Northern District of Illinois

CHICAGO ― A former physician who was affiliated with three Chicago hospitals was sentenced today to nearly six years in federal prison for illegally distributing prescription drugs in exchange for sex and cash. The defendant, JOSHUA D. BARON, a pediatric neurologist, pleaded guilty in March, admitting that he provided approximately 149 prescriptions for controlled substance medications, totaling thousands of doses, to 16 individuals in exchange for sex between 2006 and 2011. These individuals were never patients of Baron, they never visited his office as a patient, and he never asked them about medical issues, took their medical history, conducted an examination, or attempted to diagnose them.

Baron, 40, of Forest Park and formerly of Oak Park, was ordered to begin serving his 70- month sentence on Sept. 12 by U.S. District Judge Rebecca Pallmeyer. The judge also placed Baron on supervised release for 10 years after his sentence and ordered him to pay a $1,000 fine and perform 1,000 hours of community service.

Between late 2006 and early 2011, Baron dispensed prescriptions for controlled substances to individuals outside of the usual course of professional practice and without a legitimate medical purpose. He posted at least 78 advertisements offering to trade various prescription drugs, including Adderall, Norco, Percocet, Xanax, Vicodin, Ativan, Ritalin, Darvocet, OxyContin, and Klonopin, on an online website, and all of the ads were placed through one of three email addresses he used under the sections, “Men Who Would Pay” and “Casual Encounters.” Through these prescriptions, Baron traded thousands of doses of various medications to 16 individuals, mostly for sexual favors and, in some instances, cash.

Baron was initially charged by the state in January 2011 after an undercover investigation by the Wilmette Police Department. He was charged federally in October 2011 following a broader investigation by the U.S. Drug Enforcement Administration and the Chicago Police Department.

Baron was licensed in Illinois in May 2006 and, until January 2011, treated patients at Rush University Medical Center, John H. Stroger, Jr., Hospital of Cook County, and St. Anthony=s Hospital, all in Chicago. He voluntarily surrendered his medical license and his DEA registration in 2011.

The sentence was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Jack Riley, Special Agent-in-Charge of the DEA=s Chicago Field Division. The Wilmette Police Department, the Chicago Police Department Organized Crime Division=s narcotics and gang section, and the Illinois Department of Financial and Professional Regulation assisted in the investigation.

The government was represented by Assistant U.S. Attorneys Carol Bell and Matthew Schneider.

CHICAGO — A Chicago man was sentenced today to 30 years in federal prison for forced sex-trafficking of two minor and two young adult women. The defendant, CARL BRANDON SMITH, forced his victims to engage in commercial sex acts, used physical violence, and threatened to kill them if they ever left him between 2010 and early 2012.

Smith, also known as “Moo,” 27, pleaded guilty in January 2103 to transporting a minor from Wisconsin to Illinois for prostitution. He targeted young and vulnerable women and girls, ages 17 through 21. He psychologically manipulated them, convinced them that he was their boyfriend who loved them, and then forced them to earn their keep by working as prostitutes.

One victim spoke in court today, describing the physical and emotional impact that Smith’s crimes had on her. Addressing the defendant, she said she has moved on in her life, but she will remain permanently scarred.

“You were a violent pimp. . . . The pain, fear, and harm you’ve inflicted on these women is devastating,” U.S. District Judge Amy J. St. Eve said in imposing the sentence. Smith must serve at least 85 percent of his sentence and the judge placed him on five years’ supervised release after he is imprisoned. Smith was also ordered to pay approximately $239,000 in restitution to be allocated among the four victims based on a formula that takes into account the number of days each was prostituted, how many men they were forced to have sex on average each day, and the rate that Smith advertised their services.

“He did unspeakable things to his victims,” Assistant U.S Attorney Christopher Grohman argued at sentencing, adding in a written memo that the government could not “put into words the magnitude of harm or the life-altering consequences Smith caused his victims through his mosaic of cruelty.”

After the victims started in Smith’s employ, he kept them “in line” using a regime of verbal threats, drugs, physical beatings, and forcible sex acts. For just under two years, he “caused incalculable physical and psychological damage to his victims, in some cases scarring them physically and emotionally for life,” AUSA Grohman argued.

According to court documents, Smith met one victim in December 2010 and began contacting her via phone, text, and social media, asking her to move to Chicago, intending that she be his “girlfriend” and also engage in prostitution. In February 2011, Smith drove from Chicago to the victim’s residence in Wisconsin, and then drove her from Wisconsin to his apartment in Chicago, knowing that she was under 18 at the time.

Once in Chicago, Smith “dated” the victims for approximately a week before she began working as a prostitute under his employ between February and July 2011. Acting as her pimp, Smith advertised the victim for commercial sex on internet sites, and instructed her to have sex with customers in his apartment and in area motels, with Smith collecting the money she earned. The DuPage County Sheriff’s Office, the Naperville and Aurora police departments, and the Cook County Human Trafficking Task Force assisted in the investigation. The government was represented by Assistant U.S. Attorney Christopher Grohman.

The sentence was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Robert J. Holley, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation.

CHICAGO — A former west suburban Lyons police officer was sentenced today to five years in federal prison for illegally extorting more than $48,000 from targets of criminal investigations he was supposedly conducting during 2013. The defendant, JIMMY J. RODGERS, who was a 14-year veteran of the Lyons Police Department, was sentenced after pleading guilty in May to extortion.

Rodgers, 44, of Chicago, was assigned to a U.S. Food and Drug Administration, Office of Criminal Investigations, task force and his duties included investigating the sale of contraband and counterfeit cigarettes. In the course of his work, he set up six fake transactions with criminals, detained them, hand-cuffed them, stole their goods and funds for his own benefit, threatened them, and then lied and concealed the scam.

Rodgers, 44, of Chicago, was assigned to a U.S. Food and Drug Administration, Office of Criminal Investigations, task force and his duties included investigating the sale of contraband and counterfeit cigarettes. In the course of his work, he set up six fake transactions with criminals, detained them, hand-cuffed them, stole their goods and funds for his own benefit, threatened them, and then lied and concealed the scam.

“The temptation for police officers to extort illegal operations is great. People need to know they will go to jail for this conduct,” U.S. District Judge Thomas M. Durkin said in imposing the 60-month sentence. “The sentence here should serve as a reminder that the penalty for shaking people down is not a slap on the wrist.”

Rodgers was also fined $48,980 and was ordered to begin serving his sentence on Nov. 7. Rodgers was arrested last September and pleaded guilty in May.

According to court records, Rodgers recruited cooperating sources to assist in setting up transactions in which the source would sell contraband cigarettes to potential targets of the investigation. Rodgers agreed to pay the sources a fee for each transaction the sources conducted. Rodgers’ extortion was discovered by the FBI when one of the confidential sources reported the conduct after realizing that none of the targets were arrested, the transactions were not recorded, and Rodgers had begun paying him in cash from proceeds of the transactions instead of with checks from the Lyons Police Department as Rodgers had arranged previously.

The sentence was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Robert J. Holley, Special Agent-in-Charge of the Federal Bureau of Investigation. The Lyons Police Department and FDA’s Office of Criminal Investigations assisted in the investigation.

The government was represented by Assistant U.S. Attorney Sunil Harjani.

CHICAGO — A former commercial real estate businessman was sentenced today to eight years in federal prison for soliciting the murder of a Texas businessman whom he owed an $8 million judgment. The defendant, DANIEL DVORKIN, was convicted of solicitation of murder and five counts of using a telephone and a car to commit a murder-for-hire following a week-long jury trial in August 2013 in U.S. District Court.

Dvorkin, 76, formerly of Lombard, was arrested in July 2012 and has been in federal custody since he was convicted last year. U.S. District Judge Edmond Chang imposed the sentence in Federal Court.

Dvorkin “was a calm, cool, collected businessman who negotiated the price of a hit man as though he were closing a real estate deal, who showed only real concern for his bank account over the life of [the victim],” Assistant U.S. Attorneys Heather K. McShain and Jeff Perconte argued in a government sentencing memo.

According to the evidence at trial, the victim obtained an $8 million judgment in February 2012 against Dvorkin and two of his businesses, and the judgment became collectible in May 2012 after the parties failed to settle through mediation. In April 2012, Dvorkin contacted an individual, who reported to local police and later to the FBI that Dvorkin had solicited him to hire a hit man to kill the victim over the $8 million judgment. The individual who Dvorkin solicited began cooperating with law enforcement and recorded a series of conversations and meetings with Dvorkin in furtherance of the murder-for-hire plot. Investigators feared that Dvorkin, after balking at the price being negotiated with the cooperating individual, had found a cheaper hit man who was not identified, and approached Dvorkin, who was later arrested in July 2012.

The sentence was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Robert J. Holley, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation. The Oakbrook Terrace Police Department assisted in the investigation.

CHICAGO ― A Grundy County gun dealer was indicted on federal firearms charges alleging that he illegally sold 11 firearms from either his store or his residence to an undercover law enforcement officer posing as a felon, as well as to a convicted felon who was cooperating with law enforcement, federal law enforcement officials announced today.

The defendant, PATRICK SEAN KEIRAN, 40, of Elwood, Ill., in Will County, has been a federally licensed firearms dealer since April 2013 and operated American Choice Firearms and Ammo in Gardner, Ill., in Grundy County.

A federal grand jury returned a six-count indictment yesterday charging Keiran with one count of selling firearms to an individual he had reason to believe was a convicted felon, one count of selling firearms to an individual who did not display a valid Firearm Owner’s Identification (FOID) Card, and four counts of selling firearms without recording the name, age, and residence of the purchaser.

Keiran will be arraigned on a date to be determined in U.S. District Court in Chicago. He was initially charged in a criminal complaint and arrested on July 2, and was released on bond. His gun store was closed at that time and the Bureau of Alcohol, Tobacco, Firearms, and Explosives removed the firearms and ammunition remaining in the store at that time.

According to the charges, between May 29 and June 20, 2014, Keiran illegally sold 11 firearms ― eight 9mm handguns, two .22 caliber rifles, and a .38 caliber revolver. ATF agents began investigating Keiran in May after receiving information from a confidential source that he was selling firearms to prohibited persons and falsifying ATF paperwork in an attempt to fraudulently legitimize the prohibited sales, according to the complaint. The charges allege that Keiran initially conducted the illegal sales with an undercover agent at his store and later conducted additional illegal sales with the agent and a cooperating individual at his residence.

The indictment was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Carl Vasilko, Special Agent-in-Charge of the Chicago Office 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.

Keiran faces five counts of illegally selling firearms that each carry a maximum sentence of five years in prison, and a sixth count that carries a maximum penalty of 10 years in prison, and all six counts carry a maximum fine of $250,000. If convicted, the court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.

The government is being represented by Assistant U.S. Attorney Christopher Parente.

Indictment

Complaint

CHICAGO — A federal law enforcement officer was indicted on witness tampering charges for allegedly attempting to thwart an investigation of a sham marriage that she arranged a decade earlier. The defendant, ENKHCHIMEG ULZIIBAYAR EDWARDS, was charged with two counts of witness tampering in a federal grand jury indictment that was returned yesterday and announced today.

Edwards, also known as “Eni Edwards, 36, of Carpentersville, a U.S. Customs and Border Protection officer at O’Hare International Airport, will be arraigned on a later date to be determined in U.S. District Court.

The charges resulted from an investigation by the U.S. Department of State, Diplomatic Security Service Chicago Field Office. The U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) and the Department of Homeland Security’s Office of Inspector General assisted in the investigation.

According to the indictment, Edwards arranged for Individual A, a Mongolian citizen, to marry a friend of hers, Individual B, who was a U.S. citizen. Edwards arranged the marriage so Individual A could apply for and obtain U.S. citizenship through marrying Individual B. In July 2003, Individuals A and B were married in Las Vegas. Shortly after they were married, the couple applied for Individual A to become a naturalized U.S. citizen. After the U.S. Citizenship and Immigration Services requested additional information, Individual B failed to provide the requested information and stopped pursuing U.S. citizenship for Individual A. After the naturalization petition was rejected, Individuals A and B divorced in May 2004.

By January 2013, federal law enforcement authorities were conducting an investigation of the role that Edwards played in the marriage of Individuals A and B. On Jan. 8, 2013, and again the following day, Edwards allegedly engaged in witness tampering by attempting to corruptly persuade Individual B, with intent to hinder, delay, and prevent Individual B from communicating information to law enforcement relating to a federal crime.

Each count of witness tampering carries a maximum penalty of 20 years in prison and a $250,000 fine. If convicted, the court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.

The indictment was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Scott F. Collins, Acting Special Agent-in-Charge of the U.S. Department of State, Diplomatic Security Service Chicago Field Office.

The government is being represented by Assistant U.S. Attorney Peter S. Salib.

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.

Indictment

CHICAGO — Six defendants are facing federal fraud charges involving separate schemes to obtain a total of more than $2.7 million through fraudulent statements in loan applications submitted to banks, mortgage lenders, several community colleges, the U.S. Department of Education, and the Small Business Administration since 2006. Five of the defendants were indicted together yesterday for scheming to fraudulently obtain more than $2.4 million. The sixth defendant, who alone was arrested today, was indicted separately for allegedly scheming to fraudulently obtain an additional $300,000 in mortgage fraud and student loan fraud. Both indictments stem from the same investigation of fraudulent loan applications.

In an alleged mortgage fraud scheme, three of the five defendants ― ANTHONY TRICE, then president of Fifty One 06 Property Management and Acquisitions, Inc., JERROD L. WEATHERSBY, a director and vice president of the defunct company, and NOREEN B. MIAN, then a licensed loan officer for Exclusive Bancorp., Inc., in Lincolnwood ― were charged with scheming with others between 2006 and 2011 to fraudulently obtain more than $2.1 million in mortgage loans for 14 properties in Chicago and suburban Burnham and Park Forest. According to the indictment, Trice, 34,of Chicago; Weathersby, 36, of Harvey; and Mian, 34, of Chicago, prepared and submitted false documents and made false statements to lenders about the buyers’ qualifications for the loans. Trice also allegedly made false statements in requests for loan modifications related to two of the properties.

In an alleged student loan fraud scheme between 2010 and 2012, Trice and Weathersby, together with WARREN K. TAYLOR, 35, and DAVID N. EDWARDS, 37, both of Chicago, were charged with fraudulently seeking to obtain approximately $240,000, and successfully obtaining approximately $135,000 by submitting at least 40 fraudulent applications for admission and federal student aid from Harper College, Elgin Community College, and Joliet Junior College. According to the indictment, the defendants knew that the applicants — some of whose identities were acquired by Trice and Weathersby in connection with an earlier credit card fraud scheme — had not agreed to be enrolled in college, were ineligible for financial aid, and did not intend to use the financial aid funds for educational purposes. The defendants allegedly caused the financial aid checks to be sent to certain addresses in Chicago and Park Forest, and that they then cashed the checks and used the proceeds for themselves and others.

In an alleged credit card fraud scheme between 2006 and 2008, Trice and Weathersby were charged with obtaining individuals’ personal identifying information by promising to help them improve their credit ratings and obtain money. According to the indictment, Trice and Weathersby then made false statements in applications for lines of credit and credit card accounts and, without the consent of the applicants, withdrew more than $145,000 from the lines of credit and credit card accounts. During the same time, they also allegedly fraudulently obtained a $35,000 bank loan, which was guaranteed by the Small Business Administration, and used the proceeds for personal purposes.

Trice was charged with six counts of mail fraud, five counts of wire fraud, three counts of bank fraud, and one count each of making false statements on loan applications, student loan fraud, and aggravated identity theft. Weathersby was charged with one count each of wire fraud and aggravated identity theft. Taylor was charged with four counts of mail fraud and one count each of aggravated identity theft and student loan fraud. Mian was charged with two counts of wire fraud and one count of making false loan application statements, and Edwards was charged with one count each of mail fraud and student loan fraud.

The indictment also seeks forfeiture of more than $2.41 million from Trice, Taylor, Mian, and Edwards. All five defendants will be arraigned on later date to be determined in U.S. District Court and an arrest warrant was issued for Edwards alone.

In a separate indictment, DERREK L. CAMPBELL, II, 34, of Chicago, was charged with two counts of making false loan application statements and one count each of wire fraud and student loan fraud for allegedly obtaining more than $300,000 through false statements to mortgage lenders between 2009 and 2013 in connection with purchasing two properties in 2009, obtaining federal student aid in 2011, and seeking a loan modification on one of the properties in 2013. The indictment also seeks forfeiture of $302,420.

Campbell was arrested today and was scheduled to be arraigned this afternoon in Federal Court.

Each count of bank fraud, wire fraud affecting a financial institution, and making false loan application statements carries a maximum sentence of 30 years in prison and a $1 million fine; each count of mail fraud carries a maximum sentence of 20 years in prison and a $250,000 fine, and student loan fraud carries a maximum of five years in prison and a $250,000 fine. Aggravated identity theft carries a mandatory sentence of two years in prison consecutive to any other sentence and a $250,000 fine.

The charges were announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Robert J. Holley, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation, together with officials of the U.S. Department of Education Office of Inspector General, the U.S. Small Business Administration, and the Federal Housing Finance Agency.

The government is represented by Assistant U.S. Attorney Christopher R. McFadden.

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.

Trice Complaint

Campbell Complaint

CHICAGO — The former owner of an area home building company that went bankrupt in 2008, leaving unfinished a commercial and residential property development in northwest suburban Algonquin, was sentenced today to 15 months in federal prison for bank fraud related to the collapse of the project, known as Riverside Square.

The defendant, BRUCE HAWKINS, 64, of Denver and formerly of Algonquin, who owned Aspen Homebuilders, Inc., was also ordered to pay $1,017,183 in restitution by U.S. District Judge Robert M. Dow, Jr. Hawkins, who pleaded guilty in January, was ordered to surrender to begin serving his sentence on Oct. 14.

“It is important that developers and general contractors know that if they commit fraud in the financing of their projects, their conduct will be met with serious consequences,” Assistant U.S. Attorney Sunil Harjani argued in a government sentencing memo. “It is important that developers know they will go to jail if they lie in bank documents in order to steal funds from financial institutions.”

Hawkins admitted defrauding Amcore Bank of more than $1 million from the proceeds of $13.5 million line of credit to finance the project. In September 2006, acting through Riverside Square, LLC, Hawkins obtained the bank loan to finance the construction of Riverside Square, located at 1100 West Algonquin Rd. Between January 2007 and June 2008, Hawkins fraudulently obtained slightly more than $1 million in loan proceeds from the bank by submitting false contractor statements, waiver of liens, and contract invoices that requested funds purportedly for village permits, construction work, and consulting work for the development.

To obtain funds from the bank loan, Hawkins submitted false contractor statements to the bank in which he verified that subcontractors and his company were owed funds for work performed on Riverside Square. Hawkins submitted, and caused the submission of, false lien waivers and invoices for work performed to the title company, which was designated by Amcore Bank to keep and disburse funds for the project. After these documents were submitted, the bank authorized the title company to disburse funds to Hawkins and the subcontractors.

The sentence was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and John Lucas, Special Agent-in-Charge of the Federal Deposit Insurance Corporation Office of Inspector General in Chicago.

ROCKFORD — Thirteen Rockford area residents are facing federal gun and/or narcotics charges, federal and local law enforcement officials announced today. The indictments stem from a year-long investigation into firearms and cocaine trafficking in the Rockford area led by the Bureau of Alcohol, Tobacco, Firearms and Explosives and the Rockford Police Department. ATF agents, together with local police and other authorities, began executing arrest warrants this morning.

Zachary T. Fardon, United States Attorney for the Northern District of Illinois, praised the teamwork of the ATF and Rockford Police Department. Mr. Fardon announced the charges with Carl J. Vasilko, Special Agent-in-Charge of ATF in Chicago, and Chet Epperson, Rockford Police Chief. Also participating in the investigation and arrests were the Belvidere Police Department, Winnebago County Sheriff’s Office and the Illinois State Police.

Ten of the thirteen defendants were arrested today; one defendant was already in custody; and one defendant was previously arraigned. Those arrested today will appear before U.S. Magistrate Judge Iain D. Johnston and will remain in federal custody pending detention hearings.

Everardo Rodriguez, 28, Oscar Pina, 38, and Gabriel Rodriguez, 38, are each charged separately with selling cocaine. Mallek Sanchez, 28, is charged alone with selling cocaine, being a felon in possession of a firearm, and possessing a firearm with an obliterated serial number. Teovonni Cunningham, 29, Darrell Reed, 26, and Michael Schaffer, 31, are all charged together with conspiring to possess and sell stolen firearms. Cunningham is also charged with possession of 21 stolen firearms and numerous rounds of stolen ammunition, with being a felon in possession of those stolen firearms and ammunition, and with selling one of the stolen firearms and the stolen ammunition. Reed is also charged with possessing and selling four of the stolen firearms.

Daniel Guajardo, 24, is charged separately with being a felon in possession of a firearm and possession of a short-barreled shotgun. Jose G. Pagan, 37, is charged alone with being a felon in possession of a firearm and possessing a firearm with an obliterated serial number. Mario A. Guerra, 33, and Rosario Pillado, 21, are each charged separately with being a felon in possession of a firearm. Sergio Cazares, 20, and Jose M. Martinez, 26, are each charged separately with possessing a firearm with an obliterated serial number.

All of the defendants are Rockford residents, except for Darrell Reed who is a resident of Byron, Ill., and Mallek Sanchez, who is a resident of Belvidere, Ill.

Each drug distribution charge carries a maximum sentence of 20 years in prison and a $1 million fine. Each charge of a felon possessing a firearm, of possessing or selling a stolen firearm, or of possessing of a short-barreled firearm carries a maximum sentence of 10 years in prison and a maximum fine of $250,000. Each charge of possessing a firearm that has an obliterated serial number carries a maximum sentence of 5 years in prison and a maximum fine of $250,000. The charge of conspiring to possess and sell stolen firearms carries a maximum sentence of 5 years in prison and a maximum fine of $250,000. Upon conviction, the court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.

The government is being represented by Assistant United States Attorney John G. McKenzie.

The public is reminded that an indictment contains 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 will have the burden of proving guilt beyond a reasonable doubt.

CHICAGO — A registered nurse who operates a suburban health care provider that sends physicians to patients’ homes was arrested today on a federal health care fraud charge. The defendant, DIANA JOCELYN GUMILA, who manages Suburban Home Physicians, doing business as Doctor At Home, was charged with health care fraud in a criminal complaint that was unsealed upon her arrest. The complaint alleges a scheme to defraud Medicare by falsely certifying patients as being confined to their homes and requiring home health services; falsely increasing, or “upcoding,” claims for services; over-scheduling and double-billing patient visits, submitting false claims for providing extensive oversight of patients’ home health services, and billing for tests that were not medically necessary.

Gumila, 45, a licensed registered nurse in Illinois since 1991, was scheduled to appear at 3 p.m. today before U.S. Magistrate Judge Young Kim in U.S. District Court.

Simultaneous with Gumila’s arrest, agents from the FBI, the U.S. Department of Health and Human Services Office of Inspector General, and other law enforcement agencies executed search warrants at the offices of Doctor At Home and an affiliated business, Xpress Mobile Imaging, both located in the 800 block of East Higgins Road in Schaumburg, as well as at Gumila’s residence in Streamwood. A warrant was also executed to seize alleged fraud proceeds in a bank account maintained by Suburban Home Physicians.

The arrests and charges were announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Robert J. Holley, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation; and Lamont Pugh III, Special Agent-in-Charge of the Chicago Regional Office of the HHS-OIG. The Railroad Retirement Board Office of Inspector General is also participating in the investigation.

According to a 69-page affidavit in support of the arrest, search and seizure warrants, Doctor At Home sends physicians and physician’s assistants, who are accompanied and driven by a medical assistant, to visit patients in their homes. Doctor At Home gets many of its patients from home health agencies, which refer patients to Doctor At Home so that a physician will sign a form ordering the home health agency to provide nursing services to the patient.

According to Medicare claims data, from 2013 through May 2014, more than 300 home health agencies have submitted Medicare claims stating that they were ordered by just four Doctor At Home physicians to provide home health services to approximately 4,000 patients. Those home health agencies were paid more than $20 million as a result of their claims.

The affidavit alleges that most of Doctor At Home’s visits were billed to Medicare as if they were complicated, with the average payment for most visits approximately $120. As a result of alleged double-billing, over-billing, and certifying patients for home health services who were not confined to the home, Doctor At Home assisted home health agencies in falsely billing Medicare, allegedly causing Medicare to pay more than $1,000 a month on many patients simply so a nurse can visit once a week and conduct a basic check of the patient’s condition.

“Doctor At Home’s practices and processes regularly cause Medicare to pay more than $1,250 a month for basic maintenance of many patients who do not need such services,” the complaint alleges.

The affidavit states that agents have interviewed one current and seven former employees of Doctor at Home, including a current physician’s assistant who contacted law enforcement in January this year. Investigators have also reviewed an audio recording provided by a former Doctor At Home physician of an October 2013 meeting she had with Gumila, as well as emails and documents, claims data, and patient files, and have conducted interviews with patients of Doctor At Home and their primary care physicians whose statements contradict Doctor At Home’s billing and patient records.

In the recorded meeting, the doctor, identified as “Physician D,” who began working for Doctor At Home only a few weeks earlier, told Gumila that several patients did not qualify for certain services. Gumila responded by telling Physician D that she was an “artist” who should “paint the picture” of each patient in a way that Medicare would accept, the affidavit states.

Gumila allegedly overruled at least one physician and manipulated the certification of many patients as being confined to the home and requiring home health services. In doing so, she assisted home health agencies in billing Medicare for ineligible patients and medical services in exchange for Doctor At Home receiving patient referrals from the home health agencies. As part of the scheme, Doctor At Home allegedly scheduled patient visits on a monthly basis rather than based on patient need and billed Medicare as if the visits were complicated when they were actually routine and short in duration. Doctor At Home also frequently double-billed the same visit as a “patient visit” and also as a “wellness visit.” Doctor At Home also claimed that physicians and physician’s assistants provided extensive oversight of patients’ home health services when, in fact, employees in the Philippines prepared those oversight claims in part by counting routine visits toward oversight.

The complaint also alleges that Doctor At Home has billed Medicare for thousands of eye-movement tests that some providers believe were medically unnecessary, and it has referred thousands of echocardiograms and ultrasound tests to Xpress Mobile Imaging, which has several business ties to Doctor At Home.

Health care fraud carries a maximum penalty of 10 years in prison and a $250,000 fine and restitution is mandatory. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.

The government is being represented by Assistant U.S. Attorney Stephen Chahn Lee.

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 Medicare Fraud Strike Force began operating in Chicago in February 2011, and consists of agents from the FBI and HHS-OIG, working together with prosecutors from the U.S. Attorney’s Office and the Justice Department’s Fraud Section. The strike force is are part of the Health Care Fraud Prevention & Enforcement Action Team (HEAT), a joint initiative announced in May 2009 between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country. Scores of defendants have been charged locally in health care fraud cases since the strike force began operating in Chicago.

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

Complaint

ROCKFORD — A former Chicago, Ill. man was sentenced on July 22, 2014, in federal court on drug conspiracy charges.  ROBERT PRESLEY, 34, also known as “Munchie,” was sentenced to 440 months in federal prison, to be followed by 5 years of supervised release.  After a nine-day jury trial in the U.S. District Court in Rockford, Presley was convicted on June 14, 2012, of conspiracy to distribute at least one kilogram of heroin, one count of possessing a firearm in furtherance of a drug-trafficking crime, and two counts of being a felon in possession of a firearm.

According to the indictment and evidence at trial, Steven McDowell, 38, formerly of Rockford, also known as “Ty,” was the leader of an illegal drug trafficking operation in Rockford. Beginning as early as April 2010, and continuing into December 2010, the conspirators obtained large amounts of heroin from Chicago, transported the heroin to Rockford where it was diluted for resale and packaged in smaller zip lock bags or baggies for individual use, then grouped into packs.  Presley’s role was to obtain raw heroin from Chicago and to assist in the distribution.  The defendants used runners to distribute street-level quantities of heroin at numerous locations in Rockford.  McDowell and other co-conspirators rented cars that were used to deliver heroin to their street-level dealers, and used cell phones to notify runners where to go to distribute heroin to a customer or for when a runner needed to be resupplied or have money picked up.  Some of the co-conspirators, including Presley, used or possessed firearms for protection during their operations.

Two other men were also convicted on June 14, 2012, after the jury trial, and previously sentenced for their roles in the drug conspiracy:

STEVEN T. McDOWELL was convicted of one count of conspiracy to distribute at least one kilogram of heroin, and six counts of distribution of heroin, and was sentenced on Feb. 7, 2013, to 315 months in federal prison for his role in the conspiracy.  McDowell was also ordered to serve 5 years of supervised release following his imprisonment.

JEREMY COOPER, 26, formerly of Chicago, also known as “J.D.,” was convicted of one count of conspiracy to distribute at least one kilogram of heroin, three counts of distribution of heroin, one count of possession with intent to distribute heroin, and one count of being a felon in possession of a firearm.  Cooper was sentenced on Sept. 18, 2012, to 270 months in federal prison, and 5 years of supervised release following his imprisonment.

In addition, two other men pled guilty to their involvement in the conspiracy:

MURRAY STEVE HARRIS, JR., 38, formerly of Chicago, also known as “M,” pled guilty on Jan. 19, 2012, to conspiracy to distribute at least one kilogram of heroin, and was sentenced on April 19, 2012, to 130 months in federal prison, to be followed by 5 years of supervised release following his imprisonment.

NORMAN BREEDLOVE, 48, formerly of Rockford, also known as “Way,” pled guilty on May 24, 2012, to one count of conspiracy to distribute at least one kilogram of heroin, and one count of possessing a firearm in furtherance of a drug trafficking crime, and is awaiting sentencing.

The sentencing was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Robert J. Holley, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation; Richard Meyers, Winnebago County Sheriff; and Chet Epperson, Chief of the Rockford Police Department.

The government was represented by Assistant U.S. Attorney Mark T. Karner.

CHICAGO ― Three Chicago men are facing federal prison sentences ranging from 20 to 51 months for their roles in a seven-year fraud scheme that caused client banks of their ATM servicing business to lose more than $1.7 million. The last of the three defendants was sentenced today while the other two were sentenced last month.

The defendants, JAMES CARLSON, JOSEPH CABELLO, and THOMAS O’MALLEY, owned and operated ATS Uptime, Inc., from approximately 1999 through 2013, with offices in Chicago and Oswego. ATS had about a dozen clients and serviced approximately 800 ATMs, which included replenishing cash, collecting deposits, and maintain the banking machines.

Carlson, 46, was the president of ATS and beginning in the summer of 2010 was primarily responsible for the company’s vault, and loading cash into and repairing ATMs, including some he owned personally. As the fraud scheme was collapsing, Carlson voluntarily reported it to the FBI in September 2013 and cooperated extensively with the investigation, including recording conversations with Cabello and O’Malley. Carlson was sentenced today to 20 months in prison, beginning Sept. 19, and ordered to pay $658,572 in restitution.

“You cannot steal millions of dollars and not pay a substantial price,” U.S. District Judge Ronald Guzman said today in noting Carlson’s cooperation but rejecting his request for probation.

O’Malley, 42, was the chief financial officer, office manager, bookkeeper, and at times, responsible for the vault in Chicago. He was sentenced last month to 33 months in prison, beginning July 30, and ordered to pay $1,758,572 in restitution.

Cabello, 41, who personally owned some of the ATMs serviced by ATS, ran the Oswego office and was responsible for servicing ATMs. He was sentenced last month to 51 months in prison and ordered to pay $1,758,572 in restitution.

All three men pleaded guilty to one count of wire fraud after they were charged in September 2013.

According to court records, in 2005, Carlson discovered that approximately $200,000 of funds belonging to clients was missing. Around the same time, O’Malley said that he needed to use clients’ funds from the vault to pay for some of ATS’ moving expenses, and Carlson instructed Cabello and O’Malley to return the client funds and was assured they would be returned. In October 2010, shortly after Carlson began working in ATS’ Chicago vault, Carlson learned that ATS was missing approximately $1.1 million and did not have enough money to repay all of its clients. Prior to that time, Cabello and O’Malley had access to the cash in ATS’ Chicago vault.

O’Malley admitted that he stole at least $200,000 of clients’ funds for business purposes and his own personal use. Cabello admitted that he used clients’ funds for his own ATMs, and did not keep track of the amount he took or the amount he repaid.

Between 2007 and 2012, O’Malley and Cabello, and after October 2010, Carlson, used funds belonging to certain clients, which were stored in the vault, to fill ATMs that belonged to other clients, and to repay money owed to other clients, without authorization from the owners of those funds to use their money in that manner. As part of the fraud scheme, the defendants emailed account balance statements to their clients, falsely representing the amount of cash that ATS actually had on hand for them, both because of their thefts and commingling of client funds. They also deceived bank auditors into believing that ATS was properly handling client funds by moving the cash they had available from one owner to another.

The sentences were announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Robert J. Holley, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation.

The government was represented by Assistant U.S. Attorney Jacqueline Stern.

CHICAGO ― Seven defendants are facing federal charges here for their alleged participation in a drug and firearms trafficking operation between south suburban Harvey and Marion, Ohio, federal law enforcement officials announced today. At least 19 assorted firearms, many of them stolen from gun owners in central Ohio, were seized during the course of the investigation, which was led by the Bureau of Alcohol, Tobacco, Firearms and Explosives.

One defendant was arrested today and one yesterday in Ohio, two were arrested last week (one here and one in Ohio), and three others are in state custody in Ohio. They were charged in three separate criminal complaints filed last week in U.S. District Court in Chicago, with the last complaint unsealed today.

One defendant, AUBREY BURKS, 22, of Harvey, allegedly led the trafficking operation. According to one of the complaints, five defendants conspired with Burks between January and April this year to distribute heroin and crack cocaine, some of which they obtained in the Chicago area, to drug customers in and around Marion, located approximately 50 miles north of Columbus. At times, Burks and five other defendants accepted firearms from their drug customers as payment. The defendants transported, or arranged for the transportation, of guns from Marion to Harvey, where they stored them at various residences. The defendants obtained drugs in the Chicago area by exchanging firearms for narcotics, or selling firearms for money they used to buy drugs, which they later sold to customers in Ohio, the charges allege.

Burks was charged alone in one complaint with being a felon-in-possession of firearms for allegedly possessing six firearms that were seized by Harvey police on Jan. 30, 2014, from a residence in Harvey. He was arrested last week in Ohio and is being transferred in custody to Chicago for prosecution.

Five defendants were charged together in a second complaint with conspiring with each other and Burks to possess and distribute heroin and crack cocaine, as well as to violate multiple federal firearms statutes, including dealing firearms without a federal license. They are: KIERRE WATERFORD, 24, also known as “Finess” and “Vaness;” KEVIN JACKSON, 23, aka “Ray-Ray” and “New York;” Burks’ brother, OMAR BURKS, 24, aka “T-O;” ANTHONY JACKSON, 20, aka “Smookie” and “B-D;” and DANIEL MURPHY, 28, all of whom have residential ties to Harvey and/or Marion.

Murphy was arrested today and Anthony Jackson was arrested yesterday, both in Ohio, while Waterford, Kevin Jackson, and Omar Burks are in state custody in Ohio.

The seventh defendant, ANTHONY GALVAN, 19, of Harvey, aka, “Ant,” was charged alone in a third complaint with selling firearms without a federal license. Galvan allegedly sold six firearms to an undercover police officer in a vehicle parked in front of his residence in Harvey during five transactions between Jan. 14 and Feb. 20, 2014. Galvan was arrested last week and remains in federal custody in Chicago without bond.

The arrests and charges were announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Carl Vasilko, Special Agent-in-Charge of the Chicago Office of the Bureau of Alcohol, Tobacco, Firearms, and Explosives. Also assisting in the investigation were the Chicago Police Department and the CPD/ATF Firearms Trafficking Task Force, the Illinois State Police, the Harvey Police Department, the Marion Metro Drug Enforcement Unit (MARMET), the Marion Police Department, the Marion County Sheriff’s Office, the Ohio State Police, the Columbus Field Division of ATF, the U.S. Attorney’s Offices for the Northern and Southern District of Ohio, and the Chicago High Intensity Drug Trafficking Task Force (HIDTA).

Conspiracy and dealing firearms without a federal license each carry a maximum sentence of five years in prison, while the felon-in-possession count against Aubrey Burks carries a maximum sentence of 10 years in prison. The drug distribution conspiracy against five defendants carries a maximum penalty of 20 years in prison and a $1 million fine. If convicted, the court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.

The government is being represented by Assistant U.S. Attorney Sharon Fairley.

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

Burks Complaint

Galvan Complaint

Waterford Complaint

CHICAGO ― A former North Chicago school board member was sentenced today to 10 years in federal prison for receiving at least $566,000 in kickbacks from three co-defendants who controlled several different transportation companies that received more than $21 million in student bus contracts over nearly a decade.

The defendant, GLORIA HARPER, 63, formerly of North Chicago, pleaded guilty last October to one count each of wire fraud and filing a false federal income tax return. Harper admitted that between 2001 and 2010 she schemed to deprive the approximately 4,000-student North Chicago Community Unit School District 187 (NCSD) of her honest services. Harper instigated and orchestrated the fraud scheme with four co-defendants, including Alice Sherrod, the district’s former transportation director. The three co-defendants funneled kickbacks totaling at least $800,000 to Harper and Sherrod and made more than $9.6 million in profits.

“This was a serious, serious offense that took advantage of an impoverished school district and the ultimate victims were the school children of North Chicago,” U.S. District Judge Sharon Johnson Coleman said in imposing the sentence today after a hearing that began last week. Judge Coleman ordered Harper to serve her sentence consecutive to a 30-month federal sentence that Harper received in 2012 in Louisiana for defrauding the federal E-Rate program that funds education technology. The judge also ordered Harper to pay approximately $7.2 million in restitution.

“The North Chicago School District has one of the highest low-income populations in the state. But rather than looking out for the interests of the district’s taxpayers and the children who depended on the schools for education, Harper selfishly used her position to enrich herself, and then filed false tax returns,” Assistant U.S. Attorney Matthew Getter argued at sentencing.

Sherrod, 62, of Berwyn and formerly of Gurnee; Tommie Boddie, 69, of Harvest, Ala., and formerly of Wadsworth; Derrick Eubanks, 50, of Lake Villa; and Barrett White, 55, of Matteson, have also pleaded guilty and are awaiting sentencing.

Harper, who was a member of the NCSD board from 1999 to May 2009, and Sherrod, who was District 187's transportation director from 2001 to July 2010, used their positions to enrich themselves secretly by soliciting and accepting gifts and cash from their three codefendants in exchange for favorable official action regarding student transportation contracts. Initially, Harper and Sherrod received kickbacks of approximately $4,000 to $5,000 a month but, by 2003, they were collecting approximately $20,000 a month.

From the late 1990s until mid-2003, the NCSD contracted with various companies to provide student transportation, including T&M Transportation, which was owned in part and controlled by Boddie, and Eubanks Transportation, which was owned in part and controlled by Eubanks. In 2001, Harper and Sherrod met with Boddie and agreed they would arrange for the NCSD to increase the number of students that T&M transported in exchange for kickback payments.

In May 2003, Harper suggested to Boddie and Eubanks that they join together to form one company ― Safety First Transportation, Inc., which won the NCSD’s transportation contract in 2003, and Harper, Sherrod, Boddie, and Eubanks agreed that they would split the profits from the contract. After an IRS audit of Safety First in 2006-2007, White, who had been acting as the “bagman” for the kickbacks, began receiving funds from Safety First as both an employee and a contractor, even though he provided little service other than being the bagman.

In April 2008, the defendants agreed to set up a new company, Quality Trans, LLC, to replace Safety First and to assume its contracts with the school district. All five agreed to continue splitting profits from Quality Trans, and Boddie, Eubanks and White continued making cash payments to Harper and Sherrod.

The sentence was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Robert J. Holley, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation; and James C. Lee, Special Agent-in-Charge of the Internal Revenue Service Criminal Investigation Division in Chicago. The North Chicago School District cooperated with the investigation.

CHICAGO — A former clerk for a lean hogs futures trader was sentenced today to eight months in prison after being convicted in March of commodities fraud for manipulating trades to profit more than $200,000 for herself to the detriment of public customers.

The defendant, NICOLE M. GRAZIANO, 33, of Addison and formerly of Roselle, was also ordered to pay $212,000 in restitution to various clearing firms on behalf of victim investors. U.S. District Judge James Zagel, who found Graziano guilty of four counts of commodities fraud in March after a bench trial, imposed the sentence in Federal Court.

Graziano’s scheme resulted in an “almost unbelievable success rate” of 90 to 100 percent of winning trades for her own account, which would have been impossible in an ordinary market setting, Judge Zagel said when he delivered his verdict.

According to the evidence, Graziano, who was a clerk for a member broker at the Chicago Mercantile Exchange, now CME Group, secretly inserted order tickets for her own personal orders into the decks of tickets submitted by public customers. She provided the tickets and trade cards to brokers to execute during the closing bracket of trading in lean hogs futures contracts. Using her position as a clerk, Graziano fraudulently allocated favorable prices to her own trades (giving herself low prices for buy orders and high prices for sell orders), and reaped profits to the detriment of public customers. Between September 2009 and August 2010, Graziano submitted at least 89 fraudulent trade cards to the appropriate clearing firms, resulting in approximately $212,000 in illegal profits to her during the closing bracket.

Judge Zagel said that the scheme damaged “the legitimacy of the exchange itself” and hurt customers because she took away benefits that could have gone to them for her own advantage.

The sentence was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Robert J. Holley, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation. The CME Group assisted in the investigation.

The government was represented by Assistant U.S. Attorneys Christopher R. McFadden and Tiffany McCormick.

CHICAGO — A Skokie couple was arrested today after they and their home health care company were indicted on federal health care fraud charges for allegedly bilking Medicare of more than $800,000 for physician services that were never provided to patients. The couple and their company were also charged with conspiring to pay another defendant $11,000 in illegal kickbacks for patient referrals.

The couple, JOHN YOUSEFZAI, and his wife, ARMANOUHI ARZOMANIAN, owned and operated MEDICOSE HOME HEALTH CARE SERVICE, Inc., which employed physicians and provided in-home medical services to patients. The couple operated Medicose from their home in Skokie, where federal agents executed a search warrant today.

Yousefzai, 66, and Arzomanian, 56, neither of whom is a licensed medical professional, were each charged with five counts of health care fraud, one count of conspiracy, and two counts of paying kickbacks for referrals of Medicare patients to Medicose, which was charged with five counts of health care fraud.

Also arrested today was WILSON NARSA, 52, of Chicago, who worked for a non-profit organization that provided services to the elderly and disabled. He was charged with conspiracy and two counts of receiving kickbacks for referring Medicare patients to Medicose.

The three individual defendants and Medicose pleaded not guilty at their arraignment this afternoon in U.S. District Court. Yousefzai and Arzomanian were each released on a $50,000 secured bond, and Narsa was released on his own recognizance. A status hearing was scheduled for Aug. 12 before U.S. District Judge Harry Leinenweber.

The defendants were charged in a 10-count indictment that was returned by a federal grand jury on July 1 and unsealed today following the arrests. The indictment also seeks forfeiture from the couple of at least $800,000 and a residence they own in Wilmette, as well as at least $11,000 from Narsa.

According to the indictment, Medicose employed four physicians licensed in Illinois. Between May 2008 and January 2014, Medicose sought more than $2.1 million in reimbursement from Medicare for physician home visits, and Medicare paid Medicose more than $1.4 million. Of that amount, Medicose, Yousefzai, and Arzomanian allegedly submitted more than $1.3 million in fraudulent claims to Medicare for physician services that were not actually provided. As a result, the couple and Medicose caused Medicare to lose more than $800,000. Those three defendants caused the fraud proceeds to be disbursed from Medicose’s corporate bank accounts for the couple’s personal benefit, the indictment alleges.

Between December 2010 and August 2013, all four defendants allegedly conspired to have Medicose pay kickbacks to Narsa and others, including at least $11,000 to Narsa, to induce Medicare patient referrals and increase the patient census at Medicose, which, in turn, enriched Medicose and its owners.

The indictment was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Lamont Pugh III, Special Agent-in-Charge of the Chicago Regional Office of the HHS-OIG; and Robert J. Holley, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation.

The government is being represented by Assistant U.S. Attorney William Ridgway.

Each count of health care fraud carries a maximum penalty of 10 years in prison and a $250,000 fine or a fine totaling twice the gain or loss, whichever is greater, while conspiracy and each count of violating the anti-kickback statute carry a maximum sentence of five years in prison and a $250,000 fine, and restitution is mandatory. Medicose faces a maximum corporate penalty of each count of five years’ probation 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 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.

Indictment

ROCKFORD — A former employee of Milledgeville Community Credit Union was sentenced by U.S. District Judge Frederick J. Kapala for embezzling money from Milledgeville Community Credit Union, in Milledgeville, Ill. KIMBERLY KENT, 53, who was also a former Treasurer of Wysox Township, was sentenced to 8 months in prison, to be followed by 2 years of supervised release requiring her to serve the first 6 months of supervision under home confinement, and a $5,000 fine. Kent was also ordered to pay restitution in the amount of $10,176.72 to Milledgeville Community Credit Union and $5,278.75 to Wysox Township, in addition to restitution in the amount of $231,823.15 that Kent already paid. Restitution included investigative costs incurred by the Credit Union and Township.

Kent pleaded guilty to the charge on February 24, 2014. According to Kent’s written plea agreement, from October 2005 through February 2012, Kent embezzled approximately $219,600 from Milledgeville Community Credit Union, where she was the manager and responsible for supervising other employees. Kent was also responsible for her own cash drawer and for handling various transactions on accounts, including the deposit and withdrawal of funds to and from customers’ accounts. As stated in the plea agreement, to conceal her embezzlement, Kent created fictitious loans using the names of family members and fictitious certificates of deposit. In 2009, Kent was elected treasurer of Wysox Township. Kent admitted that in August 2010, in her capacity as treasurer of Wysox Township, she used funds from Wysox Township’s account at Milledgeville Community Credit Union to cover her embezzlement. Kent used the money she embezzled for personal purposes. The deposits of the credit union were insured by the National Credit Union Administration Board.

The sentencing was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Robert J. Holley, Special Agent-in-Charge of the Chicago Office of Federal Bureau of Investigation.

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

CHICAGO — Two California men were indicted on federal charges for allegedly damaging and interfering with the operations of a mink farm in Morris, Ill., last August. Property belonging to the mink farm, about 60 miles southwest of Chicago, was damaged and approximately 2,000 minks were released from captivity on Aug. 14, 2013. The defendants also allegedly conspired to damage and interfere with the operations of a fox farm in Roanoke, Ill., northeast of Peoria, around the same time.

One defendant, TYLER LANG, was arrested today by FBI agents in El Segundo, Calif. He was scheduled to appear this afternoon in Federal Court in Los Angeles before facing further court proceedings in U.S. District Court in Chicago. The second defendant, KEVIN JOHNSON, is in state custody in Woodford County, Illinois, and both defendants are scheduled to be arraigned in Federal Court in Chicago on July 29.

Johnson, 27, also known as “Kevin Olliff,” and Lang, 25, whose last known residences were in Los Angeles, were both charged with one count each of conspiracy and interstate travel to damage and interfere with the operations of an animal enterprise. The two-count indictment was returned by a federal grand jury in Chicago on Tuesday and it was unsealed following Lang’s arrest.

According to the indictment, the Morris mink farm and the Roanoke fox farm were in the business of breeding, raising, and selling the animals to fur manufacturers.

Between Aug. 5 and Aug. 15, 2013, Johnson and Lang allegedly conspired to travel throughout the United States, including through Illinois, Iowa, and Wisconsin, for the purpose of damaging and interfering with the operations of animal enterprises, including the mink and fox farms. On Aug. 14, 2013, they allegedly traveled interstate and damaged real and personal property (including animals and records) and interfered with the operations of the mink farm in Morris, located in Grundy County. The indictment alleges the offenses resulted in economic damage exceeding $10,000.

In addition to the release of approximately 2,000 minks from their cages, portions of the fence surrounding the farm were removed allowing the minks to escape from the property. A barn was painted with the words “Liberation is Love,” and a caustic substance was poured or sprayed on two farm vehicles, damaging the paint.

Each count carries a maximum penalty of five years in prison and a $250,000 fine, and restitution is mandatory. If convicted, the court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.

The arrest and indictment were announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Robert J. Holley, 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 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.

Indictment

CHICAGO — A high-ranking leader of the Latin Kings street gang was sentenced today to 35 years in federal prison after being convicted of racketeering conspiracy and related charges involving narcotics trafficking and violence that plagued the Little Village neighborhood on the city’s west side. The defendant, JUAN AMAYA, 38, was convicted by a jury in March of this year after a trial in U.S. District Court.

In 2008, Amaya was the leader, or “Regional Inca,” of the Almighty Latin King Nation’s 26th Street Region, encompassing Little Village, the gang’s most important stronghold. Amaya was “in charge of over 1,000 soldiers ― many of whom were simply boys sent off to kill or be killed” under rules and policies he oversaw, the government argued in seeking a sentence of 40 years imprisonment.

Amaya was held responsible for participating in a conspiracy to commit murder, according to findings by U.S. District Judge Rebecca Pallmeyer, who imposed the sentence in Federal Court. Amaya must serve at least 85 percent of the sentence.

Last week, Nedal Issa, who was the Inca of the Latin Kings’ Cicero Section of the 26th Street Region and who pleaded guilty, cooperated, and testified as a government witness, was sentenced to nearly 17 years in prison by U.S. District Judge Charles Norgle. Amaya’s sentencing marks the last significant event in cases since 2008 that resulted in federal convictions of, and lengthy sentences for, Augustin Zambrano, the Latin Kings’ leader or “Corona;” Vicente Garcia, the gang’s “Supreme Regional Inca;” Fernando King, who preceded Garcia as second-incommand; and more than two dozen other top-ranking leaders.

“These sentences hold these defendants accountable for the barbaric enterprise known as the Latin Kings and for their roles in murder, attempted murder, shootings, beatings, drug trafficking, and other crimes,” said Zachary T. Fardon, United States Attorney for the Northern District of Illinois. “I want to thank our local, state and federal law enforcement partners for their brave and outstanding work resulting in a major impact on this gang enterprise,” Mr. Fardon added.

The evidence at Amaya’s trial showed that by 2008, just a couple of years after he was released on parole from a 24-year sentence for a 1992 murder conviction, Amaya was promoted to Regional Inca of the Little Village Region, reporting only to Garcia and Zambrano and effectively running the gang at their behest. During his tenure, Amaya discussed 25 shootings committed by his underlings while expressing pride at the consistency of violence. All told, hundreds of shootings resulting from Latin Kings conduct occurred in Little Village during the period of Amaya’s prominence, according to the government.

Amaya was indicted separately in 2012 following the 2008 and 2009 indictments of more than 30 top leaders of the Latin Kings. All have been convicted and sentenced except for a few defendants who remain fugitives. From its origin and base in the west side Little Village neighborhood, the Latin Kings spread throughout Chicago and Illinois and established branches in other states, where local leaders acted with some autonomy but adhered to the rules and hierarchy of the Chicago gang, according to trial evidence and court records.

The sentence was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Robert J. Holley, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation; and Carl Vasilko, Special Agent-in-Charge of the Chicago Office of the Bureau of Alcohol, Tobacco, Firearms and Explosives. The Chicago Police Department, the U.S. Immigration and Customs Enforcement (ICE) Office of Homeland Security Investigations (HSI) in Chicago, the Cook County Sheriff’s Police, and the Joliet Metropolitan Area Narcotics Squad also had significant roles in the investigation, which was conducted through the federal High Intensity Drug-Trafficking Area (HIDTA) Task Force and under the umbrella of the Organized Crime Drug Enforcement Task Force (OCDETF).

In late 2006, ATF agents led an investigation that resulted in federal drug trafficking and firearms charges against 38 Latin Kings members and associates. In 2008, the FBI led an investigation that resulted in state and federal charges against 40 Latin Kings members and associates, including Zambrano and numerous co-defendants. In total, nearly 100 Latin Kings members and associates have faced state or federal charges since 2006. The convictions resulted from a sustained, coordinated effort by federal law enforcement agencies, working together with the Chicago Police Department and other state and local partners, to dismantle the hierarchy of the Latin Kings and other highly-organized, often violent Chicago street gangs.

Zambrano was the highest-ranking Latin King to be convicted and sentenced since Gustavo “Gino” Colon, who also holds the title of “Corona,” was sentenced to life in prison in 2000.

The government was represented by Assistant U.S. Attorneys Andrew Porter, Nancy DePodesta and Tiffany McCormick.

CHICAGO — A Chicago man was arrested today on federal charges for allegedly impersonating an employee of the U.S. Marshals Service on two occasions last year. The defendant, ROBERT P. ROZYCKI, was arrested without incident by deputy U.S. Marshals.

Rozycki, 37, was charged with two felony counts of impersonating a U.S. Marshals Service employee in an indictment that was returned by a federal grand jury yesterday and unsealed following his arrest. He is scheduled to be arraigned at 1:30 p.m. today before U.S. Magistrate Judge Michael Mason in Courtroom 2266 in the Dirksen Federal Courthouse.

The indictment charges Rozycki with falsely assuming the identity of and pretending to be a U.S. Marshals Service employee on March 3 and May 18, 2013.

Each count of impersonating a federal law enforcement officer carries a maximum penalty of three years in prison and a $250,000 fine. If convicted, the court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.

The arrest and indictment were announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Darryl McPherson, United States Marshal for the Northern District of Illinois.

The government is being represented by Assistant U.S. Attorney Kathryn Malizia.

The public is reminded that an indictment 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.

Indictment

CHICAGO ― A Chicago man self-surrendered to law enforcement authorities today on federal charges alleging that he conspired with others to buy at least 43 firearms in Indiana and illegally transport those firearms to Chicago for sale. The new defendant, WINSTON GERALDS, allegedly conspired with previous defendant David Lewisbey and others in the interstate gun trafficking conspiracy.

Geralds, 24, also known as “Worm,” was indicted on one count each of conspiracy and dealing firearms without a federal license, and two counts each of illegally transporting firearms across state lines and interstate travel to sell guns without a license. He pleaded not guilty to the charges after presenting himself with his attorney for arraignment in U.S. District Court. He was taken into federal custody and a detention hearing was scheduled for 1:30 p.m. Friday before U.S. Magistrate Judge Geraldine Soat Brown in Federal Court.

Geralds was charged in a seven-count indictment returned by a federal grand jury on May 28. A co-defendant, MAURICE STRICKLAND, 26, of Chicago, was charged with one count of being a felon-in-possession of a firearm. Strickland, also known as “Reece,” was arrested on June 9, pleaded not guilty, and remains detained in federal custody.

The indictment alleges that Geralds accompanied Lewisbey on multiple trips to Crown Point, Ind., and Indianapolis between April 21-23, 2012, and purchased firearms at gun shows and other venues. It adds they illegally brought the firearms to Chicago, where they sold no fewer than 43 guns to previous defendants, who then sold the guns to an individual who was cooperating with ATF agents. All of those guns were recovered by law enforcement.

Lewisbey, 24, of South Holland; Levaine Tanksley, 29, of Chicago; and Charles Lemle, 28, of Chicago, were previously convicted of various firearms offenses and sentenced. Michael Hall, 29, of Chicago, is awaiting sentencing.

Geralds allegedly accompanied Lewisbey and participated in each of the gun transactions on April 21-23, 2012, and conspired with him in illegally selling the firearms across the state line. At the time, Strickland lived in a residence in the 6800 block of South Langley Avenue where Tanksley sold some of the guns he bought from Lewisbey. Strickland was charged with illegally possessing a firearm on April 22, 2012, because of a previous felony conviction.

The indictment against Geralds and Strickland was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Carl Vasilko, Special Agent-in- Charge of the Chicago Office of the Bureau of Alcohol, Tobacco, Firearms, and Explosives. The Chicago Office of 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).

Conspiracy and dealing firearms without a federal license each carry a maximum sentence of five years in prison, while each count of illegally transporting firearms across state lines, and interstate travel to sell guns without a license carry a maximum penalty of 10 years in prison. The felon-in-possession count against Strickland carries a maximum sentence of 10 years in prison. Each count carries a maximum fine of $250,000. If convicted, the court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.

The government is being represented by Assistant U.S. Attorneys Christopher Parente and Bethany Biesenthal.

Indictment

CHICAGO — The United States filed a civil lawsuit against California-based IPC The Hospitalist Company, Inc., and its subsidiaries, alleging that IPC submitted false claims to federal health care programs, the U.S. Attorney’s Office announced today. The complaint alleges that IPC violated the federal False Claims Acts by knowingly engaging in systematic overbilling for hospital evaluation and management services billed to Medicare, Medicaid, and other federal health benefit programs.

The government’s complaint, intervening in a whistleblower’s lawsuit, was filed yesterday in U.S. District Court. Last December, when the whistleblower’s lawsuit was unsealed, the United States gave notice of its intention to file its own complaint.

IPC, based in North Hollywood, Calif., is one of the largest hospitalist companies in the United States, employing 2,500 hospitalist physicians and other health care providers in more than 1,300 facilities in 28 states. Hospitalists are physicians who work only in hospitals and other long-term care facilities, overseeing and coordinating inpatient care for patients from admission to discharge.

The government’s lawsuit alleges that IPC physicians sought payment for higher and more expensive levels of medical service than were actually performed ― a practice commonly referred to as “upcoding.” Specifically, the lawsuit alleges that IPC encouraged its physicians to bill at the highest levels regardless of the level of service provided and pressured physicians with lower billing levels to “catch up” to their peers.

“IPC’s upcoding scheme caused, and still continues to cause, Medicare, Medicaid and other federal payors to overpay millions of dollars to IPC,” the suit states. “As a result of corporate/management pressure, and/or in keeping with IPC corporate culture and expectations to maximize billings, IPC hospitalists have routinely and systematically submitted upcoded claims for payment to the United States,” it adds.

The lawsuit was originally filed under seal in 2009 by Dr. Bijan Oughatiyan of Dallas, who worked as a hospitalist for IPC in San Antonio from 2003 to 2008, under the qui tam or whistleblower provisions of the False Claims Act. The federal law and similar state statutes permit private individuals to sue for false claims on behalf of the government and to share in any recovery. The Act also allows the government to intervene or take over the lawsuit, as it has done in this case, and to recover three times its damages plus civil penalties ranging from $5,500 to $11,000 for each false claim submitted.

As alleged in the government’s complaint, more than half of IPC’s revenues have come historically from government medical insurers, including Medicare and Medicaid, as well as the TRICARE Program, the Federal Employee Health Benefits Program, and the Railroad Retirement Medicare Program.

The lawsuit alleges that IPC pressured and encouraged its physicians to engage in systematic overbilling of the codes submitted to government health benefit programs for evaluation and management procedures such as admission, subsequent hospital visits, and discharge of patients. Based on IPC’s regular and detailed monitoring of the codes billed by individual physicians, the lawsuit alleges that IPC was aware that its physicians were using the highest-level billing codes (those which require the most work and are reimbursed at the highest amounts) at rates far in excess of what would normally be expected. It further alleges that IPC knew or should have known that its physicians could not have actually been performing the services at the levels for which claims were submitted.

The complaint illustrates the government’s emphasis on combating health care fraud. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered more than $17 billion through False Claims Act cases, with more than $12.2 billion of that amount recovered in cases involving fraud against federal health care programs.

The case is being handled by the U.S. Attorney’s Office for the Northern District of Illinois and the Fraud Section of the Commercial Litigation Branch of the Justice Department’s Civil Division, with assistance from the U.S. Department of Health and Human Service’s Office of Inspector General, the Office of Personal Management’s Office of Inspector General, and the Railroad Retirement Board’s Office of Inspector General. The government is being represented by Assistant U.S. Attorney Eric Pruitt and DOJ Senior Trial Counsel Elizabeth Rinaldo.

The case is captioned United States ex rel. Oughatiyan v. IPC The Hospitalist Company, Inc., et al., No. 09 C 5418 (N.D. Ill.). The claims asserted against IPC are allegations only, and there has been no determination of liability. In a civil case, the government has the burden of proving the allegations by a preponderance of the evidence.

Complaint

CHICAGO ― A suburban Chicago woman was sentenced to six years in federal prison for operating a federal income tax fraud scheme as well as one of the largest fictitious employer unemployment fraud schemes ever prosecuted nationwide. The defendant, JACQUELINE KENNEDY, who owned a south side tax preparation business, engaged in one scheme to falsely claim federal tax refunds and, together with 15 co-defendants, engaged in a related scheme using the identities of other individuals, including some of her tax service clients, to fraudulently obtain millions of dollars from state unemployment insurance agencies in Illinois, Indiana and four other states.

Kennedy, 41, formerly of Country Club Hills, received the six-year prison term and was ordered to pay more than $4.8 million in restitution last Thursday by U.S. District Judge Joan Lefkow. Kennedy and her co-defendants were indicted in April 2012, and, after initially being released on bond, Kennedy became a fugitive in September 2012 while she continued to commit unemployment insurance fraud. She was arrested in December 2012 and has remained in federal custody.

Judge Lefkow said Kennedy’s conduct “undermines the public’s confidence in the validity of state unemployment programs.” Kennedy has been defiant and “made choices knowing full well they were illegal,” the judge added.

Kennedy pleaded guilty in December to one count of making false claims for tax refunds, one count of wire fraud, and three counts of mail fraud. Kennedy owned and managed ATAP Financial Enterprises, Inc., ATAP Tax & Business Solutions, Inc., and ATAP Tax Services, Inc., (collectively ATAP), all tax preparation businesses located at one time at 1757 West 95th St., in Chicago. Between January 2008 and April 2010, Kennedy prepared more than 200 false income tax returns by attaching false W-2 forms from fictitious entities to her clients’ tax returns to inflate their Earned Income Tax Credit.

Between February 2009 and December 2012, Kennedy and her co-defendants registered 97 fictitious companies they created with state unemployment agencies and then filed more than 900 false unemployment insurance claims for fictional employees who were purportedly terminated from the fictitious companies without fault. Proceeds from the claims were deposited on debit cards that Kennedy and her co-defendants used to withdraw the proceeds of their scheme.

After a sentencing hearing on May 30, Judge Lefkow ruled last week that Kennedy alone was responsible for restitution totaling $4,815,740, consisting of a $546,619 loss resulting from the tax fraud scheme, and an actual loss of $4,269,121 from the unemployment insurance benefits fraud scheme. She also found that Kennedy intended a loss of more than $13.8 million from the unemployment fraud scheme.

In total, Kennedy and co-defendants bilked state unemployment insurance agencies in Illinois, Indiana, Kansas, Minnesota, Mississippi, and Oklahoma out of approximately $9.1 million, including nearly $6 million from the Illinois Department of Employment Security.

In addition to Kennedy, who was a leader and organizer of the schemes, all 15 codefendants have been convicted, and 11 of them have been sentenced to terms ranging from probation to three years in prison, while four others are awaiting sentencing.

The sentence was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; James Vanderberg, Special Agent-in-Charge of the U.S. Department of Labor’s Office of Inspector General, Office of Labor Racketeering and Fraud Investigations; James C. Lee, Special Agent-in-Charge of the Internal Revenue Service Criminal Investigation Division; Robert J. Holley, Special Agent-in-Charge of the Chicago Office of Federal Bureau of Investigation; and Tony Gómez, Inspector-in-Charge of the U.S. Postal Inspection Service in Chicago. The Social Security Administration Office of Inspector General also assisted in the investigation.

The government was represented by Assistant U.S. Attorneys Michelle Petersen and Andrianna Kastanek.

CHICAGO — A Tennessee man was arrested and charged with federal computer hacking for allegedly conspiring to launch cyber attacks on two universities and three companies since last summer, federal law enforcement officials announced today. The defendant, TIMOTHY JUSTIN FRENCH, is allegedly associated with a group of individuals, known as “NullCrew,” who have claimed responsibility for dozens of high-profile computer attacks against corporations, educational institutions, and government agencies.

French, 20, was arrested without incident by FBI agents at his home in Morristown, Tenn., east of Knoxville, last Wednesday. He waived a detention hearing today in Federal Court in Knoxville, and will be transferred in custody to face prosecution in U.S. District Court in Chicago, where no court date has yet been scheduled. French was charged with conspiracy to commit computer fraud and abuse in a criminal complaint that was filed under seal on June 3 and was unsealed upon his arrest.

French, also known as “Orbit,” “@Orbit,” “@Orbit_g1rl,” “crysis,” “rootcrysis,” and “c0rps3,” and members of NullCrew allegedly launched computer attacks that resulted in the release of computer data and information, including thousands of username and password combinations.

“Cyber crime sometimes involves new-age technology but age-old criminal activity ― unlawful intrusion, theft of confidential information, and financial harm to victims,” said Zachary T. Fardon, United States Attorney for the Northern District of Illinois. “Hackers who think they can anonymously steal private business and personal information from computer systems should be aware that we are determined to find them, to prosecute pernicious online activity, and to protect cyber victims.”

According to the complaint affidavit, NullCrew has used Twitter accounts to announce dozens of attacks against various victims, including the websites of two organizations in July 2012 and eight computer servers belonging to a large company in September 2012. In both instances, the announcements included links to posts on Pastebin, a website that allows uploading of text files for others to view, containing usernames and passwords associated with those victims. In November 2012, NullCrew announced an attack on a foreign government’s ministry of defense, releasing more than 3,000 usernames, email addresses, and passwords purportedly belonging to members of the defense ministry.

The affidavit states that the FBI has been working with a confidential witness who was invited to join online chats with members of NullCrew. During these chats, which occurred through Skype, Twitter, and CryptoCat, Nullcrew members discussed past, present, and future computer hacks, shared current computer vulnerabilities and planned target, and discussed releases of their victims’ information. The witness has assisted with the investigation primarily in an effort to help the FBI, the affidavit states.

The complaint charges French with involvement in five cyber attacks launched by NullCrew: a July 19, 2013, attack on University A, a large public university; a Feb. 1, 2014, attack on Company A, a large Canadian telecommunications company; attacks in early 2014 against University B and California-based Company B, both announced by NullCrew on April 20, 2014 as part of a series of hacking attacks; and an attack against Company C, a large mass media communications company, that NullCrew announced on Feb. 5, 2014.

In each of these instances, information allegedly hacked from the victims’ computers was released by NullCrew and caused significant financial damages to the universities and companies, including the costs of responding to the computer intrusions, conducting damage assessments, and restoring the computer systems.

During each of the attacks, the investigation identified a computer user named “Orbit,” who was using an internet protocol (IP) address assigned to French’s Morristown, Tenn., address. Records from the victims’ computers show access from the same IP address at or around the time the attacks were being discussed or occurred, according to the complaint.

The computer hacking charge in this case carries a maximum sentence of 10 years in prison and a $250,000 fine. If convicted, the court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.

The arrest and charge were announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Robert J. Holley, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation. The investigation is continuing, they said.

The government is being represented by Assistant U.S. Attorney William Ridgway.

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

ROCKFORD — A Roscoe, Ill. man was sentenced today in federal court by U.S. District Judge Frederick J. Kapala to 295 months in federal prison, followed by 5 years of supervised release, for transporting child pornography via the internet. JASON NICOSON, 36, who pled guilty on May 20, 2013, admitted in his written plea agreement that in December 2011 and January 2012, he used the internet to transport images and videos that contained multiple visual depictions of minors engaging in sexually explicit conduct.

The sentencing was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Robert J. Holley, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation. The Illinois State Police and the Illinois Internet Crimes Against Children Taskforce assisted in the investigation.

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

ROCKFORD — A Crystal Lake, Ill. man pleaded guilty today in federal court before U.S. District Judge Frederick J. Kapala to mail fraud. MICHAEL S. MACKAY, 47, of Crystal Lake, Ill., admitted that from Sept. 2011 to at least May 16, 2012, he participated in a scheme to defraud victims into falsely believing they were hired to work as “secret shoppers” or payment processors.

According to the written plea agreement, after applying to work-at-home advertisements on the Internet, victims would receive a letter with at least one counterfeit negotiable instrument, such as a counterfeit money order. The victims were instructed to deposit the counterfeit negotiable instrument in their financial institution, retain a certain percentage as payment for their services, go to the nearest Western Union and wire transfer the remaining proceeds as instructed. The victims were also instructed to report their experience, believing they were hired as secret shoppers to evaluate local businesses, via email to an email address contained in the letter. The participants in the scheme received the proceeds via the wire transfers before the victims learned that the money orders were counterfeit.

Mackay admitted that during the course of the scheme he received at least $2.5 million in counterfeit negotiable instruments in packages sent to Crystal Lake from New York, Nigeria, and Ghana, and other locations. Each package contained counterfeit money orders and other negotiable instruments in amounts ranging from $500 to $2,000 each of which appeared to be issued by either the United States Postal Service, American Express, Capital One Bank, Citizens National Bank of Texas, First National Bank, or the Navy Federal Credit Union. Mackay received emails from other scheme participants that contained instructions, a “secret shopper” letter, and United States Postal Service Express mailing labels. Mackay then placed a “secret shopper” letter in a United States Postal Service express mailing envelope along with at least two counterfeit money orders to multiple victims throughout the United States. Mackay received wire transfers of at least $10,000 from his victims and others involved in the scheme as payment for his role in the scheme before the victims learned that the negotiable instruments were counterfeit.

Sentencing for Mackay is set for Sept. 19, 2014, at 2:30 p.m. Mackay faces a maximum sentence of 20 years’ imprisonment, a term of supervised release of up to 3 years following imprisonment, and a fine of up to $250,000, or twice the gross gain or gross loss resulting from that offense, whichever is greater. The Court may also impose a term of probation of between 1 and 5 years, and must order restitution to the victims of the offense in an amount determined by the Court. The actual sentence will be determined by the United States District Court, guided by the advisory United States Sentencing Guidelines.

The guilty plea was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Antonio Gomez, Postal Inspector-In-Charge of the Chicago Division of the U.S. Postal Inspection Service.

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

Plea Agreement

CHICAGO — Twenty-seven defendants are facing state or federal narcotics charges for their alleged roles in supplying and distributing heroin and crack cocaine in the neighborhood just north of Douglas Park on the city’s west side. An investigation led by officers of the Chicago Police Department and agents of the Drug Enforcement Administration assigned to the Chicago Strike Force, resulted in federal charges against 14 defendants and state charges against 13 others, who police and federal agents began arresting early this morning.

Eight handguns, an AR-15 assault rifle, approximately $140,000, nearly a half-kilogram of heroin, and some cocaine were seized this morning during the arrests. Another half-kilogram of heroin was seized during the course of the investigation from last August through this month. Early today, Chicago police, DEA agents, and other Chicago Strike Force law enforcement partners also executed eight search warrants upon several defendants’ residences and four alleged stash houses.

The federal defendants were charged with conspiracy or possession with intent to distribute narcotics in five separate criminal complaints that were filed yesterday in U.S. District Court and unsealed following the arrests. The federal defendants were scheduled to begin appearing at 3 p.m. today before U.S. Magistrate Judge Daniel Martin in U.S. District Court. The state defendants were charged with delivery of a controlled substance in separate complaints and will appear later in state court.

According to a 169-page affidavit in support of the federal arrests and search warrants, the investigation revealed that KENNETH SHOULDERS, a leader of the Conservative Vice Lords (CVL) street gang, controlled the distribution of narcotics in the area bounded by West Roosevelt Road, West Fillmore Street, and South California and South Kedzie avenues immediately north of Douglas Park. Shoulders, 47, of Chicago, also known as “Kenny Shannon,” allegedly assigned responsibility for narcotics distribution on specific corners within the 12 blocks he controlled to specific individuals, who further delegated distribution to shift workers who sold heroin and crack cocaine throughout the day.

The area is just south of the Interstate 290 Eisenhower Expressway corridor that has been referred to as the “Heroin Highway” because of the accessibility it provides to city and suburban heroin customers.

An admitted member of the “12th Street” faction of the Traveling Vice Lords (TVL) street gang (named for Roosevelt Road’s location at 1200 south on Chicago’s street grid) told investigators in 2013 that Shoulders is a high-ranking member of the Conservative Vice Lords who controlled all of the Vice Lords and drug operations in the area known as “12th Street,” north of Roosevelt Road between the 1100 and 1200 blocks. This cooperating individual told agents that the 12th Street Vice Lords consist primarily of CVL members, but also members of the TVL, Black Souls Nation, Gangster Disciples, and New Breed street gangs. The non-Vice Lord members are mostly “pack workers” or street level drug dealers who have no direct allegiance to the 12th Street Vice Lords other than making money from selling drugs within the 12th Street territory.

“This case mirrors the trending alignment of Chicago’s street gangs into localized drugdealing factions, and the investigation is another example of the extraordinary cooperation among the Chicago Police Department, DEA and other local, state and federal law enforcement agencies,” said Zachary T. Fardon, United States Attorney for the Northern District of Illinois. “While this case focuses on narcotics trafficking and the complaint does not allege these defendants committed any acts of violence, we believe that bringing serious charges such as these is an effective tool in reducing violence in our communities,” he said.

“This operation demonstrates how police and prosecutors are continuing to work together to dig in at the local level and hammer away at the drug markets plaguing our communities,” said Cook County State’s Attorney Anita Alvarez. “We are pleased to be an active participant in the Chicago Strike Force efforts and look forward to continued success.”

Mr. Fardon and Ms. Alvarez announced the charges with Garry F. McCarthy, Superintendent of the Chicago Police Department; Jack Riley, Special Agent-in-Charge of the Chicago Field Division of the Drug Enforcement Administration; and James C. Lee, Special Agent-in-Charge of the Internal Revenue Service Criminal Investigation Division.

“This investigation stemmed from numerous citizen complaints, and those citizens should now be able to enjoy their communities without the threat of these alleged gang and narcotic activities,” said Chicago Police Department First Deputy Superintendent Al Wysinger. “I am extremely proud of the members of our department who led this investigation, and the entire joint law enforcement Strike Force that tracked this alleged criminal organization’s illegal activities and is bringing the offenders to justice to make our community safer,” he said.

“This is exactly the type of case we envisioned when we put together the Chicago Strike Force,” Mr. Riley said. “To go after alleged significant criminal organizations and hold the leaders of those organizations accountable for their actions, with the shared desire that the positive results will be felt in our communities.”

The investigation was conducted through the U.S. Organized Crime Drug Enforcement Task Force (OCDETF) Chicago Strike Force, which ― in addition to the DEA, IRS-CID and CPD ― consists of U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI), the Federal Bureau of Investigation, the Bureau of Alcohol, Tobacco, Firearms and Explosives, the U.S. Marshals Service, and task force officers from various state and local law enforcement agencies, including the Cook County Sheriff’s Police Department and the Illinois State Police.

The complaint affidavit alleges that Shoulders was a wholesale supplier of heroin and worked with his partner, DERRICK WASHINGTON, 44, of Hazel Crest, aka “D-Rock;” his sister, SANDRA SHOULDERS, 49, of Chicago, aka “Penny;” and his son, KENNETH WILLIAMS, 29, of Chicago, aka “Lil’ Kenny,” and other members of the “Shoulders drug trafficking organization.” Another cooperating individual told investigators that Williams managed his father’s heroin distribution at the corner of West Fillmore and South Francisco, and that a state defendant, CHARLES WEATHERSBY, 31, managed Shoulders’ crack cocaine distribution from the same corner.

The Shoulders drug trafficking organization operated its heroin distribution from its main stash house at 211 South Lavergne Ave., as well as specific locations in the 12th Street area, such as 2902 and 2950 West Fillmore St., and 1107 South Mozart St., the charges allege. Other defendants allegedly diluted the heroin to increase profits, shuttled heroin among the various stash and retail locations, advised Shoulders when a new supply was needed, and returned his share of the profits to him. The Shoulders organization’s heroin was typically packaged in small user-portion plastic bags with either a green dollar sign or a black bomb symbol stamped on them.

One federal complaint charges nine defendants ― Shoulders, Washington, Sandra Shoulders, Williams, ANTHONY HAYES, 48, aka “Mustafa;” HARRISON HALL, 50; TIARA WHITE, 27; MARLEANA PORTER, 20; and CRANE MARKS, 50, all of Chicago ― with conspiracy to possess and distribute more than a kilogram of heroin. If convicted, they each face a mandatory minimum sentence of 10 years in prison and a maximum of life imprisonment and a $10 million fine.

RODNEY BEDENFIELD, 40, of Chicago, aka “Bump,” was charged separately with supplying heroin to the Shoulders organization. MARC DAVIS, 45, of Chicago, allegedly supplied heroin to Bedenfield, and was charged with QUEENIE VARGAS, 25, of Chicago, an alleged courier who transported heroin for Davis. If convicted, these three defendants face a mandatory minimum of five years in prison and a maximum of 40 years and a $5 million fine.

DORIAN MILLER, 42, of Riverdale, and JEWNEUS WILSON, 35, of Chicago, were charged separately with being heroin customers of Bedenfield. If convicted, they face a maximum of 20 years in prison and a $1 million fine.

The state defendants, in addition to Weathersby, are: JIM DUNBAR, 19; AMOS HADLEY, 61; DAVID HIGGS, 37; DEONTE HOLLINGWORTH, 26; PARIS HOLMES, 18; JOHN PERRY, 26; NIKKI SANDERS, 21; MILTON TAYLOR, 30; ANTWONE WASHINGTON, 20; NATHANIEL YANCEY, 21; SHARDELL GREEN, 27; and ANTWONE HENRY, 27, all of Chicago.

Assistant United States Attorneys Stephen P. Baker, Shoba Pillay and Katherine A. Sawyer are representing the government in the federal cases. Assistant State’s Attorney Aaron R. Bond is handling the state cases.

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

Shoulders et al. Complaint

CHICAGO — Illinois State Rep. DERRICK SMITH (10th District) was convicted today on federal corruption charges for accepting a $7,000 cash bribe in March 2012 to write an official letter of support for a daycare center that he believed was seeking a state grant as part of an undercover investigation. Smith was found guilty by a jury that began deliberating Monday afternoon following a trial that began on May 28.

Smith, 50, of Chicago, was convicted of one count each of bribery and attempted extortion. No sentencing date was immediately set. A status hearing was set for Sept. 23 before U.S. District Judge Sharon Johnson Coleman. Bribery carries a maximum sentence of 10 years in prison and attempted extortion carries a maximum of 20 years, and both counts carry a $250,000 maximum fine. The court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.

According to the evidence at trial, a confidential source identified as “Pete,” who worked on Smith's political campaigns and who, unbeknownst to Smith, was cooperating with the FBI, had numerous conversations with Smith about helping a fictional daycare owner obtain a purported state grant in exchange for a cash bribe. On March 2, 2012, Smith provided “Pete” with an official letter of support for the daycare owner to obtain a $50,000 Early Childhood Construction Grant from the state’s Capital Development Board. In return, during a recorded meeting on March 10, 2012, “Pete” gave Smith $7,000 cash, purportedly from the fictional daycare owner.

In March 2011, Smith was appointed state representative for the 10th District, which covers portions of Chicago=s near west and near northwest sides. He was campaigning for his General Assembly seat in the March 20, 2012, primary election when he was arrested on March 13, 2012. Despite being impeached, he was elected to his seat in November 2012 while the charges were pending, but he became a lame duck this past February when he lost his primary bid for re-election.

Trial evidence showed that “Pete” approached the agents in December 2011 and said that that Smith was willing to trade political and non-political favors for money. During multiple recorded in-person meetings and telephone calls beginning Jan. 24, 2012, Smith agreed to write a letter of support for the purported grant application in exchange for a $7,000 bribe. On Jan. 26, 2012, Smith and “Pete” toured the daycare facility and Smith was given information about its purported expansion plans.

Throughout February 2012, Smith and “Pete” had multiple conversations in which “Pete” told Smith that the daycare was applying for an Early Childhood Construction Grant. During those recorded conversations, Smith agreed to provide a letter of support in exchange for the daycare owner’s payment of $7,000. In late February 2012, Smith directed “Pete” to have the daycare owner draft a letter for Smith to sign, and law enforcement sent a draft letter of support to Smith’s office via email. On March 2, 2012, “Pete” retrieved the letter, which was signed by Smith on his official letterhead and was addressed to the Illinois Capital Development Board.

During early March 2012, Smith told “Pete” that he wanted payment from the daycare owner, and Smith rejected payment by cashier’s check because he did not want any trace of the money. Smith told “Pete” that he wanted the $7,000 in cash, and agreed to give “Pete” $2,000 for arranging the deal. On March 10, 2012, “Pete” met with Smith in Smith’s vehicle and “Pete” counted out the $7,000 ― all in $100 bills ― for Smith during their recorded meeting.

Smith did not report receipt of the cash on his Illinois campaign finance reports. After he was arrested, Smith admitted to agents that he had accepted $7,000 in exchange for the letter of support and, accompanied by agents, he retrieved $2,500 from beneath a chest at the foot of his bed at his home and returned that money to the agents.

The verdict was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Robert J. Holley, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation.

The government is being represented by Assistant U.S. Attorneys Marsha A. McClellan and Michael T. Donovan.

CHICAGO — The captain of a petroleum barge that exploded in 2005, resulting in the death of a crew member, and the company that owned and operated the vessel were convicted today on federal charges of felony maritime negligence and causing thousands of gallons of oil to pollute the Chicago Sanitary and Ship Canal. The defendants, DENNIS MICHAEL EGAN and EGAN MARINE CORP., were found guilty following a bench trial that was conducted intermittently since last September in U.S. District Court.

Egan, 35, of Topeka, Ill., and formerly of Lemont, and Egan Marine, of Lemont, were each convicted of one count of negligent manslaughter of a seaman and one count of oil pollution of a navigable waterway. The verdict was delivered in an oral ruling from the bench by U.S. District Judge James Zagel, who heard closing arguments on Friday, concluding 13 nonconsecutive days of trial.

Judge Zagel tentatively set sentencing for Sept. 24.

The negligent manslaughter count against Dennis Egan carries a maximum sentence of 10 years in prison and a $250,000 fine, and the same count against Egan Marine carries a maximum penalty of five years’ probation and a $500,000 fine. The misdemeanor oil pollution count carries a maximum penalty against Dennis Egan of a year in prison and a $100,000 fine, while Egan Marine faces a maximum sentence of a year’s probation and a $200,000 fine. Both defendants face a minimum fine of $2,500 on the pollution count. Restitution is mandatory. The Court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.

The verdict was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Neal R. Marzloff, Special Agent-in-Charge of the U.S. Coast Guard Investigative Service, Central Region in Cleveland; and Randall Ashe, Special Agent-in-Charge of the U.S. Environmental Protection Agency’s Criminal Investigation Division in Chicago.

According to the evidence at trial and court records, on Jan. 19, 2005, a fully-loaded Egan Marine tank barge, known as the EMC-423, being pushed by the tow boat Lisa E, was transporting approximately 600,000 gallons of clarified slurry oil (CSO) from the ExxonMobil Oil Corp. refinery near Joliet to the Ameropan Oil Corp. facility near the canal and California Avenue in Chicago. CSO is a byproduct of petroleum refining that can also be used as fuel, among other uses. About 4:40 p.m., just after clearing the Cicero Avenue Bridge and heading northeast parallel to the I-55 Stevenson Expressway, a large explosion erupted on the barge. As a result, the EMC-423 sank, discharging thousands of gallons of the combustible heavy oil into the canal. Immediately after the blast, crewman Alexander Oliva, 29, who had been aboard the barge, was determined to be missing. His body was recovered from the canal near Laramie Avenue on Feb. 4, 2005.

Judge Zagel ruled that Oliva’s death resulted from the explosion and the negligence that created the explosion. Egan Marine and its employees negligently vented combustible vapors from the cargo hold of the barge to the deck of the vessel, causing an explosion hazard. Oliva was using a propane-fueled open flame from a handheld “rosebud torch” to heat a cargo pump on the barge deck. CSO hardens in cold temperatures, requiring the cargo pump to be heated to offload the oil at its destination. The use of an open flame to heat the pump near the vented vapors caused the explosion and, ultimately, Oliva’s death, the destruction of the barge, and the oil pollution of the canal.

Dennis Egan was the captain and pilot of the Lisa E and the EMC-423 barge, which had no crew, self-propulsion or navigation system of its own. Dennis Egan was negligent and inattentive to his duties on the vessels by allowing an open flame to be used on the deck of the EMC-423, which was loaded with 599,424 gallons of the slurry oil. Egan Marine, which owned both vessels, was negligent in allowing the use of the open flame aboard the barge, resulting in the explosion and Oliva’s death.

“Without question it is against Coast Guard regulations, the standard of care, and is downright reckless, to employ the use of a propane torch on top of 600,000 gallons of a petroleum by-product,” the government claimed in closing argument brief.

Both Dennis Egan and Egan Marine violated the oil pollution provisions of the federal Clean Water Act by negligently causing the discharge of thousands of gallons of oil into the canal, which is a navigable U.S. waterway.

The government is being represented by Assistant U.S. Attorneys Timothy Chapman and Matthew Hiller and Special Assistant U.S. Attorney Crissy Pellegrin, of the U.S. EPA’s Office of Regional Counsel for Region 5 in Chicago.

CHICAGO — During three telephone conference calls with an outside auditing firm and his own company’s CEO and CFO in November 2012 and January 2013, a sales representative for a downstate computer and telecommunications business posed as an employee of a global telecommunications company that the downstate firm had partnered with and, with his CEO’s alleged knowledge and participation, lied about the downstate company being owed millions of dollars by its larger international partner, according to a federal fraud indictment.

As a result, DAVID GODWIN, the chief executive officer, president and board chairman of the former ContinuityX Solutions, Inc., of Metamora, Ill., and JOHN COLETTI, a ContinuityX sales representative, allegedly secured $6 million in November 2012 from two victim financing companies for ContinuityX based on the allegedly false assurances that its global marketing partner owed ContinuityX $12 million in receivables.

Godwin, 52, of Germantown Hills, Ill., was charged with six counts of wire fraud, and Coletti, 53, of Canyon Country, Calif., was charged with four counts of wire fraud, in an indictment returned yesterday by a federal grand jury in Chicago. The indictment also seeks forfeiture of approximately $6 million from both defendants. Both defendants will be ordered to appear for arraignment on a date to be determined in U.S. District Court in Chicago.

According to the indictment, an unnamed global telecommunications company entered into a joint marketing agreement with ContinuityX under which ContinuityX billed the larger company for computer and telecommunications services, including networked computer server space, which ContinuityX provided to the international firm’s customers. Godwin and Coletti allegedly falsely represented to the two victim financing companies in Atlanta and Baltimore, an auditing firm, and ContinuityX’s chief financial officer and investors, that ContinuityX was owed $12 million for services it provided to the global firm’s customers. Godwin allegedly caused ContinuityX to create false emails and invoices as part of the fraud scheme and knew that a signature was forged on a purchase order.

Godwin and Coletti together fraudulently arranged the conference calls in which Coletti posed as an employee of the global telecommunications partner to falsely assure auditors, ContinuityX’s CFO, and the two victim financing companies that the accounts receivable were legitimate and that payment was forthcoming, the indictment alleges.

To conceal the false invoices, Godwin allegedly fraudulently caused ContinutyX to file a Form 10-Q with the U.S. Securities and Exchange Commission in November 2012, which Godwin certified as CEO of ContinuityX, purportedly recognizing $4 million in revenue from the global telecommunications company that Godwin knew was false.

Each count of wire fraud carries a maximum penalty of 20 years in prison and a $250,000 million fine, and restitution is mandatory. If convicted, the court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.

The indictment was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Robert J. Holley, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation. The Chicago office of the Securities and Exchange Commission cooperated with the investigation.

The government is being represented by Assistant U.S. Attorney Steven Dollear.

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.

Indictment

CHICAGO — A Schaumburg man was arrested and charged with transporting child pornography for allegedly transmitting two pornographic images of a prepubescent minor to an undercover law enforcement officer last week, federal law enforcement officials announced today. The defendant, KURT S. MAYER, was charged in a criminal complaint filed today in U.S. District Court following his arrest Friday night.

Mayer, 34, had an initial appearance Saturday before U.S. Magistrate Judge Geraldine Soat Brown and remains in federal custody pending a detention hearing at 1:30 p.m. Wednesday before Magistrate Judge Brown in Federal Court.

According to the complaint affidavit, a detective with the Washington, D.C., Metropolitan Police Department, who was assigned to an FBI task force and working in an undercover capacity, received an email last Thursday in response to an online advertisement. The user of the email account who responded to the ad was subsequently identified as Mayer.

The undercover officer exchanged a series of emails and instant messages with the individual, later identified as Mayer, during which Mayer allegedly sent the two images depicting child pornography. The undercover officer was able to confirm that that the child was real and that Mayer had just taken the photos as he had claimed in his messages, the complaint alleges.

On Friday, law enforcement agents were able to identify the email account and Internet address associated with the individual who responded to the online advertisement, as well as the identity and address of the customer associated with that Internet address. Mayer was arrested Friday evening near his home at the same time as agents were executing a federal search warrant at his residence.

Transportation of child pornography carries a mandatory minimum sentence of five years in prison and a maximum of 20 years and a $250,000 fine. If convicted, the court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.

The arrest and charge were announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Robert J. Holley, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation. The Schaumburg Police Department assisted with executing the search warrant and Mayer’s arrest. The investigation is continuing, they said.

The investigation was conducted by the FBI’s Child Exploitation Task Force. The task force is part of a nationwide effort known as the Innocence Lost National Initiative targeting those involved in the commercial sexual exploitation of children in the United States. In Chicago, the CETF is comprised of FBI special agents and officers and investigators from the Chicago Police Department, the Cook County Sheriff's Office, and the Cook County State’s Attorney’s Office.

The government is being represented by Assistant U.S. Attorney R. Matthew Hiller.

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.

ROCKFORD — A Rockford man was sentenced today in federal court to a total of 420 months in federal prison for committing firearms and drug trafficking offenses. DAYTON POKE, 35, was sentenced by U.S. District Judge Frederick J. Kapala to serve 360 months’ imprisonment for possessing with intent to distribute crack cocaine and for possessing a firearm as a felon. In addition, the court sentenced Poke to serve a consecutive term of 60 months’ imprisonment for possessing a firearm in furtherance of his drug trafficking crime. After serving his sentence in federal prison, Poke will be placed on 5 years of supervised release. Poke was also ordered to pay a special assessment of $300.

Poke was found guilty of possessing with intent to distribute crack cocaine, possessing a firearm as a felon and possessing a firearm in furtherance of a drug trafficking crime following a two-day jury trial on May 7, 2014. According to the evidence introduced at trial, on July 6, 2011, two Rockford Police Gang Unit detectives stopped a car driven by Poke for a traffic violation after it pulled into a residential driveway on 10tth Avenue in Rockford. During the traffic stop, the detectives searched the car and found a loaded handgun hidden underneath the driver’s seat, and crack cocaine inside the car’s center console. Prior to the stop by police, Poke had been convicted of a crime punishable by a term of imprisonment exceeding one year.

The sentencing was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Carl J. Vasilko, Special Agent-in-Charge of the Chicago Field Division of the Bureau of Alcohol, Tobacco, Firearms & Explosives; and Chet Epperson, Chief of the Rockford Police Department.

The government is represented by Assistant U.S. Attorneys Mark T. Karner and Joseph C. Pedersen.

CHICAGO — A Chicago investment fund manager fraudulently obtained more than $11.3 million from 41 investors and misused the funds for his own benefit, as well as to repay certain investors in a Ponzi-type scheme, according to a criminal fraud case announced today by federal law enforcement officials. The defendant, NEAL GOYAL, was the founder and sole managing member of Blue Horizon Asset Management, LLC, and Caldera Advisors, LLC, both of which were unregistered investment advisors.

Goyal, 33, of Chicago, was charged with one count of wire fraud in a criminal information filed yesterday in U.S. District Court, where he will be ordered to appear for arraignment on a date yet to be determined.

The U.S. Securities and Exchange Commission filed a parallel civil fraud lawsuit yesterday and obtained a court order freezing the assets of Goyal and his funds. The SEC suit alleges that Goyal stole his investors’ money to fund his own lavish lifestyle, to pay business expenses, and to support a variety of personal business ventures including a bar and two children’s clothing boutiques that his wife operates in Chicago. United States Securities and Exchange Commission v. Neal V. Goyal, et al.14 CV 3900 (NDIL).

According to the criminal case, between June 2006 and May 2014, Goyal obtained more than $11.3 million from investors through offering and selling limited partnerships in three Blue Horizon funds and a Caldera Equity Fund by making false representations about the intended use of the funds, the investment returns generated, and the source of the investment returns and principal paid to investors. In fact, Goyal allegedly misappropriated the investors’ funds for his own benefit and concealed the fraud scheme by creating and distributing false account statements.

Beginning in early 2006, Goyal represented that funds invested in the Blue Horizon funds would be used for long and short trading in equities, options, and other securities. By June 2006, Goyal began sending false account statements to investors that inflated the financial results from trading purportedly being done by those funds, the charging document alleges. By the first half of 2008, Goyal allegedly knew that he intended to misuse the funds for himself and to make Ponzi-type payments to certain investors. By January 2009, Goyal had stopped trading for two Blue Horizon funds and had not traded at all for the third Blue Horizon fund. In February 2009, Goyal allegedly began engaging in a similar fraud scheme with investments in the Caldera Equity Fund.

Wire fraud carries a maximum penalty of 20 years in prison and a $250,000 fine, or an alternate fine totaling twice the loss or twice the gain, whichever is greater, and restitution is mandatory. If convicted, the court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.

The charge was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Robert J. Holley, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation. They commended the assistance of the SEC. The government is being represented by Assistant U.S. Attorney Kenneth Yeadon.

The public is reminded that an information 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.

Information

CHICAGO ― A Chicago man is facing federal gun charges for allegedly illegally trafficking nearly 40 firearms and illegally possessing at least 11 firearms between 2010 and 2012. The defendant, EARL GARDNER, was arrested last night by Chicago Police officers on a federal warrant issued after he was indicted last Wednesday by a federal grand jury.

Gardner, 25, of the 5900 block of South Bishop Street, was charged with one count of dealing firearms without a federal license and four counts of being a convicted felon in possession of firearms.

He pleaded not guilty today at his arraignment before U.S. Magistrate Judge Mary Rowland and was ordered to remain in custody pending a detention hearing at 1:30 p.m. Friday in U.S. District Court.

According to the indictment and a prosecutor’s statements in court today, Gardner engaged in the business of dealing 39 firearms without a federal license between Dec. 29, 2010, and June 7, 2012, when he sold the guns to a cooperating individual. Those 39 firearms included more than a dozen semi-automatic pistols, 10 revolvers, 10 rifles, three shotguns, and two TEC-9 9 mm pistols. On Sept. 19 and 22, 2011, and Jan. 21 and Feb. 9, 2012, Gardner allegedly illegally possessed two or more firearms on each date after having been convicted of a felony, which disqualified him from possessing a gun. Among the 11 firearms that Gardner allegedly possessed were various 9 mm and .22, .38, and .45 caliber pistols, as well as several rifles, including two Norinco Model SKS 7.62 x 39 mm rifles.

Dealing firearms without a federal license carries a maximum sentence of five years in prison, while each count of being a felon-in-possession of firearms carries a maximum of 10 years in prison, and all five counts carry a $250,000 maximum fine. If convicted, the court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.

The arrest and charges were announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Carl Vasilko, Special Agent-in-Charge of the Chicago Office of the Bureau of Alcohol, Tobacco, Firearms, and Explosives; and Chicago Police Superintendent Garry McCarthy. The government is being represented by Assistant U.S. Attorney Timothy Chapman.

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.

Indictment

CHICAGO ― A suburban businessman and his bookkeeper are facing federal fraud charges for allegedly cheating credit card companies of approximately $1.2 million and evading their personal federal income tax obligations of more than $1.5 million, federal law enforcement officials announced today. The defendants, VIET NGUYEN and ADELINA MIGUEL, are scheduled to be arraigned on Thursday on one count each of wire fraud and tax evasion that were brought in a criminal information filed last Thursday in U.S. District Court.

Because the defendants allegedly intentionally failed to keep records concerning which credit card charges were fraudulent, authorities are appealing for anyone who thinks they might be a victim to contact an Internal Revenue Service Criminal Investigation agent at 630-493-5224.

Nguyen, 41, of St. Charles, owned and operated various companies, including Expedite Media Group, Inc., VB Management Holding Company, Inc., and Pure Small Business, Inc., which provided internet marketing and internet technology services such as website development and mass marketing through emails. Miguel, 37, of Joliet, was the office manager and bookkeeper for those companies and she managed payroll, handled credit card charges, and issued tax forms to employees.

According to the indictment, between 2008 and March 2012, Nguyen and Miguel allegedly swindled customers, credit card companies and banks by fraudulently charging customers’ credit and debit cards and bank accounts for services that were not provided. Nguyen directed Miguel and other staff to make fraudulent charges to meet daily sales quotas that he set and he and Miguel knew could not be met without fraudulently charging for services that were not provided, it adds.

As part of the scheme, Nguyen allegedly opened new companies so that he could fraudulently obtain new merchant accounts. There were so many customer complaints about fraudulent charges that Nguyen’s merchant accounts were frequently cancelled, and Nguyen incorporated new companies to get around that problem, the indictment alleges.

Because the companies’ federal income tax obligations flowed through Nguyen’s personal income tax returns, he was charged with tax evasion for allegedly filing false returns for 2009 that underreported his income. Miguel was charged with tax evasion or allegedly filing a false return for 2009 that underreported her income. In all, both defendants allegedly caused a tax loss of more than $1.57 million for 2008-10.

Among other things, Nguyen and Miguel allegedly caused the companies to pay their personal expenses, including Nguyen’s payments for a Rolls Royce, Bentley, Hummer, Ferrari, Land Rover, two Audis and other autos, as well as mortgage payments, cash withdrawals, credit card charges, skating lessons, dental bills, utilities, and property taxes. Nguyen directed Miguel to enter payments for personal expenses as business expenses in the companies’ ledgers to avoid reporting the payments as personal income on their tax returns, the indictment alleges.

The charges were announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; James C. Lee, Special Agent-in-Charge of the IRS Criminal Investigation Division in Chicago; Robert J. Holley, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation; and Illinois Attorney General Lisa Madigan, whose office assisted in the investigation. The government is being represented by Assistant U.S. Attorney Jacqueline Stern.

Wire fraud carries a maximum sentence of 20 years in prison and a $250,000 fine or an alternate fine of twice the loss or twice the gain, whichever is greater. Tax evasion carries a maximum of five years and a $250,000 fine. In addition to criminal penalties, including the costs of prosecution, defendants convicted of tax offenses remain responsible for any taxes and interest due, as well as civil penalties of up to 75 percent of the tax owed. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.

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

Indictment

CHICAGO — An owner and three former employees of an Illinois hospice company, as well as the company itself, were indicted on federal health care fraud charges for allegedly engaging in an extensive scheme to obtain higher Medicare and Medicaid payments by fraudulently elevating the level of hospice care for patients. In many instances, the level of hospice care allegedly exceeded what was medically necessary or actually provided, including for some patients who did not have terminal illnesses or who were enrolled far longer than the required life expectancy of six months or less.

One defendant, SETH GILLMAN, 45, of Lincolnwood, an attorney and the coadministrator and co-owner of Passages Hospice, LLC, which was based in Lisle and has suspended operations, was initially charged in a criminal complaint when he was arrested in January.

Gillman, together with three new individual defendants and Passages Hospice, were charged in an 18-count indictment returned by a federal grand jury on Thursday.

Gillman, Passages, and GWEN HILSABECK, 47, of Pontiac, Ill., who served as coadministrator of Passages, were each charged with 16 counts of health care fraud and one count of conspiracy to obstruct a federal audit. Hilsabeck was also charged with one count of making false statements regarding a health care benefit program in a patient’s initial plan of care.

Also indicted were CARMEN VELEZ, 35, of Palatine, who served as Passages’ director of nurses for the Chicago region and director of clinical services, and ANGELA ARMENTA, 34, of Wheeling, who served as Passages’ director of certified nursing assistants for the Chicago region. They were charged with four counts each of health care fraud.

All four individual defendants and Passages are scheduled to be arraigned on June 2 in U.S. District Court in Chicago.

According to court documents, Passages did not have its own inpatient facility, but instead deployed nurses to visit hospice patients in nursing homes and private residences. Between August 2008 and January 2012, Passages received more than $90 million in Medicare payments for hospice services, including more than $20 million billed as general inpatient services.

The indictment alleges that between August 2008 and January 2012, Gillman and the other defendants caused Passages to submit false claims to Medicare and Medicaid for medically unnecessary hospice care for patients who were not terminally ill and did not qualify for general inpatient care.

Gillman, Hilsabeck, and Passages allegedly paid bonuses to nursing directors and certified nursing assistant directors, including Velez and Armenta, to increase the number of patients on general inpatient care. In addition, they offered incentives, such as payments to nursing homes based on the number of patients on general inpatient care to increase Passages’ patient census, the indictment alleges.

In August and September 2009, Gillman, Hilsabeck, Passages, and Velez, allegedly conspired to obstruct a federal audit by agreeing to alter patient files that had been requested by TrustSolutions, which contracted with the Centers for Medicare and Medicaid Services to audit providers for fraud and abuse.

The indictment was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Lamont Pugh III, Special Agent-in-Charge of the Chicago Regional Office of the HHS-OIG; and Robert J. Holley, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation. The Illinois Attorney General’s Office is also participating in the investigation.

The government is being represented by Assistant U.S. Attorney Stephen C. Lee.

Each count of health care fraud carries a maximum penalty of 10 years in prison and a $250,000 fine, while conspiracy to obstruct a federal audit and making false statements regarding a health care benefit program each carry a maximum sentence of five years in prison and a $250,000 fine, and restitution is mandatory. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.

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 Medicare Fraud Strike Force began operating in Chicago in February 2011, and consists of agents from the FBI and HHS-OIG, working together with prosecutors from the U.S. Attorney’s Office and the Justice Department’s Fraud Section. The strike force is are part of the Health Care Fraud Prevention & Enforcement Action Team (HEAT), a joint initiative announced in May 2009 between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country. Scores of defendants have been charged locally in health care fraud cases since the strike force began operating in Chicago.

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

Indictment

ROCKFORD — A Warren, Ill. man was sentenced today in federal court for armed bank robbery. The defendant, Derrick W. Holmes, 24, was sentenced by U.S. District Judge Frederick J. Kapala to 76 months in federal prison for the robbery of Kent Bank, 996 West Fairview Road, Freeport, Ill., on Sept. 26, 2013. The court also ordered Holmes to pay restitution of $6,338 to Kent Bank.

Holmes pled guilty to the charge on Jan. 27, 2014. According to the written plea agreement, on Sept. 26, 2013, at approximately 1:05 p.m., Holmes entered Kent Bank while wearing gloves, dark glasses, and a blue knit stocking type hat covering his face. Holmes approached the teller counter, raised his arm and pointed a BB gun pistol at an employee of Kent Bank. Holmes told the teller and the other tellers present to give him all their money, put their teller drawers on the counter and that no one will get hurt. The teller pulled a teller drawer and put it on the counter in front of Holmes. Holmes took $6,338 out of the teller drawer stuffed it in his pants pockets. Holmes then walked out of the bank and fled on a motorcycle.

Holmes also admitted in his written plea agreement that on Sept. 26, 2013, he attempted to enter the Community Bank, 401 South Church Street, Orangeville, Ill., in order to rob it but was unable to enter the bank because bank employees locked the doors when they saw Holmes approaching the bank wearing a navy blue ski mask. Holmes has been in federal custody since his arrest by the Nashville, Tenn. Police Department on October 6, 2013.

The sentencing was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Robert J. Holley, Special Agent-in-Charge of the Chicago Office of Federal Bureau of Investigation; David Snyders, Sheriff of Stephenson County; and Mark Rohloff, Sheriff of Green County, Wisconsin.

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

CHICAGO ― A federal grand jury returned a four-count indictment charging former Illinois State Rep. KEITH FARNHAM with possessing, receiving, and transporting child pornography, federal law enforcement officials announced today. Farnham was initially charged with one count of possession of child pornography in a criminal complaint filed last month in U.S. District Court.

Farnham, 66, of Elgin, was indicted yesterday on one count of possessing child pornography involving a minor under age 12, one count of receiving child pornography, and two counts of transporting child pornography, all via computer. Farnham, who was previously released on his own recognizance with conditions, including home incarceration and electronic monitoring, will be arraigned on a date yet to be determined in Federal Court.

The indictment also seeks forfeiture of a computer hard drive that was seized at Farnham’s residence on March 13, when agents with U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) executed federal search warrants at Farnham’s state office and residence in Elgin.

Farnham resigned his seat in the Illinois General Assembly on March 19.

According to the complaint affidavit, HSI agents were investigating information received from the HSI Cyber Crimes Center that an email address, later linked to Farnham, was being used to trade child pornography on the Internet.

Possession of child pornography of a minor under age 12 carries a maximum sentence of 20 years in prison, while each count of receiving and transporting child pornography carries a mandatory minimum sentence of five years and a maximum of 20 years, and a maximum fine of $250,000 on each count. If convicted, the Court must impose a reasonable sentence under federal sentencing statutes and the advisory United States Sentencing Guidelines.

The indictment was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Gary Hartwig, Special Agent-in-Charge of HSI in Chicago.

The government is being represented by Assistant U.S. Attorney Michelle Petersen.

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.

Indictment

CHICAGO — A former Chicago tax preparer was sentenced today to nearly four years in federal prison for filing nearly 3,200 false federal income tax returns that claimed refunds totaling more than $3.37 million for clients. The defendant, VERLEAN HOLLINS, was sentenced to 46 months in prison and fined nearly $800,000 after pleading guilty in January to two counts of aiding and assisting in the preparation of false federal income tax returns.

Hollins, 43, of South Holland, was ordered to begin serving her sentence on Sept. 23 by U.S. District Judge Samuel Der-Yeghiayan. The $798,250 fine, which Hollins agreed to but does not currently have the ability to pay, represents twice the product of the 3,193 false returns multiplied by Hollins’ average client fee of $125.

This was “not a minor offense, there was significant loss to the government over a period of years,” Judge Der-Yeghiayan said in imposing the sentence in U.S. District Court. “Defendant stole from the people,” he said, adding her crime “became a business lifestyle.”

Hollins, who owned Taxes, Etc., Inc., a tax preparation business located in the 2300 block of East 71st Street, admitted that for calendar years 2009 through 2011, she filed a total of 3,193 individual income tax returns for clients, each of which claimed false education tax credits. As a result, she falsely claimed refunds totaling more than $3.372 million for her clients, the majority of whom paid her approximately $125 to prepare their returns. The vast majority of Hollins’ clients never indicated that they or a dependent were eligible for a college tuition credit, and among the small number of her clients who were eligible for the tax credit, none provided any documents to support eligibility.

The government is being represented by Assistant U.S. Attorney Kaarina Salovaara.

The sentence was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and James C. Lee, Special Agent-in-Charge of the Internal Revenue Service Criminal Investigation Division in Chicago.

CHICAGO ― Today is important to me. I am honored to be here, and I am going to take this opportunity to talk candidly with you about a topic that is deeply important to me.

My office focusses on some significant areas: terrorism, public corruption, financial crimes, cybercrime. But today I am going to focus on one topic: violence in the city of Chicago.

[Slide presentation.]

I wanted to start with those slides because I think we need to starkly define the problem ― to look at it, to understand what is happening, and where, and why.

This is a gang problem, and a gang faction problem.

This is a disparate impact on certain neighborhoods problem.

It’s a fairness problem. A right-and-wrong problem.

This is an economic problem. It’s a reputational problem.

This is a community problem.

A church problem. A parenting problem.

This is a local, state and federal government problem.

This is a law enforcement problem.

And most of all, it a social justice problem.

It is my problem. It is your problem. It is our problem.

In this room we have business leaders, law leaders, and civic leaders. We have thoughtful people, and powerful people. I appreciate you being here today. I want us to talk about this problem: today, tomorrow, every day, every week, until we come to a better place than where we are now.

Changing what you just saw is going to take sustained investment, involvement and commitment from the government and from you -- the business, legal and civic communities. It will take all of us, doing everything we can, and with a long view; this is a marathon not a sprint. We’re talking about a generational change. But we can do it. And we must do it. So we will.

Let me tell you now about what we’re doing at the United States Attorney’s Office.

Our office here has about 150 Assistant U.S. Attorneys. Of those, 20 work in our Civil Division, and the rest are criminal litigators — federal prosecutors. Among our 130 federal prosecutors, for years, we have had the largest group work on issues related to violent crime. Historically, those prosecutors have worked under the auspices of our Narcotics & Gangs section. And over the past couple of decades, we’ve had major, successful prosecutions out of that section ― racketeering cases, narcotics cases, gun cases, criminal conspiracy cases ― against senior leadership within each of those major gangs: the Gangster Disciples, the Latin Kings, the Black P Stones, and the Black Disciples, and others.

As successful as those cases were in dismantling gang leadership, they of course did not represent an end to the violence. At their time, in their place, they helped. But the violence did not stop.

And unfortunately, over the past decade, the gang problem has grown more complex, rather than less. The factioning that I described makes these issues more challenging for law enforcement to grab hold of and tackle. With many gangs, we no longer have the old-school, clearly delineated gang leadership, with corporate hierarchical structure, where we can readily identify the CEO and top brass of the gang, investigate, indict and lock them up — as we did with Larry Hoover, Jeff Fort, Augustin Zambrano and others.

Instead, more and more often, many gangs are factioned, with little central leadership, and the violence is often between factions within the gangs and no longer about protecting the gang enterprise ― narcotics or otherwise ― but instead, more and more, these shootings and killings are for base, indiscriminate and petty reasons ― revenge, disrespect, perceived disrespect sometimes through social media ― kids pulling the trigger over nothing.

And so as our problems change, so must we.

After I started in October, I put my head down and did my due diligence. I spoke with the lawyers in my office, with judges, with defense lawyers, with law enforcement; I read everything I could read on violence in Chicago; I went to court to observe what we were doing, and I ingrained myself in our major investigations and programmatic efforts.

Through that process, I came to a conclusion that was shared by my senior leadership in the office. We decided that while we are very proud of what we have accomplished in the past, now was and is the right time for us to write the words Violent Crime on a piece of paper, draw a circle around them, assign a cadre of talented federal prosecutors, and say to them: your job, your sole mission, is to help the city and the district tamp down on violent crime. And you are empowered to work together, to think strategically, and to use whatever tools you think best suited to accomplish that mission ― the federal narcotics statutes, the gun statutes, racketeering, fraud, money laundering, the federal robbery and extortion statutes, and prevention and reentry tools ― ways of trying on the front end to prevent these kids from shooting at each other.

So that is exactly what we did. In March, I announced internally a restructuring of our Criminal Division and among the changes that went into effect on March 31 was the creation of a new Violent Crimes section. That section has one mission: to help the city and district tamp down on violent crime.

I believe that the standing up of our Violent Crimes section at the U.S. Attorney’s Office comes at an opportune time. The nature, extent and quality of cooperation and collaboration across local, state and federal law enforcement is at an all-time high.

As someone who served as a prosecutor here in the late 1990s and early 20-oughts, and who has served in another city and district, I believe we have a uniquely strong and committed law enforcement community here in Chicago.

Let me give you a few concrete examples:

We have monthly collaborative law enforcement meetings ― attended by the Chicago Police Department, the FBI, DEA, ATF, IRS, HSI and others ― to talk about investigations and prosecutions of the most violent criminals in Chicago. I often attend these meetings myself, and there are senior prosecutors from my office and the Cook County State’s Attorney’s Office there. We gather in a large room, sit around a table, and talk about specific individuals and investigations. Information flows freely between the city, the state and the feds. We leave that room and work collaboratively to make cases on those violent offenders, and then we get back in that room every month to talk about what more we can do. And my office works with Anita Alvarez’s office to make sure we bring the best cases, against the worst offenders, in the right forums.

Another example: Separate and apart from those meetings, for over two years now, we have had in this district a joint Strike Force, called the OCDEFT Strike Force, comprised of topnotch agents and officers from DEA, CPD, FBI, ATF, HSI, USMS, and various Sheriffs’ offices. And officers and agents assigned to this OCDEFT Strike Force all work together, full time, in integrated units, under one roof, with the focused mission of attacking major drug trafficking organizations and gangs at the “choke point” between cartels and street drug distribution, which usually means gangs. My office has a prosecutor embedded in the Strike Force, and CCSAO has a prosecutor embedded in the Strike Force, and many other state and federal prosecutors work cases stemming from the Strike Force. That is remarkable cross pollination and collaboration by law enforcement. And that is what it’s going to take to help move the needle on violence in this city.

A third example: Project Safe Neighborhoods. About a decade ago, law enforcement in Chicago recognized that a disproportionate number of shootings and homicides were concentrating in these six CPD districts I showed in the slide presentation. So we initiated a program, called Project Safe Neighborhoods or “PSN” and created a joint federal, state and local PSN Task Force (different than the OCDEFT Strike Force), the purpose of which is use federal gun statutes to investigate the most violent criminals in those six afflicted districts.

That task force is more than a decade old and going strong. There are committed officers from CPD and ATF, who work with my office and the CCSAO, to investigate and bring those cases. The task force meets monthly. And separate from those meetings every month or so, a senior prosecutor from my office gets together with a senior prosecutor from the CCSAO to go through pending gun cases and make strategic decisions about which office should charge which defendants with gun crimes.

Those are three concrete examples of my overarching point: this truly is a progressed, progressive and committed law enforcement community we have in the city of Chicago. I believe that the new Violent Crimes section in my office will help us continue and build upon those important programs.

Apropos of that, I want to take a few minutes to tell you about another aspect of who we are and what we do to fight violent crime. This area is something that, in my view, not enough people realize or understand that we do at the U.S. Attorney’s Office. When people think of us, they think we carry a stick, we are prosecutors/enforcers. But we also offer a carrot. We try to help and incentivize people not to commit violent crimes.

Thousands of offenders, people convicted of committing acts of violence, are released from state and federal prisons in Illinois every year. When we started Project Safe Neighborhoods over a decade ago, we had data showing that a large number of those returning offenders were coming home to ― reentering ― the same afflicted neighborhoods you just saw in those six Chicago districts. And we had statistics showing that a significant percentage of exoffenders reentering those neighborhoods would commit another violent offense within three years of getting out of prison.

The PSN Task Force wanted to find a path to stop that pattern of violence.

And so we designed monthly “Parolee Forums” or “offender notification meetings,” and we have been holding those meetings for over a decade. In fact, our meetings ― parolee forums in Chicago ― have become the model for similar forums now held in major cities across the country.

What do these forums look like? They occur monthly and rotate among the neighborhoods I showed you. Typically, 20-30 recently released parolees moving back into the host neighborhood attend each meeting. The goal of the forums is offer those attendees the chance to make an informed choice.

At the outset, they hear from the local CPD commander, a senior federal prosecutor, a senior Cook County prosecutor, and an ATF agent about what will happen to them if they reoffend. The emphasis is on guns. Often, these are young men coming out of their initial stint in prison and they don’t fully appreciate that because they are now a convicted felon, just by picking up a gun, they would be committing a felony that carries a substantial sanction. We explain that to them, not in a heavy-handed way, but in an honest way. We tell them the truth about the tragic stories we see every day when it comes to felons in possession of firearms.

That’s the heavy part. There’s also a more uplifting part. At the forums, we have social services providers, who are terrific and talk to the attendees about how they can help. For example, City Colleges of Chicago often participates and talks about GED classes and even college course opportunities. Other social services organizations offer help and expertise with things that range from getting a haircut, to how to prepare a resume and find a job. And at some point during the forums, a successful ex-offender addresses the attendees, encouraging them that, while difficult, it is possible to make the right choices and put their lives back on track.

I’ve attended these meetings. They are compelling. They are emotional. And they work.

Early on in the PSN program, we recognized the importance of seeking an impartial, arms-length academic examination. And so we partnered with top academic researchers at the University of Chicago, Andrew Papachristos and Tracy Meares, who are now at Yale but still part of our PSN team here. The analytical work done by Professors Papachristos and Meares has fortified the success of this program. They have found that ex-offenders who participate in the forums are 30 percent less like to commit a new offense than those who don’t. Thirty percent: that is moving the needle.

So our reentry and violence prevention efforts are a real success story and one that we are continuing. In fact, right now, we are expanding those efforts into the juvenile offender arena.

It may not surprise you, given what you’ve seen today, to hear me say that research shows when it comes to predicting violent behavior and social problems later in life, an important inflection point is around 13- or 14-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.

So last year, the PSN Task Force applied for federal grant money to launch a new initiative, which we have called our “Youth Outreach Forum.” DOJ awarded us that grant, and this month we launched in Chicago. In partnership with the Chicago Police Department, Chicago Public Schools, the Cook County Juvenile Probation Department and other agencies and social service providers, we are taking the success of our parolee forums and applying that model to at-risk youth.

The specific target audience is juvenile probation or parolees who committed gun or violent offenses. And the goal is to provide those kids with long-term intensive mentoring and wraparound services to address their needs and prevent recidivism.

We are initially focused on two CPD districts ― the 7th and 11th, which is Englewood, Garfield Park, and lower Humboldt Park. The forums are designed to educate the kids about law enforcement, to humanize law enforcement, and to give the kids options and incentives to reassimilate into school and connect with community organizations and activities. Alternatives to the gang route. We are working also with a not-for-profit organization, Youth Guidance, who will selectively provide intensive mentoring through their program, Becoming a Man (BAM).

I am proud that we in Chicago are once again at the cutting edge, leading these efforts related to violence prevention. I believe these initiatives are deeply important to our long-term success in fighting violent crime, and I am committed to continuing them as long as it takes to help those unfairly afflicted neighborhoods.

I hope that gives you some sense as to who we are and what we are doing at the U.S. Attorney’s Office when it comes to violent crime in Chicago. We are and will be vigorous in investigating and prosecuting the most violent criminals in Chicago. But we cannot arrest our way out of the gang problem. From a law-enforcement perspective, that’s why I think it’s so important that we continue our violence prevention and parolee reentry efforts. We have to attack this problem at its roots. I don’t want to prosecute violent offenders if instead we can stop them from taking that act of violence in the first instance.

I am deeply honored to get to work with the state, CPD leadership, and leadership from the federal agencies. I believe we have a passionate and like-minded group, committed to taking a comprehensive approach to tamp down on violence. We are working hard, we are working thoughtfully, and we are working together. And we are all in this for the long haul.

That said, law enforcement is a piece of the puzzle but only a piece. And so now I’m at the point in my remarks when I turn to you, and I make an ask. I ask each of you to think about this problem, and how you can own it. You, your company, your law firm, your community organization, your church, your neighborhood.

[Resume slide presentation.]

These are not war zones. They are not separate and discrete from our city. They are our city. They are our neighborhoods with wonderful, law-abiding, decent Chicagoans; citizens, colleagues, neighbors who, like you and me, deserve to feel safe and to be safe at in the neighborhood they call home.

That’s my problem, and it’s your problem. It belongs to all of us, as any social justice issue does. The challenges before us are daunting but they are finite. We can work together to make change real. We have to. Kids are dying. Let’s get to work.

I appreciate you being here with me today. I’m happy to take any questions.

ROCKFORD — ANTHONY F. D’AGOSTINO, 79, the former owner, CEO and President of Commercial Mortgage and Finance Co., in Rockford, was sentenced today by U.S. District Judge Frederick J. Kapala for seventeen counts of mail fraud, one count of wire fraud, and one count of securities fraud. Judge Kapala sentenced D’Agostino to 90 months in federal prison for each count of wire and mail fraud and 60 months in prison for securities fraud, to run concurrent, followed by 3 years of supervised release. Judge Kapala also ordered D’Agostino to pay $49,350,615.95 in restitution. D’Agostino was ordered to surrender on July 14, 2014.

After a six-day bench trial in September 2013, Judge Kapala found D’Agostino guilty on January 17, 2014, of mail fraud, wire fraud, and securities fraud. According to the decision, D’Agostino raised capital for his business by selling instruments known as Promissory Notes and Certificates of Participation to investors. The evidence showed that D’Agostino concealed from the investors the fact that Commercial Mortgage had a negative net worth that steadily increased during the years that D’Agostino owned the company. Specifically, by year-end 2003, when Commercial Mortgage’s net worth had fallen to -$12,860,653 and it had been six years since Commercial Mortgage had made a profit, it became clear to D’Agostino that Commercial might not recover and D’Agostino engaged in a scheme to defraud investors by utilizing Commercial Mortgage’s long-standing good will and reputation in order to obtain and retain money from investors. From the end of 2003 through October 8, 2008, D’Agostino’s fraud scheme exposed the investors to losses of more than $20 million.

Judge Kapala found that D’Agostino made specific false statements to several of the investors. Specifically, defendant told Commercial Mortgage customers that Commercial Mortgage was “doing well,” “doing great,” “very fine,” or “wonderful.” According to the decision, D’Agostino made these statements about Commercial Mortgage’s financial circumstances and the statements were false.

The sentence was announced today by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Robert J. Holley, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of investigation; and Illinois Secretary of State Jesse White.

The government is being represented by Assistant U.S. Attorneys Scott A. Verseman and Scott R. Paccagnini.

ROCKFORD — A California man was indicted today by a federal grand jury in Rockford on fraud charges. WILLIAM J. BURLEY, 34, of Yucaipa, Cal., was charged with three counts of wire fraud in connection with a scheme to defraud International Aid Services – USA, Inc. (“IAS America”), a non-profit charity formed in Idaho and based in Crystal Lake, Ill., and International Aid Services (“IAS”), a charitable international non-governmental organization headquartered in Stockholm, Sweden, of $30,000.

According to the indictment, four IAS employees were assaulted in Somalia, and three of the employees were then kidnaped. Burley, the indictment alleges, claimed he was an experienced operative who would assist IAS in negotiating with the Somalia captors and in rescuing the captured IAS employees. The indictment charges that in order to induce IAS and IAS America into hiring the defendant and his company, Burley falsely claimed to have been a highly decorated Navy SEAL, to have graduated from the Universities of Delaware and Maryland, to have attended numerous training facilities, to have been a consultant for the Navy, Department of Defense, and State Department, and to have been a law enforcement officer.

According to the indictment, as a result of the defendant’s false and fraudulent pretenses, representations, and promises, he received a total of $30,000 in the form of three wire transfers sent from the Crystal Lake Bank and Trust to the Bank of America in Redlands, California. One wire for $5,000 was sent on Aug. 20, 2012, and two wires for a total of $25,000 were sent on Aug. 30, 2012.

Each count of wire fraud carries a maximum penalty of 20 years in prison, and a maximum fine of $250,000, or an alternate fine totaling twice the loss or twice the gain derived from the offense, whichever is greater. If convicted, the Court must impose a reasonable sentence under the advisory United States Sentencing Guidelines, as well as restitution. If convicted, the Court must impose a reasonable sentence under federal sentencing statutes and the advisory United States Sentencing Guidelines.

The indictment was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; and Robert J. Holley, Special Agent-in-Charge of the Chicago Office of Federal Bureau of Investigation. The government is being represented by Assistant U.S. Attorney John G. McKenzie.

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

CHICAGO — A south loop condominium developer and two attorneys are among six defendants facing federal charges for allegedly engaging in a $22.8 million mortgage loan fraud scheme, federal law enforcement officials announced today. The defendants allegedly caused buyers to fraudulently obtain approximately 60 mortgages from various lenders to purchase condominiums at Vision on State, a 250-unit building located at 1255 South State St.

Real estate developer WARREN N. BARR, III, was a member of 13th & State, LLC, which obtained a $55.7 million loan in 2005 to finance the development and construction of Vision on State between 2004 and 2008. Barr, 62, of Riverside, was charged with nine counts of bank fraud and four counts of making false statements on loan applications in a 13-count indictment that was returned by a federal grand jury last Thursday.

Also indicted were: ROBERT D. LATTAS, 37, of Oak Brook, an attorney who represented 13th & State at condo closings, seven counts of bank fraud and three counts of making false statements; JEFFREY A. BUDZIK, 37, of Miami Beach and formerly of Chicago, an attorney who represented individuals purchasing condos at Vision on State, one count of bank fraud; ASIF A. ASLAM, 43, of Irvine, Calif., and formerly of Lincolnwood, six counts of bank fraud and one count of making false statements; LEONARDO V. SANDERS, 51, of Chicago, who similar to Aslam recruited individuals to purchase condos and then lease them to renters, two counts of bank fraud and one count making false statements; and JAMES J. CARROLL, 63, of Naperville, who was chief financial officer and a member of 13th & State, one count of bank fraud.

The indictment also seeks forfeiture of $22,872,527 from Barr, Lattas, Aslam, and Sanders.

Barr is believed to be living temporarily in Saudi Arabia and a warrant was issued for his arrest. The other five defendants are scheduled to be arraigned at 10 a.m. Wednesday, or on other dates to be determined, in U.S. District Court.

Between March 2007 and July 2012, the defendants allegedly caused buyers to obtain mortgages to purchase condos at Vision on State by making false statements to lenders in loan applications, real estate contracts, and HUD-1 settlement statements about the sales price of the units, the buyers’ employment, income, financial condition, assets, liabilities, sources of down payment, and intention to occupy the condos, and the funds that 13th & State was providing such as the buyers’ down payments, buyers’ incentives, and commissions.

According to the indictment, Barr, Lattas, and Carroll determined the minimum prices that 13th & State should receive for the condos and facilitated the sale of those units at inflated prices, knowing the difference between the two prices, or “the spread,” would be paid to Aslam, Sanders and others to recruit buyers with incentives that were not disclosed in loan documents.

All six defendants allegedly caused false documents to be prepared that concealed from lenders that funds represented as the buyers’ down payments were actually provided by 13th & State, so that the buyers were contributing little or no equity, and that the purchase prices were inflated. Aslam and Sanders allegedly received funds from Barr and others at Barr’s direction, and, knowing this was not disclosed to lenders, kept some of the funds for themselves and used some of the funds to pay condo buyers’ assessments and closing costs.

The indictment also alleges that Barr purchased a condo at Vision on State and that he, Lattas, and Carroll knew that loan documents contained false information about the sales price and the source of Barr’s down payment, as well as false information about his assets and liabilities.

The lenders allegedly defrauded include AmTrust Bank, Bank of America, First Tennessee Bank, JP Morgan Chase Bank, and Wells Fargo.

The charges were announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Robert J. Holley, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation; and Michael P. Stephens, Acting Inspector General for the Federal Housing Finance Agency.

The government is being represented by Assistant U.S. Attorney Christopher R. McFadden.

Each count of bank fraud and making false statements on loan applications carries a maximum penalty of 30 years in prison and a $1 million fine, or an alternate fine of twice the loss or twice the gain, whichever is greater, and restitution is mandatory. 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.

Indictment

CHICAGO ― A south suburban man was sentenced to nearly 17 years in federal prison for buying hundreds of high-powered firearms at guns shows in Indiana and illegally transporting them to Chicago where he sold them without a federal firearms dealer license. The defendant, DAVID LEWISBEY, was sentenced late yesterday in U.S. District Court.

After a two-week trial last September, Lewisbey, 24, of South Holland, was convicted of dealing firearms without a federal license, two counts of illegally transporting firearms across state lines, and two counts interstate travel to sell guns without a license.

“This case is a perfect example of where the guns come from . . . and into the hands of gangbangers who then shoot them and kill and wound people,” U.S. District Judge Ronald Guzman said before imposing a 200-month sentence.

“During one of the deadliest years in Chicago’s history, the defendant was pumping numerous unregistered and untraceable firearms into the most violent neighborhoods in Chicago. The defendant ran his business on the side streets and back alleys of Chicago’s neighborhoods. No background checks, no receipts, no written record,” Assistant U.S. Attorneys Bethany Biesenthal and Christopher Parente argued in a sentencing memo.

Evidence at the trial showed that between January 2008 and September 2012, Lewisbey, who had no criminal record that disqualified him from buying firearms, routinely traveled to various gun shows in Indiana and purchased duffle bags full of guns that he brought back to Chicago. A government witness testified that he personally observed Lewisbey buy more than 100 firearms, as well as dozens of high-capacity magazines, at Indiana gun shows.

During just one 48-hour period, on April 22-23, 2012, Lewisbey bought 43 guns in Indiana and brought them to Chicago, where he delivered them to co-defendant LEVAINE TANKSLEY, who with two other co-defendants, sold them to an individual who was cooperating with ATF agents. All of those guns were recovered by law enforcement.

Last month, Judge Guzman sentenced Tanksley, 29, of Chicago, to more than 11 years in prison, and CHARLES LEMLE, 28, of Chicago to 10 years in prison. MICHAEL HALL, 29, of Chicago, who cooperated with the government and testified against Lewsibey is awaiting sentencing. Tanksley, Lemle, and Hall each pleaded guilty to illegally possessing firearms as previously convicted felons.

Lewisbey’s sentencing was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Carl Vasilko, Special Agent-in-Charge of the Chicago Office of the Bureau of Alcohol, Tobacco, Firearms, and Explosives. The Chicago Office of 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).

CHICAGO — A West suburban man and a Chicago woman were arrested on federal charges for allegedly engaging in a bank fraud scheme purporting to involve the fraudulent sale of two two-flat apartment buildings in Chicago, federal law enforcement officials announced today. The charges followed a federal undercover investigation of fraudulent mortgage loan transactions.

GEORGE DRAVILAS, 36, of Medinah, and BRIDGET HUTCHERSON, 40, of Chicago, were each charged with bank fraud in a criminal complaint filed yesterday and unsealed following their arrests yesterday. Hutcherson was released on her own recognizance while Dravilas remains in federal custody pending a detention hearing at 3 p.m. Friday before U.S. Magistrate Judge Maria Valdez in U.S. District Court.

According to the complaint affidavit by an agent with the U.S. Department of Housing and Urban Development’s Office of Inspector General, a cooperating individual (CI-1) who was arrested in January 2013 identified Dravilas as someone he had worked with to conduct fraudulent mortgage transactions. The FBI initiated an undercover investigation in which CI-1 posed as a mortgage broker who was engaged in fraud and was seeking assistance in structuring fraudulent mortgage loan transactions. Two additional cooperating individuals, including a licensed real estate appraiser, two undercover law enforcement agents who posed as straw buyers of the two properties, and a bank also participated in the investigation.

The complaint alleges that Dravilas agreed to prepare underlying documents to be submitted as part of the fraudulent mortgage loan applications to the bank for the purchase of two residential properties by straw buyers who would receive a share of the seller’s loan proceeds. The two-flats were located in the 6300 block of South Parnell Avenue and the 6600 block of South Sangamon Street in Chicago. Although Dravilas claimed not to own the properties, he allegedly supplied real estate purchase contracts, title commitments, fraudulent and inflated lease rental agreements, money to obtain fraudulently inflated appraisals, and letters extending and renewing the real estate purchase contracts, the charges allege.

Dravilas allegedly schemed to sell both apartment buildings for a fraudulently inflated sales price of $275,000 each, while purporting to kickback $100,000 on each transaction to each of the undercover straw buyers, while keeping a fee for himself and the cooperating individuals.

Hutcherson allegedly received $600 to supply one of the cooperating individuals with fraudulent W-2s, check stubs, and earnings statements in the names of the straw buyers to be used in support of the mortgage loan applications.

The arrests and charges were announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Robert J. Holley, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation; and Barry McLaughlin, Special Agent-in-Charge of the U.S. Department of Housing and Urban Development Office of Inspector General in Chicago. HUD-OIG and FBI agents conducted the investigation through the South Suburban Financial Crimes Task Force, which includes the Cook County Sheriff’s Police Department, the Internal Revenue Service Criminal Investigation Division, the U.S. Postal Inspection Service, and the U.S. Postal Service Office of Inspector General.

The government is being represented by Assistant U.S. Attorney Andrew S. Boutros.

Bank fraud carries a maximum penalty of 30 years in prison and a $1 million fine, and restitution is mandatory. 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 a complaint 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.

Complaint

CHICAGO — A retired City of Chicago official who managed the city’s red light camera program for nearly a decade was arrested today for allegedly accepting cash and personal benefits totaling hundreds of thousands of dollars to steer $124 million in city contracts to Redflex Traffic Systems, Inc., to establish, operate and expand the program. The defendant, JOHN BILLS, allegedly received cash bribes, other forms of payment, and an Arizona condominium, all funneled from Redflex through unnamed Individual A, Bills’ one-time friend who received $2 million in salary, bonuses, and commissions as a consultant to Redflex.

Bills, 52, of Chicago, was charged with one count of federal program bribery in a criminal complaint that was filed yesterday and unsealed today. Bills was scheduled to appear at 3 p.m. before U.S. Magistrate Judge Maria Valdez in Federal Court.

Between 2003, when the city awarded Phoenix-based Redflex its initial contract, and 2011, Bills allegedly received from Individual A cash and checks directly and indirectly for his benefit, including to repay loans, for his retirement party, and catering for another party. Individual A also purchased for Bills a Glendale, Ariz., condominium for $177,000, which Bills, often with friends and family, visited 22 times between May 2008 and 2012.

Bills, who retired in 2011 as managing deputy commissioner of the city’s transportation department after 32 years with the city, managed the city’s red light program and served as a member of the city’s contract evaluation committee.

According to an FBI affidavit supporting the charges, in October 2003, the city awarded a contract to Redflex for the installation, maintenance and operation of the city’s first Digital Automated Red Light Enforcement Program (DARLEP), which used cameras to automatically record and ticket drivers who ran red lights. Between 2004 and 2008, the city paid Redflex approximately $25 million under this contract, and Redflex installed and maintained 136 camera systems in Chicago intersections, and assisted in reviewing and processing violations. Bills, then assistant transportation commissioner, was a voting member of the city’s request for proposal (RFP) evaluation committee that recommended awarding the contract to Redflex after a one-month trial run of competing systems by Redflex and another finalist. In February 2008, the city awarded a new, non-competitive contract to Redflex to operate and maintain the previously installed 136 camera systems, and paid Redflex approximately $33 million under that contract.

Also in February 2008, following the competitive RFP process, the city awarded a new DARLEP contract to Redflex that was similar to the first. Bills was an advisory member of this RFP evaluation committee. The city paid Redflex approximately $66 million under this contract, which resulted in approximately 248 red light cameras being installed, bringing the total number of Redflex cameras to 384 and the total amount the city has paid Redflex to approximately $124 million.

By 2010, Chicago had the largest red light camera program in the United States, representing 20 percent of the total camera systems that Redflex operated nationwide. For Redflex, a subsidiary of Australian-based Redflex Holdings Ltd., the Chicago contract was its most important because of the revenue it generated and the name recognition it gave the company, according to the affidavit.

The complaint affidavit is supported by information from Confidential Source 1 (CS1), a former Redflex employee who initially provided Bills in 2002 with an unsolicited proposal to install red light cameras in Chicago. Frequent communications between CS1 and Bills led CS1 to understand that Bills was trying to determine if he could get money from Redflex in return for the company getting the red light camera contract. Shortly after a Jan. 3, 2003, pre-bid meeting that CS1 attended with other vendors, Bills asked CS1 to get him and his friends a hotel room in Los Angeles. CS1 paid for Bills’ hotel room with the approval of CS1’s superiors, believing that it would influence Bills to help Redflex get the Chicago contract. As CS1 anticipated, Bills did not offer and did not reimburse CS1 for the hotel room and instead thanked CS1, who submitted a voucher and was reimbursed by Redflex.

Between February and May 2003, during a pilot phase with Redflex and a competing vendor, Redflex paid for drinks and meals for Bills. Upon Bills’ recommendation, Redflex hired Company A as a subcontractor. In May 2003, before the city contract was awarded, Bills made comments to remind CS1 that Bills was being courted by the competing vendor. After Bills and CS1 strategized to ensure a favorable result, on May 27, 2003, the evaluation committee and city transportation commissioner recommended that Redflex be awarded the DARLEP contract, which went into effect in October 2003.

At a celebratory dinner in June 2003, Bills allegedly told CS1 words to the effect of, “It’s time to make good,” which CS1 understood to mean that Bills wanted and expected to be paid for helping Redflex win the Chicago contract. Bills allegedly floated alternative suggestions for funneling benefits to him, including suggesting that Redflex could pay him through the newly created Chicago customer liaison position. During the summer and fall of 2003 Redflex hired Individual A to fill that position and negotiated his compensation structure. In addition to salary and bonuses, Redflex payments to Individual A included commissions totaling more than $1.34 million between 2008 and 2011.

Before Bills retired, he allegedly made it known to CS1 and other Redflex employees that he wanted a job with Redflex. After it was decided that Redflex could not hire him directly, Redflex arranged for Bills to get a job with Company B, which was funded by Redflex. That job lasted through the early spring of 2012.

The affidavit alleges that between late 2003 and November 2012, Individual A and Bills used several different methods to transfer funds to Bills. In 2008, Individual A purchased the Glendale, Ariz., condominium for Bills’ use. In addition, checks written on Individual A’s bank account were used to repay debts Bills had accumulated and also to pay for personal expenses of Bills and his family. Individual A also withdrew large amounts of cash, totaling more than $643,000 between 2006 and 2011, which temporally correspond to Bills’ repayment of loans as well as Bills’ payment of numerous personal expenditures, including purchasing a $12,500 used Mercedes-Benz, with cash. Although some of Bills’ cash expenditures do not correspond to specific withdrawals by Individual A, Bills’ financial records reflect no withdrawals of cash by him to support the personal expenditures. In fact, records reflect very little cash on-hand by Bills during this time period.

The charges were announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Robert J. Holley, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation; James C. Lee, Special Agent-in-Charge of the Internal Revenue Service Criminal Investigation Division in Chicago; and Joseph Ferguson, Inspector General for the City of Chicago. The investigation is continuing, they said.

The government is being represented by Assistant U.S. Attorneys Carrie Hamilton and Laurie Barsella.

Federal program bribery carries a maximum penalty of 10 years in prison and a $250,000 fine. If convicted, the court must impose a reasonable sentence under federal sentencing statutes and the advisory United States Sentencing Guidelines.

The public is reminded that 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 ― Julie B. Porter, a 10-year veteran of the U.S. Attorney’s Office who has supervised financial fraud and child exploitation cases and participated in significant trials involving corporate fraud and public corruption, has become the chief of the office’s criminal division, Zachary T. Fardon, United States Attorney for the Northern District of Illinois, announced today.

Ms. Porter succeeds Manish S. Shah, who served as criminal chief for two years and was confirmed on April 30 by the U.S. Senate to be a judge on the U.S. District Court bench in Chicago. Prior to Ms. Porter’s appointment, which took effect on Friday, she was chief of the office’s financial fraud section.

“Julie is a great lawyer, a wonderful human being, and a prosecutor with deep understanding and real love for this office and what we do,” Mr. Fardon said.

The chief of the criminal division is third in the chain of command overseeing criminal prosecutions, following the U.S. Attorney and the First Assistant. Just over 120 of the office’s 152 attorneys are assigned to the criminal division, while the remaining attorneys are assigned to the civil division and the western division in Rockford.

Ms. Porter, 41, joined the U.S. Attorney’s Office in 2004. In 2009, she received a Justice Department award for being a leader and role model as a federal prosecutor from the Director of the Executive Office for United States Attorneys. Ms. Porter played a key role as a member of the prosecution teams in the corporate fraud trial of Conrad Black and other executives of the Hollinger International newspaper publishing company, and in multiple public corruption cases involving the City of Chicago’s Hired Truck program and Operation Board Games.

Ms. Porter is a graduate of Williams College and the University of Michigan Law School. In 2007, she was recognized in the “40 under 40” feature in Crain’s Chicago Business.

CHICAGO — A Bolingbrook man was indicted on federal charges alleging that he violated U.S. export laws by attempting to ship a thermal imaging camera from his company in Schaumburg to a company in Pakistan without obtaining a license from the U.S. Commerce Department, federal law enforcement officials announced today.

The case involves a FLIR HRC-U thermal imaging camera, which was on a Commerce Department list of controlled export goods for reasons of national security and regional stability. As a controlled material, a license was required from the Commerce Department’s Bureau of Industry and Security to export the camera to certain countries, including Pakistan.

The defendant, BILAL AHMED, 33, was charged with one count of violating the International Emergency Economic Powers Act (IEEPA) and one count of attempted smuggling of goods in violation of U.S. export regulations in a two-count indictment returned by a federal grand jury yesterday. Ahmed was initially charged in a criminal complaint and arrested on March 14, and he was subsequently released on a $100,000 secured bond.

No date has been set yet for Ahmed to be arraigned in U.S. District Court in Chicago.

According to the complaint affidavit and the indictment, Ahmed was the owner, president, and registered agent of Trexim Corp., which used the address of a virtual office in Schaumburg. Between November 2013 and February of this year, Ahmed corresponded via email with a company in California and negotiated the purchase of a FLIR HRC-U camera for approximately $102,000, which he paid with two checks in February. Ahmed took delivery of the camera on Feb. 27 at a commercial shipping store in Bolingbrook.

On March 7, Ahmed allegedly took the camera, packaged in two boxes, to a different commercial shipper located in Elk Grove Village and left the packages to be shipped to a company in Pakistan. The waybill included a handwritten note containing the letters “NLR,” meaning “no license required.” A search of U.S. State and Commerce Department databases showed there were no licenses applied for or obtained by Ahmed, Trexim or any other related individual or company names for the export of a FLIR HRC-U camera from the U.S. to Pakistan, the indictment alleges.

The indictment was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Robert J. Holley, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation, and Ronald B. Orzel, Special Agent-in-Charge of the U.S. Department of Commerce, Bureau of Industry and Security, Office of Export Enforcement, Chicago Field Office. The Justice Department’s National Security Division is providing assistance in the case.

Violating IEEPA carries a maximum penalty of 20 years in prison and a $1 million fine, while attempted smuggling of goods carries a maximum penalty of 10 years in prison and a $250,000 fine. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines. The government is being represented by Assistant U.S. Attorney Bethany Biesenthal.

An indictment contains merely 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.

Indictment

ROCKFORD — A former Freeport, Ill. man was sentenced today in federal court by U.S. District Judge Frederick J. Kapala on a federal drug trafficking charge. The defendant, ROBERTO ALVARADO, 61, was sentenced to 78 months in federal prison, to be followed by 5 years of supervised release. Judge Kapala ordered that at the end of his prison term, Alvarado, a citizen of Mexico, surrender to officials with Immigration and Customs Enforcement for deportation.

Alvarado had been arrested on Dec. 1, 1989, on a drug trafficking charge by FBI Special Agents. On Dec. 15, 1989, he was released on a $20,000 bond pending trial. However, Alvarado failed to appear for a court appearance on Sept. 18, 1990, and fled from Illinois. His bond was forfeited and the assets he had posted for bond were turned over to the United States. An arrest warrant was also issued for him. On June 28, 2013, Alvarado was a passenger in a car that was stopped in Montana by a State Police Trooper for speeding. The Trooper was able to identify Alvarado as being wanted by the FBI and took him into custody. Alvarado appeared before a federal magistrate who ordered that Alvarado be detained and transported to Rockford.

Once in Rockford, Magistrate Judge P. Michael Mahoney ordered that Alvarado be detained pending trial. Alvarado pled guilty to the drug trafficking charge on Dec. 4, 2013. In his plea agreement, Alvarado admitted that on Dec. 1, 1989, in Rock Falls, he had attempted to possess with the intent to distribute 1,414 grams of cocaine. At sentencing today, Judge Kapala noted the amount of time that Alvarado had spent as a fugitive and found it to be an aggravating factor in imposing the sentence.

The sentencing was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Robert J. Holley, Special Agent in Charge of the Chicago Office of the Federal Bureau of Investigation.

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

CHICAGO — The former longtime elected clerk for the Village of Burnham was charged today with stealing more than $650,862 from her office at the south suburb’s village hall and using most of the cash to gamble at casinos. The defendant, NANCY DOBROWSKI, was charged with one count each of wire fraud and filing a false federal income tax return in a criminal information filed in U.S. District Court.

Dobrowski, 70, of Burnham, served as Burnham’s elected clerk from 1980 until she resigned on May 29, 2013, when FBI agents executed a federal search warrant at the clerk’s village hall office. Through her attorney, Dobrowski authorized the government to disclose that she will plead guilty to the charges. No date has been set yet for Dobrowski to be arraigned in Federal Court.

As clerk, Dobrowski was responsible for managing Burnham’s finances and depositing cash and checks collected by the clerk’s office into the village’s bank accounts.

Between at least 2004 and May 2013, Dobrowski allegedly took cash the village received as payment for fees and fines from the public. She then used most of the cash to gamble at casinos in Indiana and elsewhere either by taking cash to casinos or by depositing the money into her personal bank account and then withdrawing it from automated teller machines at casinos. She falsely represented the village’s finances to auditors and covered up her fraud scheme by causing false entries in village books, according to the charges.

As part of the fraud scheme, Dobrowski allegedly took cash from both the village cash register and the collection of money received as tow bonds. She recorded false amounts of tow bond money that had been received to make it appear that the village collected less cash than it had actually received, and sometimes she used tow bond money to balance the cash register, the charges allege.

To conceal her misappropriation of cash from the village cash register, Dobrowski waited a week to deposit cash into the village’s bank accounts instead of making daily deposits. By delaying deposits, Dobrowski could use funds received by the village in the later week to make up for funds she had taken during the prior week, making the deposit appear to match the revenues despite having taken cash from the register, the information alleges.

Dobrowski allegedly further concealed the scheme by failing to record checks received from the public as payment for village fees and services. She would place the unrecorded checks into the register to compensate for an equal amount of cash she had taken, making the register appear balanced. She provided false information to the village’s outside audit firm regarding the village’s revenues and regularly disposed of the cash register tape to conceal that the village’s revenues often did not match the deposits into village bank accounts.

Dobrowski was also charged with filing a false federal income tax return for 2012, when she reported total income of $309,181, knowing that her total income was substantially greater than that because she failed to report the cash she misappropriated from the village in 2012 as income.

Wire fraud carries a maximum penalty of 20 years in prison and a $250,000 fine or an alternate fine totaling twice the gross loss or gain, whichever is greater. Filing a false federal income tax return carries a maximum penalty of three years in prison, a $250,000 fine, and mandatory costs of prosecution. Restitution is mandatory and defendants convicted of tax offenses remain liable for back taxes, interest, and a civil penalty of up to 75 percent of the amount owed.

The indictment was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Robert J. Holley, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation; and James C. Lee, Special Agent-in-Charge of the Chicago Office of the Internal Revenue Service Criminal Investigation Division.

The government is being represented by Assistant U.S. Attorney Steven Block.

The public is reminded that an information 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.

Indictment