visa program to fraudulently raise capital from Chinese nationals who were seeking residency in the United States.

ANSHOO SETHI, the founder of A Chicago Convention Center LLC, purported in 2011 to build a hotel and convention center near O’Hare International Airport in Chicago. Sethi solicited Chinese nationals to invest $500,000 apiece in the project, plus $41,500 in administrative fees to Sethi’s company. Each Chinese national who participated in the project also applied for an EB-5 visa, which allows foreign investors to obtain a temporary two-year visa that could later be converted to a permanent visa upon success of an employment-generating investment. While soliciting investors Sethi made several false statements, including lies about funding and tax credits from the State of Illinois and the City of Chicago, none of which materialized.

The $900 million project never got off the ground, and no EB-5 visas were ever granted to investors.

Sethi, 32, of Chicago, pleaded guilty last year to one count of wire fraud. In addition to the 36-month prison term, U.S. District Judge John Z. Lee also ordered Sethi to pay $8.85 million in restitution to the victim investors.

The prosecution represents the largest EB-5 criminal fraud case in the United States to date.

The sentencing 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.

“Defendant Anshoo Sethi abused the EB-5 visa program and blatantly lied to investors and the United States government on a massive scale,” Assistant U.S. Attorney Sunil Harjani argued in the government’s sentencing memorandum. “Overseas investors spent much time and energy making the difficult decision to invest in the Sethi project, and processing their visa applications – not knowing that the project was built on a bed of lies and forged documents.”

According to his plea agreement, Sethi’s fraud scheme began in the summer of 2011 and continued until February 2013. Sethi told investors that he planned to build the hotel and convention center on a three-acre parcel of land in the 8200 block of West Higgins Road in Chicago, just east of O’Hare. Sethi falsely told investors that his company maintained relationships with large hotel chains that purportedly were interested in the project, including Hyatt, Starwood and Intercontinental Hotel Group. To bolster an additional false statement regarding City of Chicago funding, Sethi signed a “Redevelopment Agreement TIF” document that purported to convey a relationship between the city and Sethi’s company. The document, which contained a bogus city ordinance implying that the project had been approved for TIF funding, was provided to third party brokers who used it to solicit investors.

In all, Sethi raised approximately $158 million from more than 290 investors. The U.S. Securities and Exchange Commission brought a civil lawsuit against Sethi and was able to restore approximately $147 million to Chinese investors.

The government is represented in the criminal prosecution by Mr. Harjani.

CHICAGO — Four Chicago men have been arrested on federal drug charges for allegedly operating a busy heroin trade in the Douglas neighborhood on the city’s South Side.

A joint federal and state investigation, led by the U.S. Drug Enforcement Administration and the Chicago Police Department, revealed that the defendants were selling heroin via a shared cellular phone number known as the “Vanna White Line.” Individuals wishing to purchase heroin would call the Vanna White Line to place an order, and the defendants would arrange to meet the customer to conduct the transaction, according to a criminal complaint filed in U.S. District Court in Chicago. The drug deals would often take place in the 3500 block of South Calumet Avenue and other parts of the Douglas neighborhood, the complaint states. Over a six-month period in 2016, there were approximately 193,720 calls to the Vanna White Line, according to the complaint.

The investigation, dubbed “Operation Wheel of Fortune,” used wiretaps, controlled drug purchases and extensive surveillance to uncover the heroin operation. The probe was conducted under the umbrella of the High Intensity Drug Trafficking Area Task Force (HIDTA). The investigation also led to narcotics charges in state court against several other defendants.

The federal complaint was announced by Zachary T. Fardon, 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 Eddie Johnson, Superintendent of the Chicago Police Superintendent. The U.S. Marshals Service and the Hickory Hills Police Department provided valuable assistance.

The federal defendants, JOSEPH THOMPSON, 33, MARIO COOPER, 28, DEWAYNE BOLDEN, 26, and DEVANTE REED, 23, were arrested Thursday. They are each charged with conspiracy to possess a controlled substance with the intent to distribute. They appeared Thursday before U.S. Magistrate Judge Michael T. Mason and were ordered to remain in federal custody pending detention hearings next week.

According to the complaint, the Vanna White Line was selling approximately 130 grams of heroin every two days. The heroin was allegedly stored in an apartment in the 4700 block of South Martin Luther King Drive in Chicago.

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 federal drug conspiracy charge carries a minimum sentence of five years in prison and a maximum of 40 years. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.

The government is represented in federal court by Assistant U.S. Attorneys Scott Edenfield and Cornelius Vandenberg.

Roxann Gist and Dominique King, both of Chicago, Illinois, pleaded guilty to conspiracy and other charges related to a scheme to obtain fraudulent tax refunds using stolen ID information, announced Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and U.S. Attorney Zachary T. Fardon of the Northern District of Illinois.

 

According to documents filed with the court, from 2012 to 2015, Gist, 45, and King, 26, along with another co-conspirator filed at least 858 fraudulent income tax returns, using stolen names and social security numbers. Those returns sought approximately $2,780,724 in refunds. As part of the scheme, Gist and King acquired the personal identification information of thousands of unsuspecting individuals, and directed others to receive and collect fraudulent income tax refund checks, and to open up bank accounts to receive direct deposits of such refunds. They also recruited others to provide addresses where refund checks could be delivered.

 

Gist and King are scheduled to be sentenced on June 6 and June 14, respectively. Gist faces a statutory maximum sentence of five years in prison for conspiracy to steal public funds, 10 years in prison for theft of public money and a two-year mandatory minimum sentence for aggravated identity theft, which will run consecutive to any other sentence imposed by the court. King faces a statutory maximum sentence of five years in prison for conspiracy to steal public funds and a two-year mandatory minimum sentence for aggravated identity theft, which will run consecutive to any other sentence imposed by the court. Gist and King also face a period of supervised release, restitution and monetary penalties.

 

Acting Deputy Assistant Attorney General Goldberg commended special agents of IRS-Criminal Investigation, who conducted the investigation, and Trial Attorney Timothy M. Russo of the Tax Division, who prosecuted this case. Acting Deputy Assistant Attorney General Goldberg also thanked the U.S. Attorney’s Office for the Northern District of Illinois for their substantial assistance in the case.

 

Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.

CHICAGO — A Chicago man was arrested today on federal sex trafficking charges for allegedly using Facebook to recruit minors to participate in sex acts with him and others.

BRYAN OSBORNE, 27, posed as a woman named “Lonyae Johnson” to communicate via Facebook with more than 2,000 individuals, many of them minors, according to a criminal complaint and affidavit filed in federal court in Chicago. Osborne, as Johnson, enticed several children to agree to appear in films depicting child pornography, on the promise that they would be paid thousands of dollars, the complaint states. Osborne, however, told the minors that they would first need to have sex with a producer named “Trey,” purportedly so that Trey could make sure the minors were suitable for filming, according to the charges.

Several of the minors agreed to the arrangement and met with Trey, who turned out to be Osborne, the complaint states. Osborne, posing as Trey, engaged in sex acts with the minors inside and outside of a building in the Austin neighborhood on Chicago’s West Side, according to the complaint. He later fabricated various reasons for why the minors would not be paid, the complaint states.

The complaint charges Osborne with one count of sex trafficking and one count of enticing a minor to engage in a sex act. He appeared this afternoon before U.S. Magistrate Judge Michael T. Mason and was ordered to remain in federal custody. A detention hearing was scheduled for Feb. 16, 2017, at 9:00 a.m.

The complaint was announced by Zachary T. Fardon, 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; Eddie Johnson, Superintendent of the Chicago Police Superintendent; James D. Robnett, Special Agent-in-Charge of the Chicago Office of the Internal Revenue Service Criminal Investigation Division; and Cook County Sheriff Thomas J. Dart. The Cook County State’s Attorney’s Office Investigations Bureau provided valuable assistance.

The government is represented by Assistant U.S. Attorneys Bethany Biesenthal, Michelle Petersen and Rebekah Holman.

According to the charges, Osborne used the Facebook handle “lonyae.gotafattie” to pose as Johnson. Osborne told some of the minors that they could be paid larger sums if they referred even younger children to Osborne for participation in child pornography, the complaint states. Osborne also enticed some minors on Facebook to engage in prostitution with other individuals he had recruited, according to the complaint.

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 is punishable by a statutory minimum sentence of ten years in prison, and a maximum of life. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory U.S. Sentencing Guidelines.

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 — An Indiana man was sentenced today to more than 13 years in federal prison for holding himself out as a psychiatrist and prescribing medications to a nine-year-old child and dozens of others.

SCOTT C. REDMAN, 37, of Hammond, Ind., used the identity of an Illinois physician to see patients and prescribe medications at a clinic on Chicago’s Near North Side. The real physician is employed by a different Illinois medical facility. Redman assumed the physician’s name to prescribe medications to more than 50 individuals from September 2015 to February 2016. The purported patients included a nine-year-old child, for whom Redman prescribed a 30-day supply of Vyvanse, a medication that treats attention deficit hyperactivity disorder.

A jury in November convicted Redman on three counts of wire fraud, one count of aggravated identity theft, one count of furnishing false information to the Drug Enforcement Administration, and five counts of distributing a controlled substance. U.S. District Judge Samuel Der-Yeghiayan imposed the 157-month sentence in federal court in Chicago.

The sentence was announced by Zachary T. Fardon, 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 defendant’s conduct was shameless,” Assistant U.S. Attorney Katie M. Durick argued in the government’s sentencing memorandum. “He preyed upon an already vulnerable population of patients, including a nine-year old little boy, who were seeking mental health treatment for a variety of psychiatric conditions.”

Evidence presented at trial revealed that Redman maintained office hours at the clinic to treat his supposed patients. A purported profile of Redman on the clinic’s website contained the name of the real physician, alongside a photograph of Redman and fraudulent biographical and educational information. In addition to the Vyvanse, Redman prescribed other controlled substances to his supposed patients, including Adderall, Clonazepam and Xanax.

The government is represented by Ms. Durick and Assistant U.S. Attorney Matthew F. Madden.

A Harvey, Illinois man pleaded guilty today to wire fraud and aggravated identity theft charges related to a scheme to obtain fraudulent tax refunds using stolen ID information, announced Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and U.S. Attorney Zachary T. Fardon of the Northern District of Illinois.

 

According to the plea agreement, from November 2014 through March 2015, Jonathan Herring, 34, working with at least two others, prepared and filed income tax returns using stolen names and social security numbers, and deposited the fraudulently obtained tax refunds into bank accounts that he controlled. In total, Herring filed approximately 225 fraudulent returns claiming approximately $845,979 in tax refunds.

 

Herring was charged in February 2016 with wire fraud, aggravated identity theft and access device fraud. According to the indictment, some of the victims of his scheme were members of the U.S. Air Force.

 

Sentencing is scheduled for July 25. Herring faces a statutory maximum sentence of 20 years in prison for the wire fraud count and a mandatory sentence of two years in prison for the aggravated identity theft count, which will run consecutive to any other prison term he receives. Herring also faces a period of supervised release, restitution and monetary penalties.

 

Acting Deputy Assistant Attorney General Goldberg thanked agents of the Internal Revenue Service Criminal Investigation, who conducted the investigation, and Tax Division Trial Attorneys Michael C. Boteler and Timothy M. Russo, who are prosecuting the case. Acting Deputy Assistant Attorney General Goldberg also thanked the U.S. Attorney’s Office for the Northern District of Illinois for their substantial assistance in the case.

 

Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.

 

CHICAGO — An alleged cyber spammer has been indicted on federal fraud charges for sending well over a million spam emails and damaging several computer networks.

MICHAEL PERSAUD, 36, of Scottsdale, Ariz., used multiple Internet Protocol addresses and domains – a technique known as “snowshoe spamming” – to transmit spam emails over at least nine networks, according to an indictment returned in federal court in Chicago. Persaud sent well over a million spam emails to recipients in the United States and abroad, the indictment states. He often used false names to register the domains, and he created fraudulent “From Address” fields to conceal that he was the true sender of the emails, according to the indictment. The charges also accuse Persaud of illegally transferring and selling millions of email addresses for the purpose of transmitting spam.

The indictment charges Persaud with ten counts of wire fraud and seeks the forfeiture of four computers.

The indictment was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Gregory J. Haanstad, United States Attorney for the Eastern District of Wisconsin; Michael J. Anderson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation; and R. Justin Tolomeo, Special Agent-in-Charge of the Milwaukee Office of the FBI.

According to the indictment, Persaud gained access and use of the victim networks by falsely representing that he would not use their systems to send spam, and that he would comply with their policies prohibiting spamming, the indictment states. In reality, Persaud used a California company called Impact Media LLC and other aliases to send spam on behalf of sellers of various goods and services, the indictment states. Persaud earned commissions for each sale generated by the spam, the indictment states.

When some of the networks terminated his lease and denied him access to their networks, Persaud used aliases to contract with other networks, according to the indictment. In some instances, Persaud provided false forms of identification and payment, including a driver’s license and debit card, to support the alias, the indictment states. Persaud’s alleged aliases included the names “Michael Prescott,” “Michael Pearson,” and “Jeff Martinez.”

The indictment was returned Dec. 9, 2016, and ordered unsealed after Persaud’s arrest last month in Arizona. His arraignment earlier today before U.S. Magistrate Judge Susan E. Cox marked his first Chicago court appearance. Persaud pleaded not guilty and was ordered released on his own recognizance. While on bond, Persaud is restricted from traveling outside the District of Arizona, with the exception of making court appearances in Chicago.

A status hearing was scheduled for Feb. 21, 2017, at 10:15 a.m., before U.S. District Judge Andrea R. Wood.

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.

Each count of wire fraud is punishable by up to 20 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 Jessica Romero of the Northern District of Illinois, and Assistant U.S. Attorney Michael Chmelar of the Eastern District of Wisconsin.

WASHINGTON – A major U.S. hospital service provider, TeamHealth Holdings, as successor in interest to IPC Healthcare Inc., f/k/a IPC The Hospitalists Inc. (IPC), has agreed to resolve allegations that IPC violated the False Claims Act by billing Medicare, Medicaid, the Defense Health Agency and the Federal Employees Health Benefits Program for higher and more expensive levels of medical service than were actually performed (a practice known as “up-coding”), the Department of Justice announced today. Under the settlement agreement, TeamHealth has agreed to pay $60 million, plus interest.

 

“This settlement reflects our ongoing commitment to ensure that health care providers appropriately bill government programs vital to patient health care,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division.

 

The government contended that IPC knowingly and systematically encouraged false billings by its hospitalists, who are medical professionals whose primary focus is the medical care of hospitalized patients. Specifically, the government alleged that IPC encouraged its hospitalists to bill for a higher level of service than actually provided. IPC’s scheme to improperly maximize billings allegedly included corporate pressure on hospitalists with lower billing levels to “catch up” to their peers.

 

“Medical providers who fraudulently seek payments to which they are not entitled will be held accountable,” said U.S. Attorney Zachary T. Fardon for the Northern District of Illinois. “False documentation of treatment is not just flawed patient care; it is illegal.”

 

As part of the settlement, TeamHealth entered into a five-year Corporate Integrity Agreement (CIA) with the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) covering the company’s hospital medicine division. This CIA is designed to increase TeamHealth’s accountability and transparency so that the company will avoid or promptly detect future fraud and abuse.

 

“When health care companies boost their profits by misrepresenting the services they bill to taxpayer-funded health care programs, our office will make sure they are held accountable for their deceptive schemes and that they make changes to bill these programs appropriately,” said Special Agent in Charge Lamont Pugh of HHS-OIG.

 

The settlement resolves allegations filed in a lawsuit by Dr. Bijan Oughatiyan, a physician formerly employed by IPC as a hospitalist. The lawsuit was filed in a federal court in Chicago, Illinois, under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private individuals to sue on behalf of the government for false claims and to share in any recovery. The Act also allows the government to intervene and take over the action, as it did in this case. Mr. Oughatiyan will receive approximately $11.4 million.

 

The government’s intervention in this matter illustrates the government’s emphasis on combating health care fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement, can be reported to the Department of Health and Human Services, at 800-HHS-TIPS (800-447-8477).

 

The settlement was the result of a coordinated effort by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the Northern District of Illinois, and HHS-OIG.

 

The case is captioned United States ex rel. Oughatiyan v. IPC The Hospitalist, Inc., et al., Case No. 09-C-5418 (N.D. Ill.). The claims resolved by the settlements are allegations only and there has been no determination of liability.

A major U.S. hospital service provider, TeamHealth Holdings, as successor in interest to IPC Healthcare Inc., f/k/a IPC The Hospitalists Inc. (IPC), has agreed to resolve allegations that IPC violated the False Claims Act by billing Medicare, Medicaid, the Defense Health Agency and the Federal Employees Health Benefits Program for higher and more expensive levels of medical service than were actually performed (a practice known as “up-coding”), the Department of Justice announced today. Under the settlement agreement, TeamHealth has agreed to pay $60 million, plus interest.

 

“This settlement reflects our ongoing commitment to ensure that health care providers appropriately bill government programs vital to patient health care,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division.

 

The government contended that IPC knowingly and systematically encouraged false billings by its hospitalists, who are medical professionals whose primary focus is the medical care of hospitalized patients. Specifically, the government alleged that IPC encouraged its hospitalists to bill for a higher level of service than actually provided. IPC’s scheme to improperly maximize billings allegedly included corporate pressure on hospitalists with lower billing levels to “catch up” to their peers.

 

“Medical providers who fraudulently seek payments to which they are not entitled will be held accountable,” said U.S. Attorney Zachary T. Fardon for the Northern District of Illinois. “False documentation of treatment is not just flawed patient care; it is illegal.”

 

As part of the settlement, TeamHealth entered into a five-year Corporate Integrity Agreement (CIA) with the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) covering the company’s hospital medicine division. This CIA is designed to increase TeamHealth’s accountability and transparency so that the company will avoid or promptly detect future fraud and abuse.

 

“When health care companies boost their profits by misrepresenting the services they bill to taxpayer-funded health care programs, our office will make sure they are held accountable for their deceptive schemes and that they make changes to bill these programs appropriately,” said Special Agent in Charge Lamont Pugh of HHS-OIG.

 

The settlement resolves allegations filed in a lawsuit by Dr. Bijan Oughatiyan, a physician formerly employed by IPC as a hospitalist. The lawsuit was filed in a federal court in Chicago, Illinois, under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private individuals to sue on behalf of the government for false claims and to share in any recovery. The Act also allows the government to intervene and take over the action, as it did in this case. Mr. Oughatiyan will receive approximately $11.4 million.

 

The government’s intervention in this matter illustrates the government’s emphasis on combating health care fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement, can be reported to the Department of Health and Human Services, at 800-HHS-TIPS (800-447-8477).

 

The settlement was the result of a coordinated effort by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the Northern District of Illinois, and HHS-OIG.

 

The case is captioned United States ex rel. Oughatiyan v. IPC The Hospitalist, Inc., et al., Case No. 09-C-5418 (N.D. Ill.). The claims resolved by the settlements are allegations only and there has been no determination of liability.

 

CHICAGO — A Chicago man was ordered detained in federal custody today for allegedly possessing thousands of photographs and videos of child pornography.

SCOTT RESKEY, 61, is charged with one count of possessing an image of child pornography involving a minor under the age of 12. A search of Reskey’s laptop computer revealed more than 45,000 images and more than 200 videos of apparent child pornography, according to a criminal complaint filed in U.S. District Court in Chicago.

Reskey was arrested last week at his home on the Northwest Side of Chicago. He appeared in federal court this morning before U.S. Magistrate Judge Young B. Kim and was ordered detained in federal custody.

The charge against Reskey arose from a federal investigation of an online community that sent and received child pornography via an anonymous website, according to the complaint. The investigation remains ongoing.

The complaint 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 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 charge in the complaint is punishable by a maximum sentence of 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. Attorney Grayson Walker.

ROCKFORD — A Suburban Chicago physician pleaded guilty today before U.S. District Judge Frederick J. Kapala to bribery concerning health care programs receiving federal funds.

NEIL SHARMA, 36, of Lemont, has been a licensed Illinois physician since March 2011. Between September 2013 and March 2015, he was the Medical Director of a managed care services company that contracted with both Medicare and Medicaid to provide health care benefits.

As stated in a plea agreement, the State of Illinois contracted with the company to provide skilled nursing services to patients who were covered by Medicare, Medicaid, or both. In early 2015, the company contracted with three other firms to provide skilled nursing services. Sharma admitted that from Feb. 13, 2015, to March 13, 2015, as Medical Director and an agent of the company, he corruptly solicited and accepted cash payments of $2,500 and $7,500 from an individual in exchange for Sharma sending more patients to the individual’s company, and for providing that company with additional Medicaid and Medicare beneficiaries through Sharma’s company’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 bribe would bring in millions of dollars.

Sharma faces a maximum sentence of ten years’ imprisonment, a term of supervised release of up to three years following imprisonment, and a fine of up to $250,000. Sentencing is set for May 11, 2017, at 9:30 a.m., before Judge Kapala in Rockford.

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 government is represented by Assistant U.S. Attorneys Scott R. Paccagnini and Joseph C. Pedersen.

A former Poplar Grove, Illinois woman pleaded guilty in federal court in Rockford, Illinois today to mail fraud and aggravated identity theft, announced Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and U.S. Attorney Zachary T. Fardon for the Northern District of Illinois.

According to documents filed with the court, from 2012 through 2014, Shameka Carr, 30, used individuals’ names, social security numbers and dates of birth without their knowledge or consent to file fraudulent income tax returns.  Carr directed the fraudulently claimed refunds to prepaid debit cards and refund checks which she had mailed to addresses in Rockford and its surrounding areas.  Carr admitted to an intended tax loss of $1,026,284.  

Sentencing is scheduled for May 2.  Carr faces a statutory maximum sentence of 20 years in prison on the mail fraud count and a two-year mandatory minimum sentence on the aggravated identity theft count.  Carr also faces a period of supervised release, restitution and monetary penalties.    

Acting Deputy Assistant Attorney General Goldberg and U.S. Attorney Fardon commended special agents of the U.S. Postal Inspection Service and IRS-Criminal Investigation and the Boone County Sheriff’s Department, who conducted the investigation, and Trial Attorneys Michael C. Boteler and John T. Mulcahy of the Tax Division, who are prosecuting the case.

Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.  

CHICAGO — A convicted felon who was a leader of the violent Gangster 2-6 Nation street gang has been sentenced to 22 years in prison on federal gun and drug charges.

A federal jury in 2015 convicted FRANCISCO MASIAS of selling cocaine and illegally possessing 16 handguns. Masias, who had previously been convicted of a felony, illegally acquired the guns from an associate. Masias then gave the guns to JOSE MALDONADO, a fellow gang member who in turn provided them to another gang member. Law enforcement seized the firearms before they could be further distributed.

Masias, Maldonado and more than 15 other defendants have been convicted as part of a joint federal, state and local investigation dubbed “Operation Shady Business.” The gang’s drug and gun activities were uncovered through the use of wiretaps, cooperating witnesses and surveillance. The probe was initiated by the Chicago Police Department and conducted under the umbrella of the U.S. Organized Crime Drug Enforcement Task Force (OCDETF), with assistance from the High Intensity Drug Trafficking Area Task Force (HIDTA).

U.S. District Judge Rebecca R. Pallmeyer imposed the 264-month sentence for Masias on Friday in federal court in Chicago.

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

Masias, 38, of Berwyn, was a longtime leader of the Gangster 2-6 Nation, which operated a violent drug-trafficking organization on the West Side of Chicago, predominantly in the Little Village area. Evidence at trial revealed that the gang violently protected its distribution of cocaine. During the investigation officers searched a Nottingham Park residence that had been converted into a marijuana grow house and seized more than 100 marijuana plants, which had an estimated street value of $1 million. JASON HERRERA, who resided at the grow house and served as security, pleaded guilty to a drug charge and was sentenced to five years in prison.

A jury convicted Maldonado, of Chicago, on gun and drug charges, and he was sentenced to 22 years in prison.

The government is represented by Assistant U.S. Attorneys Matthew F. Madden and Ankur Srivastava.

CHICAGO — A Connecticut investment manager has been arrested for allegedly operating a multi-million dollar fraud scheme that swindled approximately 30 individuals, including victims who reside in the Chicago area.

ALVIN WILKINSON, the founder of Chicago Index Partners LP and Wilkinson Financial Opportunity Fund LP, both based in Sharon, Conn., persuaded approximately 30 individuals to invest approximately $13 million in his funds, according to an indictment returned in federal court in Chicago. Wilkinson’s marketing materials to potential investors noted his prior affiliation with the Chicago Board Options Exchange, where he previously served as a Director. Instead of investing the funds as promised to clients, Wilkinson used the victims’ money to cover personal expenses and to pay earlier investors through Ponzi-type payments, the indictment states.

The indictment was returned Tuesday and ordered unsealed after Wilkinson’s arrest Wednesday morning in Connecticut. The indictment charges Wilkinson, 58, of Sharon, Conn., with three counts of mail fraud and one count of wire fraud. A court date in Chicago has not yet been scheduled.

The indictment seeks forfeiture of $13 million in cash, as well as a property in Sharon, Conn.

The charges were 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 Commodity Futures Trading Commission, which previously filed a civil enforcement lawsuit against Wilkinson, provided valuable assistance.

According to the indictment, Wilkinson was the sole officer of his funds and had exclusive authority to manage their operations. Investors in the funds included Wilkinson’s friends, acquaintances and former colleagues. Wilkinson claimed he would trade a portfolio of financial instruments on their behalf, including options and futures, and that his trading strategy made money regardless of market conditions. In reality, Wilkinson did not maintain any trading accounts for the funds, and he did not use investor funds to trade in options and futures, according to the indictment.

The fraud scheme alleged in the indictment began no later than 1999 and continued until at least May 2016.

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.

Each count of the indictment 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. Attorney Nicholas Eichenseer.

Wilkinson Indictment

 

CHICAGO — A former dispatch supervisor for the Chicago Police Department admitted in federal court today that she provided private 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, according to a written plea agreement. Lewis provided the information to her boyfriend, an inmate in the jail who had schemed with the officer and others to smuggle in the contraband to sell to other inmates. Lewis admitted in the 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, 42, of Chicago, pleaded guilty to one count of conspiracy to commit extortion. The conviction carries a maximum sentence of 20 years in prison. U.S. District Judge Charles R. Norgle set sentencing for April 26, 2017, at 11:30 a.m.

The guilty plea was announced by Zachary T. Fardon, 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’ guilty plea brings to five the number of 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 2013.

Lewis’ boyfriend, PRINCE JOHNSON, of Chicago, has pleaded not guilty to conspiracy charges and is awaiting trial.

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

CHICAGO — A Lockport woman was convicted on federal fraud charges today for scheming to swindle money from a not-for-profit network that coordinated organ and tissue donations in Illinois and northwest Indiana.

DEBRA A. SCHULTZ received the proceeds of false invoices which had been submitted to the organization by purported physicians for alleged organ and tissue procurement. The procurement work was not actually performed, and the invoices were fraudulent. A co-defendant, SHARI L. HANSEN, who worked as an auditing coordinator for the organization, approved the payments for the bogus invoices, causing the organization to issue checks to Schultz and another co-defendant, ERIC V. MURFF.

The scheme netted the defendants $ 652,298 in illegal profits. Schultz retained thousands of dollars of the stolen funds for her own benefit.

The jury convicted Schultz, 46, on all three counts of wire fraud. The convictions carry a maximum sentence of 60 years in prison. U.S. District Judge Robert M. Dow Jr. scheduled a sentencing hearing for May 19, 2017.

The verdict was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; and E.C. Woodson, Postal Inspector-in-Charge of the U.S. Postal Inspection Service in Chicago. Evidence at trial revealed that the scheme began no later than March 2008 and continued until at least April 2010. Hansen created or caused to be created fraudulent invoices that she submitted to the not-for-profit organization. The invoices requested payment to Schultz and Murff for organ and tissue procurement work that the defendants knew was not actually performed. Many of the false invoices specified that Murff as well as Schultz’s son, identified as Individual A, were doctors who performed organ and tissue procurement, when in reality neither Murff nor Individual A did any such work and was not a physician. Indeed, when the fraud began, Individual A was 17 years old and attending high school.

Hansen, in her role as auditing coordinator, approved the fake invoices, thereby authorizing and directing the organization to issue checks to Murff and Schultz’ son. Murff and Schultz pocketed some of the money and transferred other portions of the funds to one or more bank accounts held in Hansen’s name.

 

A Northern District of Illinois resident was sentenced to 60 months in prison today announced Principal Deputy Assistant Attorney General Caroline D. Ciraolo, head of the Justice Department’s Tax Division, and U.S. Attorney Zachary T. Fardon for the Northern District of Illinois.

 

From approximately January 2011 through April 2015, Carlos Smith stole personal identifying information obtained from individuals who sought credit repair or credit card processing services through CLS Financial Services Inc. (CLS), a business Smith operated, and used the information to file false individual income tax returns. Smith also stole identities of individuals who worked for Chicago’s Board of Education and used this information to file false individual income tax returns. Smith filed approximately 92 fraudulent income tax returns, claiming more than $1 million in refunds. Smith directed the fraudulently obtained tax refunds to prepaid debit cards, addresses, and bank accounts he controlled, including accounts opened in the names of individuals whose identities he had stolen. Smith also filed his own false individual income tax returns for 2012 through 2014.

 

On Oct. 19, 2016, Smith pleaded guilty to aggravated identity theft and theft of government funds. In addition to the term of prison imposed, Smith was ordered to serve two years of supervised release and to pay $ 633,884 in restitution to the IRS.

 

Principal Deputy Assistant Attorney General Ciraolo and U.S. Attorney Fardon commended special agents of IRS-Criminal Investigation, who conducted the investigation, and Tax Division Trial Attorneys John T. Mulcahy and Sonia M. Owens, and former Tax Division Trial Attorney Assistant U.S. Attorney Ryan R. Raybould, who prosecuted the case.

 

Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.

CHICAGO — A convicted bank robber has been sentenced to 29 years in federal prison for firing a gun at a teller and customer during a robbery in Orland Park.

CARL P. WILSON pocketed $20,000 from the Oct. 13, 2014, robbery of First Midwest Bank, 11200 W. 143rd St., in Orland Park. During the robbery, Wilson fired a black semi-automatic handgun at a teller and customer, narrowly missing both of them. Wilson, who had an account at the bank, was arrested nine days later after a traffic stop in Joliet.

Wilson, 28, of Joliet, pleaded guilty last year to one count of armed bank robbery, one count of discharging a firearm during the robbery, and one count of being a felon in possession of a firearm. U.S. District Judge Thomas M. Durkin imposed the 29-year sentence Thursday in federal court in Chicago.

The sentencing 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 Joliet Police Department provided valuable assistance.

“While any bank robbery is a serious offense, an armed bank robbery in which the perpetrator discharges a firearm is exceptionally serious,” Assistant U.S. Attorney Ankur Srivastava argued in the government’s sentencing memorandum. “Defendant’s crime was violent, motivated by greed, and put lives in danger.”

According to the charges, Wilson entered the bank wearing a dark hood over his head and a dark cloth draped across his face. Displaying the handgun, Wilson jumped over the teller counter and yelled, “Give me the [expletive] money!” As the teller quickly walked to the cash dispenser, Wilson fired the gun, narrowly missing her. Wilson then shot at a customer who was walking into the bank, barely missing him also. After obtaining the money, Wilson jumped back over the counter, exclaiming, “Have a great [expletive] day!” while waiving his gun in the air.

Wilson also admitted robbing a First Midwest Bank branch in Bolingbrook on Aug. 11, 2014. During the Bolingbrook robbery, Wilson opened fire on a teller within approximately five seconds of entering the bank, striking her in the arm.

At the sentencing hearing in federal court, the victim in the Bolingbrook robbery and several witnesses from the Orland Park robbery testified about their harrowing experiences.

The government was represented by Mr. Srivastava.

Thank you Vanita. I am grateful to you, Attorney General Lynch, and to all of the outstanding women and men from the Civil Rights Division and my Office who have spent the last 13 months working so hard to make today happen.

Today, history is made, and it couldn’t come at a more important time. The past year has been among the most brutal in Chicago memory. Gun violence has overwhelmed us. We have been thunderstruck with grief and heartbreak, fear and confusion, uncertainty and sadness. Today’s findings, coupled with the City and Chicago Police Department’s commitment to work with us toward sustained change, are an historic turning point, a major step forward.

This is hard. I’m in law enforcement and have spent much of my career working with CPD. They are a noble institution with thousands of wonderful and brave public servants. The bad officers are fewer; the good officers are many.

But the institution as a whole has some challenges, and those challenges are getting in the way of being as good as we can be at fighting crime. I have seen that first hand.

The first step is taking an honest look at what’s wrong. And to be clear, that doesn’t mean pointing fingers or casting blame; that’s not what this is about. It’s about what an incredibly challenging job it is to be a police officer, and making sure that our police officers have what they need to do the job right.

As Vanita and the Attorney General both mentioned, the City and CPD have not stood still while we conducted this review. I want to thank and commend the City, Mayor Emanuel, Superintendent Johnson, and the many others at CPD and the City who have worked hard and thoughtfully over this past year or more. They have led, and are leading a number of new reforms and efforts to address some of these deficiencies.

In our report, we address each of those new measures -- in some cases simply with applause, because we agree with them; in other cases, by pointing out how or where we find the measures to be insufficient or inadequate. Those critiques, while important, do not detract from the reality that the City and CPD have leaned forward and are pushing for change. And with the City and CPD’s agreement today, we now have a framework – an anticipated Consent Decree that will include an Independent Monitor – for not only making sure change happens, but making sure it sticks.

Let me emphasize that point. The deficiencies we found are longstanding, some decades old. Prior reform efforts in Chicago’s history -- and there have been many -- have not gotten the job done. And over the years, these festering problems have impacted and to a degree even come to define CPD’s culture.

CPD officers need and deserve what the citizens of Chicago want and deserve: a culture of excellence; a culture of integrity; a culture of altruism; a culture of pride in public service. Today is a big step toward manifesting that culture. And I again thank the Superintendent and the Mayor, as well as their leadership teams, for being part of that.

There has been, over the past couple years, a lot of pain and polarization about policing. There are those who are very skeptical about police and want a complete overhaul. And there are those who think that police, particularly in a violence-ridden city, don’t need any reform and should be unfettered by scrutiny.

Neither. There is so much about CPD that is great and worthy of our deepest respect. And yet no one is above scrutiny, especially our public institutions. This report is balanced, and the truth lies in the balance. Today’s findings are consistent with a police force that is proactive, vigilant and effective. One is a means to the other. I strongly believe implementing these findings is a necessary precursor to our long-term fight against violent crime in Chicago.

Chicago is a world class city that faces a tragic and challenging reality in the form of our gun violence epidemic. Especially last year, but for decades now, we have had too many people die from gun violence; too many kids struck by errant bullets; and entire neighborhoods on the south and west sides unfairly, disproportionately afflicted by gun violence. I spend a large chunk of every day working with CPD and others to stop gun violence in those neighborhoods. For over three years, that is what has kept me up at night. And one thing I have learned is that for us to succeed, we need to fix these systemic issues at CPD.

When officers do bad things and there’s no accountability, that hurts us all. It erodes trust. And when you repeat that pattern year after year, that breaks trust. Broken trust seriously impairs law enforcement. As Superintendent Johnson has said, if folks don’t trust and respect CPD, they won’t work with CPD. If victims, victims’ families, and witnesses across entire communities won’t provide information to help solve crimes and take violent criminals off the street, then crimes don’t get solved, and violence continues.

Today, with the City and CPD, we begin to fix that paradigm. By providing CPD officers first-class training, proper supervision, a promotion system that is fair and is perceived to be fair. By having an accountability system, with consistent rules and results, that holds officers accountable when they violate law or policy. By doing those things we rebuild trust and repair relationships, and make Chicago safer and stronger.

I am a public servant who believes police officers are the noblest of our public servants. They are women and men who’ve taken a job at modest pay where every day they wake up not knowing if they may get hurt or even killed. I’ve been in law enforcement most of my career, and I know that the vast majority of officers do that for this simple reason: they are good people; they care; they want to serve and protect; they want to love and live impactful lives as part of our community.

It’s time to give them what they need to succeed, and in doing so, help all of Chicago shine.

I’d like to turn it over to Mayor Rahm Emanuel, who’ll make some remarks, followed by Superintendent Eddie Johnson.

The Justice Department announced today that it has found reasonable cause to believe that the Chicago Police Department (CPD) engages in a pattern or practice of using force, including deadly force, in violation of the Fourth Amendment of the Constitution.  The department found that CPD officers’ practices unnecessarily endanger themselves and result in unnecessary and avoidable uses of force.  The pattern or practice results from systemic deficiencies in training and accountability, including the failure to train officers in de-escalation and the failure to conduct meaningful investigations of uses of force. 

The city of Chicago and the Justice Department have signed an agreement in principle to work together, with community input, to create a federal court-enforceable consent decree addressing the deficiencies found during the investigation. 

“One of my highest priorities as Attorney General has been to ensure that every American enjoys police protection that is lawful, responsive, and transparent,” said Attorney General Loretta E. Lynch.  “Sadly, our thorough investigation into the Chicago Police Department found that far too many residents of this proud city have not received that kind of policing.  The resulting deficit in trust and accountability is not just bad for residents – it’s also bad for dedicated police officers trying to do their jobs safely and effectively.  With this announcement, we are laying the groundwork for the difficult but necessary work of building a stronger, safer, and more united Chicago for all who call it home.”

“The failures we identified in our findings – that we heard about from residents and officers alike — have deeply eroded community trust,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division.  “But today is a moment of opportunity, where we begin to move from identifying problems to developing solutions.  I know our findings can lead to reform and rebuild community-police trust because we’ve seen it happen in community after community around the country over the past 20 years.”

“The findings in our report, coupled with the City of Chicago and Police Department’s commitment to work together with us, are an historic turning point and a major step toward sustained change,” said U.S. Attorney Zachary T. Fardon of the Northern District of Illinois.  “Implementing these findings is a necessary precursor to our long-term success in fighting violent crime in Chicago.”

On Dec. 7, 2015, Attorney General Lynch announced the investigation into the CPD and the city’s Independent Police Review Authority (IPRA).  The investigation focused on CPD’s use of force, including racial, ethnic and other disparities in use of force, and its systems of accountability.

In the course of its pattern or practice investigation, the department interviewed and met with city leaders, current and former police officials, and numerous officers throughout all ranks of CPD.  The department also accompanied line officers on over 60 ride-alongs in every police district; heard from over 1,000 community members and more than 90 community organizations; reviewed thousands of pages of police documents, including all relevant policies, procedures, training and materials; and analyzed a randomized, representative sample of force reports and the investigative files for incidents that occurred between January 2011 and April 2016, including over 170 officer-involved shooting investigations and documents related to over 400 additional force incidents.

The department found that CPD’s pattern or practice of unconstitutional force is largely attributable to deficiencies in its accountability systems and in how it investigates uses of force, responds to allegations of misconduct, trains and supervises officers, and collects and reports data on officer use of force.  The department also found that the lack of effective community-oriented policing strategies and insufficient support for officer wellness and safety contributed to the pattern or practice of unconstitutional force.

In addition, the department also identified serious concerns about the prevalence of racially discriminatory conduct by some CPD officers and the degree to which that conduct is tolerated and in some respects caused by deficiencies in CPD’s systems of training, supervision and accountability.  The department’s findings further note that the impact of CPD’s pattern or practice of unreasonable force falls heaviest on predominantly black and Latino neighborhoods, such that restoring police-community trust will require remedies addressing both discriminatory conduct and the disproportionality of illegal and unconstitutional patterns of force on minority communities.

In the agreement in principle, the Justice Department and the city of Chicago agreed that compliance with the consent decree will be reviewed by an independent monitor.  The agreement in principle provides a general framework for change, but the department will be doing community outreach to solicit input in developing comprehensive reforms.  In the days ahead, the department will continue speaking to local authorities, officers and ordinary citizens to gather their perspectives about the challenges facing the city – and the changes needed to address them.  Comments from the public may be provided by email to Community.CPD@crt.usdoj.gov.    

Throughout the department’s investigation, CPD leadership remained receptive to preliminary feedback and technical assistance, and started the process of implementing reforms.  Under the leadership of Mayor Rahm Emanuel and Superintendent Eddie Johnson, CPD has taken a number of encouraging steps, including creating the Civilian Office of Police Accountability to replace IPRA; issuing a new transparency policy mandating the release of videos and other materials related to certain officer misconduct investigations; beginning a pilot program for body-worn cameras, to be expanded CPD-wide; and committing to establish an anonymous hotline for employees to report misconduct.  While these and other measures are an important start to cooperative reform, a comprehensive, court-enforceable agreement is needed to remedy all of the department’s findings and ensure lasting reform.  

In addition, the department has been working with the city of Chicago as part of the Violence Reduction Network, a data-driven, evidence-based initiative that delivers strategic, intensive training and technical assistance.  This assistance focuses on developing an overall violence reduction strategic framework; providing immediate technical assistance and expertise to CPD; analyzing high-crime neighborhoods for resource, social service and opportunity gaps; and assisting in building capacity in Chicago’s public safety offices.  And in 2016, the U.S. Attorney’s Office for the Northern District of Illinois charged more illegal firearms cases in total, and more as a percentage of its overall cases, than it has in any year since 2004.

This investigation was conducted by the Civil Rights Division’s Special Litigation Section and the U.S. Attorney’s Office for the Northern District of Illinois with the assistance of law enforcement professionals, pursuant to the pattern-or-practice provision of the Violent Crime Control and Law Enforcement Act of 1994.  Since 2009, the Special Litigation Section has opened 25 investigations into law enforcement agencies.  The section is enforcing 20 agreements with law enforcement agencies, including 15 consent decrees and one post-judgment order.  The division recently released a comprehensive report that provides an overview of the police reform work done pursuant to the Violent Crime Control and Law Enforcement Act of 1994, which can be found at the following link: /media/872116/dl?inline.

For more information on the Civil Rights Division and the Special Litigation Section, please visit www.justice.gov/crt. 

Chicago Police Department Findings

Chicago Agreement in Principle

Chicago Police Department Findings Fact Sheet

Pattern or Practice Accomplishments Document

Justice Department Finds a Pattern of Civil Rights Violations by the Chicago Police Department

 

WASHINGTON – The Justice Department announced today that it has found reasonable cause to believe that the Chicago Police Department (CPD) engages in a pattern or practice of using force, including deadly force, in violation of the Fourth Amendment of the Constitution. The department found that CPD officers’ practices unnecessarily endanger themselves and result in unnecessary and avoidable uses of force. The pattern or practice results from systemic deficiencies in training and accountability, including the failure to train officers in de-escalation and the failure to conduct meaningful investigations of uses of force.

 

The city of Chicago and the Justice Department have signed an agreement in principle to work together, with community input, to create a federal court-enforceable consent decree addressing the deficiencies found during the investigation.

 

“One of my highest priorities as Attorney General has been to ensure that every American enjoys police protection that is lawful, responsive, and transparent,” said Attorney General Loretta E. Lynch. “Sadly, our thorough investigation into the Chicago Police Department found that far too many residents of this proud city have not received that kind of policing. The resulting deficit in trust and accountability is not just bad for residents – it’s also bad for dedicated police officers trying to do their jobs safely and effectively. With this announcement, we are laying the groundwork for the difficult but necessary work of building a stronger, safer, and more united Chicago for all who call it home.”

 

“The failures we identified in our findings – that we heard about from residents and officers alike — have deeply eroded community trust,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division. “But today is a moment of opportunity, where we begin to move from identifying problems to developing solutions. I know our findings can lead to reform and rebuild community-police trust because we’ve seen it happen in community after community around the country over the past 20 years.”

 

“The findings in our report, coupled with the City of Chicago and Police Department’s commitment to work together with us, are an historic turning point and a major step toward sustained change,” said U.S. Attorney Zachary T. Fardon of the Northern District of Illinois. “Implementing these findings is a necessary precursor to our long-term success in fighting violent crime in Chicago.”

 

On Dec. 7, 2015, Attorney General Lynch announced the investigation into the CPD and the city’s Independent Police Review Authority (IPRA). The investigation focused on CPD’s use of force, including racial, ethnic and other disparities in use of force, and its systems of accountability.

 

In the course of its pattern or practice investigation, the department interviewed and met with city leaders, current and former police officials, and numerous officers throughout all ranks of CPD. The department also accompanied line officers on over 60 ride-alongs in every police district; heard from over 1,000 community members and more than 90 community organizations; reviewed thousands of pages of police documents, including all relevant policies, procedures, training and materials; and analyzed a randomized, representative sample of force reports and the investigative files for incidents that occurred between January 2011 and April 2016, including over 170 officer-involved shooting investigations and documents related to over 400 additional force incidents.

 

The department found that CPD’s pattern or practice of unconstitutional force is largely attributable to deficiencies in its accountability systems and in how it investigates uses of force, responds to allegations of misconduct, trains and supervises officers, and collects and reports data on officer use of force. The department also found that the lack of effective community-oriented policing strategies and insufficient support for officer wellness and safety contributed to the pattern or practice of unconstitutional force.

 

In addition, the department also identified serious concerns about the prevalence of racially discriminatory conduct by some CPD officers and the degree to which that conduct is tolerated and in some respects caused by deficiencies in CPD’s systems of training, supervision and accountability. The department’s findings further note that the impact of CPD’s pattern or practice of unreasonable force falls heaviest on predominantly black and Latino neighborhoods, such that restoring police-community trust will require remedies addressing both discriminatory conduct and the disproportionality of illegal and unconstitutional patterns of force on minority communities.

 

1. the agreement in principle, the Justice Department and the city of Chicago agreed that compliance with the consent decree will be reviewed by an independent monitor. The agreement in principle provides a general framework for change, but the department will be doing community outreach to solicit input in developing comprehensive reforms. In the days ahead, the department will continue speaking to local authorities, officers and ordinary citizens to gather their perspectives about the challenges facing the city – and the changes needed to address them. Comments from the public may be provided by email to Community.CPD@crt.usdoj.gov.

 

Throughout the department’s investigation, CPD leadership remained receptive to preliminary feedback and technical assistance, and started the process of implementing reforms. Under the leadership of Mayor Rahm Emanuel and Superintendent Eddie Johnson, CPD has taken a number of encouraging steps, including creating the Civilian Office of Police Accountability to replace IPRA; issuing a new transparency policy mandating the release of videos and other materials related to certain officer misconduct investigations; beginning a pilot program for body-worn cameras, to be expanded CPD-wide; and committing to establish an anonymous hotline for employees to report misconduct. While these and other measures are an important start to cooperative reform, a comprehensive, court-enforceable agreement is needed to remedy all of the department’s findings and ensure lasting reform.

 

In addition, the department has been working with the city of Chicago as part of the Violence Reduction Network, a data-driven, evidence-based initiative that delivers strategic, intensive training and technical assistance. This assistance focuses on developing an overall violence reduction strategic framework; providing immediate technical assistance and expertise to CPD; analyzing high-crime neighborhoods for resource, social service and opportunity gaps; and assisting in building capacity in Chicago’s public safety offices. And in 2016, the U.S. Attorney’s Office for the Northern District of Illinois charged more illegal firearms cases in total, and more as a percentage of its overall cases, than it has in any year since 2004.

 

This investigation was conducted by the Civil Rights Division’s Special Litigation Section and the U.S. Attorney’s Office for the Northern District of Illinois with the assistance of law enforcement professionals, pursuant to the pattern-or-practice provision of the Violent Crime Control and Law Enforcement Act of 1994. Since 2009, the Special Litigation Section has opened 25 investigations into law enforcement agencies. The section is enforcing 20 agreements with law enforcement agencies, including 15 consent decrees and one post-judgment order. The division recently released a comprehensive report that provides an overview of the police reform work done pursuant to the Violent Crime Control and Law Enforcement Act of 1994, which can be found at the following link: https://www.justice.gov/crt/file/922421/download.

 

For more information on the Civil Rights Division and the Special Litigation Section, please visit www.justice.gov/crt.

Chicago Agreement in Principle

Chicago Police Department Findings

CPD Findings Factsheet

SPL Police Accomplishments

 

CHICAGO — A convicted felon from Chicago has been sentenced to more than five years in federal prison for illegally possessing and trafficking two dozen handguns, most of which had been stolen from a shipment of firearms at a railyard on the South Side.

WARREN GATES possessed 24 stolen firearms, 17 of which he illegally purchased from co-defendants who had stolen approximately 111 firearms from a railroad car in Chicago in the early morning hours of April 12, 2015. Gates admitted purchasing the 17 stolen firearms for purposes of reselling them for a profit, and he sold eleven of them prior to his arrest. The stolen firearms were aboard a cargo train en route from a Ruger factory in New Hampshire to Spokane, Wash. The train was parked overnight on the South Side of Chicago when the co-defendants broke locks and seals on a train car and walked off with the guns.

Gates, 49, pleaded guilty last year to one count of possession of a firearm by a prohibited person. U.S. District Judge John J. Tharp Jr. imposed the 63-month sentence Wednesday in federal court in Chicago.

The sentencing was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; and George Lauder, Acting Special Agent in Charge of the Chicago Field Division of the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives. The Chicago Police Department and the Norfolk Southern Railroad Police Department provided valuable assistance.

“The defendant purchased these stolen firearms for the purpose of reselling them to those in our community who would be most interested in purchasing stolen, unregistered and untraceable firearms from an unlicensed firearms dealer,” Assistant U.S. Attorney Christopher Parente argued in the government’s sentencing memorandum. “Those individuals who are willing to pay premiums for firearms on the black market are the individuals who cannot legally purchase firearms and those individuals who cause the most damage to this city by their possession of illegal firearms.”

There were approximately 111 firearms stolen from the cargo train. To date law enforcement has recovered 16 of those firearms at various locations and crime scenes in the Chicago area.

The government is represented by Mr. Parente.

ROCKFORD — A Rockford man was indicted yesterday by a federal grand jury on charges of child pornography.

PIERRE D. HAYES, 27, was charged with three counts of transporting child pornography via the internet in 2015.

Each count of transporting child pornography carries a mandatory minimum sentence of five years and a maximum of 20 years in prison, as well as a $250,000 maximum fine. If convicted, the Court must impose a reasonable sentence under federal sentencing statutes and the advisory United States Sentencing Guidelines.

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 indictment was announced by Zachary T. Fardon, 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 government is represented by Assistant U.S. Attorney Monica V. Mallory.

CHICAGO — A former middle school teacher was sentenced today to 13 years in federal prison for accessing child pornography involving a prepubescent minor and encouraging minors to produce sexually explicit images of themselves.

JOHN C. VASTIS began communicating online with one of the victims in 2013. From the outset, the chats were sexually charged. For nearly a year Vastis encouraged the victim to record sexually explicit photos and videos of himself and transmit the images over the internet to Vastis. Several of the images depicted the victim’s private areas. Vastis also admitted in a plea agreement that he watched child pornography involving another victim and possessed images of a prepubescent boy performing a sex act on an adult male.

Vastis, 54, of Lakemoor, pleaded guilty last year to one count of accessing child pornography with the intent to view. U.S. District Judge John J. Tharp Jr. imposed the sentence in federal court in Chicago.

The sentence was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; and James M. Gibbons, Special Agent-in-Charge of the Chicago Office of the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations. The Lakemoor Police Department, Lake County State’s Attorney’s Office and the Buffalo Grove Police Department provided assistance in the case.

Vastis was arrested in August 2014. He previously worked as a teacher at Meridian Middle School in Aptakisic-Tripp District 102 in Buffalo Grove. The school district cooperated with the investigation, and there were no allegations of sexual exploitation of Vastis’ students.

The investigation was conducted under HSI’s Operation Predator, an international initiative to protect children from sexual predators. Victims of sexual exploitation are encouraged to call HSI’s toll-free tip line at (866) 347-2423, or logon to https://www.ice.gov/predator for further information.

The government was represented by Assistant U.S. Attorney Sarah Streicker.

CHICAGO — A federal judge today sentenced the former owner of a rooftop building overlooking Wrigley Field to 18 months in prison for defrauding the Chicago Cubs and municipal taxing agencies.

R. MARC HAMID, 48, of Lincolnwood, was convicted last year on four counts of mail fraud and five counts of illegally structuring financial transactions. U.S. District Judge Thomas M. Durkin imposed the sentence in federal court in Chicago.

“Time and again, Hamid returned to one principle above all others: wherever he thought he could cut corners and put more money in his own pocket, he did it,” Assistant U.S. Attorney Barry Jonas argued in the government’s sentencing memorandum. “If there was a way to benefit himself even if to another’s detriment, he did it.”

The sentence was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; E.C. Woodson, Postal Inspector-in-Charge of the U.S. Postal Inspection Service in Chicago; and James D. Robnett, Special Agent-in-Charge of the Internal Revenue Service Criminal Investigation in Chicago.

Hamid was a licensed Illinois attorney and a former owner and operator of Right Field Rooftops LLC, which did business as Skybox on Sheffield, a rooftop entertainment venue located across the street from Wrigley Field’s right field wall. Hamid also owned and operated JustGreatTickets.com Inc. and Just Great Seats LLC, companies that purchased and re-sold tickets to entertainment and sporting events.

Skybox on Sheffield and other rooftop venues surrounding Wrigley Field had an agreement with the Cubs that required, among other things, that each rooftop pay the Cubs a royalty of 17% of their gross annual revenues. In addition, Cook County and the city of Chicago required the rooftops to pay an amusement tax on admission fees, and to report its amusement tax returns to the municipalities. The state of Illinois also required Skybox on Sheffield to file sales tax returns and to pay the state a certain dollar amount per ticket sold.

Evidence at Hamid’s nine-day trial revealed that for the years 2008 through 2011, Hamid caused Skybox on Sheffield to submit false annual royalty statements to the Cubs that under-reported attendance figures by thousands of paid attendees, and under-reported gross revenues by $1.4 million. At Hamid’s direction, sales from Skybox on Sheffield were diverted to the two ticket companies, thus concealing from the Cubs, Cook County and the city of Chicago Skybox on Sheffield’s true revenue.

Hamid’s accountant, JOSEPH GURDAK, further reduced the attendance and revenue figures reported to the Cubs. Gurdak pleaded guilty last year to one count of mail fraud and one count of willfully filing a false income tax return.

The government is represented by Mr. Jonas and Assistant U.S. Attorneys Sean Driscoll and Katherine Welsh.

CHICAGO — The United States Attorney’s Office today announced a settlement with the YMCA of Metro Chicago to resolve a complaint of discrimination filed on behalf of a child with type 1 diabetes.

The settlement agreement requires the YMCA of Metro Chicago to administer the emergency medicine glucagon to program enrollees with diabetes who have requested it.  Glucagon is a potentially lifesaving treatment for hypoglycemia (low blood sugar).  It is pre-measured and injectable and is intended to be administered to unconscious or unresponsive individuals by properly trained laypersons.

The settlement agreement also requires the YMCA of Metro Chicago to adopt and implement a comprehensive policy on diabetes management.

The settlement agreement was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois.

The U.S. Attorney’s Office received a discrimination complaint on behalf of a nine-year-old girl with type 1 diabetes who participates on a YMCA swim team.  The girl has been prescribed glucagon injections for use in the rare event that she develops severe hypoglycemia and cannot self-administer diabetes treatment.  The YMCA of Metro Chicago initially refused to administer glucagon.  As a result, the girl could not participate on the YMCA swim team without being accompanied by a family member who could administer glucagon in an emergency.

An investigation by the U.S. Attorney’s Office concluded that the YMCA of Metro Chicago discriminated against the girl by denying her, on the basis of disability, the opportunity to participate in the program, and by failing to make reasonable modifications in its policies regarding the administration of medication.

The YMCA of Metro Chicago denied the allegations of discrimination and made no admission of liability in this matter.  Nevertheless, to ensure full compliance with the Americans with Disabilities Act, the YMCA of Metro Chicago agreed to implement a comprehensive training program and establish several other procedures to afford individuals with disabilities, including diabetes, an equal opportunity to participate in its services.

The settlement agreement became effective on Dec. 21, 2016.  Although the United States agreed not to presently institute a civil action alleging discrimination under the ADA, it may review the YMCA of Metro Chicago’s compliance with the settlement at any time during the two-year duration of the agreement.  If the government 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 government is represented by Assistant U.S. Attorney Virginia Hancock.

CHICAGO — A federal jury today convicted six members of a Chicago street gang known as the Hobos of participating in a criminal organization that engaged in narcotics distribution and committed murders, attempted murders and armed robberies.

The verdicts were rendered after a 15-week trial in federal court in Chicago.  In convicting the six defendants of racketeering conspiracy, the jury found the Hobos were a criminal enterprise that robbed from other drug dealers, retaliated against rival gangs, and violently prevented witnesses from cooperating with law enforcement.  For nearly a decade the gang engaged in murders, attempted murders, robberies and narcotics distribution, primarily on the south and west sides of Chicago.

Federal, state and local authorities uncovered the gang activity through an extensive investigation conducted by the Organized Crime Drug Enforcement Task Force (OCDETF) and the Chicago High Intensity Drug Task Force (HIDTA).  The Task Forces have been responsible for disrupting some of the Chicago area’s most sophisticated drug-trafficking organizations.

The verdicts were announced by Zachary T. Fardon, 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; Eddie T. Johnson, Chicago Police Superintendent; and James D. Robnett, Special Agent-in-Charge of the Chicago Office of the Internal Revenue Service Criminal Investigation Division.  The Illinois State Police, Illinois Department of Corrections and Illinois Secretary of State Police provided assistance.

Convicted of racketeering conspiracy were GREGORY CHESTER, of Chicago; ARNOLD COUNCIL, of Chicago; PARIS POE, of Chicago; GABRIEL BUSH, of Chicago; WILLIAM FORD, of Chicago; and DERRICK VAUGHN, of Chicago.  Council, Bush, Poe and Vaughn were also convicted of committing murder in aid of racketeering.  Poe was convicted of committing murder to obstruct justice, and the jury convicted Council of using a firearm during a robbery of a clothing store.  The jury also convicted Ford on a gun charge and a drug charge.

The convictions carry maximum sentences of life in prison.  U.S. District Judge John J. Tharp Jr. scheduled sentencing hearings for June 23, 2017.

The guilty verdicts bring to ten the total number of Hobos convicted in the case.  Four members of the gang, including Chester’s cousin, pleaded guilty prior to trial.  An eleventh Hobo was identified in the indictment as a coconspirator, but he died before the charges were brought.

Evidence at trial revealed the Hobos were comprised of members from other street gangs that were once rivals.  The Hobos allied together in order to more profitably distribute narcotics, accumulate wealth, and establish control of territories on the south and west sides of Chicago.  The Hobos were violent and ruthless, often using high-powered guns and assault rifles.  Members of the gang shared the wealth with each other, buying luxury items and taking trips to Hawaii and Florida.  Although the Hobos lacked a traditional hierarchy, Chester was recognized as its leader.  From 2004 to 2013 the Hobos engaged in narcotics trafficking, home invasions and armed robberies, often of rival drug dealers.

When the Hobos learned that individuals were cooperating with law enforcement, the gang resorted to murder in order to prevent it.  In 2006 Council and Poe fatally shot Wilbert Moore, whose cooperation with Chicago Police had led to state gun and drug charges against Council.  In 2013 Poe shot and killed Keith Daniels after Daniels cooperated with the federal investigation that led to today’s convictions.

The government is represented by Assistant U.S. Attorneys Patrick Otlewski, Derek Owens and Timothy Storino.

CHICAGO — The United States Attorney’s Office for the Northern District of Illinois collected nearly $60 million in criminal, civil and asset forfeiture actions in Fiscal Year 2016, Zachary T. Fardon, United States Attorney for the Northern District of Illinois, announced today. 

The 2016 collections included $16,872,634 in criminal actions, $11,240,052 in civil actions, and $31,823,808 in asset forfeiture actions.  The total of $59,936,494 is more than double the Office’s Fiscal Year 2016 budget of approximately $28.6 million.  The total includes more than $3.6 million in criminally forfeited drug proceeds from convicted members of the Sinaloa Cartel, and more than $200,000 in administrative and criminal forfeitures arising from the prosecution of Steven M. Brazile, a corporate executive who used fraud proceeds to operate a classic car business. 

The Office this year was able to restore $15.4 million to victims of federal crimes.  It also collected $3,584,521 in criminal and civil cases pursued jointly with other U.S. Attorneys’ Offices and components of the U.S. Department of Justice.

“Our attorneys and staff place a high priority on recovering funds for the federal treasury and for victims of federal crimes,” said U.S. Attorney Fardon.  “The Office continues to deliver a valuable return to the taxpayers of our district.”

Nationally, Attorney General Loretta E. Lynch recently announced that the Justice Department collected more than $15.3 billion in civil and criminal actions in Fiscal Year 2016, which ended Sept. 30, 2016.  This figure represents more than five times the approximately $3 billion budget appropriated to the 94 U.S. Attorneys’ offices and the main litigating divisions of the Justice Department in that period.

“Every day, the men and women of the Department of Justice work tirelessly to enforce our laws, ensuring that taxpayer dollars are used properly and that the American people are protected from exploitation and abuse,” said Attorney General Lynch.  “I want to thank the prosecutors and trial attorneys who made this year’s collections possible, and I want to emphasize that the department remains committed to the well-being of our people and our nation.”

The largest collections nationally were from affirmative civil enforcement cases, in which the United States recovered government money lost to fraud or other misconduct, or collected fines imposed on individuals or corporations for violations of federal health, safety, mortgage, financial, civil rights or environmental laws.  In addition, civil debts were collected on behalf of several federal agencies, including the U.S. Department of Housing and Urban Development, Health and Human Services, Internal Revenue Service, Small Business Administration and Department of Education.

ROCKFORD — The former President of Baytree Investors Inc., a defunct St. Charles company, was sentenced Wednesday by U.S. District Judge Frederick J. Kapala. 

CHRISTOPHER A. JANSEN, 64, of St. Charles, was sentenced to 70 months in federal prison, to be followed by three years of supervised release, and ordered to pay $269,978 in restitution.  Jansen pleaded guilty on Oct. 14, 2008, to charges of wire fraud and evading income taxes.

According to the written plea agreement, Jansen was President of Baytree Investors Inc., an Illinois corporation engaged in acquiring trucking companies.  In 2001 Jansen learned DFC Transportation, a trucking company headquartered in Huntley, was for sale.  Jansen admitted in his plea agreement that he created a Delaware corporation, DFCTC Holding Inc., and arranged for DFCTC to purchase DFC with money Jansen would borrow using DFC receivables as collateral.  Jansen further admitted that he arranged for other individuals to be the owners of DFCTC, some of whom were previous investors in Baytree business acquisitions that had failed.  Jansen also admitted that he represented to others that he was the corporate secretary and controlled both DFCTC and DFC, without appointment or authority, and avoided having shareholder or director meetings. 

After its purchase, Jansen arranged for DFC to use its receivables to borrow more money from a bank, and without authorization ordered employees to transfer money from DFC to DFCTC.  Jansen admitted he then distributed the money to himself and others for their personal use and benefit without disclosing it to the shareholders and directors.  Specifically, on March 22, 2002, Jansen ordered the transfer of $250,000 by wire from a DFC account in Utah to a DFCTC account in St. Charles, for his own personal benefit and the benefit of others, without disclosing it to the shareholders or directors of either corporation.

In pleading guilty, Jansen further admitted that he attempted to evade income tax for the year 2002 that he owed to the United States.  Specifically, Jansen admitted he failed to file a federal income tax return for that year, knowing federal income taxes would be calculated and due.  Jansen also admitted he used a bank account in the name of a dissolved corporation, Talcott Financial Corporation, to receive his income and disburse his expenditures and intentionally failed to have Talcott file informational forms with the IRS for taxable income distributed to him from the account.  Jansen also admitted in the plea agreement that he controlled Baytree and DFCTC and intentionally failed to have those corporations file informational forms with the IRS, such as Form 1099, regarding distributions of taxable income to him.  Further, Jansen admitted he did not have a bank account in his name in order to avoid easy tracing of his income and avoid reporting to the IRS.

The sentencing was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; James D. Robnett, Special Agent-In-Charge of the Chicago Office of the Internal Revenue Service - Criminal Investigation Division; Michael J. Anderson, Special Agent-In-Charge of the Chicago Office of the Federal Bureau of Investigation; and Jeffrey A. Monhart, Regional Director of the Chicago Regional Office of the U.S. Department of Labor, Employee Benefits Security Administration.

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

CHICAGO — The Department of Justice and the United States Attorney’s Offices for the Northern District of Illinois and the Southern District of Ohio (collectively, “DOJ”) have entered into a Non-Prosecution Agreement with Redflex Traffic Systems Inc., a Phoenix-based automated safety company.

The agreement was announced by Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division; Zachary T. Fardon, United States Attorney for the Northern District of Illinois; and Benjamin C. Glassman, United States Attorney for the Southern District of Ohio.

The agreement was reached in part due to Redflex’s extensive and thorough cooperation over recent years, which is detailed in the agreement.  It included cooperation with the successful prosecutions of several individuals, including a high-ranking city of Chicago official and Redflex’s prior Chief Executive Officer.

Among the company’s obligations under the agreement, which shall continue for two years, Redflex will pay restitution and compensatory damages to the City of Chicago, the amount of which will be determined either by a final judgment or a settlement agreement in Chicago’s pending civil lawsuit against Redflex.  Redflex will also pay restitution of $100,000 to the City of Columbus, Ohio.

Further, Redflex agreed to cooperate fully with DOJ and any other law enforcement agency designated by DOJ, including the Australian Federal Police and other Australian law enforcement authorities.  As part of that obligation, Redflex must, among other things, provide DOJ, the Australian Federal Police, and other Australian law enforcement authorities, upon request, all non-privileged information, documents, records, or other tangible evidence.  Notwithstanding the two-year time period of the agreement, Redflex agreed to cooperate with DOJ, the Australian Federal Police, and other Australian law enforcement authorities until all of their investigations or prosecutions are concluded. 

In exchange for Redflex’s fulfillment of its obligations under the agreement, DOJ agreed that it will not criminally prosecute Redflex for any of the conduct arising out of investigations in Chicago and Columbus.  The agreement does not relate to any potential tax charges.

Redflex Traffic Systems is wholly owned by Redflex Holdings Group of Melbourne, Australia, which owns and operates a network of digital speed and red-light cameras worldwide.  The company installs cameras that automatically record and ticket drivers who run red lights.  As part of the Non-Prosecution Agreement, Redflex accepted responsibility for its conduct related to the illegal activities of its employees in recent U.S. investigations.

Its former CEO was convicted as part of the probes into bribes paid to elected officials to procure or expand Redflex’s contracts with Chicago and Columbus.  The investigations also resulted in the convictions of a Chicago official and a Columbus lobbyist.  John Bills, a former Chicago assistant transportation commissioner, was convicted of accepting cash and benefits from Redflex in exchange for expanding the company’s business with Chicago.  The lobbyist, John Raphael, pleaded guilty to extorting cash from Redflex to pass on to elected officials in Ohio in an effort to obtain red-light camera contracts.

Since the inception of the U.S. investigations, Redflex has initiated substantial additions and changes to its compliance program, policies and procedures.  The company agreed in the Non-Prosecution Agreement to revise and address any deficiencies in its compliance code, policies and procedures regarding compliance with applicable anti-bribery and anti-corruption laws.  Redflex agreed to adopt new policies to ensure that it maintains a rigorous anti-bribery and anti-corruption compliance code, and to install procedures designed to detect and deter violations of such laws.

During the term of the agreement, Redflex must prepare at least four follow-up reports and periodically submit them to DOJ.  If DOJ determines that Redflex has violated any provision of the Non-Prosecution Agreement, Redflex shall be subject to prosecution for any applicable violation of U.S. law, including perjury and obstruction of justice.

The government was represented in the Chicago case by Mr. Fardon and Assistant U.S. Attorneys Laurie Barsella and Timothy Storino of the Northern District of Illinois.  The Chicago case was investigated by the FBI’s Chicago Field Office, the IRS Criminal Investigation Division, and the City of Chicago’s Inspector General’s Office.  

The government in the Columbus case was represented by Trial Attorney Edward P. Sullivan of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney J. Michael Marous of the Southern District of Ohio.  The Columbus case was investigated by the FBI’s Cincinnati Field Office, Columbus Resident Agency, the IRS Criminal Investigation Division, and the Ohio Bureau of Criminal Investigation.

The Department of Justice and the United States Attorney’s Offices for the Northern District of Illinois and the Southern District of Ohio (collectively, “DOJ”) have entered into a non-prosecution agreement with Redflex Traffic Systems Inc., a Phoenix-based automated safety company.

The agreement was announced by Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division; Zachary T. Fardon, United States Attorney for the Northern District of Illinois; and Benjamin C. Glassman, United States Attorney for the Southern District of Ohio.

The agreement was reached in part due to Redflex’s extensive and thorough cooperation over recent years, which is detailed in the agreement.  It included cooperation with the successful prosecutions of several individuals, including a high-ranking city of Chicago official and Redflex’s prior Chief Executive Officer.

Among the company’s obligations under the agreement, which shall continue for two years, Redflex will pay restitution and compensatory damages to the City of Chicago, the amount of which will be determined either by a final judgment or a settlement agreement in Chicago’s pending civil lawsuit against Redflex.  Redflex will also pay restitution of $100,000 to the City of Columbus, Ohio.

Further, Redflex agreed to cooperate fully with DOJ and any other law enforcement agency designated by DOJ, including the Australian Federal Police and other Australian law enforcement authorities.  As part of that obligation, Redflex must, among other things, provide DOJ, the Australian Federal Police, and other Australian law enforcement authorities, upon request, all non-privileged information, documents, records, or other tangible evidence.  Notwithstanding the two-year time period of the agreement, Redflex agreed to cooperate with DOJ, the Australian Federal Police, and other Australian law enforcement authorities until all of their investigations or prosecutions are concluded. 

In exchange for Redflex’s fulfillment of its obligations under the agreement, DOJ agreed that it will not criminally prosecute Redflex for any of the conduct arising out of investigations in Chicago and Columbus.  The agreement does not relate to any potential tax charges.

Redflex Traffic Systems is wholly owned by Redflex Holdings Group of Melbourne, Australia, which owns and operates a network of digital speed and red-light cameras worldwide.  The company installs cameras that automatically record and ticket drivers who run red lights.  As part of the non-prosecution agreement, Redflex accepted responsibility for its conduct related to the illegal activities of its employees in recent U.S. investigations.

Its former CEO was convicted as part of the probes into bribes paid to elected officials to procure or expand Redflex’s contracts with Chicago and Columbus.  The investigations also resulted in the convictions of a Chicago official and a Columbus lobbyist.  John Bills, a former Chicago assistant transportation commissioner, was convicted of accepting cash and benefits from Redflex in exchange for expanding the company’s business with Chicago.  The lobbyist, John Raphael, pleaded guilty to extorting cash from Redflex to pass on to elected officials in Ohio in an effort to obtain red-light camera contracts.

Since the inception of the U.S. investigations, Redflex has initiated substantial additions and changes to its compliance program, policies and procedures.  The company agreed in the non-prosecution agreement to revise and address any deficiencies in its compliance code, policies and procedures regarding compliance with applicable anti-bribery and anti-corruption laws.  Redflex agreed to adopt new policies to ensure that it maintains a rigorous anti-bribery and anti-corruption compliance code, and to install procedures designed to detect and deter violations of such laws.

During the term of the agreement, Redflex must prepare at least four follow-up reports and periodically submit them to DOJ.  If DOJ determines that Redflex has violated any provision of the non-prosecution agreement, Redflex shall be subject to prosecution for any applicable violation of U.S. law, including perjury and obstruction of justice.

The government was represented in the Chicago case by Mr. Fardon and Assistant U.S. Attorneys Laurie Barsella and Timothy Storino of the Northern District of Illinois.  The Chicago case was investigated by the FBI’s Chicago Field Office, the IRS Criminal Investigation Division, and the City of Chicago’s Inspector General’s Office.  

The government in the Columbus case was represented by Trial Attorney Edward P. Sullivan of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney J. Michael Marous of the Southern District of Ohio.  The Columbus case was investigated by the FBI’s Cincinnati Field Office, Columbus Resident Agency, the IRS Criminal Investigation Division, and the Ohio Bureau of Criminal Investigation.

CHICAGO — A north suburban man defrauded more than a dozen clients, some of whom were elderly and had pledged their retirement savings, in a Ponzi-type scheme that netted him at least $1 million, according to a criminal complaint filed in federal court in Chicago.

RICHARD K.  BOOY, the founder of Principal Financial Strategies LLC and the now-defunct Safe Financial Strategies Inc., used the promise of no-risk investments and guaranteed returns to persuade at least 15 clients to hand over at least $1 million, the complaint states.  Although Booy claimed to be affiliated with the widely known investment firm Principal Financial Group, he had no actual relationship with the firm and was not authorized to invest client funds with it.  Instead of investing the funds as promised to clients, Booy used the victims’ money to cover personal expenses, including credit card debt and purchases at Best Buy and DirecTV, and to pay earlier investors through Ponzi-type payments, the complaint states.

The complaint was filed Wednesday in U.S. District Court in Chicago.  It charges Booy, 48, of Vernon Hills, with one count of mail fraud.  He is scheduled to make an initial appearance today at 3:00 p.m. before U.S. Magistrate Judge M. David Weisman.

The complaint was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; E.C. Woodson, Inspector-in-Charge of the U.S. Postal Inspection Service in Chicago; Jeffrey A. Monhart, Regional Director of the Chicago Regional Office of the U.S. Department of Labor, Employee Benefits Security Administration; and Tanya Solov, Director of the Illinois Securities Department of the Illinois Secretary of State.

The complaint alleges that the fraud scheme began in approximately June 2014 and remained ongoing as of this month.  Most of Booy’s victims are elderly, and some paid him their entire life savings or funds from retirement accounts, the complaint states.  The victims include a Chicago pastor, a retired painter, a retired government worker, and an individual who suffers from Parkinson’s Disease.  Booy often met personally with the victims in their homes, misrepresenting to them that their investments were guaranteed to return a profit, the complaint states.

Booy continued his investment scheme even after Principal Financial Group in September obtained a temporary restraining order against him that led to a court-authorized seizure of his computer and other evidence from Booy’s home, according to the complaint.

The public is reminded that a complaint 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.

Mail fraud carries a maximum sentence of 20 years in prison.  If convicted, the court must impose a reasonable sentence under federal sentencing statutes and the advisory United States Sentencing Guidelines.

The government is represented by Assistant U.S. Attorney Matthew Ebert.

ROCKFORD — Three Rockford-area men have been sentenced for their roles in an arson conspiracy to use an explosive to damage a pickup truck. 

Today, JASON VANDUYN, 41, of Machesney Park, was sentenced by U.S. District Judge Philip G. Reinhard to 151 months in federal prison, to be followed by three years of supervised release.  On Sept. 19, 2016, Vanduyn pleaded guilty to the conspiracy charge. 

According to the written plea agreement, Vanduyn admitted that between June 7, 2015, and June 12, 2015, he recruited co-defendants BRIAN BURD, 48, and ROBERT WARMOTH, 43, both of Rockford, to blow up a pickup truck.  As stated in the plea agreement, Vanduyn had been in a fistfight with the owner of the truck on June 7, 2015, and Vanduyn wanted to exact revenge on the owner.  Vanduyn offered to pay Burd and Warmoth to blow up the truck and provided them with an explosive to use.  During the early morning hours of June 12, 2015, Warmoth drove Burd to an area near Theodore Street in Loves Park, where the truck was parked.  Burd smashed a window on the truck and placed the explosive in the truck where it detonated.  No one was injured in the ensuing explosion.

Burd and Warmoth pleaded guilty to the conspiracy charge on Aug. 8, 2016.  On Dec. 12, 2016, Burd and Warmoth were each sentenced to 30 months in federal prison, to be followed by three years of supervised release.  Judge Reinhard also ordered restitution of $12,000, jointly and severally, to be paid by the three co-defendants.

The sentencings were announced by Zachary T. Fardon, 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; George Lauder, Acting Special Agent-in-Charge of the Chicago Field Division of the Bureau of Alcohol, Tobacco, Firearms & Explosives; and, Chuck Lynde, Chief of the Loves Park Police Department.  The investigation was conducted under the auspices of the FBI Safe Streets Task Force, which includes representatives from FBI, ATF, Loves Park Police Department, Winnebago County Sheriff’s Department, and Rockford Police Department.

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

ROCKFORD — A Sycamore attorney was indicted today by a federal grand jury on charges of bankruptcy fraud. 

KEVIN O. JOHNSON, also known as “K.O. Johnson,” 50, of Sycamore, was charged with four counts of bankruptcy fraud and four counts of making a false oath in a bankruptcy case under penalty of perjury, fraudulently concealing or withholding information in the books or records of the financial affairs of the debtor, and concealing assets. 

As alleged in the indictment, Johnson, a Sycamore attorney whose practice included bankruptcy law, filed a Chapter 7 Bankruptcy Petition on Dec. 31, 2011.  The indictment alleges that Johnson fraudulently concealed property from the bankruptcy trustee, creditors, and the United States Trustee, including complete information about $1,790,000 of account receivables owed to Johnson by his present and former clients.  The indictment charges that Johnson failed to comply with a court order requiring Johnson to turn over all proceeds from the collection of the account receivables.  Johnson is further charged with having directed clients not to send any payments to the Bankruptcy Trustee and asking clients to sign misleading documents about the nature of payments they made, despite Johnson knowing that all future account receivable payments were required to be made to the Trustee. 

The indictment also alleges that Johnson made false statements concerning his security interests and liens on the $1,790,000 of account receivables, removed invoices and fee agreements from client files, and obstructed the Bankruptcy Trustee by omitting a bank account Johnson used to deposit a check received in payment of an account receivable owed to Johnson at the time he filed for bankruptcy. 

The indictment 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.

Each charge in this case carries a maximum penalty of up to five years in prison, and a fine of up to $250,000 or twice the gross gain or gross loss resulting from the offense, whichever is greater.  The Court may also impose a sentence of probation of one to five years, and a term of supervised release of up to three years.  If convicted, the court must impose a reasonable sentence under federal sentencing statutes and the advisory U.S. Sentencing Guidelines.  

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. Attorney Michael D. Love.

CHICAGO — An Ohio man will be arraigned today on a federal drug charge in the first Chicago-area prosecution related to the synthetic opioid carfentanil.

CLIFFORD REED allegedly purchased multi-kilogram quantities of heroin from various sources in Chicago, and then mixed it with carfentanil to increase the amount of heroin he could distribute.  Carfentanil is a synthetic opioid listed federally as a Schedule II controlled substance.  The drug is approximately 100 times stronger than fentanyl and approximately 10,000 times stronger than morphine.  Carfentanil is most frequently used as a tranquilizer for elephants and other large mammals in zoos and wildlife environments.

Reed, 27, of Cincinnati, Ohio, was indicted earlier this month by a federal grand jury in Chicago on one count of distributing a kilogram or more of a substance containing a mixture of heroin, fentanyl and carfentanil.  His arraignment is scheduled for 1:30 p.m. today before U.S. District Judge Sara L. Ellis.

The indictment was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; and James M. Gibbons, Special Agent-in-Charge of the Chicago Office of the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations.  The Illinois State Police provided assistance in the investigation.

“Investigating heroin and opioid trafficking is the number one narcotics enforcement priority in our office,” said U.S. Attorney Fardon.  “Carfentanil-laced narcotics pose an extremely serious threat to our communities, and anyone who attempts to distribute it will be held accountable.”

“Carfentanil is an insidious opioid with deadly consequences for users and first responders alike,” said Special Agent-in-Charge Gibbons. “This is the first carfentanil case to be charged in federal court here, clearly demonstrating the tenacity with which HSI is combatting the ongoing epidemic affecting our country.  We are committed to protecting public safety by keeping this dangerous substance out of our communities and holding those responsible for fueling this public health crisis to the fullest extent of the law.”

The federal investigation revealed that Reed traveled to the South Side of Chicago earlier this year to distribute carfentanil-laced heroin to an individual who, unbeknownst to Reed, was cooperating with law enforcement, according to a criminal complaint and affidavit previously filed in the case.  The transaction between Reed and the cooperating source occurred on Sept. 9, 2016, in a vehicle near 93rd Street and Stony Island Avenue, the complaint states.  Shortly after the audio-recorded deal, law enforcement officers stopped the vehicle and arrested Reed on an outstanding warrant from Ohio, the complaint states.  The officers seized from the vehicle approximately one kilogram of the carfentanil-laced heroin, according to the complaint.

Federal authorities recently took custody of Reed and transported him to Chicago for the arraignment.  His indictment marks the first time a defendant has been charged in the Northern District of Illinois with distributing carfentanil-laced heroin.

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 distribution count in the indictment is punishable by a mandatory minimum sentence of ten years in prison, and a maximum sentence of life.  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 U.S. Attorney Christopher Hotaling.

CHICAGO — The owner of two recycling businesses was arrested today for allegedly operating a multi-million dollar fraud scheme involving the illegal landfilling or re-selling of potentially hazardous electronic waste.

BRIAN BRUNDAGE, the former owner of Intercon Solutions Inc. and the current owner of EnviroGreen Processing LLC, caused thousands of tons of e-waste and other potentially hazardous materials to be landfilled, re-sold to customers who shipped the materials overseas, or stockpiled, according to an indictment returned in U.S. District Court in Chicago.  Brundage fraudulently misrepresented to his customers that the materials had been disassembled and recycled in an environmentally sound manner, the indictment states. 

The indictment was returned earlier this month and ordered unsealed after Brundage's arrest this morning.  The indictment charges Brundage, 45, of Dyer, Ind., with five counts of income tax evasion, four counts of mail fraud and two counts of wire fraud.  He is scheduled to make an initial appearance at 3:00 p.m. today before U.S. Magistrate Judge M. David Weisman in Chicago.

The indictment seeks forfeiture of $10 million in cash.

The charges were announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; John K. Gauthier, Acting Special Agent-in-Charge the U.S. Environmental Protection Agency’s Criminal Investigation Division in Chicago; James D. Robnett, Special Agent-in-Charge of the Chicago Office of the Internal Revenue Service Criminal Investigation Division; James M. Gibbons, Special Agent-in-Charge of the Chicago Office of the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations; and Carol Fortine Ochoa, Inspector General of the U.S. General Services Administration.

According to the indictment, several private companies and governmental entities hired Chicago Heights-based Intercon and Gary, Ind.-based EnviroGreen for the disassembly, recycling or destruction of e-waste and other materials.  The customer agreements stipulated that Intercon and EnviroGreen would handle all materials in an environmentally sound manner, without landfilling or exporting, and without reselling the materials in whole form.  Intercon specifically represented that it engaged in “absolutely no reselling, no remarketing, no landfilling, no incineration, and no exportation,” the indictment states.

Unbeknownst to their customers, Intercon and EnviroGreen for more than a decade knowingly sold the e-waste and other materials, including potentially hazardous glass and batteries, to vendors whom Brundage knew would ship the materials overseas.  Some of the materials contained Cathode Ray Tubes, which are the glass video display components of certain electronic devices, such as computer and television monitors, and which contain potentially hazardous amounts of lead, according to the indictment.  The indictment further alleges that Brundage caused multiple tons of CRT glass and other potentially hazardous materials to be destroyed in environmentally unsafe ways and later landfilled, all in direct contravention to Intercon’s public representations regarding its recycling practices.

At one point in 2011, Intercon was publicly accused of shipping potentially hazardous materials to Hong Kong.  In response, Brundage began a fraudulent effort to publicly deny and conceal Intercon’s involvement in the shipment, the indictment states.  Brundage destroyed business records related to the shipment and made efforts to conceal other overseas shipments of large quantities of e-waste, according to the indictment.  The fraud scheme continued for another five years, the indictment states.

The tax charges relate to Brundage’s efforts to evade paying thousands of dollars in income taxes during the scheme, according to the indictment.  Brundage often caused Intercon to pay his own personal expenses, including wages for his nanny and payments to the Horseshoe Casino in Hammond, Ind., while later deducting the expenditures as business expenses on Intercon’s corporate tax returns, 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. 

Each count of income tax evasion is punishable by up to five years in prison.  The wire fraud and mail fraud counts each carry a maximum sentence of 20 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 Sean J.B. Franzblau and Special Assistant U.S. Attorney Crissy Pellegrin.

ROCKFORD — A California man claiming to have been a Navy SEAL was sentenced today by U.S. District Judge Philip G. Reinhard to federal prison for defrauding non-profit organizations.  

WILLIAM J. BURLEY, 36, formerly of Yucaipa, Calif., was sentenced to three years in federal prison, to be followed by three years of supervised release for defrauding International Aid Services – USA Inc. (IAS America), a non-profit organization located in Crystal Lake, and International Aid Services (IAS International), a non-profit organization based in Stockholm, Sweden.  Burley was also ordered to pay full restitution of $32,454 to IAS America.  Burley pleaded guilty on Aug. 30, 2016, to wire fraud.

In his written plea agreement, Burley admitted that between July 17, 2012, and Oct. 8, 2012, he devised a scheme to defraud IAS America and IAS International.  The two non-profit organizations provided relief to, and assistance in, the economic development of poverty-stricken individuals in Africa.  On July 11, 2012, while doing humanitarian work, four IAS International workers were ambushed and assaulted in Somalia.  Three of the workers, including a woman, were kidnapped.  The fourth worker was shot and left behind.

Burley approached IAS International and offered to assist it in negotiating with the Somali captors for the release of the employees and, if necessary, to assist in the rescue of the captives.  In so doing, Burley claimed to have been a former Navy SEAL and to have received numerous citations while in the Navy, including a Presidential Unit Citation, an Afghanistan Campaign Medal, a Silver Lifesavings Medal, and a Global War on Terrorism Medal. 

All of those claims were false.  The defendant also falsely claimed to have attended the University of Delaware and University of Maryland and to have been a consultant for the Navy, the Department of Defense, and the Department of State.

Burley was able to convince IAS America to pay him $30,000 and to pay for his travel expenses to Kenya.  At Burley’s request, IAS America also paid for another individual to fly to Kenya to assist Burley in Burley’s efforts to either negotiate with the Somali pirates or to arrange for a rescue operation.  When he was unable to obtain the release of the hostages, Burley returned to the United States.  In September 2012 he went to Crystal Lake, where he presented a “rescue plan” for the hostages to IAS America and made additional false representations about his past achievements.  When IAS America learned that Burley was not a SEAL, it ended its relationship with him.

The three hostages in Somalia were not released until May 2014.

The sentencing 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 government was represented by Assistant U.S. Attorney John G. McKenzie.

CHICAGO — A suburban investment advisor has been indicted on federal fraud charges for allegedly allocating profitable trades to his personal accounts while assigning unprofitable trades to his clients.

CHARLES J. DUSHEK, the president of Lisle-based Capital Management Associates Inc., placed more than $400 million in securities trades without designating in advance whether he was trading personal funds or client funds, according to the indictment.  He then waited up to five days to allocate the trades so that he could select the profitable ones for his personal accounts and assign the losing trades to the accounts of unsuspecting clients, the indictment states.  From July 2008 to August 2012, Dushek withdrew from his personal accounts more than $1 million in gains realized from the scheme, according to the indictment.

The ten-count indictment was returned Wednesday in U.S. District Court in Chicago.  It charges Dushek, 72, of Warrenville, with nine counts of securities fraud and one count of employing a scheme to defraud a client.  Arraignment has been scheduled for Dec. 20, 2016, at 9:30 a.m., before U.S. District Judge Virginia M. Kendall.

The indictment 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 U.S. Securities and Exchange Commission, which previously filed a civil enforcement lawsuit against Dushek, provided valuable assistance.

According to the indictment, Dushek made more than 16,000 purchases of publicly traded securities valued at more than $400 million at the time of purchase.  The purchases included shares in Walgreens, Avon Products, British Petroleum, Caterpillar and PepsiCo.  Dushek maintained spreadsheets that identified whether particular trades should be allocated to client accounts or his personal account, knowing that he had manipulated the allocations by waiting one to five days after the trades were complete before allocating them, the indictment states.  The delay fraudulently ensured that profitable trades were allocated to Dushek’s personal accounts while unprofitable trades were assigned to client accounts, the indictment states.

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. 

Each count of securities fraud is punishable by up to 25 years in prison.  Employing a scheme to defraud a client carries a maximum sentence of five 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. Attorneys Rick Young and Kruti Trivedi.

CHICAGO — An Oklahoma man has been sentenced to 25 years in federal prison for producing sexually explicit images of children with whom he communicated online.

In several online conversations in 2014 and 2015, TODD NOBLE persuaded three minor girls to take sexually explicit photographs and videos of themselves.  He then convinced the girls to send the images to him via text message or online messaging service.  Several of the images depicted the victims’ private areas. 

Noble was arrested in April 2015 after the parents of one of the girls, who lived in Evanston, discovered the images on their child’s iPhone.

Noble, 51, of Lindsay, Okla., pleaded guilty earlier this year to one count of production of child pornography.  U.S. District Judge Andrea R. Wood imposed the sentence Thursday in federal court in Chicago.

The sentence 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.

“Defendant preyed upon the most innocent and vulnerable of victims – children,” Assistant U.S. Attorney April M. Perry argued in the government’s sentencing memorandum.  “Defendant invaded the sanctity of these girls’ homes, victimizing them when they were just yards away from their parents who believed that that their daughters were safe.” 

The Evanston victim was eleven years old when Noble began communicating with her online.  In numerous conversations over the course of several weeks, Noble asked her to take sexually explicit photos and videos of herself and send them to him.  According to Noble’s plea agreement, in one conversation the girl told him she was “not so sure,” and that she had “never done it before.”  Noble responded with instructions on how to make the images more sexually explicit, the plea agreement states.

Noble admitted in the plea agreement that he engaged in similar online conduct with minor girls from Texas and Oklahoma.  Noble told those girls that he was a teenager, and he sent the Oklahoma victim a photograph of what appeared to be a teenage boy, the plea agreement states.

The government is represented by Ms. Perry.

ROCKFORD — A former union local president was sentenced today by U.S. District Judge Philip G. Reinhard to federal prison for embezzling from the union.  

DAVID FLEURY, 50, of Rockford, was sentenced to two years in federal prison, to be followed by three years of supervised release. Fleury was also ordered to pay full restitution of $318,036 to Local 6 of the International Union of Bricklayers and Allied Craftworkers.  Judge Reinhard granted the government’s request that it use funds in Fleury’s retirement account to pay restitution.  Fleury had pleaded guilty on August 9, 2016, to embezzlement.

Fleury was the president of Local 6 from 2009 until 2015.  In his written plea agreement, Fleury admitted that between January 2011 and May 2015, he embezzled over $250,000 from Local 6.  He did so, according to the plea agreement, by having additional salary checks paid to him, using a union credit card for his personal expenses, siphoning off union dues that had been paid in cash, and using his union credit card to pay for travel expenses related to various union funds and keeping the reimbursements he received from those funds.  Fleury admitted to using the embezzled monies to pay for personal expenses, including vacations and gambling at casinos.  Fleury also admitted to signing false reports with the United States Department of Labor.

The sentencing was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; and Michael J. Purcell, District Director of the Chicago office of the United States Department of Labor – Office of Labor-Management Standards.

The government was represented by Assistant U.S. Attorney John G. McKenzie.

ROCKFORD — A Belvidere man was sentenced Wednesday on firearms charges by U.S. District Judge Philip G. Reinhard. 

MICHAEL TAPIA, 26, was sentenced to a total of 20 years in federal prison and to three years of supervised release following imprisonment.  Tapia did not appear at the sentencing and was sentenced in absentia after Judge Reinhard found that Tapia was knowingly and voluntarily absent.

On Aug. 25, 2016, following a four-day jury trial, Tapia was found guilty of one count of conspiring to receive, possess, conceal, store, sell, and dispose of stolen firearms and ammunition; one count of receiving, possessing, concealing, and storing stolen firearms and ammunition; and one count of illegally possessing firearms and ammunition as a convicted felon.  

Three other area men who were also charged in the case previously pleaded guilty to firearm charges: TEOVANNI CUNNINGHAM, 32, of Rockford, MICHAEL SCHAFFER, 34, and DARRELL REED, 28, both of Byron.

According to the indictment and evidence at trial, on Dec. 31, 2012, Tapia and Cunningham broke into a residence in northern Illinois and stole over 21 firearms and ammunition.  Tapia and Cunningham later transferred some of the stolen firearms to their co-defendants and stored some of the firearms at other locations. 

Cunningham pleaded guilty on May 31, 2016, to conspiring to receive, possess, conceal, store, sell, and dispose of stolen firearms and ammunition; receiving, possessing, concealing, and storing stolen firearms and ammunition; and illegally possessing firearms and ammunition as a felon.  Cunningham was sentenced on Sept. 20, 2016, to a total of 188 months in federal prison, to be followed by three years of supervised release, and was ordered to pay restitution in the amount of $12,723.99.

Reed pleaded guilty on June 15, 2016, to receiving, possessing, concealing, storing, selling, and disposing of stolen firearms, and was sentenced on Oct. 17, 2016, to one year and one day in federal prison, to be followed by 3 years of supervised release, and ordered to pay restitution in the amount of $750.00. 

Schaffer pleaded guilty on June 3, 2016, to conspiring to receive, possess, conceal, store, sell, and dispose of stolen firearms and ammunition.  Schaffer has not yet been sentenced.

The sentencing was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; and George Lauder, Acting Special Agent-in-Charge of the Chicago Field Division of the Bureau of Alcohol, Tobacco, Firearms & Explosives.  The Federal Bureau of Investigation, Winnebago County Sheriff’s Department, Rockton Police Department and Rockford Police Department assisted in the investigation.

The government was represented by Assistant U.S. Attorneys Talia Bucci and Michael D. Love.

CHICAGO — A convicted felon who fired a handgun near Wrigley Field pleaded guilty today to a federal firearm charge.

HOYTUAN PIERCE discharged the handgun on Oct. 13, 2015, during a dispute with several individuals in the 3400 block of North Clark Street in Chicago.  No one was injured.  Pierce had previously been convicted of a felony and was not legally allowed to possess the gun. 

The incident occurred at approximately 11:30 p.m.  Earlier that evening at nearby Wrigley Field, the Chicago Cubs defeated the St. Louis Cardinals to clinch the National League Division Series.

Pierce, 33, of Chicago, pleaded guilty in a plea declaration to one count of being a felon-in-possession of a firearm.  The conviction carries a maximum sentence of ten years in prison.  U.S. District Judge Elaine E. Bucklo set sentencing for April 7, 2017.

The guilty plea was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; George Lauder, Acting Special Agent in Charge of the Chicago Field Division of the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives; and Eddie Johnson, Chicago Police Superintendent.

The government is represented by Assistant U.S. Attorneys Cornelius Vandenberg and Ankur Srivastava.

CHICAGO — A federal grand jury has indicted City of Chicago Alderman WILLIE B. COCHRAN on charges he pocketed money from a charitable fund that was intended to help families and children in his South Side ward.

The 15-count indictment alleges that Cochran used money from the 20th Ward Activities Fund to pay his daughter’s college tuition and to finance his gambling expenses, as well as to purchase items for use in his home.  The indictment also charges Cochran with extorting money from a lawyer and a liquor store owner in exchange for Cochran’s aldermanic support.

The indictment was returned Tuesday in federal court in Chicago.  It charges Cochran, 64, of Chicago, with eleven counts of wire fraud, two counts of federal program bribery, and two counts of extortion.  An arraignment date has not yet been set.

The indictment 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 FBI initiated the investigation after receiving information from the former City of Chicago Legislative Inspector General’s Office, which was headed at that time by Faisal Khan.

“When an elected official uses public power for personal gain, the average citizen pays and our democratic system suffers,” said U.S. Attorney Fardon.  “We will continue to vigorously investigate and prosecute any elected official who attempts to use their office to enrich themselves.”

According to the indictment, Cochran corruptly solicited and demanded $1,500 from an Illinois attorney who represented real estate developers with properties in Cochran’s ward.  Cochran solicited and obtained the money for his continued and future aldermanic support of the developments, which included a property developed under the federal Neighborhood Stabilization Program, according to the indictment.

The indictment also charges Cochran with corruptly soliciting and demanding payment from a 20th Ward liquor store owner who sought an amendment to the Municipal Code of Chicago to allow package goods licenses on the store’s side of South Cottage Grove Avenue.  Shortly after soliciting the payment, the City Council of Chicago in April 2015 passed a Cochran-sponsored amendment that allowed for issuance of the licenses on that block, according to the indictment.

The indictment alleges that Cochran was the sole signatory on a bank account for the 20th Ward Activities Fund, a charitable endeavor that purported to host ward events such as a summer back-to-school picnic, a Valentine’s Day party for senior citizens, and events during the holiday season.  In reality, Cochran used a portion of the money contributed by donors for his own personal use, the indictment states.  These expenses included $5,000 toward his daughter’s college tuition, and approximately $25,000 that Cochran withdrew from automated teller machines in or near casinos where he gambled, according to the indictment.

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.

The charges in the indictment are punishable by a total maximum sentence of 280 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 Heather McShain and Christopher Stetler.

A Chicago man pleaded guilty today to conspiring with his cousin and his cousin’s girlfriend to kill a U.S. citizen at an Indonesian resort in 2014.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Zachary T. Fardon 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, pleaded guilty to one count of conspiracy to commit the foreign murder of a U.S. national before U.S. District Judge Rebecca R. Pallmeyer of the Northern District of Illinois, who set sentencing for March 23, 2017.

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 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 texted Bibbs, “In about a year or so I’ll have all that money . . . Not all of it . . . A couple mil prob.”  Bibbs understood this 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 he would share some of this money with 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 texted Schaefer alternative ways to kill Von Wiese, including by drowning her.  A short time later, Schaefer texted Bibbs that, “She wants me to right now . . . While she snoozing,” which Bibbs understood to mean that Mack asked Schaefer to help her kill her mother while Von Wiese was asleep.  In response, Bibbs texted Schaefer, “Go sit on her face wit a pillow then,” suggesting that Schaefer should suffocate Von Wiese.

In addition, Bibbs admitted that Schaefer then texted asking what Bibbs would do, to which Bibbs replied that Schaefer should murder Von Wiese as long as no cameras were present.  Bibbs also counseled Schaefer to be careful and 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- and 10-year sentences in prison.    

The FBI investigated the case.  Trial Attorneys Hope Olds and 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 are prosecuting the case.   

CHICAGO — A Chicago man pleaded guilty in federal court today to charges he aided 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 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.  Per the plea agreement, the government and defendant’s counsel have agreed that the maximum sentence will be no more than 20 years in prison.  Other than the agreed maximum prison term, the Court remains free to impose the sentence it deems appropriate.  U.S. District Judge Rebecca R. Pallmeyer set sentencing for March 23, 2017, at 12:00 p.m.

The guilty plea was announced by Zachary T. Fardon, 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 Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division.

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.

Evidence discovered by the FBI revealed that Bibbs and Schaefer engaged in several discussions via text message leading up to the killing.  Mack and her mother shared a hotel room, 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, the 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 replied 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, according to the plea agreement. 

A short time later, Schaefer entered the hotel room occupied by Mack and Von Wiese and bludgeoned Von Wiese to death, the 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.  Federal authorities in the U.S. arrested Bibbs on Sept. 23, 2015.

The government is represented by Assistant U.S. Attorney Bolling Haxall, as well as Hope Olds and Christine Duey, trial attorneys from the U.S. Department of Justice’s Human Rights and Special Prosecutions Section.