Northern District of Illinois

CHICAGO — On April 13, 2015, this Office announced a joint federal and state investigation into the October 20, 2014, fatal shooting of Laquan McDonald.  Both before and since that announcement, the U.S. Attorney’s Office and our law enforcement partners have been conducting a thorough investigation into the circumstances of the shooting. 

The federal investigation of the shooting remains active and ongoing.

WASHINGTON – The U.S. Department of Housing and Urban Development (HUD), the U.S. Attorney’s Office for the Northern District of Illinois, and the U.S. Environmental Protection Agency (EPA) today announced a settlement with a Rockford, Illinois landlord to resolve a claim he failed to inform tenants, some with young children, that their homes may contain potentially dangerous lead. 

The agreement requires Dennis Hardesty to replace windows and clean up lead‑based paint hazards in 50 rental properties containing a total of 52 units (see attached list of properties).  In addition to the $308,000 worth of lead abatement work, Hardesty agreed to pay $5,000 in penalties.

According to the federal government, Hardesty violated the Federal Residential Lead-Based Paint Hazard Reduction Act (Residential Lead Act) by failing to inform tenants that their homes may contain potentially dangerous levels of lead.  Winnebago County health department officials identified at least seven children with elevated blood lead levels in the properties Hardesty leased.  Investigations by the health department identified lead‑based paint and lead-based paint hazards in the units.  Going forward, Hardesty will ensure that he will provide information about lead‑based paint to tenants before they are obligated to sign any lease.

The lead abatement work Hardesty will perform as a result of the settlement includes window replacement and abatement of all friction and impact surfaces, and clearance exams to make those units lead safe for families to rent and live in.  HUD will provide ongoing monitoring of Hardesty’s implementation of the settlement agreement, and will share the results with its federal partners for possible further action.

“Lead poisoning is entirely preventable but it requires all of us to recognize that we share a responsibility to protect our vulnerable populations, especially young children who are still developing,” said Matt Ammon, Director of HUD’s Office of Lead Hazard Control and Healthy Homes. “Landlords of homes built before 1978 have a legal responsibility to make their tenants aware of lead-based paint and lead-based paint hazards they know about or that may be in their homes so that tenants can protect their families.”

“This settlement will protect children in Rockford from exposure to lead-based paint – and it sends a clear message to landlords and property managers across the country that the Environmental Protection Agency is prioritizing enforcement actions to eliminate elevated blood lead levels in children,” EPA Region 5 Administrator Susan Hedman said.

“This settlement requires Dennis Hardesty to institute a robust program to ensure that his properties are compliant with federal law,” said Zachary T. Fardon, United States Attorney for the Northern District of Illinois.  “My office will continue to enforce these important laws to protect tenants from exposure to dangerous lead paint.” 

The settlement announced today represents the first joint Residential Lead Act enforcement action in Rockford.  It was the result of intensive coordination among local health officials and federal investigators.  HUD, EPA and the Department of Justice are continuing similar enforcement efforts around the nation.  As a result of enforcement actions taken thus far, landlords have agreed to conduct lead-based paint hazard reduction in more than 187,000 apartments and to pay $1.5 million in civil penalties.  In resolving these cases, landlords have committed to expend more than an estimated $31 million to address lead-based paint hazards in the affected units.  In addition, over $700,000 has been provided by defendants to community-based projects to reduce lead poisoning.

Background

The Residential Lead Act is one of the primary federal enforcement tools to prevent lead poisoning in young children.  The Lead Disclosure Rule requires home sellers and landlords of housing built before 1978 to disclose to purchasers and potential tenants knowledge of lead-based paint or lead-based paint hazards using a disclosure form, signed by both parties, attached to the sales contract or lease containing the required lead warning statement, provide any available records or reports, and provide an EPA-approved “Protect Your Family From Lead in Your Home” information pamphlet.  Sellers must also provide purchasers with an opportunity to conduct a lead-based paint inspection and/or risk assessment at the purchaser’s expense.  Acceptable lead disclosure forms can be found at www.hud.gov/offices/lead/dislcosurerule and www.epa.gov/lead/pubs/leadbase.htm.

Health Effects of Lead-Based Paint

No safe blood lead level in children has been identified. Lead exposure can affect nearly every system in the body. Lead exposure causes reduced IQ, learning disabilities, developmental delays, reduced height, poorer hearing, and a host of other health problems in young children.  Many of these effects are thought to be irreversible. In later years, lead-poisoned children are much more likely to drop out of school, become juvenile delinquents and engage in criminal and other anti-social behavior.  Researchers have found that even at low levels, lead exposure in children can significantly impact IQ and might delay puberty in young girls.

At higher levels, lead can damage a child’s kidneys and central nervous system and cause anemia, coma, convulsions and even death.  According to the Centers for Disease Control and Prevention (CDC), 4 million households have children living in them that are being exposed to high levels of lead. There are approximately half a million U.S. children ages 1-5 with blood lead levels above 5 micrograms per deciliter, the reference level at which CDC recommends public health actions be initiated.

Eliminating lead-based paint hazards in older low-income housing is essential if childhood lead poisoning is to be eradicated.  According to CDC estimates, the percentage of children with elevated blood lead levels has been cut in half since the early 1990’s, although as many as 1 million children are still affected by lead poisoning today.  HUD estimates that the number of houses with lead paint has declined from 64 million in 1990 to 37 million in 2006.  About 23 million homes still have significant lead-based paint hazards, and about 3.6 million homes with children less than 6 years of age have one or more of these hazards.

Dennis Hardesty Subject Properties

CHICAGO — A senior accountant at the Illinois Medical District Commission pleaded guilty today to charges she embezzled more than $130,000 from the agency by misdirecting procurement funds into her personal accounts.

CYNTHIA FERNANDEZ-ALONSO, 42, of Berwyn, used her position to direct payments from the Commission’s bank account into three personal accounts, according to a plea agreement.  Fernandez-Alonso recorded the payments in the Commission’s internal records, but attributed them as having been made to the agency’s energy provider and other vendors, the plea agreement states.

Fernandez-Alonso pleaded guilty to one count of embezzlement.  The conviction carries a maximum sentence of ten years in prison and a $250,000 fine, plus mandatory restitution.  U.S. District Judge Elaine E. Bucklo scheduled a sentencing hearing for February 22, 2016, at 10:00 a.m.

The Illinois Medical District Commission is a governmental agency that facilitates collaboration among the various medical, health and social service agencies operating within the Illinois Medical District on Chicago’s Near West Side.  Fernandez-Alonso was entrusted with the responsibility of authorizing payments from the Commission’s bank account to its outside vendors and suppliers.

From at least November 2013 to at least April 2015, Fernandez-Alonso directed deposits into her accounts on a nearly monthly basis.  In some months, multiple transfers were made.  On the same day she received one such deposit – for $4,852 on Dec. 10, 2014 – a purchase of jewelry was made with her Chase debit card at Kay Jewelers for $2,847, according to the plea agreement.

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 Maureen Merin and Sarah Streicker.

Plea Agreement

CHICAGO — Civic, religious and community leaders joined top law enforcement personnel today to continue an ongoing dialogue about building trust between law enforcement and the Chicagoland community.

The Community Roundtable was convened by Zachary T. Fardon, United States Attorney for the Northern District of Illinois.  It was held in the Columbus Park Refectory in the Austin neighborhood on the city’s West Side.  Today’s event was the third such discussion, following up on productive sessions in December 2014 and March 2015.

“Today’s roundtable brought together passionate leaders, adult and youth, from different backgrounds who all share the common goal of improving community trust and making Chicago an even greater and safer place for all neighborhoods,”  Mr. Fardon said.  “We had a forthright and stimulating conversation about policing and community trust issues.” 

The U.S. Department of Justice has made the issue of community policing a top priority.  The Community Roundtables focus on developing tangible initiatives for improving the relationship between law enforcement and the community. 

Among the more than 50 participants in today’s meeting were Cook County State’s Attorney Anita Alvarez, Chicago Police Superintendent Garry McCarthy, and representatives from the U.S. Drug Enforcement Administration, the Federal Bureau of Investigation, the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives, the Cook County Juvenile Temporary Detention Center, the U.S. Marshal’s Service, Chicago Public Schools, KLEO Community Family Life Center, Chicago Board of Rabbis, Bowen High School, Purpose Over Pain, Apostolic Church of God, Chicago Community Trust, University of Chicago Crime Lab, YMCA, Mikva Challenge, Chicago Urban League, Bright Star Church, Chicago Violence Reduction Strategy, Westside Health Authority, Fierce Women of Faith, Bethel New Life Church, and Becoming A Man.

CHICAGO — A Glenview man who was hired by the Cook County Circuit Court Clerk’s Office after purportedly loaning $15,000 to a company controlled by the Clerk’s husband lied under oath when testifying about it before a grand jury, according to a federal indictment announced today.

In August 2014, SIVASUBRAMANI RAJARAM purportedly loaned $15,000 to Goat Masters Corporation, whose president was the husband of the Cook County Circuit Court Clerk.  The following month, Rajaram was hired by the Clerk’s Office as a level four Senior Clerk.  Rajaram had previously worked in the Clerk’s Office but had been living in India for several years.

On or about Oct. 1, 2015, Rajaram testified before a federal grand jury that was conducting an investigation of possible criminal violations in connection with the purchasing of jobs and promotions within the Clerk’s Office.  During his testimony, Rajaram said he had not spoken to the Circuit Court Clerk after his 2014 hiring.  He also testified he had only spoken to another high-ranking employee of the Clerk’s Office “three or four times” since returning to Chicago from India, and that the conversations were not by phone.

The indictment alleges that both statements were false.  According to the indictment, Rajaram spoke with both the Clerk and the high-ranking employee after being re-hired in 2014.  His conversations with the high-ranking employee occurred dozens of times via cell phone, according to the indictment.

The indictment was returned Thursday in U.S. District Court in Chicago.  Rajaram, 48, of Glenview, was charged with one count of making false declarations before a grand jury.  The charge carries a maximum sentence of five years in prison.  The Court has not yet scheduled an arraignment hearing.

The indictment was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Anita Alvarez, Cook County State’s Attorney; Patrick M. Blanchard, Cook County Inspector General; and Michael J. Anderson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation.

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 United States Attorneys Heather McShain and Ankur Srivastava.

Indictment

CHICAGO — A former sergeant in the Chicago Police Department pleaded guilty today to charges he took cash payments from a liquor store clerk in exchange for disclosing private government information.

RAY M. RAMIREZ served as a sergeant in the 12th Police District on the city’s Near West Side.  Ramirez admitted in a plea agreement that he obtained information from law enforcement databases and passed it to the store clerk in exchange for cash payments of $150 to $200.  The information included a criminal background check on a prospective store employee, a vehicle registration check, and a review of police incidents occurring in and around the store.

Ramirez also admitted that he shook down the clerk and other store employees for cash payments ranging from $70 to $200.  Ramirez wore his police uniform and was on duty when he demanded the payments, according to the plea agreement.

Ramirez, 52, of Chicago, pleaded guilty to one misdemeanor count of intentionally accessing a Chicago Police Department mobile computer and exceeding his authorized access to obtain information from a department or agency of the United States.  He faces a maximum sentence of 12 months in prison, a maximum fine of $100,000, and mandatory restitution.  U.S. District Judge Ronald A. Guzman scheduled a sentencing hearing for March 16, 2016, at 10:30 a.m.

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

The government is represented by Assistant United States Attorney Megan Cunniff Church.

Plea Agreement

CHICAGO — A federal judge today sentenced a Lisle man to 16 years in prison for putting at least 80 firearms into the hands of known gang members on the streets of Chicago.

WALTER FREEMAN obtained the guns from a co-defendant, TIMOTHY VANA, in exchange for crack cocaine.  Freeman later sold the guns to individuals he knew to be members of Chicago street gangs.  Several of the guns were used in shootings and other crimes in and around Chicago.

Freeman, 36, of Lisle, pleaded guilty last year to one count of knowingly and intentionally distributing a controlled substance, and one count of knowingly possessing a firearm in furtherance of a drug trafficking crime.  He also stipulated to being a felon in possession of a firearm in a charge that was filed in a separate indictment.

U.S. District Judge Sharon Johnson Coleman imposed the 16-year sentence in federal court in Chicago.

“Defendant’s possession and sale of at least 80 weapons directly contributed to the violence that our city faces,” Assistant U.S. Attorney Jennie Levin said in the government’s sentencing memorandum.  “He has victimized the entire Chicago community.”

According to a written plea agreement, Freeman sold approximately seven grams of crack cocaine per week to a regular group of customers from 2008 to 2013.  He also admitted selling crack cocaine to an undercover law enforcement agent on several occasions in 2011 and 2012.

Freeman obtained 40 guns from Vana between 1999 and 2001, and another 40 between 2010 and 2011.  The guns included revolvers and semi-automatic weapons.  Vana had stolen the guns from an avid firearms collector who resided at Vana’s family’s home in Bolingbrook.

The U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives later recovered many of the weapons after they had been involved in shootings and other crimes in and around Chicago.  ATF agents traced the serial numbers of the guns and learned they had been purchased by the same owner, who resided in Vana’s family’s house.  Further investigation revealed the drugs-for-guns arrangement between Vana and Freeman.

Vana, 54, of Forest Park, pleaded guilty last month to one count of being a felon in possession of a firearm, and one count of knowingly possessing a firearm that he had reasonable cause to believe was stolen.  Vana’s sentencing hearing before U.S. District Judge Elaine E. Bucklo will be scheduled at a later date.

Freeman’s sentence was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; and Jeffery Magee, Special Agent in Charge of the ATF Chicago Field Division.  The Cook County Sheriff’s Police and the Illinois State Police assisted in the investigation.

The government is represented by Ms. Levin.

CHICAGO — The United States Attorney’s Office in Chicago has launched a review of restaurants in the city and suburbs to ensure compliance with the Americans with Disabilities Act, authorities announced today.

The purpose of the review is to ensure that the restaurants are accessible to persons with disabilities.  The initiative is undertaken in accordance with the congressionally-mandated responsibility to review compliance with the ADA.  The U.S. Attorney’s Office hopes to work cooperatively with restaurant owners who are found to be non-compliant.

“The Americans with Disabilities Act is an important civil rights law,” said Zachary T. Fardon, United States Attorney for the Northern District of Illinois.  “Restaurant owners must conform to its accessibility provisions, and we will pursue all reasonable measures to ensure compliance.”

This year marks the 25th anniversary of the passage of the ADA.  The Act prohibits discrimination on the basis of disability in places of public accommodation, including restaurants, and requires such places to be “designed, constructed, and altered in compliance with the accessibility standards” established by the ADA’s implementing regulations.

As part of the program, an initial selection of restaurant owners in Chicago and the suburbs will be asked to complete a survey pertaining to their restaurant’s accessibility.  Federal investigators may then conduct on-site inspections of the facilities to confirm survey responses and to evaluate compliance with ADA regulations.  The initial round of surveys is being sent to the restaurants today.

Non-compliant owners and operators will initially have the option to voluntarily agree to upgrade their facilities to meet ADA requirements.  However, owners and operators found to be engaging in a pattern or practice of discrimination – and those who fail to enter voluntary compliance agreements – may face a civil lawsuit and be subject to monetary penalties and civil fines.

Additional information about the ADA can be found at www.ada.gov, or by calling the toll-free information line at the Civil Rights Division of the Justice Department at (800) 514-0301 (voice) or (800) 514-0383 (TTY).

CHICAGO — A high-ranking member of the Sinaloa Cartel in Mexico was sentenced today to 19 years in federal prison for his role in a conspiracy to transport large amounts of narcotics to the Chicago area.

TOMAS AREVALO-RENTERIA directed a portion of the cartel’s U.S.-based couriers, who distributed large quantities of cocaine and heroin in Chicago and throughout the United States.  He also coordinated logistics for the cartel and served as a broker in its efforts to ship the narcotics from Mexico.

Arevalo-Renteria, 46, pleaded guilty last year to one count of conspiracy to possess with the intent to distribute cocaine and heroin.  U.S. District Chief Judge Ruben Castillo imposed the 19-year sentence in federal court in Chicago.

“The defendant was a full functioning member of one of the most dangerous criminal organizations in existence,” Assistant U.S. Attorney Michael J. Ferrara argued in the government’s sentencing memorandum.  “The direct and indirect damage that those drugs have caused to communities in Chicago and elsewhere is immeasurable.”

The U.S. Attorney’s Office in Chicago has worked closely with federal and local law enforcement agencies to target senior leadership of the Sinaloa Cartel.  Arevalo-Renteria is one of more than 20 alleged members of the cartel to be indicted in federal court in Chicago.  The indictments include charges against the cartel’s alleged leader, JOAQUIN “CHAPO” GUZMAN.  The Chicago-based investigation has resulted in seizures of approximately $30.8 million, approximately eleven tons of cocaine, 265 kilograms of methamphetamine and 78 kilograms of heroin. 

Arevalo-Renteria has been in U.S. custody since his arrest in his native Mexico in 2010.  In his plea declaration, he admitted that he conspired with twin brothers from Chicago to distribute heroin and cocaine from 2005 to 2008.  The twins, PEDRO FLORES and MARGARITO FLORES, operated a Chicago-based wholesale distribution network for both the Sinaloa Cartel and a rival organization.

In two separate transactions brokered by Arevalo-Renteria, the Flores brothers agreed in 2008 to purchase 27 kilograms of heroin from the Sinaloa Cartel, according to Arevalo-Renteria’s plea declaration.  Unbeknownst to Arevalo-Renteria, the Flores brothers had begun cooperating with U.S. law enforcement and had provided information about the deals to investigators.  The information allowed agents to seize the 27 kilograms of heroin.

The Flores brothers pleaded guilty to federal drug charges in 2012 and were each sentenced to 14 years in prison.

Arevalo-Renteria’s sentence 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 Drug Enforcement Administration; Stephen Boyd, Special Agent-in-Charge of the Internal Revenue Service Criminal Investigation Division in Chicago; and Chicago Police Superintendent Garry F. McCarthy.

The government is represented by Mr. Ferrara and Assistant U.S. Attorneys Erika Csicsila, Georgia Alexakis, Kathryn Malizia, and Sean Franzblau.

CHICAGO — The owner of a Wheaton financial firm misused more than $1.2 million in client money to fund his company’s payroll and business obligations, according to a ten-count indictment returned in federal court in Chicago.

ROBERT PEARSON, the owner and chief executive of Illinois Stock Transfer Co., took the money out of a client fund account the company maintained at BMO Harris Bank, the indictment alleges.  Pearson allegedly used the money to meet his company’s payroll and tax commitments from February 2012 until approximately February 2014.  He tried to conceal the scheme by fraudulently representing to customers, the U.S. Securities and Exchange Commission and an outside accountant that the funds were secure, the indictment states.

The indictment, which was returned Thursday, charges Pearson, 58, of Winfield, with ten counts of wire fraud.  An arraignment hearing is set for Nov. 19, 2015, at 2:30 p.m. before U.S. District Judge Edmond E. Chang in Chicago.

Pearson’s Wheaton-based company, which did business under the name IST Shareholder Services, functioned as a transfer agent to repurchase shares of securities as a result of companies merging or being acquired.  IST also reinvested dividends for shareholders of certain IST customers, recorded changes of ownership in securities, and maintained records of issuers. 

According to the indictment, Pearson told his clients that IST complied with the rules and guidelines of the SEC, which mandated that transfer agents safeguard their customers’ funds.  In reality, Pearson knew that his company did not comply with the SEC rules because he was misappropriating certain client funds, the indictment states.  As a result of the scheme, Pearson misappropriated more than $1.2 million, according to the indictment.

The indictment 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 Antonio Gómez, Inspector-in-Charge of the U.S. Postal Inspection Service in Chicago.  The SEC assisted in the investigation.

Each count of wire fraud carries a maximum penalty of 20 years in prison and restitution to be determined by the Court, plus a maximum fine of $250,000 or twice the gross gain or gross loss resulting from the offense, whichever is greater.

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.  If convicted, the Court must impose a reasonable sentence under federal sentencing statutes and the advisory U.S. Sentencing Guidelines.

The government is represented by Assistant United States Attorney Jacqueline Stern.

Indictment

CHICAGO — The former executive director of two Deerfield-based physician offices was sentenced today to 18 months in federal prison for fraudulently diverting nearly $500,000 of the companies’ funds to her own use.

JAYNE KULHANEK, 57, used corporate credit cards of The Laser Network LLC and United Eye Care Providers to fund vacations in France and Spain, purchase antique furniture, and pay her own state and federal income taxes.  Kulhanek concealed the six-year scheme by making false accounting entries in the companies’ ledgers.

Kulhanek, of Benton Harbor, Mich., pleaded guilty in February to one count of wire fraud.  In addition to the 18-month prison term, U.S. District Judge John W. Darrah ordered Kulhanek to pay $364,598.05 in restitution.

“The crime is not one of a mistake made one time, but a six-year scheme to steal money and cover it up,” Assistant U.S. Attorney Sunil R. Harjani argued in the government’s sentencing memorandum.  “Only when the defendant’s scheme was fully exposed by company management did she stop her fraudulent conduct.”

The Laser Network and United Eye Care Providers are affiliated physician offices that provide treatment for the eye.  As executive director of the two companies, Kulhanek had access to the companies’ corporate credit cards and bank accounts in order to pay business expenses.  She also maintained the companies’ accounting ledgers.

From January 2006 to December 2012, Kulhanek used the companies’ funds to pay balances on her personal credit cards that she had spent on her own living expenses.  She attempted to conceal the scheme by fraudulently classifying the payments as having been made to a medical-equipment vendor or other supplier.  The scheme netted Kulhanek $491,328.57.

When company officials initially confronted her about the antique furniture in November 2011, Kulhanek said she had used the wrong credit card to make the purchase.  The scam continued for another year before it was fully exposed.

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 government is represented by Mr. Harjani.

CHICAGO — A former religious services assistant at the downtown Metropolitan Correctional Center pleaded guilty today to providing sensitive information to inmates about fellow prisoners in the federal corrections system.

TOMMY HAIRE, 34, performed unauthorized searches on the MCC’s internal computer system to obtain personal information about several prisoners being housed elsewhere, and then relayed that information to inmates in the MCC, according to a plea agreement.  The searches revealed various data, including the outside inmates’ psychological information, their status as sex offenders, their location within the prison system, and other personal identifying items.  Haire admitted in the plea agreement that such information would be valuable to the MCC inmates as a means of extorting the other prisoners or for committing identity and tax fraud against them.

Haire, of Chicago, pleaded guilty to one misdemeanor count of conversion of government property.  The charge carries a maximum sentence of one year in prison and a maximum fine of $100,000.  U.S. Magistrate Judge Michael T. Mason scheduled a sentencing hearing for February 2, 2016.

In addition to obtaining the sensitive information of other prisoners, Haire also used his position to provide perks to MCC inmates.  According to the plea agreement, Haire allowed the inmates to use his computer to surf the Internet, and to use his cellular phone to place calls outside of the jail.  He also mailed letters on behalf of inmates, in violation of the MCC’s rules on screening prisoners’ correspondence.

The guilty plea was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; and John F. Oleskowicz, Special Agent-in-Charge of the U.S. Department of Justice, Office of the Inspector General, Chicago Field Office.

The government is represented by Assistant United States Attorneys Lindsay Jenkins and Maureen Merin.

Plea Agreement

CHICAGO — An Ohio man was convicted yesterday for his role in a sex trafficking conspiracy involving minor girls who were transported to Chicago from Iowa to engage in prostitution.

WILLIE WOODS, 44, of Toledo, Ohio, helped transport the minor girls from Iowa City in 2012.  Once in Chicago, Woods and his co-conspirators forced the girls to engage in prostitution.  At the time, one victim was 14 years old and the two other victims were each 16 years old.

After a seven-day trial in federal court in Chicago, the jury convicted Woods on one count of sex trafficking conspiracy; three counts of sex trafficking of minors by force, fraud or coercion; one count of transporting minors to engage in prostitution; and one count of obstruction of justice.

The counts for sex trafficking of minors by force, fraud, or coercion are punishable by a mandatory minimum of fifteen years in prison to life and the transportation count is punishable by a mandatory minimum of ten years in prison to life. U.S. District Judge Sharon Johnson Coleman will schedule a sentencing hearing at a later date.

Woods is among three defendants charged in the case.  MALIK McKEE and his sister, SHUNTINA McKEE, both of Iowa City, previously pleaded guilty to one count of sex trafficking conspiracy.  Judge Coleman sentenced Malik McKee to 102 months in prison, plus restitution of $6,000.  Shuntina McKee is awaiting sentencing.

Evidence at Woods’ trial revealed that the defendants forced the minor girls to engage in prostitution in Iowa and Chicago.  The defendants took photographs of the minors and used them in advertisements on websites, including Backpage.com.  When a prospective “date” responded to the advertisement, the defendants arranged the meeting and then pocketed the proceeds.

The three minor girls testified at trial about their ordeals.  The girls described the defendants’ violent and abusive acts, which included using power and coercion to force the girls to perform sex acts for money.  One of the girls testified that Woods starved her by withholding food until she would submit to his demands to engage in prostitution.

The conviction 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 Garry F. McCarthy, Superintendent of the Chicago Police Department.  The FBI and Chicago Police conducted the investigation, in coordination with the Cook County Human Trafficking Task Force.  Federal prosecutors and law enforcement authorities in the Southern District of Iowa and the Northern District of Ohio also provided assistance.

The government is represented by Assistant United States Attorneys Megan Cunniff Church and Bethany Biesenthal.

ROCKFORD — A Rockford, Ill. woman was arrested today on federal charges of making false claims for federal tax refunds and using other persons’ identification in connection with the fraudulent claims for tax refunds.  CRYSTAL S. JACKSON, 27, of Rockford, was charged by a federal indictment on Oct. 20, 2015.  The indictment charged her with 45 counts of filing fraudulent claims for federal tax refunds, and three counts of illegally possessing and using other persons’ identification in connection with making fraudulent claims for federal tax refunds.

The indictment alleges that between Aug. 1, 2011 and Feb. 5, 2013, Jackson prepared and filed, both electronically and by mail, 45 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.  Some of the 2010 and 2011 fraudulent tax returns listed the address of a relative of Jackson as the taxpayers’ address, and requested debit cards containing the tax refunds be mailed to that address.

Each count of filing a fraudulent claim for a federal income tax refund carries a maximum potential penalty of up to 5 years in prison.  Each count of possessing another person’s identification in connection with making a fraudulent claim for a federal income tax refund carries a potential penalty of up to 5 years in prison, or up to 15 years in prison if the charge involves obtaining anything of value totaling $1,000 or more during any one year period.  In addition each count charged carries a fine of up to $250,000, or twice the gross gain or gross loss resulting from that offense, whichever is greater, and full restitution.  If convicted, the court must impose a reasonable sentence under federal sentencing statutes and the advisory United States Sentencing Guidelines.  Jackson will appear for a detention hearing at 3:00 p.m. today in Federal Court in Rockford, before U.S. Magistrate Iain D. Johnston.

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 arrest was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Stephen Boyd, Special Agent-In-Charge of the Chicago Field Office of Internal Revenue Service - Criminal Investigation Division

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

Indictment

CHICAGO — In the first federal prosecution of its kind, a high-frequency trader was convicted today of disrupting commodity futures prices in a $1.4 million fraud scheme.

MICHAEL COSCIA, 53, used an automated trading technique to commit a crime known as “spoofing” to earn illegal profits from orders he placed through Chicago-based CME Group and London-based ICE Futures Europe.  Coscia commissioned the design of two computer programs, known as algorithms, to implement his fraudulent strategy at his New Jersey trading firm.

The jury in federal court in Chicago deliberated for approximately one hour before convicting Coscia on all 12 counts, including 6 counts of commodities fraud and 6 counts of spoofing.  Each count of commodities fraud carries a maximum sentence of 25 years in prison and a $250,000 fine, while each count of spoofing carries a maximum sentence of ten years in prison and a $1 million fine.  U.S. District Judge Harry D. Leinenweber scheduled a sentencing hearing for March 17, 2016, at 9:45 a.m.

The indictment against Coscia, of Rumson, N.J., marked the first federal prosecution nationwide under the anti-spoofing provision that was added to the Commodity Exchange Act by the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act.  The case was prosecuted by Assistant United States Attorneys Renato Mariotti and Sunil Harjani of the Securities and Commodities Fraud Section of the U.S. Attorney’s Office in Chicago.  The section, which was created in 2014, is dedicated to protecting markets and preserving investors’ confidence.

“The defendant’s trading activities disrupted the markets in his favor and against legitimate traders and investors,” said Zachary T. Fardon, United States Attorney for the Northern District of Illinois.  “We have to have fairness and integrity in our markets.  And enforcement, including federal criminal prosecutions, is an important tool to protecting those values.  The jury’s verdict exemplifies the reason we created the Securities and Commodities Fraud Section in Chicago, which will continue to criminally prosecute these types of violations.”

Mr. Fardon announced the conviction along with Michael J. Anderson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation.

High-frequency trading is a form of automated trading that uses computer algorithms for placing a high volume of trading orders in milliseconds.  It is illegal for traders to engage in spoofing, which involves placing “bids” to buy or “offers” to sell a futures contract with the intent to cancel the bid or the offer before execution.

Evidence at the seven-day trial showed that Coscia engaged in spoofing in the markets of various commodities, including gold, soybean meal, soybean oil, high-grade copper, Euro FX and Pounds FX currency futures.  In less than three months in 2011, Coscia illegally profited nearly $1.4 million.

Coscia has been a registered commodities trader since 1988.  In 2007, he formed Panther Energy Trading LLC in Red Bank, N.J.

A Bolingbrook, Illinois, man pleaded guilty today to a federal charge that he attempted to travel overseas to join a designated foreign terrorist organization in Syria.

The guilty plea was announced by Assistant Attorney General for National Security John P. Carlin, 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.

Mohammed Hamzah Khan, 20, pleaded guilty to one count of attempting to provide material support to a foreign terrorist organization, identified in a written plea agreement as the Islamic State of Iraq and the Levant (ISIL).

Khan, a U.S. citizen from southwest suburban Bolingbrook, faces a maximum sentence of 15 years in prison.  U.S. District Judge John J. Tharp Jr. of the Northern District of Illinois did not immediately schedule a sentencing hearing.  A status hearing was set for Dec. 3, 2015, at 12:30 p.m. EST.

Khan has been detained in federal custody since he was arrested on Oct. 4, 2014, at O’Hare International Airport by members of the Chicago Joint Terrorism Task Force. 

According to his plea agreement, beginning no later than approximately February 2014, Khan used the Internet to obtain introductions to ISIL members in Syria and to assist him with traveling there to join the terrorist group.  Khan spoke with ISIL members to coordinate the logistics of his admission into ISIL-controlled territory, the plea agreement states.

Khan also admitted in the plea agreement that he knew ISIL had been designated by the United States as a foreign terrorist organization.  Upon arriving in Syria, according to the plea agreement, Khan intended to work under the direction and control of ISIL, and be required to take any assignment ISIL gave him.

The case was investigated the FBI and the Chicago Joint Terrorism Task Force.  U.S. Customs and Border Protection, U.S. Immigration and Customs Enforcement-Homeland Security Investigations (ICE-HSI) and the Illinois State Police also provided significant assistance in the investigation.

The case is being prosecuted by Assistant U.S. Attorneys Matt Hiller, Angel Krull and Sean Driscoll of the Northern District of Illinois, and Trial Attorney Michael Dittoe of the National Security Division’s Counterterrorism Section.

Mohammed Hamzah Khan Plea Agreement

CHICAGO — A Bolingbrook man pleaded guilty today to a federal charge that he attempted to travel overseas to join a foreign terrorist organization in Syria.

MOHAMMED HAMZAH KHAN, 20, pleaded guilty to one count of attempting to provide material support to a foreign terrorist organization.  The organization is identified in a written plea agreement as the Islamic State of Iraq and the Levant (“ISIL”).

Khan, a U.S. citizen from southwest suburban Bolingbrook, faces a maximum sentence of 15 years in prison.  U.S. District Judge John J. Tharp Jr. did not immediately schedule a sentencing hearing.  A status hearing was set for Dec. 3, 2015, at 11:30 a.m.

Khan has been detained in federal custody since he was arrested on Oct. 4, 2014, at O’Hare International Airport by members of the Chicago Joint Terrorism Task Force.

Beginning no later than approximately February 2014, Khan used the Internet to obtain introductions to ISIL members in Syria and to assist him with traveling there to join the terrorist group, according to the plea agreement.  Khan spoke with ISIL members to coordinate the logistics of his admission into ISIL-controlled territory, the plea agreement states.

Khan admitted in the plea agreement that he knew ISIL had been designated by the United States as a foreign terrorist organization.  Upon arriving in Syria, according to the plea agreement, Khan intended to work under the direction and control of ISIL, and be required to take any assignment ISIL gave him.

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

The Joint Terrorism Task Force is comprised of Special Agents of the FBI, officers of the Chicago Police Department, and representatives from an additional 20 federal, state and local law enforcement agencies.  U.S. Customs and Border Protection, U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI), and the Illinois State Police also provided significant assistance in the investigation.

The government is represented by Assistant United States Attorneys Matt Hiller, Angel Krull and Sean Driscoll; and U.S. Department of Justice Trial Attorney Michael Dittoe of the National Security Division.

Plea Agreement

ROCKFORD — A Lake County woman pleaded guilty today in federal court to two counts of bank robbery and one count of attempted bank robbery.  TERESA M. KNOWLES, 39, of Volo, Ill., pleaded guilty before U.S. District Judge Frederick J. Kapala to robbing the Chase Bank, in Crystal Lake, Ill. on March 21, 2015, and the Chase Bank, in Grayslake, Ill. on March 24, 2015, as well as attempting to rob the Chase Bank in Johnsburg, Ill., on March 24, 2015.

According to the written plea agreement, on March 21, 2015, Knowles drove a Nissan SUV to a branch of Chase Bank located in Crystal Lake, Ill.  She entered the bank, approached a teller window and passed the teller a note that demanded $10,000.  The teller first handed Knowles $400.  When Knowles said that was not enough money, the teller then handed Knowles another $2450.  Knowles then left the bank and drove away.

Knowles also admitted in the plea agreement that on March 24, 2015, she drove to a branch of Chase Bank located in Grayslake, Ill.  She entered the bank and handed a teller a note similar to the note Knowles used in robbing the Chase Bank branch in Crystal Lake. The teller handed Knowles $1,000.  Knowles walked out of the Chase Bank with the note and drove away.

In addition, Knowles admitted that on March 24, 2015, she drove to a branch of Chase Bank located in Johnsburg, Ill.  There, she entered the bank and handed a teller a note demanding money.  When the teller refused to hand over any money, Knowles walked out of the Chase Bank and drove away.

Each count of bank robbery and attempted bank robbery carries a maximum potential penalty of up to 20 years in prison, up to 3 years of supervised release following imprisonment, a fine of up to $250,000, and full restitution.  The court must impose a reasonable sentence guided by the advisory United States Sentencing Guidelines.  Sentencing for Knowles is set for February 4, 2016, at 2:30 p.m.

The guilty plea was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Michael J. Anderson, Special Agent-in-Charge of the Chicago Office of Federal Bureau of Investigation.  The Johnsburg Police Department, McHenry Police Department, Grayslake Police Department, and Crystal Lake Police Department assisted in the investigation.

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

Plea Agreement

CHICAGO — This morning, JOHN DENNIS HASTERT, 73, of Plano, pleaded guilty in federal court to one count of illegally structuring cash withdrawals in order to evade financial reporting requirements.  The Honorable U.S. District Judge Thomas M. Durkin scheduled a sentencing hearing for February 29, 2016, at 10:00 a.m.

The United States Attorney’s Office for the Northern District of Illinois issued this statement following the guilty plea:

“Now that Mr. Hastert has pled guilty, and the Court has accepted his guilty plea, the case will proceed to sentencing.  As part of the sentencing process in this case, as in all cases, we will provide the Court with relevant information about the defendant’s background and the charged offenses, and the defendant will have an opportunity to do the same, so that the Court can impose an appropriate sentence taking into account all relevant factors in the case.  We have no further comment about the matter at this time.”

Plea Agreement

ROCKFORD — A former Davis, Ill. resident pleaded guilty today before U.S. District Judge Frederick J. Kapala to a charge of failure to register under the federal Sex Offender Registration and Notification Act (“SORNA”).  MARK STEPHEN CURTIS, 29, who moved from North Carolina to Davis, Ill. during September 2014, admitted in a written plea agreement that he was a sex offender required to register in Illinois under SORNA.  According to the plea agreement, Curtis remained a resident in Davis, Ill. until at least Oct. 19, 2014, but did not register as a sex offender as required, despite knowing that he needed to register within three days of moving to a new state.

Curtis faces a maximum sentence of 10 years’ imprisonment, a term of supervised release following imprisonment of at least 5 years and up to life, and a fine of up to $250,000.   Sentencing for Curtis is set for Feb. 2, 2016, at 2:30 p.m.

The guilty plea was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Roberto Robinson, Acting United States Marshal for the Northern District of Illinois.

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

Plea Agreement

CHICAGO — A Chicago father who offered to hire a hit man to execute two potential witnesses in his son’s murder trial was sentenced today to 17 and a half years in federal prison.

EURIPIDES CAGUANA, 61, sought the killings of two men he believed would testify against his son in his upcoming murder trial.  Caguana paid $500 to an undercover individual to purchase a gun, and he offered the individual up to $7,500 to have the two witnesses killed.

A jury in May convicted Caguana on four counts of murder for hire.  U.S. District Judge Thomas M. Durkin imposed the 210-month sentence in federal court in Chicago.

“The defendant’s conduct strikes at the heart of the criminal justice system,” Assistant U.S. Attorney Peter S. Salib argued in the government’s sentencing memorandum.  “Without witnesses, criminal cases can never be judged on the merits of the evidence.”

Caguana’s son, Travis Caguana, is charged with murder in the Circuit Court of Cook County in connection with a fatal drive-by shooting of a man on June 8, 2011.  In October 2013, a cooperating individual notified law enforcement that Euripides Caguana had called him seeking to have two men killed to prevent them from testifying against Travis Caguana.  Over the course of a few days, the cooperating individual and an undercover police officer – posing as a hit man – engaged in a series of secretly recorded meetings and conversations with Euripides Caguana.

During one of the meetings, Euripides Caguana provided the cooperating individual with $500 to purchase a gun, and he offered to pay up to $7,500 to have the two potential witnesses killed.  He is heard on a recording telling the individual, “I want both of them, both of them.”

Caguana was arrested on Oct. 17, 2013, and the murders for hire were never carried out.

A trial date in the state murder case against Travis Caguana has not yet been set.

The sentence 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 Chicago Police Superintendent Garry F. McCarthy.

The government is represented by Mr. Salib and Assistant U.S. Attorney Derek Owens.

CHICAGO — The chief executive of Chicago-based Mobile Doctors pleaded guilty today to charges that he fraudulently increased Medicare bills for in-home treatment that was shorter and less complicated than the claims indicated.

DIKE AJIRI, 44, of Wilmette, admitted in a plea agreement that he personally altered patient files so that the now-defunct company could fraudulently bill several patient visits to Medicare at the highest possible level.  The improper billing – known as “upcoding” – defrauded Medicare and the Railroad Retirement Board of approximately $1,854,000, according to the plea agreement.

Ajiri pleaded guilty to one count of health care fraud.  He faces a maximum sentence of ten years in prison when U.S. District Judge John J. Tharp Jr. sentences him on April 19, 2016, at 2:00 p.m.

Mobile Doctors, which closed in 2013 after Ajiri was arrested, had been located at 3319 N. Elston Ave., in Chicago.  The company contracted with physicians to arrange in-home visits for patients in Illinois, Michigan, Indiana and other states.  For an in-home visit with an established patient to be billed properly at the highest level, the visit must involve at least two of the following components as defined by the American Medical Association:  a comprehensive interval history, a comprehensive examination, and/or medical decision-making process of moderate to high complexity.  According to the AMA, such a visit usually involves problems of moderate to high severity, with the physician typically spending 60 minutes face-to-face with the patient and/or the patient’s family.

According to the plea agreement, Ajiri personally altered Mobile Doctors’ billing forms – and instructed Mobile Doctors’ personnel to do the same – so that many of the in-home visits were fraudulently billed to Medicare and the Railroad Retirement Board at the highest level.  Ajiri knew that these visits did not qualify for the maximum payment, and that it was unlawful for him to submit the false claims.

The investigation was carried out by the Medicare Fraud Strike Force, which consists of agents from the Federal Bureau of Investigation and the U.S. Department of Health and Human Services, and prosecutors from the U.S. Attorney’s Office and the Justice Department’s Fraud Section. The strike force is part of the Health Care Fraud Prevention & Enforcement Action Team (HEAT), a joint initiative between the Department of Justice and HHS to prevent fraud and to enforce anti-fraud laws around the country.

The investigation also resulted in charges against BANIO KOROMA, a Mobile Doctors physician.  The indictment against Koroma charges that he falsely certified patients as confined to their homes when they were not actually home-bound and did not require specialized care.  Koroma, of Tinley Park, is scheduled to proceed to trial on Dec. 7, 2015, before Judge Tharp.

Ajiri’s 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 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.  The Railroad Retirement Board Office of Inspector General is also participating in the case.

The government is represented by Assistant United States Attorneys Stephen Chahn Lee and Eric Pruitt.

To report health care fraud or to learn more about the Health Care Fraud Prevention & Enforcement Action Team (HEAT), logon to: StopMedicareFraud.gov.

Plea Agreement

ROCKFORD — A Polo, Ill. woman was charged yesterday by a federal grand jury for embezzling funds.  KAYLA BERGSTROM, 46, of Polo, Ill., was First Vice-President of First State Bank, with branches located in Polo and Shannon, Ill.  As alleged in the indictment, as Vice-President, Bergstrom had the highest security level assigned in the bank’s software program which controlled all customer bank accounts, the bank’s general ledger accounts, adding new accounts, and the maintenance of all bank accounts.  Bergstrom’s responsibilities included reconciling all of the bank’s correspondent accounts including the bank’s correspondent account with US Bank.  The indictment alleges that between Feb. 23, 2010 and Feb. 3, 2014, Bergstrom embezzled money from First State Bank by creating cash advance tickets for the bank’s correspondent account at US Bank and crediting the amounts of cash advance tickets to her personal account and the business account for her husband’s automobile repair business.  According to the indictment, Bergstrom concealed her embezzlement by changing the balances on the bank’s US Bank account statements by manually cutting and pasting false account balances on the statements.

Embezzlement carries a maximum potential penalty of up to 30 years in prison, up to 5 years of supervised release following imprisonment, and a fine of up to $1,000,000.  Bergstrom has since repaid the funds to First State Bank.  If convicted, the court must impose a reasonable sentence under federal sentencing statutes and the advisory United States Sentencing Guidelines.   Bergstrom will be arraigned before United States Magistrate Judge Iain D. Johnston on Oct. 22, 2015, at 11:00 a.m. in U.S. District Court in Rockford.

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 guilt beyond a reasonable doubt.

The indictment 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 Joseph Moriarty, Special Agent in Charge for the Chicago Regional Office, Federal Deposit Insurance Corporation - Office of Inspector General.

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

Indictment

CHICAGO — A Kenilworth businessman has been indicted on charges he evaded federal income taxes by concealing $3 million he earned in connection with a high-rise real estate deal in downtown Chicago, federal authorities announced today.

SALVATORE GALIOTO earned $3 million in personal income as part of the acquisition of nine floors in a high-rise building at 55 E. Washington St. in Chicago in 2007, according to the indictment.  The seller, Pittsfield Development LLC, paid the money as a consulting fee for closing the deal.  Instead of reporting the money on his personal income taxes, Galioto caused false partnership tax returns to be prepared and filed, misstating that the $3 million was earned in 2008 by his company, 55 E. Washington Development LLC, according to the indictment.

The indictment was returned Thursday afternoon in U.S. District Court in Chicago.  It charges Galioto with one count of corrupt interference with the administration of Internal Revenue Service laws, and three counts of willfully making false and fraudulent statements to the IRS.

Galioto, 54, also known as “Sam Galioto” and “Sammy Galioto,” will be arraigned on a future date to be set by the Court.

According to the charges, Galioto entered into a consulting agreement with Pittsfield on or about March 28, 2007.  The agreement called for Pittsfield to pay $3 million to Galioto when the sale was completed.  On or about Dec. 28, 2007, Galioto’s company purchased floors 13-21 from Pittsfield for $22,652,876.82, the indictment states.

Galioto concealed receipt of Pittsfield’s payment by having it paid to his relative as a nominee.  The relative is identified in the indictment only as “Individual C.”  On or about Dec. 31, 2007, Pittsfield sent a portion of Galioto’s consulting fee to Individual C in the form of a check for $962,121.75.  Shortly thereafter, Galioto caused Individual C to sign and endorse the check over to Galioto, who took possession of it, endorsed it, and deposited it for his own use, according to the indictment.  Galioto failed to report that money in his individual federal income tax returns for the years 2007 and 2008, the indictment alleges.

Instead, the false partnership returns were filed, misstating that Galioto’s company had earned the $3 million in 2008, the indictment alleges.

The corrupt interference charge carries a maximum sentence of three years in federal prison and a $5,000 fine.  Each count of making false and fraudulent statements to the IRS is punishable by up to three years in prison and a fine of $100,000.

The indictment was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Stephen Boyd, Special Agent in Charge of the Internal Revenue Service Criminal Investigation in Chicago; and John A. Brown, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of investigation.

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 government is represented by Assistant U.S. Attorney Patrick Otlewski.

Indictment

CHICAGO ― A Bolingbrook man has been sentenced to 47 years in federal prison for running a brutal sex trafficking ring that forced four victims into prostitution.

McKENZIE CARSON used violence and coercion to force his victims into working as prostitutes in Chicago and nearby suburbs.  Carson frequently provided the victims with heroin, and he controlled how much of the drug each victim was allowed to use.  One of the victims was 17 years old at the time Carson ran his pimping operation in 2010.

A federal jury in 2013 convicted Carson, 43, on four counts of sex trafficking.  All four victims testified about their ordeals during the trial.

U.S. District Judge Elaine E. Bucklo sentenced Carson on Thursday to 47 years in prison for each of the four counts.  The sentences are to run concurrently.

“The defendant’s conduct here was particularly brutal and sadistic, and has caused irreparable harm to his victims,” Assistant U.S. Attorney Jennie Levin argued in the government’s sentencing memorandum.  “He instilled into them fear, intimidation and humiliation.”

Evidence at trial showed that Carson recruited and groomed his victims.  In addition to supplying his victims with heroin, Carson used threats and physical beatings to assert control over them.  When the victims broke his rules or disobeyed him, Carson often raped them.  He also required his victims to commit commercial sex acts, and to give him the money they earned.

Carson, who worked off and on as a taxi driver in Chicago and the suburbs, has been in federal custody without bond since his arrest in 2012.

The sentencing was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; and John A. Brown, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of investigation.  The investigation was conducted by a multi-agency task force that was led by the FBI and included the Cook County Sheriff’s Office, the Cook County State’s Attorney’s Office, the Kendall County State’s Attorney’s Office, the Will County Sheriff’s Office, and the police departments from Alsip, Bolingbrook, Channahon, Downers Grove, Joliet, Naperville, Oswego, Romeoville, Shorewood, and Westmont.

The government was represented by Ms. Levin and Assistant U.S. Attorney Bethany Biesenthal.

CHICAGO ― A Grundy County gun dealer was sentenced today to 4 years in federal prison for selling nearly a dozen firearms to buyers he believed were not legally allowed to purchase the weapons.

PATRICK SEAN KEIRAN, 41, used his federal firearms license to sell eleven weapons to two buyers, one of whom was an undercover law enforcement officer who told Keiran he couldn’t pass the required background check.  The other buyer was a convicted felon whose criminal history prevented him from legally purchasing the weapons.  In both instances, Keiran doctored the bill of sale and the federal firearms paperwork by using the names of other customers as the purported buyers.

Keiran, who operated American’s Choice Firearms and Ammo in Gardner, pleaded guilty in April to one count of selling a firearm to a prohibited person.  In addition to the 48-month prison term, U.S. District Judge Matthew F. Kennelly also imposed three years of supervised release.

“The defendant let these individuals walk out of his store with brand new firearms and no possible paper trail for law enforcement to follow if those guns were ever used for criminal purposes,” Assistant U.S. Attorney Christopher V. Parente argued in the government’s sentencing memorandum.  The defendant “put his own greed above the safety of the community.”

Keiran has been a federally licensed firearms dealer since April 2013.  On May 29, 2014, Keiran sold three 9mm handguns for $960 to the undercover agent from the Bureau of Alcohol, Tobacco, Firearms, and Explosives.  The following month, Keiran sold the undercover agent a .38-caliber revolver for $398.43, and two .22-caliber rifles for approximately $1,390.  The rifle transaction was completed at Keiran’s home in Elwood because Keiran wanted to avoid the surveillance cameras in his gun shop.

On June 20, 2014, Keiran sold five 9mm handguns for $1,600 to the convicted felon, who was cooperating with law enforcement.  This deal was also conducted inside Keiran’s home.

Keiran was arrested in July 2014, and his gun store was closed.

The sentencing was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; and Jeffery Magee, Special Agent in Charge of the Chicago Field Division of the Bureau of Alcohol, Tobacco, Firearms and Explosives.  The Will County Sheriff’s Police Department, the Will County Metropolitan Area Narcotics Squad (MANS), and the Grundy County Sheriff’s Department assisted in the investigation.

The government was represented by Mr. Parente.

CHICAGO — The former owner of Edgewater Medical Center on Chicago’s North Side was sentenced today to 21 months in federal prison for his efforts to thwart collection of more than $188 million in civil judgments.

PETER G. ROGAN lied in a federal affidavit when he denied controlling millions of dollars in a trust account in the Bahamas.  He also willfully violated multiple court orders as part of a decades-long effort to protect his offshore assets from judgment creditors who had obtained more than $188 million in combined civil judgments arising from fraud during Rogan’s tenure as CEO of the now-shuttered medical center.

Rogan, 69, formerly of Valparaiso, Ind., pleaded guilty last month to one count of perjury.  In addition to the 21-month prison term, U.S. District Judge Harry D. Leinenweber ordered Rogan to comply with all outstanding court orders, including orders relating to discovery and financial obligations.

“The defendant’s conduct was abundantly contemptuous and lucrative, as well as exceedingly difficult to detect, investigate, and prosecute,” Assistant U.S. Attorney Andrew S. Boutros argued in the government’s sentencing memorandum.  The defendant “substantially interfered with the administration of justice.”

Rogan once owned Edgewater Medical Center and later sold it, but he continued to manage the facility through various companies he owned.  The hospital, located at 5700 N. Ashland Ave., closed in 2001 amid a criminal investigation that resulted in the healthcare fraud convictions of a Rogan-owned management company, a hospital administrator and several doctors, the latter of whom performed medically unnecessary surgical procedures and treatments on unsuspecting patients.

In 2006, the United States obtained a civil judgment of $64,259,032 against Rogan for his role in Edgewater’s submission of false claims for reimbursement under the Medicare program.  The following year, Dexia Crédit Local, a bank that extended credit financing to the hospital, was awarded a $124 million default judgment in a separate civil fraud suit against Rogan and his companies.

In the course of their respective proceedings against Rogan, the United States and Dexia discovered that Rogan’s Bahamian trust account was being used to hold millions of dollars in secret offshore assets.  Rogan had created the trust with the help of FREDERICK M. CUPPY, an Indiana attorney, as well as another attorney described in the indictment as “Florida Lawyer.”  Cuppy, formerly of Valparaiso, Ind., and now of Fort Lauderdale, Fla., pleaded guilty to a perjury charge before Judge Leinenweber.  He was sentenced in 2013 to one year and a day in prison.

On Dec. 21, 2006, Rogan responded to the government’s collection efforts by filing an affidavit with the Court in which he denied that he exercised control over assets in the trust account.  Rogan admitted in a plea agreement that this statement was false and misleading.  Rogan also admitted that he willfully and wrongfully violated several court orders in the Dexia litigation, including lying and causing his attorneys to lie to the Court about his control over his offshore trust.

The sentencing was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; and John A. Brown, Acting Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation.

The government was represented by Mr. Boutros and Assistant United States Attorneys Daniel W. Gillogly, Eric S. Pruitt and Joseph A. Stewart.

 

CHICAGO — BARBARA BYRD-BENNETT pleaded guilty in federal court today to using her position as chief executive officer of the Chicago Public Schools to guide lucrative no-bid contracts to her former employer in exchange for bribes and kickbacks.

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

Byrd-Bennett previously worked as a consultant for SUPES and Synesi before moving to CPS in May 2012.  She served as CEO at CPS from Oct. 12, 2012, to June 1, 2015.

Byrd-Bennett, 66, of Solon, Ohio, pleaded guilty to one count of wire fraud.  She faces a maximum sentence of 20 years in prison, mandatory restitution, and a maximum fine of $250,000 or twice the gross gain or gross loss resulting from the offense, whichever is greater.  The Court will impose a reasonable sentence under federal sentencing statutes and the advisory United States Sentencing Guidelines.

The Court will schedule a sentencing date at a later time.  U.S. District Judge Edmond E. Chang scheduled a status hearing for Jan. 27, 2016, at 9:00 a.m.

In addition to the expected kickback from the contracts, Byrd-Bennett admitted in the plea agreement that the companies provided her with numerous other benefits, including meals and tickets to sporting events.

The Wilmette-based SUPES and the Evanston-based Synesi are also charged in the indictment, along with their respective former owners, GARY SOLOMON, 47, of Wilmette, and THOMAS VRANAS, 34, of Glenview.  The four co-defendants are scheduled for an arraignment on Oct. 14, 2015, at 2:00 p.m., before Judge Chang.

Byrd-Bennett’s guilty plea was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; John A. Brown, Acting Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation; and Nicholas J. Schuler, Inspector General for the Chicago Public Schools.

The government is represented by Assistant United States Attorneys Megan Cunniff Church and Lindsay Jenkins.

Plea Agreement

CHICAGO — A federal indictment returned today charges BARBARA BYRD-BENNETT with using her position atop the Chicago Public Schools to award lucrative no-bid contracts to her former employer in exchange for bribes and kickbacks.

The 23-count indictment alleges that Byrd-Bennett steered no-bid contracts worth more than $23 million to THE SUPES ACADEMY LLC, and SYNESI ASSOCIATES LLC, in exchange for an expectation of hundreds of thousands of dollars in bribes and kickbacks.   The companies agreed to conceal the kickback money by funneling it into accounts set up in the names of two of Byrd-Bennett’s relatives, according to the indictment.  A later agreement called for the funds to be paid to Byrd-Bennett in the form of a “signing bonus” after her employment with CPS ended and the companies re-hired her as a consultant, according to the indictment.

The companies, which specialize in training principals and school administrators, provided Byrd-Bennett with numerous other benefits, including meals, an airplane ticket, and seats at basketball and baseball games, the indictment states.  Byrd-Bennett also expected to receive reimbursement from the companies for costs associated with a holiday party she hosted for CPS personnel, according to the charges.

The Wilmette-based SUPES and the Evanston-based Synesi are also charged in the indictment, along with their respective former owners, GARY SOLOMON and THOMAS VRANAS.  Byrd-Bennett had worked as a consultant for SUPES and Synesi before moving to CPS in May 2012.  She was appointed chief executive officer at CPS on Oct. 12, 2012.

The indictment charges Byrd-Bennett, 66, of Solon, Ohio, with 15 counts of mail fraud and five counts of wire fraud.  Solomon, 47, of Wilmette, is charged with 15 counts of mail fraud, five counts of wire fraud, two counts of bribery of a government official, and one count of conspiracy to defraud the United States.  Vranas, 34, of Glenview, is charged with 15 counts of mail fraud, four counts of wire fraud, two counts of bribery of a government official, and one count of conspiracy to defraud the United States.  SUPES and Synesi are charged as corporate defendants with 15 counts of mail fraud and five counts of wire fraud apiece.

The indictment seeks forfeiture from defendants Solomon, Vranas, SUPES and Synesi of all money and property traceable to the violations, estimated at approximately $2 million.

An arraignment date in U.S. District Court in Chicago has not yet been set.

“Graft and corruption in our city’s public school system tears at the fabric of a vital resource for the children of Chicago,” said Zachary T. Fardon, United States Attorney for the Northern District of Illinois.  “School officials and city vendors who abuse the public trust will be held accountable.”

Mr. Fardon announced the indictment along with John A. Brown, Acting Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation; and Nicholas J. Schuler, Inspector General for the Chicago Public Schools.

“The American people expect honest services from their government leaders, particularly those responsible for leading our teachers and caring for our children,” said Special Agent Brown.  “The FBI, in conjunction with our local, state and federal law enforcement partners, remains steadfast in its pursuit of those willing to trade the education of our children for their own prosperity.”

“The public education system is harmed when a high-level insider chooses to line their pockets with public funds," CPS Inspector General Schuler said.  "My office is committed to rooting out corruption at any level through joint investigations such as this one.”

The contracts referenced in the indictment were awarded by the Chicago Board of Education, which governs CPS, as part of a CBOE training program called the Chicago Executive Leadership Academy (CELA).  One such contract – worth $2.09 million for leadership training of school administrators – was awarded to SUPES within two weeks of Byrd-Bennett’s appointment as CEO, and then extended with an additional $225,000 allocation in 2013.   A larger no-bid contract – worth $20.5 million – was awarded to SUPES on June 26, 2013.

The indictment alleges that Byrd-Bennett used her position as CEO to lobby CBOE officials on behalf of SUPES and Synesi, and to actively seek funds from the CPS budget to expand the CELA program for the companies’ benefit.  Byrd-Bennett directed CPS employees to obtain the necessary approvals to eliminate competitive bidding from the procurement process, and to ensure that the contracts were awarded to SUPES, according to the indictment.

All the while, Byrd-Bennett falsely represented to CBOE officials that she received no financial compensation from the companies, the indictment contends.  In reality, Byrd-Bennett maintained an interest in SUPES and Synesi through a secret consulting agreement, which promised to pay her a percentage of the gross proceeds from the contracts she helped to procure, according to the indictment.

The indictment cites an email between Solomon and Vranas on or about Dec. 6, 2012, which contained a prior email discussion between Byrd-Bennett, Solomon and Vranas.  In that email, Solomon informed Byrd-Bennett, in part: “It is our assumption that the distribution will serve as a signing bonus upon your return to SUPES/Synesi.  If you only join for the day, you will be the highest paid person on the planet for that day.”

In the late summer or early fall of 2013, according to the indictment, Solomon informed Byrd-Bennett that the CBOE Inspector General wanted to review Solomon’s and Vranas’s emails.  Solomon said Vranas planned to use a computer program to delete the emails, and he told Byrd-Bennett to delete her emails as well, the indictment states.

Each count of mail and wire fraud is punishable by a maximum sentence of 20 years in prison, mandatory restitution, and a maximum fine of $250,000 or twice the gross gain or gross loss resulting from the offense, whichever is greater.  Each count of bribery of a government official carries a maximum sentence of ten years in prison and a maximum fine of $250,000 or twice the gross gain or gross loss resulting from the offense, whichever is greater.  The charge of conspiracy to defraud the United States is punishable by a maximum sentence of five years in prison and a maximum fine of $250,000 or twice the gross gain or gross loss resulting from the offense, whichever is greater.

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 defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.

The government is represented by Assistant United States Attorneys Megan Cunniff Church and Lindsay Jenkins.

Indictment (175.45 KB)

ROCKFORD — A federal grand jury in Rockford returned a superseding indictment today charging seven individuals, six men and a woman, with conspiring to manufacture, possess and distribute 1,000 or more marijuana plants.  The superseding indictment charges four individuals, JEREMIAH N. CLEMENT, 37, of Des Plaines, Ill., GEORGE H. BACUS, 51, of Niles, Ill., YOUSIF Y. PIRA, 62, of Chicago, Ill., and JUSTIN T. PAGLUSCH, 33, of Ingleside, Ill., who had previously been indicted on April 21, 2015, and three additional individuals,  SHLIMON SHIMON, 47, of Chicago, Ill., CASEY WILLIAMS, 28, of Great Falls, Mont., and DESTINY FREEMAN, of Palmer, Alaska.  The indictment alleges that between Jan. 2, 2013, and Jan. 6, 2015, the defendants conspired to illegally grow and store marijuana in a warehouse located at 1916 11th Street in Rockford.  The warehouse was destroyed by a fire on Jan. 6, 2015.

Arrest warrants were issued for Shimon, Williams and Freeman and they are still at large.  Clement, Bacus and Pira were arrested in April 2015.  Clement is in federal custody and Bacus and Pira were released pending trial.  An arrest warrant for Paglusch was issued on April 21, 2015, and he is still at large.  The ATF has offered a $5,000 reward for information leading to Paglusch’s arrest. Call ATF Tip Line – 1-888-ATF-TIPS  or 1-888-283-8477.

The charge carries a mandatory minimum sentence of 10 years in prison and a maximum of life in prison and a maximum fine of $10 million.  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 is only a charge and is not evidence of guilt.  Each 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; Jeffery A. Magee, Special Agent-in-Charge of the Chicago Field Division of the Bureau of Alcohol, Tobacco, Firearms & Explosives; and Derek Bergsten, Chief of the Rockford Fire Department.  The Winnebago County Sheriff’s Department Narcotics Unit and Rockford Police Department Narcotics Unit assisted in the investigation.

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

Superseding Indictment

The Justice Department announced today that it has reached a settlement that resolves allegations that the owners and managers of a continuing care retirement community known as Sedgebrook violated the Fair Housing Act by instituting policies and maintaining practices that discriminated against residents with disabilities at the facility, which is located in Lincolnshire, Illinois.

The proposed settlement, which still must be approved by the court, was filed today, along with a complaint, in the United States District Court for the Northern District of Illinois.  The complaint alleges that since 2011, Sedgebrook has instituted a series of policies that prohibited, and then limited, residents’ ability to dine in the communal dining rooms of the independent living wing of the facility if they required assistance eating due to a disability.  Additionally, the complaint alleges that Sedgebrook maintained a policy prohibiting residents of the independent living wing from hiring live-in caregivers and refused to grant reasonable accommodations to that policy that would have allowed Sedgebrook residents with disabilities to use and enjoy their apartments. 

Under the settlement, Sedgebrook will pay $210,000 into a settlement fund to compensate residents and family members who were harmed by these policies.  Sedgebrook will also pay a $45,000 civil penalty to the United States.  In addition, Sedgebrook will appoint a Fair Housing Act compliance officer and will implement a new dining and events policy, a new policy applicable to residents’ private employment of caregivers, and a new reasonable accommodation policy.  Additionally, Life Care Services LLC, the company that manages Sedgebrook and is a named defendant in the lawsuit, will take steps to implement similar policies at the over 100 independent living and continuing care retirement communities it owns or manages across the country. 

“This consent order will ensure that all residents with disabilities at Sedgebrook are treated equally and that residents are able to get the assistance they need in the dining room and in the other central areas of their lives,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division.  “We are very pleased with the steps Life Care Services and Sedgebrook are taking to embrace new, non-discriminatory policies and help make them the standard, industry-wide.” 

“Equal opportunities must be afforded to individuals who require assistance due to a disability,” said U.S. Attorney Zachary T. Fardon of the Northern District of Illinois.  “The proposed settlement represents a significant step towards ensuring all members of the Sedgebrook community are treated justly.”

Individuals who are entitled to share in the settlement fund will be identified through a process established in the consent order.  Persons who believe they were subjected to unlawful discrimination at Sedgebrook should contact the Justice Department toll-free at 1-800-896-7743 mailbox #995, or e-mail the Justice Department at fairhousing@usdoj.gov.

The federal Fair Housing Act prohibits discrimination in housing based on race, color, religion, national origin, sex, disability, and familial status.  More information about the Civil Rights Division and the laws it enforces is available at www.justice.gov/crt.  Individuals who believe that they may have been victims of housing discrimination can call the Justice Department at 1-800-896-7743 and leave a message at mailbox #995, e-mail the Justice Department at fairhousing@usdoj.gov, or contact the Department of Housing and Urban Development at 1-800-669-9777 or through its website at http://portal.hud.gov/hudportal/HUD?src=/program_offices/fair_housing_equal_opp.

CHICAGO — The president of a southern California trucking company plotted with a Serbian man to extort $40,000 from a Chicago-area software company by hacking into the company’s computer system and threatening to disclose the data, federal authorities announced today.

STEFAN STOJANOVIC, 20, of Zemun, Serbia, hacked into the company’s servers in May and threatened to expose sensitive information, including employee usernames and passwords, unless the company paid him $40,000, according to a criminal complaint and affidavit filed in U.S. District Court in Chicago.  Per instructions from Stojanovic, an employee of the company deposited the funds into a bank account in California, the complaint states.

A check for $25,000 – made payable to “cash” – was subsequently drawn on the California account and deposited into a bank account controlled by Love Freightways, a transportation logistics company in Anaheim, Calif., according to the complaint.  The signatory for the Love Freightways account is its president, NEMANJA LOVRE, 32, of Seal Beach, Calif.

Lovre was arrested in California Wednesday morning.  The complaint, which was unsealed following the arrest, charges him with intentionally extorting money by threat to cause damage to a protected computer.  He is scheduled to appear for a bond hearing today at 2:00 p.m. PDT in U.S. District Court in Santa Ana, Calif.  The U.S. Attorney’s Office for the Northern District of Illinois will seek to remove Lovre to Chicago for prosecution.

Serbian officials arrested Stojanovic early Wednesday morning local time in Serbia.  He is expected to face charges in Serbia and be prosecuted in that country.

The Chicago-area software company is identified in the complaint only as “Company A.”  The employee who paid the money is identified only as “Individual A.”

According to the affidavit, Stojanovic first contacted the company via email and stated that he worked for Love Freightways, which recently had become a customer of Company A.  Stojanovic said in the email that he had hacked into Company A’s servers and obtained the personal identifying information of its employees.  He also provided a sample of the stolen data.  Individual A ultimately agreed to pay Stojanovic $40,000 in an attempt to protect the hacked data from being released, the complaint states.

Stojanovic instructed Individual A to have a cashier’s check deposited in the bank account in California, the complaint states.  On May 21, the $40,000 was received in the California account.  In early June, a $25,000 check was drawn on the account and made payable to “cash,” according to the complaint.  It was deposited into the Love Freightways account controlled by Lovre, the affidavit states.

The arrest and charge against Lovre were announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; and John A. Brown, Acting Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation.

The charge against Lovre carries a maximum sentence of 10 years in prison.  If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.

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 government is represented by Assistant U.S. Attorney Peter Salib of the U.S. Attorney’s Office for the Northern District of Illinois.

Complaint

CHICAGO — A Chicago man who helped purchase 43 firearms in Indiana and transport them to Illinois for sale on the streets of Chicago was sentenced today to 37 months in prison.

After purchasing the weapons at gun shows and from individual vendors in Crown Point and Indianapolis, WINSTON GERALDS helped bring the firearms into Illinois and sell them on the South Side of Chicago.  Unbeknownst to Geralds, the Chicago buyer was cooperating with law enforcement officers from the Bureau of Alcohol, Tobacco, Firearms and Explosives.

Geralds, 25, pleaded guilty in May to one count of illegally transporting firearms across state lines.  U.S. District Judge John Z. Lee imposed the 37-month sentence in federal court in Chicago.

“The defendant arranged for the sale of unregistered and untraceable firearms on the side streets and back alleys of Chicago’s neighborhoods,” Assistant U.S. Attorneys Bethany K. Biesenthal and Christopher V. Parente argued in the government’s sentencing memorandum.  “By directly assisting in the supply of firearms to this city, the defendant very directly contributed to the cycle of gun violence.”

Geralds used middlemen to facilitate selling the guns to the cooperating source.  In four separate meetings on April 22, 2012, the middlemen sold 20 weapons to the cooperating source at locations in the Greater Grand Crossing and Chinatown neighborhoods of Chicago.  The following day, the middlemen sold 23 more guns to the cooperating source in a Chinatown parking lot.

Five other defendants, including one middleman, were charged in connection with this investigation:

• Levaine Tanksley, of Chicago, served as a middleman in the transactions with the cooperating source.  Tanksley pleaded guilty to unlawfully transporting a firearm and was sentenced to more than 11 years in prison.
• Charles Lemle, of Chicago, acted as security for at least one of the firearm deals with the cooperating source.  Lemle pleaded guilty to unlawfully transporting a firearm and was sentenced to 10 years in prison. Prior to the guilty plea, Lemle violated the terms of his pretrial release by possessing a gun on New Year’s Eve 2013.  An additional indictment was filed, and Lemle pleaded guilty to being a felon in possession of a firearm.  He is set to be sentenced by Judge Lee on Oct. 7, 2015.
• Michael Hall, of Chicago, acted as security for at least one of the firearm deals.  Hall pleaded guilty to unlawfully transporting a firearm and is scheduled to be sentenced by U.S. District Judge Ronald A. Guzman on Nov. 18, 2015.
• David Lewisbey, of South Holland, served as the leader of the Indiana-to-Illinois gun trafficking ring.  He was convicted at trial of dealing and transporting firearms.  Lewisbey was sentenced to more than 16 years in prison.
• Maurice Strickland, of Chicago, lived in a residence in the Greater Grand Crossing neighborhood where the guns were sold to the cooperating source.  He pleaded guilty to unlawfully transporting a firearm and was sentenced to 42 months in prison.

The sentence was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; and Jeffery Magee, Special Agent in Charge of the Chicago Field Division of the Bureau of Alcohol, Tobacco, Firearms and Explosives.  The Federal Bureau of Investigation, the Chicago Police Department and the Illinois State Police assisted in the investigation, which was conducted with the Chicago High Intensity Drug Trafficking Task Force (HIDTA).

The government is represented by Ms. Biesenthal and Mr. Parente.

ROCKFORD — A Rockford resident was convicted yesterday after a two-day jury trial on a federal gun charge.  The defendant, MARTEZ DICKSON, 29, was found guilty by a federal jury following a trial before U.S. District Judge Philip G. Reinhard for illegally possessing a firearm as a convicted felon.

According to the indictment and evidence at trial, on May 31, 2014, Rockford Police Officers were called to the McDonald’s on 11th Street after Dickson was discovered asleep in the driver’s seat of a car parked in the drive-thru lane.  When officers arrived on the scene, Dickson was found in possession of a loaded 9 mm handgun.  Dickson previously had been convicted of a felony.  As a result, he was prohibited from possessing a firearm.

Dickson was originally charged in state court and was transferred to federal court where he was charged under tough federal firearms laws as part of the Project Safe Neighborhoods program.  Project Safe Neighborhoods is an intensive, cooperative effort between local, state, and federal law enforcement to attack gun crimes.  The cornerstone of the program is that every defendant committing an offense involving a gun will be reviewed for possible federal prosecution in order to obtain the harshest penalties for the worst offenders.  Additional information about Project Safe Neighborhoods may be found at: www.psn.gov.

Dickson faces a maximum sentence of life imprisonment.  The actual sentence will be determined by the United States District Court, guided by the advisory United States Sentencing Guidelines.   Dickson’s sentencing is set for December 28, 2015, at 9:00 a.m.

The conviction was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Jeffery Magee, Special Agent-in-Charge of the Chicago Field Division of the Bureau of Alcohol, Tobacco, Firearms & Explosives; Joseph Bruscato, Winnebago County State’s Attorney; and Chet Epperson, Rockford Police Chief.  The government is represented by Assistants U.S. Attorney Talia Bucci and Margaret J. Schneider.

The Justice Department announced today that it had filed a lawsuit against the city of Des Plaines, Illinois, alleging that the city violated the Religious Land Use and Institutionalized Persons Act of 2000 (RLUIPA) when it refused to allow the American Islamic Center (AIC) to operate a place of worship in a vacant office building it had contracted to purchase. 

The complaint, filed in the United States District Court for the Northern District of Illinois in Chicago, alleges that the city of Des Plaines imposed a substantial burden on the AIC’s exercise of religion and otherwise discriminated against AIC based on religion when it refused to grant its request for rezoning that would allow it to operate an Islamic place of worship in a vacant office building it had contracted to purchase.  The complaint alleges that the city imposed parking standards and other zoning criteria that were not supported under its zoning ordinance and that it had never imposed on non-Muslim places of worship.

“The ability to establish a place for collective worship is a fundamental protection of the First Amendment and our civil rights laws,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division.  “The Justice Department will remain vigilant in its mission to ensure that all religious groups enjoy the right to practice their faiths freely.”       

“The freedom to practice the religion of one’s choosing is a precious right in our country,” said U.S. Attorney Zachary T. Fardon of the Northern District of Illinois.  “We will continue to enforce the laws that protect this important right.”

RLUIPA, enacted in 2000, contains multiple provisions prohibiting religious discrimination and protecting against unjustified burdens on religion exercise.  Persons who believe that they been subjected to religious discrimination in land use or zoning may contact the Housing and Civil Enforcement Section of the Justice Department’s Civil Rights Division at 1-800-896-7743.  More information about RLUIPA, including a report on the first ten years of its enforcement, may be found at http://www.justice.gov/crt/about/hce/rluipaexplain.php.

CHICAGO — The Justice Department today filed a lawsuit against the City of Des Plaines, alleging that the northwest suburb violated federal law when it refused to allow an Islamic group to operate a place of worship in a vacant office building.

The suit contends that Des Plaines discriminated against the American Islamic Center when it refused to grant a rezoning request to allow AIC to set up a place of worship in a vacant office building it had contracted to purchase.  The city imposed parking standards and other zoning criteria that were not supported under its zoning ordinance and that had never been imposed on non-Islamic places of worship, according to the suit.

The lawsuit was filed in U.S. District Court in Chicago.  It alleges that Des Plaines violated the Religious Land Use and Institutionalized Persons Act (RLUIPA).

“The ability to establish a place for collective worship is a fundamental protection of the First Amendment and our civil rights laws,” said Principal Deputy Assistant Attorney General Vanita Gupta of the Justice Department’s Civil Rights Division.  “The Justice Department will remain vigilant in its mission to ensure that all religious groups enjoy the right to practice their faiths freely.”      

“The freedom to practice the religion of one’s choosing is a precious right in our country,” said Zachary T. Fardon, United States Attorney for the Northern District of Illinois.  “We will continue to enforce the laws that protect this important right.”

AIC is a non-profit religious organization of Bosnian Muslims.  Most of its 180 members came to the United States in the 1990s as refugees from war-torn Yugoslavia.  In February 2013, AIC entered into a contract to purchase property at 1645 Birchwood Avenue in Des Plaines.  The contract to purchase the property was contingent upon rezoning it to allow its use as an institutional place of worship.

The Des Plaines City Council denied the rezoning request in July 2013.  As a result, AIC has been without a place of worship for more than two years, the suit contends.

RLUIPA, enacted in 2000, contains multiple provisions prohibiting religious discrimination and protecting against unjustified burdens on the exercise of religion.  More information about RLUIPA, including a report on the first ten years of its enforcement, may be found at http://www.justice.gov/crt/about/hce/rluipaexplain.php.

The government is represented by Ms. Gupta, Steven H. Rosenbaum, Timothy J. Moran, Eric W. Treene and Ryan G. Lee of the U.S. Department of Justice’s Civil Rights Division, Housing and Civil Enforcement Section; and Assistant U.S. Attorneys Michael J. Kelly and Patrick W. Johnson of the U.S. Attorney’s Office for the Northern District of Illinois.

Complaint

The following are remarks by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, delivered at the City Club of Chicago on September 28, 2015:

In April of last year, I had the chance to come here for the first time.  I was about 6 months into my job, and I had the option of talking about whatever I wanted.  I chose to talk about violent crime in Chicago.  Well, it’s been 17 months.  I’m honored to be back.  And I again have something I want to say about violent crime in Chicago.

Our murder rate so far this year is up about 20% from last year.  And 20% is a troubling number.  But let me give you two points of context that lend perspective: First, last year - 2014 - was our lowest homicide rate in Chicago since 1965.  That’s 5 decades.  So the watermark against which we’re measuring our 20% increase this year is a historically low one.

And second, we are not alone.  Major cities across the country are seeing even more significant surges in homicide rates this year: in Milwaukee, they’ve seen a 76% increase; in St Louis, a 60% increase; in Baltimore, 56%; in Washington, DC, a 44% increase.  So viewed in that light, our 20% increase in Chicago is not as alarming as many.

So I could leave it at that.  I could make those contextual points in response to the inevitable audience question about violence, and I could choose to focus my opening remarks instead on ISIL, or public corruption, or cybercrime, or any of the other mission-critical areas we serve at the U.S. Attorney’s Office.

I’m not going to do that.  Why not?

[Refer to PowerPoint]

Every face you see here is a child shot and killed this year in the city of Chicago.  Let’s focus in on a few:

• In February, 13-year-old Anthony Diaz was observing an altercation between his 17-year-old sister and another girl in Belmont Cragin - a fight, by the way, arranged through social media. As Anthony was walking away from the fight, he was shot 4 times and died.
• In May, Raheem Dameron, a 15-year-old, was standing with a friend on a Bronzeville street when shots were fired from a passing car.  Raheem’s friend was hit in the ankle and survived.  Raheem was hit in the back and died on the scene.
• On a June afternoon, 15-year-old Martese Gentry came upon an altercation on Millard Avenue in Lawndale.  A person in the fight opened fire and bullets struck Martese in the abdomen and chest, killing him.
• Amari Brown was 7 years old and spending the Fourth of July this year at his grandmother’s house in Humboldt Park, when somebody sprayed gunshots onto the porch of grandma’s house, injuring a woman and killing Amari.
• 17-year-old Kimythe Hubbard was one of 6 siblings in his Woodlawn family, 3 boys and 3 girls.  On July 9, Kimythe was walking behind the Mount Pleasant Missionary Baptist Church when he was shot in the back and died.

Those are five.  Every face you see here has a story; every one a child shot and killed this year in Chicago.

No place in Chicago is completely safe but there are neighborhoods on the West and South sides that are unfairly, disproportionately impacted by the gun violence.  By police district, so far this year the most violent parts of Chicago include the 4th, 6th, 7th, and 11th districts.  Those districts are home to some of Chicago’s beautiful neighborhoods and public places.

So what do these neighborhoods otherwise have in common?

[Refer to PowerPoint]

Gangs and gang factions.  Gangster Disciple factions, Latin King factions.  Dozens of gang factions across these neighborhoods.  Gang factions that are constantly recruiting new members, and recruiting them young.  In our most violence-afflicted neighborhoods, we now see kids affiliating with gang factions as early as the 1st or 2d grade.

And we are seeing not only more homicides in these neighborhoods but more shootings, and particularly more indiscriminate shootings – shootings over petty things – disrespect, trash talk, just walking across gang turf lines.

Let’s look at a random weekend this year.

[Refer to PowerPoint]

This July 4th weekend, over 50 people were shot in Chicago.  This slide shows just a few examples of the shootings.  A bullet in the armpit, a bullet in the finger, a bullet in the butt, a bullet in the foot.  Random shots, drive-by shots, sprayed shots.

And more and more often, shots fueled by social media. Twitter, Instagram, Facebook.  Petty disputes and trash talk that escalate over social media with sometimes fatal consequences.

Let me give you a quick case example.

[Refer to PowerPoint]

In February 2014 there was a gang-related shooting of a 19-year-old named Shaquon Thomas, also known as Young Pappy.  Young Pappy was hit but not killed in the shooting.  A 17-year-old boy named Markeyo Carr was caught by a stray bullet and killed.  The next day Young Pappy tweeted “I’m Still Here.”  A few months later, in July of 2014, there was another attempt to shoot and kill Young Pappy.  This time a stray bullet struck a 28-year-old photographer named Wil Lewis who was waiting for a bus in Rogers Park.  Wrong place, wrong time.

In April 2015, Young Pappy posted a video called “Homicide” on YouTube in which he taunted his rival gang members.  Then in May he posted another video, this one called “Shooters”, in which he pretended to be holding a gun and taunted “you don’t even know how to shoot.”  One week later he was gunned down and killed about a block from where he recorded that video in Uptown.

A 22-year-old named Clifton Frye posted comments about Young Pappy’s shooting on his Facebook.  3 days after Young Pappy was killed, Frye was shot and killed by a 17 year old boy.

That’s 4 dead – a 17-year-old, a 19-year-old, a 22-year-old, a 28-year-old, and at least one 17-year-old trigger puller.  Why?  No real reason; taunting, disrespect, loathing fueled by social media.

Here’s the point: our violent crime problem in Chicago has become more unwieldy; we’re seeing more and more indiscriminant shootings, social media spats leading to spraying bullets.  And often with kids on either or both sides of the gun.

Whatever the statistics, this year versus last, and regardless that our surge this year reflects a national trend, here’s my bottom line: in Chicago, our violent crime problem is a social justice problem.  For too long, gun crime has been tearing at the fabric of our social contract in this city.  These are our kids. These are our neighborhoods.  This problem hits the heart of who we are, and who we want to be, as a city.  We cannot abide our Chicago being one where it’s okay for kids to die and entire neighborhoods to cocoon in fear.

Let me be honest if obvious: these issues are tough.  Our violence problems are rooted in social injustices like poverty, and joblessness, and educational and economic inequality.  Kids need parents, and mentors, and education, and work opportunities.  And when instead what they see, in some parts of our city, starting in the first or second grade, is gangs and gang factions as a social network and ostensible path to self-identity and success, then we have lost the war before the battle has begun.

I’m not here to offer sound-bite solutions.  I am here to speak honestly and to address some of the important moving parts I see from the perspective of the U.S. Attorney’s Office.

And I’m here to ask you to think about what you can do from your perspective, and to carry forward this discussion into your community, your work place, your church, your family.

We have to keep a long view. These are generational challenges.  But to borrow a phrase from Dr. King we also have to feel the fierce urgency of now.  I want us to wake up every day and recommit to ending this cycle of kids dying and neighborhoods set apart.

For the remainder of my remarks, I’m going to touch upon three things that are important from my perspective: first, prosecutions; second, juvenile justice; and third, the issue of community trust.

Prosecutions

At the United States Attorney’s Office our primary job is enforcement.  We prosecute criminals.  And federally, with our limited resources here, we have to be especially careful to focus on the worst of the worst – to pick the right individuals, and then to use the appropriate federal tools to help take those individuals off the street.

We are doing just that.  Our prosecutors at the U.S. Attorney’s Office are right now bringing big cases against violent gangs and offenders.  A few quick examples:

[Refer to PowerPoint]

• United States v. Levaughn Collins et al.  James Triplett controlled the heroin market in a North Lawndale neighborhood west of Douglas Park.  This year, we charged Triplett, his supplier Levaughn Collins, and a number of other defendants with a variety of federal crimes.  This is a photograph showing the line of people waiting to purchase heroin as part of this market before we took it down.  And this shows the weapons that we recovered when we executed that takedown.
• United States v. Nate Hoskins (“Operation Double Is”).  “Double Is” stands for Imperial Insane Vice Lords.  We recently charged 24 Double Is with RICO and other offenses related to drug trafficking and violence on Chicago’s West Side.  Among other things, the indictment alleged the gang-related murder of a man named Marcus Hurley.  This photo shows Hurley’s killer running from the crime scene after he shot Hurley at defendant Nate Hoskins’ direction.  The shooter himself was also later shot and killed.
• United States v. Andrew Shelton et al.; United States v. Dimitri Woods et al.; United States v. Terrance Griggs.  These are all gun cases.  In the Shelton case we charged 11 defendants with the theft and distribution of 111 handguns.  In the Woods case, 2 ATF informants were robbed at gunpoint while purchasing guns and a bulletproof vest from the defendants.  And in Griggs, the defendant was convicted this year of selling 11 guns and a bulletproof vest to an informant. This photo shows an SKS automatic weapon and bulletproof vest seized as part of that case.

Those are a few examples.  We’ve got many others, and our investigations pipeline is robust.  On nearly all of the cases, we continue to work closely and collaboratively with our local and state partners, including especially the Chicago Police Department and the Cook County State’s Attorney’s Office.  We are a likeminded group.  Our collective noses are down on the enforcement front, and we don’t plan to let up.

Now, at the tail end of any prosecution is the question of sentencing - who gets locked up, and for how long.  Over the past couple years, there has been a lot of focus on the issue of over-imprisonment in our country.  And that’s for good reason; the issue is real.

Since 1980, our national prison population has exploded.  The total detention population in this country has more than tripled, to where as of last year, the United States had 5 percent of the world’s total population, yet 25 percent of its prisoners.

Guess what?  That costs money.  Taxpayer money.  Lots of it.  Last year, over 26% of the Justice Department’s 20-plus-billion-dollar budget went toward housing prisoners.  To give you a reference point, about 7.6% went toward funding all U.S. Attorney’s offices.  We now spend way more money housing prisoners than hiring prosecutors to go after the bad guys in the first instance.

In light of that stark truth, about 2 years ago, the Justice Department launched an initiative called Smart on Crime under which the Department drew a circle around lower-level non-violent drug defendants and said as to those defendants, let’s stop the historic practice of seeking the highest mandatory prison terms, and instead let’s return sentencing discretion to the courts.

Smart on Crime is basically a policy decision–in light of fiscal realities–to return sentencing discretion to the bench for certain non-violent offenders.

Here is what Smart on Crime is not.  Smart on Crime is not “Soft on Violent Crime.”  It is not, in any way, an abandonment of the Justice Department’s commitment to fight violent crime.  In fact, our U.S. Attorney’s office here remains as aggressive as ever in using our most powerful tools to take violent offenders off the street.

As I’ve said before, prosecutions alone will not fix our problem; we can’t arrest our way out of the realities reflected in those slides.

But I want to be clear about this: we have to be aggressive and prosecute the trigger pullers; we have do everything we can to take murderers off the streets, including asking our judges to impose significant prison terms for violent offenders—locally and federally.  That is being Smart on Crime, and that’s a critical piece of long-term success.

Juvenile Justice

Our federal court system, at least for now, is an adult system.  It’s not suited to address juvenile violence issues.  And yet, you know that a significant part of our problem in Chicago is a youth violence problem.  We have child shooters; we have child victims.  And not surprisingly, in predicting adult violent behavior, a key inflection point is 14, 15, 16 years of age.  Kids carrying guns or committing acts of violence at that age are much more likely to later repeat those acts of violence and to end up incarcerated as adults.  

Last year, my Office launched a new initiative – our “Youth Outreach Forums”.  In partnership with the Chicago Police Department, Chicago Public Schools, and the Cook County Juvenile Probation Department, we designed forums to talk to at-risk kids 13-17 years old.  We began hosting the forums in Englewood, and Garfield Park, and Humboldt Park, and we’ve now moved inside the Cook County Juvenile Detention Center and are conducting forums there.

Our forums are structured to educate these kids about the dangers of gang affiliation and recidivism, including especially picking up a gun.  The forums are also designed to encourage education and help introduce these kids to community services and organizations that give them alternatives to the gang route -- a pathway, a network that is good instead of bad.

We’ve made the forums evidence-based.  The University of Chicago Crime Lab is tracking the kids who complete the forums against placebo groups to assess results.  That will take time, but if we can move the needle on even some of these kids’ fates, we will have done something important.

Just a few weeks ago, I was at one of our Youth Forums in the Cook County Juvenile Detention Center.  The kids I met that day may have done something wrong to land them in detention, but it could not have been more clear to me that these kids were not hardened criminals; they were kids; they were curious; they were hopeful, they were struggling and looking for help.

I’m proud that our office is leading the way forward and holding these forums.  I don’t believe these forums are a panacea.  What they are is a start, a catalyst, a way for us to shine our flashlight on a place that dearly needs attention for us to succeed, as a city, long term in the fight against violence. 

So that’s another piece of our puzzle at the U.S. Attorney’s Office.  We have the hammer of prosecution and prison for truly violent people.  And we’re working to extend the rope, the lifeline for kids who’ve wandered down the wrong path and need our help before it’s too late.

Community Trust

Another critical piece of our puzzle, and the last broad topic I’ll hit on during my limited time today -- community trust.  The issues that became front-and-center after Ferguson, and then Staten Island, and Ohio, and Baltimore, and on down that list – those issues are directly relevant to our fight against violent crime here in Chicago.

Distrust between communities and cops breeds violence.  Distrust causes kids to make bad decisions, it causes cops to make bad decisions, and it makes it harder to solve violent crimes when they occur.  So this issue of trust between cops and communities is huge.

Last December, shortly after the “no prosecution” announcement in Ferguson, my office hosted a Community Round Table, and we had there Attorney General Eric Holder, Mayor Emanuel, Anita Alvarez, Garry McCarthy, other law enforcement leaders, community and religious leaders, and a select group of kids from some of these most violence-afflicted neighborhoods in Chicago.

To be frank, I wasn’t sure what to expect going into the roundtable.  This is another thing that is not exactly in the traditional wheelhouse of a U.S. Attorney’s Office.  That said, I found it valuable.  It brought together some passionate leaders from across different parts of the city, and we had a candid and thought-provoking discussion about policing and trust issues.

So we did it again in March of this year.  We had another roundtable. And we’re doing another one in November.  As long as there’s work to be done, my Office will keep making the time and sending the invitations.   

The most remarkable aspect of these roundtable discussions, to me, has been the kids.  We’ve had a great group of young men and women who came to us from the most violence-afflicted neighborhoods.  And we also had CPD commanders from those same neighborhoods.  And the back-and-forth during the roundtables between the kids and the commanders has been enlightening.  Here’s the nub of what I’ve taken away from it:

From the kids’ perspective, what they want from the police is respect.  They don’t want to feel judged by the color of their skin, or by whether they’re wearing sagging pants, or because they’re hanging on the block with gang members.  What they want is to be judged on their own merits, and when officers don’t know them personally and lump them in with other kids in the neighborhood who dress the same way, or look or talk the same way they do, that breeds resentment and distrust.

From the officers’ perspective, they want to succeed.  They want to make the neighborhood safer and be good at their jobs.  But what also became clear through the dialogue is that they too want to feel judged on their own merits.  They don’t want to feel embattled or vilified just because they wear the badge; they want to feel respected by the people they are risking their lives to protect.

And from both sides, the common ground for improvement?  Connectivity.  Knowing each other.  Making an investment of time and good will outside the context of bad things happening.  Whether it’s law enforcement hosting a neighborhood barbeque, or a park clean up, or participating in a local basketball tournament -- whatever the vehicle, whatever the context, finding ways for officers to get to know the kids, and kids to get to know the officers, so that when the officers come across the kids at a crime scene or in an investigation, that prior relationship, however deep, exists.  When you have that, things won’t always go perfect but they tend to go a whole lot better.

I’m grateful that we are seeing more and more of that these days from our city and community leaders and the great women and men of our Chicago Police Department.

I want to ask you to think for a minute about what it means to serve as a Chicago Police Officer.  Police officers by and large are the most noble of our public servants; they are citizens who’ve decided to take a job, with modest pay, where every day they wake up not knowing if they may get hurt or even killed.   And why do they do that and wear that risk every day?  I will tell you my view, based on many years of first-hand experience working with cops -- most do it because they care.  They want the same things nearly all of us want: to be happy, to love, to have a family, to enjoy a safe community, and live an impactful life.

Police officers are not separate and apart from our communities; they are our communities, no different than you and me.  And they fundamentally deserve a presumption of our respect and trust.

For our system of justice to work, people need to believe in that system.  With no trust, there is no belief.

These trust issues, of course, are not unique to Chicago.  There is a national discussion happening now, and an important watermark in that national discussion, in my opinion, occurred earlier this year when FBI Director Jim Comey gave a speech at Georgetown University.  If you haven’t read it, I’d encourage you to jump on line and find it.  Comey talked about the relationship between law enforcement and the diverse communities law enforcement serves.  And in reflecting upon that relationship, he identified what he called his “own hard truths.”

I share Jim Comey’s hard truths.  Here they are: 

First, we in law enforcement have to be honest and acknowledge that much of our history is ugly when it comes to issues of race.  At many points in history, law enforcement has enforced a status quo that was brutally unfair to disfavored groups.  That is an ugly part of our national inheritance, and we need to accept that.

Second, we all – inside and outside of law enforcement - have to be honest about the widespread existence of unconscious bias.  By understanding latent bias, and talking about it, even if we can’t completely eliminate those reactive instincts, we can help our behavior in response to them.

And third, there is a cynicism that can happen to people in law enforcement over time based on experience and observation.  And that cynicism can lead to mental short-cuts that result in unfair treatment.  And in addressing that problem, we have to be honest and recognize that it’s not as simple as just changing who we hire and how we train law enforcement.  The truth is significantly harder than that.

We have to address the tragic reality that because of our nation’s past sins, young men of color, particularly in urban neighborhoods, too often inherit a legacy of crime and prison.  So yes, we have to talk about cops, but we also have to talk about how we change that legacy and create a better world and better options for those young men.

Those are Jim Comey’s “hard truths”.  And mine.  And really, they belong to us all.  Those hard truths go to the heart of everything that I have been talking about today.

Our violent crime issues in Chicago are hard.  Our history with regard to race is hard.  Poverty is hard.  Inequality is hard.  Childhood is hard.  Policing is hard.  Trust is hard.

One thing about hard things in life, it seems to me, is that usually they require balance, and measured circumspection, and patience and bravery to figure them out and to fix them.  Hard things don’t come with easy or quick solutions.

 [Refer to PowerPoint]

This is Tyjuan Poindexter, a 14-year-old.  Eight days ago Tyjuan was walking with some friends to play basketball in his North Kenwood neighborhood on the South Side.  As a car drove by, someone yelled “is that them?” and started shooting.  One of Tyjuan’s friends he was going to play ball with, a 15-year-old boy, was hit in the ankle and the shin.  He survived.  Tyjuan was hit once, in the head.  He died that night, in a driveway on the corner of 44th and South Greenwood.

The things I’ve talked about today -- prosecutions, youth outreach, community trust -- these are all important ingredients, from the perspective of my office, for helping to get us to a better place.  But there’s a lot work to be done.  Work in our courts.  Work in our government.  Work in our schools.  Work in our churches.  Work in our homes.  Work on our streets.

Each of us has to stop waiting for someone else to solve this problem and realize that the problem belongs to us all.

Let me close with a point of pride.  The events of Ferguson were about a year ago.  And in the wake of those events, and then again following the many other national crises over the last year, we have seen dozens and dozens of protests and rallies across Chicago.  Unlike many other places, our protests have been almost entirely peaceful, thoughtful and impactful.  A number of civic and religious leaders in Chicago have played - and continue to play - an important part in that process.  And at the same time, our law enforcement, and particularly the Chicago Police Department, have respected the protest process, and have repeatedly allowed our communities to be heard while ensuring the public safety.

That is called democracy.  And I’ve come to believe that we’re pretty damn good at it here in Chicago.  And that’s a reflection of the goodness of this place -- the strength and love citizens here hold for our city and each other.

That same strength and love is the key to our long-term success in fighting violent crime.  We as a community have to muster and leverage our best: our best leadership, our best philanthropy, our best resources, our best creativity, our best good will, and our best intentions.

We have to recognize that this fight is a law enforcement fight. And it is an economic fight.  And it is an educational fight.  And it is fundamentally a fight to overcome tragic aspects of our national inheritance.

The stakes are high.  The place we love hangs in the balance.  I believe we can succeed, and we will succeed because of who we are in Chicago.

Every one of us has to see the long horizon, while every day waking up with the fierce urgency of now.

Remarks by U.S. Attorney Zachary T. Fardon

CHICAGO — An Oak Lawn man was arrested today on federal charges that he imported anabolic steroids from China and distributed them to large-scale suppliers in the Chicago area.

JOSEPH T. PALERMO, 33, imported anabolic steroids, human growth hormone and pharmaceuticals from outside the United States for approximately five years, according to a federal criminal complaint and affidavit.  The shipments from China arrived in the form of raw liquid or powder, which Palermo manufactured into usable steroids and distributed to large-scale dealers in the Chicago area, according to the charges.

Earlier this month, federal agents executing a search warrant at Palermo’s Oak Lawn residence discovered a makeshift steroid laboratory in the walk-in closet of a locked bedroom, the affidavit states.  Inside the closet were approximately 600 empty glass vials, approximately 250 vials filled or partially-filled with suspected liquid steroids, more than 6,000 tablets labeled as anabolic steroids, glass beakers, a hot plate and a digital scale, according to the affidavit.  Agents also discovered more than $9,000 in cash and several firearms, including a 9mm Glock handgun that was concealed under a pad in a sofa, the affidavit states.

Palermo, who is employed by the Argonne National Laboratory, was taken into custody this morning.  He was charged with possession of a controlled substance with the intent to distribute.  He appeared this afternoon before U.S. Magistrate Judge Maria Valdez and was released on a personal recognizance bond.

The arrest and charge against Palermo were announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; James Gibbons, Acting Special Agent-in-Charge of the Chicago Office of the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI); Antonio Gómez, Inspector-in-Charge of the U.S. Postal Inspection Service in Chicago; and the U.S. Department of Energy’s Office of Inspector General.

The arrest is part of an ongoing investigation that has resulted in the issuance of numerous federal and state search warrants, as well as the initiation of other federal criminal cases, according to the affidavit.

According to the charges, Palermo purchased the steroids online and often wired the money through Western Union.  The shipments were sometimes sent to P.O. Boxes that Palermo opened in his name or the names of people whose identities he had found on driver’s licenses mistakenly left behind at a downtown Chicago nightclub where Palermo formerly worked as a bouncer, according to the charges.  Palermo estimated that he grossed approximately $2,000 per month through the scheme, the affidavit states.

In June, U.S. Customs and Border Protection officers in San Francisco intercepted a Chinese parcel addressed to a residence Palermo controlled in Northlake, the affidavit states.  Although the parcel was declared as “Titanium Dioxide,” it contained 359.2 grams of an oily anabolic steroid, the affidavit states.  In July, CBP officers intercepted a second Chinese shipment, this time containing a powdery anabolic steroid concealed in a tinfoil baggie, according to the charges.  It was addressed to a Palermo-controlled P.O. Box in Elmhurst, the affidavit states.

The charge against Palermo carries a maximum sentence of 10 years in prison and a $500,000 fine.  If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.

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 government is being represented by Assistant U.S. Attorney Kartik K. Raman.

Complaint

CHICAGO — The cousin of a man convicted with Heather Mack of murdering Mack’s mother at an Indonesian resort was charged with conspiring with the couple to commit the killing, according to a criminal complaint unsealed in federal court in Chicago today.

ROBERT RYAN JUSTIN BIBBS, 24, of Chicago, advised his cousin, Tommy Schaefer, and Schaefer’s girlfriend, Heather Mack, about how to kill Mack’s mother, Sheila Von Wiese, according to the federal complaint and FBI affidavit.  Bibbs was aware of the couple’s plot to kill Von Wiese at an Indonesian resort on Aug. 12, 2014, and he counseled Schaefer on how to get away with it, the affidavit states.  Bibbs believed Schaefer would gain access to Von Wiese’s estate through Mack, and that Schaefer would share the inheritance with family members, according to the charges.

Federal authorities arrested Bibbs earlier today.  The complaint charges him with conspiracy to commit the foreign murder of a U.S. national.  He is scheduled to make an initial court appearance at 3:00 p.m. today before U.S. Magistrate Judge Maria Valdez.

“Our commitment to fighting violent crime extends beyond the border,” said Zachary T. Fardon, United States Attorney for the Northern District of Illinois.  “We will use whatever tools are necessary to pursue justice both here and abroad.”

Mr. Fardon announced the arrest and complaint along with John A. Brown, Acting 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.

“Our pursuit of individuals involved in violent crimes carried out overseas could not occur without the assistance of our worldwide network of Legal Attaches and their relationships with our international partners,” said Mr. Brown.

An Indonesian court 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.

U.S. authorities executed multiple search warrants to acquire information stored in the cellular telephones of Schaefer and Bibbs, and in the Facebook accounts of Bibbs, Schaefer and Mack.  The affidavit cites several discussions via text message between Bibbs and Schaefer both before and during Schaefer’s and Mack’s trip to Bali.  During a text conversation on July 25, 2014, Schaefer told Bibbs that Von Wiese’s murder would occur in a month, and that it would result in financial gain for both of them, according to the complaint.

Soon after Schaefer checked into the St. Regis Bali resort on the morning of Aug. 12, 2014, he sent a text message to Bibbs, who was in the U.S.  The message stated that an attempt to kill Von Wiese by causing an overdose of medicine had failed, according to the complaint.  Schaefer’s text messages to Bibbs stated: “Wasn’t enough bro smh” [shaking my head]…“Definitely need that ” [emoji of a handgun].  Bibbs replied, “Damn I told you”; to which Schaefer responded, “I know I already thought about that”…“U was right.”

Later in the morning, Schaefer exchanged text messages with Mack, who was sharing a room with her mother on a different floor of the same hotel.  According to the complaint, Mack encouraged Schaefer to come to her room and carry out the murder.  This exchange prompted Schaefer to send a series of text messages to Bibbs, stating, “She wants me to right now”… “while she snoozing”… “Go in.”  Bibbs replied, “Go sit on her face wit a pillow then.”

Schaefer and Mack then exchanged several text messages in which they referred to each other as the film characters Bonnie and Clyde, according to the affidavit.  The affidavit states that Schaefer asked Mack, “Can u wack her in the head with a big ass pole”; to which Mack responded, “Can you”; and Schaefer replied, “Yes.”

Schaefer then traveled to the third floor where Mack and her mother were staying, according to the complaint.  He is seen on the hotel’s surveillance camera standing in an elevator with what appears to be an item stuffed under his shirt.  At that point, the affidavit states that Schaefer sent a series of text messages to Mack, saying, “Let me just creep up and wak her”… “Once I do it”…”She was drunk slipped and fell”; to which Mack responded, “Okay g”…“Okay just knock her out”…“Itll be so much easier.”

A short time later, Von Wiese was bludgeoned to death.  The affidavit states that later in the morning, Schaefer sent a series of text messages to Bibbs, saying, “Need yo help bro”…“I’m gucci but for some reason I don’t feel bad.”  Bibbs responded, “She wasn’t a good person”…“There wasn’t any positive energy released from her body.”  The pair then exchanged text messages for the next ten minutes, during which time they discussed the U.S. Men’s Basketball team, according to the complaint.

Schaefer and Mack were arrested the following day in another hotel in Bali.

The charge of conspiracy to commit the foreign murder of a U.S. national carries a maximum sentence of life 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. Attorneys Bolling Haxall and Julie B. Porter; and Hope Olds and Christine Duey, trial attorneys from the U.S. Department of Justice’s Human Rights and Special Prosecutions Section.

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.

Complaint

CHICAGO — The former owner of Edgewater Medical Center on Chicago’s North Side pleaded guilty today to a federal perjury charge stemming from his efforts to thwart attempts by the U.S. and a creditor to collect more than $188 million in civil judgments.

PETER G. ROGAN admitted that he lied in a federal affidavit when he denied controlling millions of dollars in a trust account in the Bahamas, according to a written plea agreement.  Rogan acknowledged that he had control over the money and its distribution to beneficiaries, and that he had established the trust to protect his assets from judgment creditors.   Rogan also admitted that he willfully violated several court orders in a bank creditor lawsuit, when he made – and caused his legal counsel to make – false representations to the Court about his control over the offshore trust.

Rogan’s false statements in the affidavit and his willful disobedience of Court orders were intended to prevent the U.S. government and the bank creditor from collecting more than $188 million in combined civil judgments arising from fraud during Rogan’s tenure as CEO of the now-shuttered hospital, according to the plea agreement.

Rogan, 69, formerly of Valparaiso, Ind., pleaded guilty to one count of perjury.  Under the terms of the plea agreement, Rogan faces a sentence of 12 to 21 months in prison.  U.S. District Judge Harry D. Leinenweber scheduled a sentencing hearing for Oct. 14, 2015, at 9:45 a.m.

Rogan once owned Edgewater Medical Center and later sold it, but he continued to manage the facility through various companies he owned.  The hospital, located at 5700 N. Ashland Ave., closed in 2001 amidst a federal criminal investigation that resulted in the healthcare fraud convictions of a Rogan-owned management company, a hospital administrator and several doctors, the latter of whom performed medically unnecessary surgical procedures and treatments on unsuspecting patients.

After a civil trial in 2006, the United States obtained a judgment of $64,259,032 against Rogan for his role in Edgewater’s submission of false claims for reimbursement under the Medicare program.  The following year, Dexia Crédit Local, a bank that extended credit financing to the hospital, was awarded a $124 million default judgment in a separate civil fraud suit against Rogan and his companies.

In the course of their respective proceedings against Rogan, the United States and Dexia discovered that Rogan’s Bahamian trust account was being used to hold millions of dollars in secret offshore assets.  Rogan had created the trust with the help of FREDERICK M. CUPPY, an Indiana attorney, as well as another attorney described in the indictment and plea agreement as “Florida Lawyer.”  Cuppy, formerly of Valparaiso, Ind., and now of Fort Lauderdale, Fla., pleaded guilty to a perjury charge before Judge Leinenweber.  He was sentenced in 2013 to one year and a day in prison.

On Dec. 21, 2006, Rogan responded to the government’s collection efforts by filing an affidavit with the Court in which he denied that he exercised control over assets in the trust account.  Rogan admitted in the plea agreement that this statement was false and misleading.  Rogan also admitted that he willfully and wrongfully violated several court orders in the Dexia litigation, including lying and causing his attorneys to lie to the Court about his control over his offshore trust.

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

The government is represented by Assistant United States Attorneys Andrew S. Boutros, Daniel W. Gillogly, Eric S. Pruitt and Joseph A. Stewart.

Plea Agreement

CHICAGO —A former employee of the Social Security Administration has been sentenced to 21 months in federal prison for cashing her deceased mother’s Social Security checks for nearly 30 years after her death.

GEORGIA THOMPSON, 68, of Chicago, received $419,644 in fraudulent benefits from 1986 to 2014.  Thompson’s mother died on Aug. 3, 1986, but Thompson failed to notify the Social Security Administration, even though Thompson herself was employed by the agency.

Thompson pleaded guilty in June to one count of theft of government funds.  On Monday, U.S. District Judge Andrea R. Wood imposed a sentence of 21 months in federal prison.  Judge Wood also ordered Thompson to pay $419,644 in restitution.

For the first 21 years after the death of Thompson’s mother, the U.S. Treasury mailed checks to a Post Office Box in Chicago that was controlled by Thompson.  Thompson converted the funds to her own use by forging her mother’s signature on the checks.

In approximately October 2007, Thompson used her deceased mother’s personal identifying information to instruct the Social Security Administration to directly deposit the funds into a bank account controlled by Thompson.  The U.S. Treasury complied with the instruction and continued to pay the Social Security benefits.  It also sent Thompson a one-time stimulus payment of $250 in May 2009.

The Social Security Administration discovered the fraud in 2014 after noticing that Thompson’s deceased mother had not used her Medicare benefits in several years.

The sentence was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; and Tracey Thanos, Special Agent-in-Charge of the Chicago Field Division of the Social Security Administration’s Office of the Inspector General.

The government was represented by Special Assistant U.S. Attorney Jared C. Jodrey.

The medical biller of a Chicago-area visiting physician practice was sentenced today to 45 months in prison for her role in a $4 million health care fraud scheme.

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, Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Services-Office of Inspector General (HHS-OIG) in Chicago and Acting Special Agent in Charge John A. Brown of the FBI’s Chicago Division made the announcement.

Mary Talaga, 54, of Elmwood Park, Illinois, was convicted in May 2015 following a jury trial of one count of conspiracy to commit health care fraud, six counts of health care fraud and three counts of false statements relating to a health care matter.  In addition to imposing the prison term, U.S. District Judge Gary Feinerman of the Northern District of Illinois ordered Talaga to pay approximately $1 million in restitution.

From 2007 to 2011, Talaga was the primary medical biller at Medicall Physicians Group Ltd., a physician practice that visited patients in their homes and prescribed home health care.  The evidence at trial showed that Talaga and her co-conspirators routinely billed Medicare for overseeing patient care plans (a service known as “care plan oversight” or CPO) when, in fact, the doctors at Medicall rarely provided the service.  The evidence at trial also showed that Talaga and her co-conspirators billed Medicare for other services that were never provided, including services rendered to patients who were deceased, services purportedly provided by medical professionals no longer employed by Medicall, and services purportedly provided by medical professionals who, based on billing records, worked over 24 hours per day.

According to the evidence presented at trial, during the five-year conspiracy, Medicall submitted bills to Medicare for more than $4 million in services that were never provided.  Medicare paid more than $1 million on those claims.

Rick Brown, 58, of Rockford, Illinois, and Roger A. Lucero, 64, of Elmhurst, Illinois, were also convicted of offenses based on their roles in the scheme.  Brown was convicted along with Talaga at trial and was previously sentenced to serve more than seven years in prison.  Lucero, Medicall’s Medical Director, pleaded guilty and will be sentenced at a later date.

The case was investigated jointly by HHS-OIG and the FBI, and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office of the Northern District of Illinois.  This case was prosecuted by Trial Attorney Brooke Harper and Senior Trial Attorney Jon Juenger of the Criminal Division’s Fraud Section.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged over 2,300 defendants who collectively have billed the Medicare program for over $7 billion.  In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.           

CHICAGO — The founding member of a Geneva investment firm used client funds to trade his own stocks and to purchase a yacht and luxury vehicle for himself, according to a federal indictment announced today.

STEPHEN C. BROWERE, the founder and principal of Geneva-based Stephens Capital Management Inc., used the promise of lucrative and guaranteed returns to persuade his clients to purchase $1.66 million in promissory notes in Douglas Capital Corp., located in Lisle.  What Browere didn’t reveal was that a relative was the president of Douglas Capital, and that Browere himself had access to Douglas Capital’s lines of credit and ran its day-to-day operations, according to the eight-count indictment returned Wednesday in U.S. District Court in Chicago.  Instead of investing the funds as promised to clients in the promissory notes, Browere used the money to perform trades in his own investment portfolio and to cover personal expenses, including the purchase of a yacht and luxury vehicle, the indictment states.

Browere, 56, of Geneva, also obtained the power of attorney on behalf of an elderly client who was infirm and suffering from dementia, according to the indictment.  The power of attorney gave Browere access to the client’s cash and property, which were valued at $2.1 million.  Browere misappropriated some of this money to purchase four vacant lots in Lisle and to make interest payments to other clients, the indictment states.  After the client died, Browere maintained control over the estate and continued to misuse the estate’s assets, according to the indictment.

The indictment charges Browere with eight counts of mail fraud.  It seeks forfeiture of the four vacant lots in Lisle, as well as properties in Geneva and elsewhere in Lisle.

An arraignment hearing will be scheduled by the Court at a later date.

The indictment alleges that Browere’s scheme began no later than 2007 and continued until approximately February 2014.  Browere initially promised an annual interest return of 8.5% from the promissory notes in Douglas Capital, plus full repayment of the principal at the end of a year or upon expiration of the notes, the indictment states.  Browere concealed the scheme by using principal payments from some investors to make interest payments to others, and by mailing phony account statements that inflated the market performance of their portfolios, according to the indictment.  Many of the investors pledged their life savings or funds from their qualified retirement plans or individual retirement accounts, the indictment states.

When the elderly client’s money began to diminish, and some clients began requesting reimbursement of their principal investments in Douglas Capital, Browere announced that interest on the notes would be reduced to 2.5% and payment of principal amounts would be delayed until further notice, according to the indictment.  In a letter to investors on Aug. 25, 2010, Browere blamed Douglas Capital’s financial problems on the “economic melt down” and the “current banking system and new government rules and regulations that continue to create havoc in this area of the economy,” according to the indictment.

The indictment was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Jeffrey A. Monhart, Director for the Chicago Region of the U.S. Department of Labor - Employee Benefits Security Administration; Antonio Gómez, Inspector-in-Charge of the U.S. Postal Inspection Service in Chicago; and Illinois Secretary of State Jesse White, whose Securities Department participated in the investigation.

Each count of mail fraud carries a maximum sentence of 20 years in prison, a $250,000.00 fine and mandatory restitution.  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 government is represented by Assistant United States Attorney Patrick Otlewski.

Indictment

CHICAGO — A former clerk for the Cook County Recorder of Deeds accepted a $200 cash bribe in exchange for preparing and agreeing to record a back-dated deed on an Oak Park home, according to a federal indictment announced today.

REGINA TAYLOR accepted the bribe from an individual who purportedly wanted to add a relative’s name to the deed of a residence in Oak Park, according to the indictment.  Unbeknownst to Taylor, the individual was actually an undercover law enforcement agent, the indictment states.

The indictment was returned Thursday in U.S. District Court in Chicago.  It charges Taylor, 59, of Chicago, with one count of mail fraud and two counts of wire fraud.  Taylor will be arraigned before U.S. District Judge Sara L. Ellis on Sept. 24, 2015, at 10:00 a.m.

According to the indictment, Taylor offered and agreed to prepare a false quit claim deed that added the purported relative to the deed of the Oak Park property, which was allegedly owned by three deceased individuals.  Taylor told the undercover agent that she usually charges $500 to prepare and record the fraudulent documents, but that in this instance she was willing to charge only $200, the indictment states.

Taylor directed the undercover agent not to tell anyone that the other individuals on the deed were deceased, according to the indictment.  She then prepared a fraudulent quit claim deed and back-dated it by 18 months, confirming the purported relative as a grantee.  After giving the fraudulent quit claim deed to the undercover agent to get stamped at the Village of Oak Park, the undercover agent gave Taylor $200 in cash, according to the indictment.  Taylor further directed the undercover agent to bring back the stamped copy of the fraudulent deed so that Taylor could file it at the Office of the Cook County Recorder of Deeds, according to the indictment.

The indictment was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; and John A. Brown, Acting Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation.

The mail fraud charge carries a maximum sentence of 20 years in prison, a $250,000.00 fine and mandatory restitution.  Each count of wire fraud is punishable by a maximum sentence of 20 years in prison and a maximum fine of $250,000 or twice the gross gain or gross loss resulting from the offense, whichever is greater.  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 government is represented by Assistant United States Attorney Megan Church.

Indictment

ROCKFORD — A former Bull Valley, Ill. man pleaded guilty today before U.S. District Judge Frederick J. Kapala to the concealment of assets from a Bankruptcy Trustee.  JOSEPH MICHAEL PHELAN, 51, now of Augusta, Ga, the former President of Phezer Enterprises, Incorporated, located in Crystal Lake, Ill., caused to be filed a Chapter 7 Bankruptcy Petition for Phezer Enterprises on August 18, 2008.  According to the written plea agreement, after Phelan closed Phezer Enterprises on August 13, 2008, Phelan had three Phezer employees start cutting up and scrapping unused and used Phezer assets, including stainless steel sheets and various metals.  On August 18, 2008, the day Phezer filed for bankruptcy, Phelan sold 21,182 pounds of stainless steel to Company C.  Phelan personally received $15,251.04 for the steel.

Between August 18, 2008 and August 29, 2008, two Phezer employees sold $13,399.24 worth of Phezer metals to Company B.  The two employees received cash for the sales and provided the cash to Phelan.

On September 17, 2008, Phelan received a check for $47,552.59 issued to him from Company A for Phezer metals sold to Company A.  On October 15, 2008, Phelan received a check for $4,415.91 issued to him from Company A for Phezer metals sold to Company A.  Phelan deposited both checks in his personal bank account.  Phelan did not advise the trustee or secured creditor of the sale of the assets to Companies A, B, or C, or account and deliver to the trustee or the secured creditor the proceeds from the sale of Phezer assets to Companies A, B, and C.   

Phelan faces a maximum penalty of 5 years’ imprisonment, and a fine of up to $250,000, or twice the gross gain or gross loss resulting from that offense, whichever is greater.  The judge may also impose a sentence of probation of one to five years, and a term of supervised release of up to three years.  The actual sentence will be determined by the United States District Court, guided by the Sentencing Guidelines.  Sentencing for Phelan is set for January 5, 2016, at 2:30 p.m.

The guilty plea was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and John A. Brown, Acting Special Agent-In-Charge of the Chicago Office of Federal Bureau of Investigation

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

Plea Agreement 

CHICAGO — A Naperville engineer who severed critical communication cables at an air-traffic control center in Aurora – causing thousands of flight cancellations and delays throughout the country – was sentenced today to 12 ½ years in federal prison.

BRIAN HOWARD used wire cutters to sever multiple telecommunication cables at the Chicago Air Route Traffic Control Center in Aurora on Sept. 26, 2014, disabling the Control Center’s communication with critical data centers and in-flight aircraft.  He then set fire to the equipment to inflict further damage.  The result was the immediate grounding of planes flying over the Midwest, and several days of flight cancellations and delays across the country.

Howard, 37, pleaded guilty in May to one count of willfully damaging, destroying or disabling an air navigation facility, and one count of using fire to commit a federal felony.  In addition to the 150-month prison term, U.S. District Judge Gary Feinerman ordered Howard to pay $4,502,361 in restitution to the Federal Aviation Administration.

“Brian Howard attacked a critical piece of infrastructure in our nation’s airspace, causing one of the most severe disruptions to air travel in recent memory,” said Assistant U.S. Attorney Andrew Polovin.  “He committed a violent crime that put thousands of lives at risk, and his crime warranted the sentence he received.”

At the time of the incident, Howard worked as an engineer for Harris Corp., a telecommunications contractor for the Federal Aviation Administration.  This position enabled Howard to gain access to an area of the Control Center’s basement that housed key components of the Control Center’s telecommunication infrastructure.

Howard admitted in his plea agreement that by severing the cables and setting fire to the Control Center’s telecommunication equipment, he increased the risk to aircraft traveling through the Control Center’s airspace.  He further acknowledged in the plea agreement that his actions were intended to disrupt air travel and to effectively shut down the Control Center.

Paramedics arrived at the Control Center shortly after the incident and found Howard attempting to slice his own throat with a knife, according to a criminal complaint and affidavit.  Howard told the paramedics to leave him alone, but the paramedics took the knife out of his hand and administered treatment, the affidavit states.

The sentence was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; John A. Brown, Acting Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation; and Jeffery Magee, Special Agent in Charge of the Chicago Field Division of the Bureau of Alcohol, Tobacco, Firearms and Explosives.

The government is represented by Mr. Polovin.

Individuals impacted by this incident who wish to receive notice about case developments are encouraged to contact the U.S. Attorney’s Office’s Victim Hotline: (866) 364-2621; or log on to the U.S. Attorney’s Office’s Victim Resources Website: http://www.justice.gov/usao-ndil/information-victims-large-cases.

CHICAGO — Two foreign nationals have been indicted on federal fraud charges for running a $10 million telemarketing scam that targeted elderly investors in the United States.

JONATHAN PAPA and METHSIRI “LAL” PALLIYAGURU sold phony investments in certificates of deposit and real estate to nearly 200 investors, primarily American senior citizens, according to an eight-count indictment returned Wednesday afternoon in U.S. District Court in Chicago.  The unsuspecting investors had been identified through online research of American retirement communities, and then contacted by call centers operated by Papa and Palliyaguru in the Philippines, according to the indictment.  In some of the calls and promotional materials, Papa and Palliyaguru knowingly misrepresented that Warren Buffett and Berkshire Hathaway were involved with the purported real estate investments, according to the indictment.

From August 2008 to August 2013, the investors paid approximately $10 million to a series of companies operated by Papa and Palliyaguru, the indictment states.  The defendants sent fraudulent account statements to investors that falsely stated the investments were increasing in value, when, in fact, their money had never been invested into any securities, according to the indictment.

Papa, 43, and Palliyaguru, 57, were each charged with eight counts of mail fraud that victimized ten or more persons over the age of 55.  Each count carries a maximum sentence of 30 years in prison.

Both defendants are considered fugitives.  Papa is believed to be residing in the Philippines, while Palliyaguru, formerly of the Philippines, is now believed to be in Canada.  U.S. authorities will seek the arrests and extradition of both defendants.  An arraignment date has not been scheduled.

A third defendant, AUSTIN ETCHES, previously pleaded guilty to mail fraud and cooperated with the investigation against Papa and Palliyaguru.  Etches, of Toronto, Canada, was sentenced last year to 84 months in prison.

According to the indictment, the defendants managed various companies, including one called Bradley Cooper Financial Services, which purported to be in the business of offering and selling investments.  They set up “virtual offices” in or near major American cities, including one at 500 N. Michigan Ave. in Chicago, to make it appear that the companies were legitimately operating inside the United States, the indictment states.  The defendants also used voice-over-Internet-protocol technology to make it appear that calls from the Philippines had originated from telephone numbers in the U.S., the indictment charges.

In reality, employees of the companies were not physically present in the virtual offices, but instead worked for Papa and Palliyaguru in the Manila area of the Philippines, according to the indictment.  Once the duped investors deposited funds into U.S. bank accounts controlled by Papa and Palliyaguru, the money was transferred overseas to accounts in China, Hong Kong and the Philippines, the indictment states.

The indictment was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; John A. Brown, Acting Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation; and Antonio Gómez, Inspector in Charge of the U.S. Postal Inspection Service in Chicago.

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

The government is being represented by Assistant United States Attorney Rachel Cannon.

Indictment

CHICAGO — A former police officer in the Cook County Sheriff’s Department pleaded guilty in federal court today to robbing drug dealers of cocaine, marijuana and contraband cigarettes during home invasions and while on duty.

In a written plea agreement, ROBERT VAUGHAN admitted that he robbed eight drug dealers from 2011 to 2013, earning a total profit of $300,000.  Vaughan said he conducted the robberies with two other law enforcement officers, and the trio shared in the profits, according to the plea agreement.  The robberies were carried out in Chicago, Cicero, Plainfield, Lyons, Melrose Park and Forest Park.

Vaughan, 44, of Frankfort, pleaded guilty to one count of robbery.  He faces a maximum sentence of 20 years in prison, plus a maximum fine of $250,000 or twice the gross gain or gross loss resulting from the offense, whichever is greater.  U.S. District Judge Samuel Der-Yeghiayan scheduled a sentencing hearing for February 3, 2016, at 10:00 a.m.

According to the plea agreement, Vaughan was assigned to the High Intensity Drug Trafficking Area (HIDTA) team, a joint federal, state, and local initiative to combat the trafficking of illegal narcotics.  Vaughan admitted using his position as a police officer to orchestrate deals with drug traffickers for marijuana, cocaine and contraband cigarettes.  Immediately after the transactions, Vaughan would arrest and handcuff the individuals – but then keep the narcotics for himself and release the dealers without charges.  Vaughan later sold the narcotics to other dealers in exchange for cash.

Vaughan also admitted robbing individuals and homes of marijuana based on information he had learned from confidential informants.  He was arrested on Nov. 3, 2014, after he and another law enforcement officer robbed 70 pounds of marijuana from an individual whom they believed was a drug courier.  In reality, the individual was an undercover federal agent, according to the plea agreement.

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

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

Plea Agreement

CHICAGO — A west suburban physician pleaded guilty in federal court today to a charge that he fraudulently certified Medicare patients as confined to the home, allowing healthcare agencies to bill Medicare for unnecessary in-home treatment.

As an employee and part-owner of Bloomingdale-based Home Care Physicians Inc., DR. ARTHUR DAVIDA received referrals from home-health agencies asking him to certify the patients as confined to the home.  Although he knew that at least 20 percent of the patients were not confined to the home, Davida nonetheless provided the certification – allowing the agencies to bill Medicare for treatment that Davida knew was not medically necessary, according to a written plea agreement.  Davida provided the certifications because he feared that, if he didn’t, the home-health agencies would stop sending him the referrals, the plea agreement states.

Davida, 62, of Bloomingdale, pleaded guilty to a health care fraud charge contained in a criminal information.  He faces a maximum sentence of ten years in prison when U.S. District Judge John J. Tharp Jr. sentences him on December 16, 2015, at 1:30 p.m.

Per Medicare’s rules, patients need to be certified as confined to the home before Medicare will pay for the specialized nursing care available to such individuals.  A physician’s certification is provided on a patient’s plan of care, which is typically prepared by the home-health agencies that perform the service.  According to the plea agreement, Davida began working at Home Care Physicians in 2009, and started conducting in-home visits in 2010.  From 2010 and continuing through August 2013, Davida certified numerous patients as confined to the home and needing skilled nursing services, when, in fact, they were able to leave their homes and did not need such services, according to the plea agreement.

The certifications caused the home-health agencies to submit claims to Medicare for payment of bills pertaining to medically unnecessary services, the plea agreement states.  Home-health agencies were paid more than $20 million by Medicare based on orders signed by Davida.  Given his admission that 20 percent of these patients were not confined to the home, Davida acknowledged in the plea agreement that he caused losses of at least $4 million to the Medicare program.

The guilty plea was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; John A. Brown, Acting Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation; and Lamont Pugh III, Special Agent-in-Charge of the Chicago Region of the U.S. Department of Health and Human Services Office of Inspector General.

The investigation was carried out by the Medicare Fraud Strike Force, which consists of agents from the Federal Bureau of Investigation and the U.S. Department of Health and Human Services, and prosecutors from the U.S. Attorney’s Office and the Justice Department’s Fraud Section. The strike force is part of the Health Care Fraud Prevention & Enforcement Action Team (HEAT), a joint initiative between the Department of Justice and HHS to prevent fraud and to enforce anti-fraud laws around the country.

The government is represented by Assistant United States Attorney Stephen Chahn Lee.

To report health care fraud or to learn more about the Health Care Fraud Prevention & Enforcement Action Team (HEAT), logon to: StopMedicareFraud.gov.

 Plea Agreement

The lead administrator of a Chicago-area visiting physician practice was sentenced to 87 months in prison for his role in a $4 million health care fraud scheme.

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, Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Services-Office of Inspector General (HHS-OIG) in Chicago and Acting Special Agent in Charge John A. Brown of the FBI’s Chicago Division made the announcement.

Rick Brown, 58, of Rockford, Illinois, was convicted in May 2015 following a jury trial of one count of conspiracy to commit health care fraud, six counts of health care fraud and three counts of false statements relating to a health care matter.  In addition to imposing the prison term, U.S. District Judge Gary Feinerman of the Northern District of Illinois ordered Brown to pay $1.3 million in restitution.

From 2007 to 2011, Brown was the President of Home Care America Inc., which managed the daily business operations of Medicall Physicians Group Ltd. (Medicall), a physician practice that visited patients in their homes and prescribed home health care.  The evidence at trial showed that Brown and his co-conspirators routinely billed Medicare for overseeing patient care plans (a service known as “care plan oversight” or CPO) when in fact the doctors at Medicall rarely did so.  The evidence at trial also showed that Brown and his co-conspirators billed Medicare for services that were never provided, including services rendered to patients who were deceased, services purportedly provided by medical professionals no longer employed by Medicall, and services purportedly provided by medical professionals who, based on billing records, worked over 24 hours per day.

According to the evidence presented at trial, during the five-year conspiracy, Medicall submitted bills to Medicare for more than $4 million in services that were never provided.  Medicare paid more than $1 million on those claims.

Mary Talaga, 54, of Elmwood Park, Illinois, and Roger A. Lucero, 64, of Elmhurst, Illinois, also have been convicted of offenses based on their roles in the scheme.  Talaga, Home Care America’s biller, was convicted along with Brown at trial and is scheduled to be sentenced Sept. 18, 2015.  Lucero, Medicall’s Medical Director, pleaded guilty and will be sentenced at a later date.

The case was investigated by HHS-OIG and the FBI, and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office of the Northern District of Illinois.  This case was prosecuted by Trial Attorney Brooke Harper and Senior Trial Attorney Jon Juenger of the Criminal Division’s Fraud Section.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged over 2,300 defendants who collectively have billed the Medicare program for over $7 billion.  In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.