Northern District of Illinois

CHICAGO — A former Chicago investment advisor was sentenced today to six years in federal prison for an investment fraud scheme that swindled clients, causing them to lose more than $1.6 million. The defendant, DIMITRY VISHNEVETSKY, pleaded guilty last August to wire fraud and bank fraud, admitting that he misappropriated funds raised from investors for his own purposes, including to pay for such expenses as mortgage and car payments, travel and vacations, restaurant bills, athletic club dues, and to make trades for himself, while using additional investor funds to make Ponzi-type payments to clients.

Vishnevetsky, 34, of Chicago, was ordered to pay $1,684,763 in restitution, nearly all of it to a half-dozen investment clients, by U.S. District Judge Ruben Castillo, who likened Vishnevetsky’s conduct to a financial storm that devastated the lives of his victims. Vishnevetsky was ordered to begin serving his sentence on May 28.

“This offense was entirely unnecessary,” the government argued at sentencing. “There was no good reason for this fraud, and the defendant, who was skilled in the world of finances could have gotten a legitimate job. In fact, [he] obtained a Bachelor’s degree in business administration, and attended the University of Oxford.”

According to the court records, Vishnevetsky offered and purported to sell investments, including investments in funds which promised to trade S&P Futures, and a fund that could trade in things such as equities, futures contracts, and commodities, as well as brokerage and management services for some investors, and promissory notes, through Hodges Trading, LLC, and Oxford Capital, LLC, which he controlled. Three purported Oxford funds existed in name only, as did the promissory notes, which Vishnevetsky described as London Interbank Offered Rate (LIBOR) adjusted notes.

Between September 2006 and March 2012, Vishnevetsky made false representations about the profitability of his prior and current trading, the use of the invested funds, the risks involved, the expected and actual returns on investments and trading, as well as false representations about the funds he purportedly traded. For example, Vishnevetsky created and provided some investors fraudulent trading results showing profits as high as 36 percent per year. In fact, any trades that Vishnevetsky actually made consistently resulted in losses, not profits.

The bank fraud conviction resulted from false statements Vishnevetsky made between 2007 and 2010 to Merrill Lynch Bank & Trust concerning his income and assets to cause the bank to issue, and later modify, two loans totaling approximately $519,500 to purchase a condominium in Chicago.

The government is being represented by Assistant U.S. Attorney Jacqueline Stern.

The sentence was announced by Gary S. Shapiro, United States Attorney for the Northern District of Illinois, and Cory B. Nelson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation. The Commodity Futures Trading Commission, which filed a companion civil enforcement lawsuit, assisted in the investigation.

The investigation falls under the umbrella of the Financial Fraud Enforcement Task Force, which includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit: StopFraud.gov.

ROCKFORD — A Rockford, Ill. man pleaded guilty today in federal court before U.S. District Judge Frederick J. Kapala to one count of wire fraud. CAMERON LOVE, 27, who was charged in a superseding indictment along with three other men, admitted that between mid-2010 and January 2012 he defrauded large retail chain stores by fraudulently acquiring tens of thousands of dollars of merchandise and returning the items for cash.

In the written plea agreement, Hardy admitted that as part of the scheme he and his co-defendants created and used counterfeit checks and counterfeit identifications to purchase merchandise from large chain stores such as Wal-Mart and Farm and Fleet located in various states. After he and the others purchased merchandise from those stores, they returned the merchandise to a different store location for a cash refund. Hardy admitted he knew at the time that some of the names and addresses on the checks and identification he used, and some of the bank account information, were fictitious and some were real.

In a related case, ANTHONY HARDY, 42, also of Rockford, pleaded guilty on Feb. 19, 2013, to one count of wire fraud and one count of identity theft. In addition to Hardy admitting he participated in a wire fraud scheme with Love and others, Hardy admitted he unlawfully possessed the identification of another person used to purchase merchandise from the stores in the wire fraud scheme.

Love is scheduled to be sentenced on June 4, 2013, while Hardy is scheduled to be sentenced on June 8, 2013. Two other men are also each charged with three counts of wire fraud in the superseding indictment for their roles in the scheme: WILLIAM DORN, 24, also of Rockford, and ANTHONY TAYLOR, 43, of Marietta, Ga.

Each charge of wire fraud carries a maximum penalty of up to 20 years in prison, a term of up to 3 years of supervised release following imprisonment, a $250,000 fine, and mandatory restitution. The Court may also impose a fine totaling twice the loss to any victim or twice the gain to the defendants, whichever is greater. For Hardy, the charge of identity theft carries a mandatory sentence of 2 years imprisonment, which must run consecutive to any sentence on the wire fraud charge, as well as a fine of up to $250,000. The actual sentence will be determined by the United States District Court, guided by the advisory United States Sentencing Guidelines.

The guilty pleas were announced by Gary S. Shapiro, United States Attorney for the Northern District of Illinois; and Thomas P. Brady, Inspector-in-Charge of the U.S. Postal Inspection Service in Chicago. The Rockford Police Department assisted in the investigation.

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

Love Plea Agreement

Hardy Plea Agreement

CHICAGO – An Addison man was convicted today by a federal jury of being a felon-inpossession of a firearm. The defendant, MARIO J. RAINONE, was found guilty following a two-day trial. The jury was empaneled on Monday before U.S. District Judge Harry Leinenweber in Federal Court.

Rainone, 58, who was arrested in February 2009, remains in federal custody pending sentencing, which Judge Leinenweber scheduled for June 5. Based on Rainone’s status as an Armed Career Criminal under federal law, the offense carries a mandatory minimum of 15 years and a maximum of life in prison. Rainone also faces a maximum fine of $250,000. The Court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.

Rainone was arrested by Addison police on state charges on February 12, 2009. A state search warrant was executed the next day at an apartment where Rainone was staying in the 1200 block of West Lake Street in the western suburb. A Smith & Wesson Model 19-3 .357 caliber revolver, along with personal papers and other belongings, were found in the nightstand in the bedroom used by Rainone, resulting in the federal firearms charge. The gun was stolen in October 2008, according to the original owner, who testified at trial.

A stipulation was entered at the trial that Rainone has a prior felony conviction. Federal law prohibits a convicted felon from possessing any firearm affecting interstate commerce.

The government was represented by Assistant U.S. Attorneys Amarjeet Bhachu and Michael Donovan. The verdict was announced Gary S. Shapiro, United States Attorney for the Northern District of Illinois; Cory B. Nelson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation; and the Addison Police Department.

CHICAGO — The owner of a cemetery monument business in Skokie was charged with federal tax evasion for allegedly failing to report all of his income, including money he held in a secret offshore financial account with UBS, a global financial services firm headquartered in Switzerland. The defendant, PETER TROOST, was charged in a felony information filed late yesterday in U.S. District Court.

Troost, 78, of Skokie, owns and operates Troost Memorials, a closely-held company that designs and sells cemetery monuments and gravestones. The business is located in a strip mall that Troost owns at 9853 Gross Point Rd., Skokie, and he owns another strip mall located at 1816-44 Arlington Heights Rd., in Arlington Heights. The defendant is not involved with Peter Troost Monument Company, of Hillside, which is a different company from Troost Memorials.

Troost will be arraigned in U.S. District Court on a date yet to be determined.

Troost is the first taxpayer charged in Federal Court in Chicago in connection with an ongoing investigation of U.S. taxpayer clients of UBS and other overseas banks that hid foreign accounts from the Internal Revenue Service. In February 2009, UBS entered into a deferred prosecution agreement with the United States, admitting that it helped taxpayers hide accounts from the IRS. As part of the agreement, UBS provided the government with the identities of, and account information for, certain customers of UBS’ U.S. cross-border banking business.

According to the charging document, Troost maintained at least one offshore account with UBS, which he managed with the assistance of a UBS personal banker based on the island of Jersey.

In 2007, Troost received gross income of at least $647,040, and owed federal income tax of at least $212,503, the charge states. Troost allegedly attempted to evade payment of at least $193,641 of that income tax by maintaining a secret Swiss account with UBS, to which he transferred income earned in the United States and also earned additional interest income in that account.

On his federal income tax returns for 2007-09, Troost allegedly stated that his total income was $80,271.35 in 2007; $60,802.37 in 2008; and $211,256.86 in 2009, when he knew that his total income was actually greater than those amounts in each of those years. In addition, Troost allegedly stated on his returns for each of those years that he did not have an interest in a financial account in a foreign country, when, in fact, he knew he maintained the offshore UBS account.

The charge was announced today by Gary S. Shapiro, 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.

“With the April tax deadline looming, we encourage taxpayers to think of the serious consequences, including civil and criminal penalties, for willfully presenting false information on their federal tax returns. All taxpayers must honor their obligation to report all of their income and pay all of the taxes they owe,” Mr. Lee said.

Tax evasion carries a maximum penalty of five years in prison and a $250,000 fine. In addition, a defendant convicted of tax offenses faces mandatory costs of prosecution and remains civilly liable to the government for any and all back taxes, as well as a potential civil fraud penalty of up to 75 percent of the underpayment plus interest. Federal tax law requires U.S. taxpayers pay taxes on all income earned worldwide. Taxpayers must also report foreign financial accounts if the total value of the accounts exceeds $10,000 at any time during the calendar year. A deliberate failure to file a Report of Foreign Bank and Financial Accounts (FBAR) with the U.S. Treasury Department can result in a penalty of up to 50 percent of the amount in the account at the time of the violation. If convicted, the Court must determine a reasonable sentence to be imposed under federal statutes and the advisory United States Sentencing Guidelines.

The government is being represented by Assistant U.S. Attorney Brian Havey.

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 self-admitted high-ranking member of a Chicago street gang that operates in a south side neighborhood that he and his associates refer to as “Terror Town,” was sentenced today to 20 years in federal prison. The defendant, GILBERT SPILLER, holds the rank of “general” in the Black P Stone Nation street gang and has criminal convictions spanning two decades. He was arrested by the FBI and Chicago Police in October 2011 and pleaded guilty last September to two counts of selling crack cocaine and one count of illegally selling a firearm.

The sentence was imposed today by U.S. District Judge Charles Kocoras in Federal Court.

Spiller, 37, admitted selling approximately 62.2 grams of crack cocaine on July 13, 2011, and approximately 59.2 grams of crack on July 21, 2011, to a confidential informant in the vicinity of the 7800 block of South Kingston Avenue.

On Oct. 18, 2011, Spiller sold the same individual a loaded .40 caliber handgun, knowing that the individual was a felon on parole, had recently purchased crack from Spiller on two occasions, and believing that the individual had a score to settle with rival gang members.

According to court documents, Spiller admitted that he first joined the Black P Stone Nation while he was in grade school. He was subsequently convicted of aggravated battery with a firearm and aggravated discharge of a firearm, which arose from a drive-by shooting that killed one victim and wounded four others. He was later convicted of aggravated battery of a Chicago police officer.

“As his life in the gang further hardened, he became involved in violent crime,” the government wrote in a sentencing argument. Spiller “admitted that he was involved in shooting at other people on 5 to 10 different occasions, and believed that he hit the people he was aiming at in roughly half of these shootings.”

The government was represented by Matthew Burke. The sentence was announced by Gary S. Shapiro, United States Attorney for the Northern District of Illinois; Cory B. Nelson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation; and Garry McCarthy, Superintendent of the Chicago Police Department. The investigation was conducted by the FBI/CPD Joint Task Force on Gangs.

CHICAGO — A former commodities broker was sentenced to four years in federal prison for defrauding a half-dozen customers of approximately $2.5 million and causing them to lose approximately $1.3 million. The defendant, JOSHUA T.J. RUSSO, 31, of Chicago, a former vice president of alternative investments for Olympus Futures, Inc. (previously Peak Trading Group), was sentenced after pleading guilty last November to commodities fraud.

Russo was ordered to pay $1.175 million in restitution to the Joshua T.T. Russo Settlement Fund, which was established by the National Futures Association to be distributed to the victims. He was ordered to begin serving the sentence on May 24 by U.S. District Judge Charles Norgle, who imposed the sentence last Wednesday in Federal Court.

“Using falsified e-mails, account statements, and annual reports, Russo caused his clients to raid their IRA accounts and give him their hard-earned savings to purchase what he claimed were conservative investments that hedged against risks in the commodity futures markets. In reality, Russo placed highly speculative trades that routinely lost money,” the government argued at sentencing.

In pleading guilty, Russo admitted that between March 2007 and April 2011, he fraudulently obtained approximately $2.5 million from six investors and caused losses of more than $1.3 million, including approximately $208,000 in commissions for himself that he spent on gambling, vacations, clothing, theater tickets, meals, and entertainment. Russo obtained the funds by misrepresenting to investors that their money would be used to purchase various investments, including shares of the Peak Performance Fund, which he knew had never accepted individual investors and no money was ever invested with the fund. Russo made false statements about his prior performance investing in commodity futures, the level of risk, the existence and trading performance of the Peak Performance Fund, and the uses of the funds he obtained from investors.

Instead of investing the funds as he purported, Russo misappropriated the money to make speculative trades — and regularly lost money — in various commodity futures, including energy sources, precious metals, agriculture products, foreign currencies, and stock indices. After providing one investor with false information about positive returns, Russo successfully encouraged that investor to refer friends and relatives to open accounts through him, resulting in additional victims.

The sentencing was announced by Gary S. Shapiro, United States Attorney for the Northern District of Illinois, and Cory B. Nelson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation. The Commodity Futures Trading Commission and the National Futures Association assisted in the investigation.

The government was represented by Assistant U.S. Attorney Christopher McFadden.

The investigation falls under the umbrella of the Financial Fraud Enforcement Task Force, which includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit: StopFraud.gov.

CHICAGO — A former Waukegan grocer was sentenced to 2½ years in federal prison for defrauding government food stamp and nutrition programs of more than $844,000 over approximately two years during an undercover investigation. The defendant, KHALED SALEH, who, together with his wife and co-defendant, FATIMA SALEH, owned and operated Sunset Food Market in Waukegan, illegally exchanged cash on thousands of occasions with customers using food stamp cards and nutrition coupons. They also paid customers approximately half the value in cash for goods the customers purchased at other stores using their benefits, typically infant formula, and then re-sold the same items in their store at a substantially higher price.

Khaled Saleh, 48, was sentenced on Friday to 30 months in prison by U.S. District Judge Charles Norgle, who ordered Saleh to begin serving the sentence on May 31. Sentencing for Fatima Saleh, 37, was continued to March 22. The couple were arrested in May 2011 and both pleaded guilty last August to conspiracy to defraud government programs.

The government administratively forfeited $391,616 in cash and bank account funds that were seized from the Salehs, and Judge Norgle ordered Khaled Saleh to pay $453,013 in restitution for the remaining loss.

“The food stamp and WIC [Women, Infants and Children] programs are designed to help members of society, including children, obtain a more consistent and nutritious diet than they might otherwise enjoy. To [Khaled Saleh], however, these vital programs were nothing more than his personal ATM machine and a means to stock his shelves with cheaply obtained inventory,” the government argued at sentencing.

The Salehs participated in the Supplemental Nutrition Assistant Program, formerly known as the Food Stamp Program, and were authorized to accept LINK cards used by customers to purchase eligible food items. Between August 2009 and April 2011, the defendants redeemed more than $1.175 million in LINK funds and WIC coupons.

During the undercover investigation, an agent with the U.S. Department of Agriculture, Office of Inspector General, exchanged food stamp benefits for cash and used benefits to purchase formula at a discount store, which he then re-sold for half the price in cash to the Salehs on several occasions.

After executing a search warrant at the store in April 2011, Fatima Saleh went to her apartment and agents observed her leaving a short time later with a suitcase. After giving consent to search the suitcase, agents found more than $350,000 in cash and more than 800 coupon vouchers for the WIC program. Additional cash was found in the apartment and in the couple’s bank account.

The sentencing was announced today by Gary S. Shapiro, United States Attorney for the Northern District of Illinois; Joe N. Smith, Special Agent-in-Charge of the USDA’s Office of Inspector General; and Frank Benedetto, Special Agent-in-Charge of the U.S. Secret Service, both in Chicago. The Illinois Department of Human Services assisted in the investigation.

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

CHICAGO —Seventeen defendants are facing federal narcotics and/or firearms charges which demonstrate again the intersection of drugs and illegal gun possession in Chicago. An investigation by the Chicago Police Department and the U.S. Drug Enforcement Administration of alleged drug-trafficking by a father and son that started less than a year ago, has resulted in federal narcotics charges against them, two alleged suppliers, at least eight alleged customers, and others, as well as the seizure of more than 14 kilograms of cocaine, three kilograms of heroin, 15 firearms, and approximately $320,000.

The investigation moved up and down an alleged drug supply ladder as a result of
Chicago police officers and DEA agents using federal wiretaps on at least a dozen phones to intercept conversations and deliveries of narcotics and firearms.

In a telephone conversation on Nov. 26 last year, defendant DWYANE PAYNE, also known as “Murder,” allegedly told an individual that he needed a gun because he was going to a memorial service at North Central Park Avenue and West Division Street, where rival gang members would be present. Based on that call and others that followed, police and agents set up surveillance at the intersection and, about an hour later, approached the man who Payne had been talking to as he was standing next to a 2005 Chrysler 300. The individual ran but was quickly apprehended and gave permission to search his car. Inside, two TEC-9 semi-automatic pistols with extended magazines were found on the floor of the backseat – one was loaded with 30 live rounds and the other, which had a defaced serial number, was loaded with approximately 28 live rounds, including one in the chamber.

Payne’s brother, MARSHALL PAYNE, was also indicted yesterday for being a previously convicted felon in illegal possession of both loaded TEC-9s.

Four days later, on Nov. 30, 2012, after listening to other intercepted conversations, investigators stopped a vehicle in the 7400 block of West Waveland Avenue, arrested the driver
– an alleged drug courier, LUCIO CUEVAS – and seized two kilograms of cocaine and a handgun later found in a trap compartment in the vehicle. Believing that the cocaine was destined for delivery to the nearby residence of JOHNNY MENDEZ, located in the 3700 block of North Olcott Avenue, authorities later that day arrested Mendez and his father, JOHNNY
CHAPARRO, who also lived nearby in the 3700 block of North Oketo Avenue. Investigators searched Mendez’s home and seized two kilograms of heroin, a handgun and approximately
$209,130.

Authorities first began investigating alleged wholesale cocaine and heroin distribution by
Chaparro and Mendez in 2012. The investigation resulted in charges against them, as well as two of their alleged suppliers, JOSE ARGUIJO and ANTONIO VALENCIA-PANTOJA, and at least eight alleged customers, ANTHONY MADISON, PAUL JENKINS, LAKICHA WHITE, DISLSON ROCHA, JOEL MELENDEZ, DWAYNE PAYNE, DELILAH MARTINEZ, and
IRIS CORREA. The charges allege that Chaparro and Mendez obtained kilogram quantities of narcotics from Arguijo on Sept. 3 and Nov. 26, 2012, and from Valencia-Pantoja on Nov. 30, including the cocaine that was seized on those dates.

Following the arrests of Chaparro, Mendez, and Cuevas on Nov. 30, and four other defendants last week, six additional defendants were arrested on Wednesday, while two others are in state custody, and two are fugitives.

All 17 defendants were charged in eight separate indictments returned yesterday by a federal grand jury. Most of the defendants either have been ordered detained or have detention hearings next week in U.S. District Court.

One indictment, against Chaparro, Mendez and seven others, seeks forfeiture of approximately $758,729 in alleged narcotics proceeds, including approximately $236,000 that was seized during the investigation. It also seeks forfeiture of Chaparro and Mendez’s residences, and an automobile. Other indictments seek forfeiture of smaller amounts of cash, as well as another vehicle and multiple firearms.

“Anyone who has paid attention over the last 25 years knows that these charges are just the latest result of the remarkable teamwork among the Chicago Police Department, DEA and other federal law enforcement agencies,” said Gary S. Shapiro, United States Attorney for the
Northern District of Illinois. “While none of these defendants are accused of acts of violence; nevertheless, narcotics and firearms prosecutions such as these are effective in helping reduce violence in Chicago, and we will continue to work closely with the CPD to achieve that goal.”
Mr. Shapiro praised the dedication of the Chicago Police Department and the DEA for the disruption of this alleged narcotics distribution activity.

“Guns and drugs remain the greatest underlying source of our city’s violence. The
Chicago Police Department will continue to attack the pervasiveness of illegal weapons and narcotics in our communities from every angle,” said Garry F. McCarthy, Superintendent of the
Chicago Police Department. “Focused, collaborative efforts with our federal partners send a clear message that those responsible for driving the related violence in our communities will be found and held accountable.”

Jack Riley, Special Agent-in-Charge of the DEA’s Chicago office, said: “The indictments of these 17 individuals yesterday should serve as a notice to criminal networks in Chicago that allegedly traffic in narcotics and weapons that the Drug Enforcement Administration and the
Chicago Police Department stand shoulder to shoulder in our commitment and we will use every available legal avenue to make our city safer.”

The investigation was conducted under the umbrella of the U.S. Organized Crime Drug
Enforcement Task Force (OCDETF).

Details of the separate indictments follow:

United States v. Chaparro, et al., 12 CR 969

JOHNNY CHAPARRO, 50; his son, JOHNNY MENDEZ, aka “Trigger,” 29; JOSE
ARGUIJO, 35; ANTHONY MADISON, 47; PAUL JENKINS, 63; LAKICHA WHITE, 36; DILSON ROCHA, 58; JOEL MELENDEZ, 2; and DWAYNE PAYNE, 29, all of Chicago except Melendez, who is from Milwaukee, were charged with various narcotics offenses in 19- count indictment. Seven of the nine defendants are in custody; Arguijo and Melendez are fugitives.

Mendez was charged with being a felon-in-possession and also possessing a firearm – a
.40 caliber semi-automatic pistol – while committing a drug offense. The felon-in-possession count carries a maximum penalty of 10 years in prison, while the count of possessing a firearm during a drug offense carries a mandatory minimum sentence of five years to a maximum of life in prison, which must be served consecutively to any other sentence, if convicted.

Chaparro, Mendez, and Arguijo each face a mandatory minimum sentence of 10 years and a maximum of life in prison and a $10 million fine on the narcotics charges. Madison, Jenkins, White, Rocha, and Melendez each face a mandatory minimum of five years and a maximum of 40 years in prison and a $5 million fine on the narcotics charges, if convicted.

United States v. Chaparro and Meireles, 13 CR 171

JOHNNY CHAPARRO was charged again, together with MODESTO MEIRELES, aka
“Old Man,” 62, of Chicago, in a six-count indictment for various narcotics offenses.

Chaparro and Meireles face a mandatory minimum of five years and a maximum of 40 years in prison and a $5 million fine, if convicted.

United States v. Valencia-Pantoja and Cuevas, 13 CR 170

ANTONIO VALENCIA-PANTOJA, 23, and LUCIO CUEVAS, 24, both of Chicago, were charged together in a three-count indictment for allegedly conspiring to distribute the cocaine that was seized from Cuevas on Nov. 30, 2012.

They each face a mandatory minimum of five years to a maximum of 40 years in prison and a $5 million fine, if convicted.

United States v. Martinez and Correa, 13 CR 157

DELILAH MARTINEZ, 33, and her mother, IRIS CORREA, 57, both of Chicago, were charged together in an 11-count indictment for allegedly conspiring to distribute narcotics.

Martinez was also indicted separately for allegedly being a felon-in-possession of a .357 revolver on July 23, 2012. (United States v. Martinez, 13 CR 173)

They each face a man mandatory minimum of five years to a maximum of 40 years in prison and a $5 million fine, if convicted. Martinez alone faces a maximum penalty of 10 years in prison if convicted of being a felon-in-possession of a firearm.

United States v. Payne, 13 CR 174
United States v. Lopez, 13 CR 154
United States v. Suriano, 13 CR 172

Three other defendants were charged separately in single-count indictments for allegedly being felons-in-possession of firearms. They are: MARSHALL PAYNE, 31, of Chicago, for allegedly possessing the two TEC-9s on Nov. 26, 2012; CARLOS LOPEZ, aka “Moses,” 34, of
Elmwood Park, for allegedly possessing a .25 caliber semi-automatic handgun on June 8, 2012; and SALVATORE SURIANO, 25, of Chicago, for allegedly possessing a shotgun on July 31, 2012.

They each face a maximum penalty of 10 years in prison if convicted of being a felon-inpossession of a firearm.

In each case, if convicted, the Court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines. The public is reminded that indictments contain only charges and are not evidence of guilt. The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.

The government is being represented by Assistant United States Attorneys Erika Csicsila and Sarah Streicker.

Chaparro et al Indictment

Valencia Cuevas Indictment

Chaparro and Mendez Complaint

Arguijo Complaint
 

CHICAGO — Self-proclaimed white-supremacist WILLIAM A. WHITE was sentenced today to 42 months in federal prison for soliciting violence to the foreman of a federal jury in Chicago that convicted another white-supremacist, Matthew Hale, in 2004. White stood trial in Chicago in January 2011 and was convicted by a jury of one count of solicitation.

“No doubt the experience was extremely frightening for the juror,” U.S. District Judge Lynn Adelman, of Milwaukee, who imposed the sentence, said in reference to the Hale jury foreman who was the victim of White’s violent solicitation.

Judge Adelman, who was assigned to preside over the case in Federal Court in Chicago, ordered White to serve the sentence consecutively to all but a little more than a month remaining on a federal sentence that White is currently serving for making threats to other victims and intimidating a witness in Virginia. White’s prior sentence totaled 43 months and is scheduled to end in early April.

Initially, Judge Adelman dismissed the 2008 indictment against White but a federal appeals court in Chicago reinstated the solicitation charge in 2010. After White’s trial in January 2011, the judge overturned the jury’s guilty verdict, but the government appealed and White’s conviction was reinstated, leading to today’s sentencing. White’s prior sentence stemmed from a December 2009 trial conviction by a federal jury in Roanoke.

“This defendant has been prolific in making threats to people,” Assistant U.S. Attorney Michael Ferrara told Judge Adelman today in arguing for a consecutive sentence instead of White’s request for time served.

The evidence at White’s Chicago trial showed that after Matthew Hale was tried, convicted and sentenced for soliciting the murder of a federal j udge in Chicago, White solicited his followers to retaliate against the foreman of that jury. White created and maintained a former web site, “Overthrow.com,” which was publicly accessible on the Internet. The web site purported to be affiliated with the “American National Socialist Workers Party” (ANSWP), and claimed the organization was comprised of a “convergence of former [white supremacy] ‘movement’ activists who grew disgusted with the general garbage that ‘the movement’ has attracted and who formed the ANSWP under the Command of Bill White.” Members of the ANSWP were described as “National Socialists... who fight for white working people.”

Between Sept. 11 and Oct. 11, 2008, White used the web site to solicit anyone to injure Juror A on account of Juror A’s role as the foreperson of the jury that convicted Hale, the leader of a white-supremacist organization known as the World Church of the Creator. Hale was sentenced to 40 years in prison for soliciting the murder of a federal judge in Chicago.

As part of White’s solicitation of violence against Juror A, White posted derogatory comments and personal information about Juror A, including Juror A’s home address and phone numbers, on the Overthrow.com web site on Sept. 11, 2008. The solicitation occurred under circumstances strongly corroborating White’s intent that another person use, attempt to use, or threaten the use of force against Juror A.

White was aware that individuals associated with the white-supremacist movement, who were the target audience of his web site, at times engaged in acts of violence, directed at non-whites, Jews, gays and persons perceived by white-supremacists as acting contrary to their interests. Prior to the solicitation against Juror A, White on multiple occasions caused postings to the web site that disclosed what purported to be the home address and/or personal identifying information of individuals who were targets of criticism on the Internet.

The Government was represented by Assistant U.S. Attorneys Michael Ferrara and William Hogan. The sentence was announced by Gary S. Shapiro, United States Attorney for the Northern District of Illinois, and Cory B. Nelson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation.

CHICAGO — Five individuals and two domestic honey processing companies have been charged with federal crimes in connection with a nationwide investigation of illegal importations of honey from China that was mislabeled as coming from other countries to avoid antidumping duties or was adulterated with antibiotics not approved for use in honey. Altogether, the seven defendants allegedly avoided antidumping duties totaling more than $180 million.

None of the charges allege any instances of illness or other public health consequences attributed to consumption of the honey.

The charges represent the second phase of an investigation led by agents of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI). In June 2011, an undercover agent assumed the role of director of procurement at defendant HONEY HOLDING I, LTD., which by then was cooperating with the investigation.

Honey Holding, doing business as Honey Solutions, of Baytown, Tex., and defendant GROEB FARMS, INC., of Onsted, Mich., two of the nation’s largest honey suppliers, have both entered into deferred prosecution agreements with the government, subject to court approval, with Honey Holding agreeing to pay a $1 million fine and Groeb Farms agreeing to the payment of a $2 million fine. Both companies have agreed to implement corporate compliance programs as part of their respective agreements.

The individual defendants include three honey brokers, as well as DOUGLAS A. MURPHY, former director of sales for Honey Holding, and DONALD COUTURE, president of Premium Food Sales, Inc., a broker and distributor of raw and processed honey in Bradford, Ontario.

In December 2001, the Commerce Department determined that Chinese-origin honey was being sold in the United States at less than fair market value, and imposed antidumping duties. The duties were as high as 221 percent of the declared value, and later were assessed against the entered net weight, currently at $2.63 per net kilogram, in addition to a “honey assessment fee” of one cent per pound of all honey. In October 2002, the Food and Drug Administration issued an import alert for honey containing the antibiotic Chloramphenicol, a broad spectrum antibiotic that is used to treat serious infections in humans, but which is not approved for use in honey. Honey containing certain antibiotics is deemed “adulterated” within the meaning of federal food and drug safety laws.

In 2008, federal authorities began investigating allegations involving circumventing antidumping duties through illegal imports, including transshipment and mislabeling, on the “supply side” of the honey industry. The investigation resulted in charges against 14 individuals, including executives of Alfred L. Wolff GmbH and several affiliated companies of the German food conglomerate whose U.S. honey-importing business was based in Chicago, and others for allegedly avoiding approximately $80 million in antidumping duties on Chinese-origin honey. Authorities seized and forfeited more than 3,000 drums of honey that entered the country illegally.

The second phase of the investigation, announced today, involves allegations of illegal buying, processing, and trading of honey that illegally entered the U.S. on the “demand side” of the industry. The investigation is continuing.

“We applaud the efforts of HSI, Customs and Border Protection, and other agencies involved in this complex, long-term investigation to enforce the laws that exist to protect U.S. consumers and the honey market,” said Gary S. Shapiro, United States Attorney for the Northern District of Illinois.

“These businesses intentionally deprived the U.S. government of millions of dollars in unpaid duties,” said ICE Deputy Director Daniel Ragsdale. “Schemes like these result in legitimate importers and the domestic honey-producing industry enduring years of unprofitable operations, with some even being put out of business. We will continue to enforce criminal violations of antidumping laws in all industries and ports of entry so American businesses and foreign producers of goods all play by the same rules.”

Also announcing the charges were Gary Hartwig, Special Agent-in-Charge of HSI Chicago; William A. Ferrara, Acting Director of Field Operations for U.S. Customs and Border Protection (CBP) in Chicago, and Daniel Henson, Special Agent-in-Charge of the Chicago Field Office of the Food and Drug Administration’s Office of Criminal Investigations.

The U.S. Food and Drug Administration operates a toll-free number for consumer inquiries: 1-888-INFO-FDA (463-6332).

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

The public is reminded that indictments and informations 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. If convicted, courts must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines. Three of the five individuals charged have authorized the government to disclose that they intend to plead guilty to the charges against them.

Details of the six separate cases follow:

United States v. Groeb Farms, Inc., 13 CR 137

GROEB FARMS, INC., of Onsted, Mich., described as the largest industrial honey supplier in the United States, was charged with buying 1,578 container loads of Chinese-origin honey between February 2008 and April 2012, knowing that it was illegally imported into the United States to avoid more than $78.8 million in antidumping duties.

The company has entered into a deferred prosecution agreement in which it accepted and acknowledged responsibility for its conduct and that of its current and former executives and employees. The agreement requires the company to continue cooperating fully for two years, to pay a $2 million fine based on its ability to pay, and to dispose any illegally-entered Chinese-origin honey in its possession.

The company admitted in a factual statement that two former executives purchased Chinese-origin honey for processing at its facilities and sold that honey to its domestic retail, foodservice, and industrial customers as mislabeled non-Chinese honey, and at other times, as Chinese honey, all while knowing that it had been illegally imported to avoid antidumping duties and, at times, honey assessment fees. The honey was variously described falsely as sugars and syrups instead of Chinese-origin honey, and as having originated in Indonesia, Malaysia, Mongolia, Thailand, and Vietnam, instead of China.

The two former executives engaged in fraudulent practices despite the company’s own audits and inspections that raised substantial concerns that the honey was illegally imported. They also provided false information to the company’s board of directors, customers, and the public regarding Groeb Farms’ involvement in knowingly purchasing, processing, and selling illegally smuggled Chinese-origin honey.

The corporate compliance program is designed to ensure that Groeb Farms maintains supply chain integrity and conducts reasonable inquiries to safeguard against any illegal activity.

United States v. Douglas A. Murphy and Honey Holding I, 13 CR 138

DOUGLAS A. MURPHY, 56, of Kingwood, Tex., and HONEY HOLDING I, LTD., doing business as Honey Solutions, a large industrial honey supplier based in Baytown, Tex., were charged together with violating the federal Food, Drug, and Cosmetic Act for allegedly purchasing discounted Polish-origin honey containing the prohibited antibiotic Chloramphenicol from Alfred L. Wolff USA in 2006. Murphy was director of sales between 2003 and 2008 and was responsible for the purchase of wholesale quantities of honey, maintaining relationships with suppliers, and the sale of honey to U.S. customers.

DOUGLAS A. MURPHY, 56, of Kingwood, Tex., and HONEY HOLDING I, LTD., doing business as Honey Solutions, a large industrial honey supplier based in Baytown, Tex., were charged together with violating the federal Food, Drug, and Cosmetic Act for allegedly purchasing discounted Polish-origin honey containing the prohibited antibiotic Chloramphenicol from Alfred L. Wolff USA in 2006. Murphy was director of sales between 2003 and 2008 and was responsible for the purchase of wholesale quantities of honey, maintaining relationships with suppliers, and the sale of honey to U.S. customers.

Murphy pleaded guilty today and, under the terms of his cooperation plea agreement, subject to court approval, he will receive a sentence of six months’ imprisonment and a fine of $26,624 when he is sentenced on May 31.

Honey Holding has entered into a deferred prosecution agreement in which it accepted and acknowledged responsibility for its conduct and that of its employees and agents. The agreement requires the company to continue cooperating fully for two years and to pay a $1 million fine based on its ability to pay. The agreement describes Honey Holding’s “extensive cooperation, including its agreement to allow an undercover law enforcement agent to assume the role of [its] director of procurement in an undercover capacity since June 2011.”

The company admitted in a factual statement that Honey Holding defrauded its downstream customers of approximately $26,624 by purchasing, processing, and selling the Polish-origin honey that was adulterated with the antibiotic.

The company also admitted that it purchased Chinese-origin honey from at least seven shell and front companies that were controlled by various Chinese honey producers and manufacturers. These illegal honey imports avoided more than $33.4 million in antidumping duties.

Honey Holding also agreed to establish a corporate compliance program to ensure that it maintains supply chain integrity and takes steps to safeguard against any illegal activity.

United States v. Jun Yang, 13 CR 139

JUN YANG, 39, of Houston, who brokered the sale of honey to Honey Holding among others, and who operated National Honey, Inc., which did business as National Commodities Company in Houston, was charged with brokering the sale of illegal Chinese-origin honey, which was misrepresented as originating in India, into the United States to avoid antidumping duties.

Yang, through his attorney, has authorized the government to disclose that he will plead guilty, admitting responsibility for fraudulently avoiding antidumping duties totaling as much as $37.9 million on Chinese-origin honey that entered the country illegally as Malaysian and Indian honey between 2009 and 2012. Yang has agreed to pay a fine of $250,000 and restitution totaling $2.64 million, in addition to whatever other sentence is imposed by the court. The government has agreed to recommend a sentence of 74 months in prison.

United States v. Urbain Tran, 13 CR 140

URBAIN TRAN, 78, of Culver City, Calif., an agent of Honey Holding who brokered honey transactions for the company since 2006, was charged with two counts of brokering the sale and transportation of illegal Chinese-origin honey, which was misrepresented as originating in Malaysia and Vietnam, into the United States to avoid antidumping duties.

Tran, through his attorney, has authorized the government to disclose that he will plead guilty under the terms of an agreement calling for a fine of $500,000 and restitution totaling $204,403, in addition to whatever other sentence is imposed by the court. Tran faces a maximum of 20 years in prison on each fraudulent sales and transportation count.

United States v. Hung Yi Lin, 13 CR 125

HUNG YI LIN, also known as “Katy Lin,” 42, of Temple City, Calif., was charged in a federal grand jury indictment returned yesterday with one count of transporting 10 container loads of Chinese-origin honey through the Chicago area after it entered the country illegally. Lin owned and operated KBB Express Inc., of South El Monte, Calif., and served as the U.S. agent for at least 12 importers that were controlled by Chinese honey producers and manufacturers. She was initially charged in a criminal complaint and arrested on Feb. 9 in California. She was released on a $100,000 secured bond and will be arraigned on a later date in U.S. District Court in Chicago.

According to the indictment, between 2009 and 2012, Lin schemed to falsify the contents of hundreds of shipping containers of Chinese-origin honey by misrepresenting them as sugars and syrups during the importation process. As a result, the honey, which had an aggregate declared value of nearly $11.5 million when it entered the country, avoided antidumping duties and honey assessments totaling $39.2 million, the charges allege.

The charge carries a maximum penalty of 20 years in prison and a $250,000 fine.

United States v. Donald Couture, 11 CR 781

DONALD COUTURE, 60, of Bradford, Ontario, the president, owner, and operator of Premium Food Sales, Inc., a Canadian broker and distributor of raw and processed honey, was indicted on four counts of violating the Food, Drug, and Cosmetic Act. In May 2009, Couture allegedly caused four container loads of his company’s honey that were rejected by one U.S. customer because of the presence of a prohibited antibiotic, Tetracycline, to be delivered to a second U.S. customer without disclosing that the honey contained the antibiotic. The honey was shipped through the Chicago area when it was transported from one customer to the other.

An arrest warrant was issued in the U.S. for Couture. Couture was initially charged in a sealed complaint in November 2011 and the complaint was unsealed after he was indicted last week. Each count carries a maximum penalty of three years in prison and a $250,000 fine.

Groeb Farms Information

Groeb Farms DPA

Murphy and Honey Holding Information

Honey Holding DPA

Murphy Plea Agreement

Yang Information

Tran Information

Lin Indictment

Couture Indictment

ROCKFORD — A Round Lake Beach, Ill. man was sentenced today in federal court for bank robbery. The defendant, Mohammed Nusrath Ali Khan, 42, was sentenced before U.S. District Judge Frederick J. Kapala to 62 months in federal prison for the robbery of the Fifth Third Bank, 450 South Randall Road, Algonquin, Ill., on May 23, 2012. In addition, the court also ordered Khan to pay restitution of $5,211 to Fifth Third Bank.

Khan pled guilty to the charge on Nov. 20, 2012. According to the written plea agreement, On May 23, 2012, at approximately 4:45 p.m., Khan entered the Fifth Third Bank branch on South Randall Road and approached a bank teller. Khan admitted that when he entered the bank, he had a BB gun concealed in the waistband of his pants under his shirt. Khan handed the Teller a note which stated that this was a robbery and demanded money. The note further stated Khan was armed with a gun and that the Teller was not to make a scene, give him any "dye packs," or activate any alarms or the defendant would shoot her. The Teller gave Khan $5,211 of the bank’s money from her teller drawer. Khan retrieved the note from the teller and then walked out of the bank. Khan has been in federal custody since his arrest by the Skokie Police Department on June 8, 2012.

The sentencing was announced by Gary S. Shapiro, Acting United States Attorney for the Northern District of Illinois; Thomas R. Trautmann, Acting Special Agent-in-Charge of the Chicago Office of Federal Bureau of Investigation; Russell Laine, Chief of the Algonquin Police Department; and Anthony Scarpelli, Chief of the Skokie Police Department.

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

CHICAGO — A former Des Plaines Police Department commander was charged today with making false statements in reports that concealed the suburban department’s failure to meet the requirements of a federally-funded impaired-driving enforcement campaign between 2009 and 2012. The defendant, TIMOTHY VEIT, allegedly inflated by 122 the number of arrests for driving under the influence and provided false information regarding blood-alcohol content levels for the fictitious arrests. As a result, the charges allege that Des Plaines fraudulently obtained $132,893 in federal reimbursement for overtime compensation.

Veit, 55, of Mt. Prospect, was with the Des Plains Police Department for 31 years and was commander of the support services division until he retired last year. He was charged with one count of making false statements in a felony information that was filed today. No date has been set yet for his arraignment in U.S. District Court.

The charges were announced by Gary S. Shapiro, United States Attorney for the Northern District of Illinois, and Michelle McVicker, Special Agent-in-Charge of the Chicago Regional Office of the U.S. Department of Transportation Office of Inspector General.

According to the charges, the U.S. Department of Transportation’s National Highway Traffic Safety Administration funded grants to state and local law enforcement agencies to conduct highway safety programs, including the Sustained Traffic Enforcement Program (STEP). Locally, the grants were administered through the Illinois Department of Transportation. The STEP grants required intensive enforcement of specific traffic laws, coupled with other measures, at specific times of the year, particularly on major holidays when alcohol-involved and unbuckled fatalities were highest.

Veit served as project director for the Des Plaines Police Department’s participation in STEP enforcement campaigns and was responsible for certifying the department’s compliance with its terms and conditions, including the performance objective that grant recipients average at least one DUI arrest for every 10 hours of overtime worked by officers on impaired-driving enforcement.

STEP grant participants paid the program costs from local funds and then, after each enforcement campaign, submitted claims for reimbursement that covered overtime pay for officers, mileage, and equipment. The reimbursement forms required such information as the identity of the project director, the total officer hours worked during each campaign, and the number of specific enforcement actions, such as DUI arrests, along with the blood-alcohol content level for each DUI arrest. Between 2009 and 2012, the Illinois Transportation Department authorized a total of $170,366 in STEP funds for Des Plaines’ impaired-driving enforcement efforts.

After Veit collected and reviewed accurate information regarding the number of citations, including DUI arrests, issued by Des Plaines officers during each enforcement campaign, the 3 charges allege that he then intentionally inflated the number of DUI arrests and provided false information about blood-alcohol content levels in the reimbursement forms. Overall, between 2009 and 2012, Veit reported a total of 152 DUI arrests during STEP campaigns, when he knew that only 30 had actually occurred. The numbers allegedly reported and actually occurring in each year were: 2009 – 27 and 13; 2010 – 47 and 8; 2011 – 62 and 8; and 2012 – 16 and 1.

As a result of the false information that Veit allegedly provided, he caused a loss of $132,893 in federal funds that were reimbursed to the City of Des Plaines for impaired-driving enforcement campaigns.

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

Making false statements carries a maximum penalty of five years in prison and 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 public is reminded that the charges are 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 — The former chairman of a west suburban bank was sentenced today to a year and a day in federal prison for making false statements in regulatory documents regarding his undisclosed personal interest in loans that resulted in the bank losing more than $680,000. The defendant, JAMES A. REGAS, who was chairman of the board of directors of the former Western Springs National Bank & Trust, pleaded guilty last July, admitting that he falsified and concealed material facts that should have been fully disclosed to the bank’s directors and government regulators during 2008 and 2009. The bank’s two branches were closed by federal regulators in April 2011, and its assets were purchased by Heartland Bank and Trust Company.

Regas, 82, of Oak Brook, has paid $681,617 in restitution and he was fined $60,000 by U.S. District Judge Gary Feinerman, who cited Regas’ “sustained course of conduct” in imposing the sentence in Federal Court in Chicago. Regas was ordered to begin serving his sentence in 90 days.

“At a time when the public’s confidence in the banking system has plummeted, Regas concealed material information from the board of directors, placed his personal interests above those of the bank, and caused false statements to be made to regulators charged with ensuring that all national banks are operating in a safe and sound manner,” the government argued in urging a custodial sentence.

In pleading guilty, Regas admitted causing a bank employee to file a false quarterly Report of Condition and Income, also known as a “Call Report,” with the Federal Deposit Insurance Corp., and he signed the report knowing they contained false information regarding the delinquency status of certain loans.

Regas admitted that between 2004 and 2009 he referred business associates to Western Springs for loans, without disclosing to the bank that he had financial partnerships with those individuals and that he intended to benefit personally from the loans. Regas knowingly submitted false conflict-of-interest statements to the bank, in which he denied having any financial relationship with any of the bank’s borrowers.

Among the loans from which Regas benefitted, directly or indirectly, without the knowledge and approval of disinterested bank directors, were: an $803,000 loan to North Park Webster LLC in December 2004, which was used partially to finance the purchase of three properties in Evanston in which Regas and family members had financial interests; a $500,000 loan to one of Regas’ associates in November 2005, from which Regas received approximately half of the proceeds indirectly through a third-party; and a $750,000 loan to a real estate investor in September 2008 to finance the investor’s purchase of an apartment building in Evanston from Regas. That building served as collateral for the bank on another loan that Regas acquired and sold through a nominee company.

These loans enabled Regas to use bank funds for his own benefit without having to apply for loans himself, posting collateral, or signing any promises to repay the bank’s money, while evading federal restrictions on insider loans. Because the loans were not fully repaid, Western Springs suffered a loss of approximately $681,617, which Regas paid as restitution.

The sentence was announced by Gary S. Shapiro, United States Attorney for the Northern District of Illinois, and Cory B. Nelson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation.

The government was represented by Assistant U.S. Attorneys Brian Havey and Andrianna Kastanek.

The prosecution falls under the umbrella of the Financial Fraud Enforcement Task Force, which includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit: StopFraud.gov

ROCKFORD — A Rockford, Ill. man sentenced today in federal court in federal court for mail fraud. JAMES PANTAZELOS, 64, of Rockford, was sentenced to 9½ years in federal prison by U.S. District Judge Philip G. Reinhard for operating a “Ponzi” type scheme in which he defrauded investors out of more than $4 million. The fraud occurred from May 2007 through December 2010.

Pantazelos pled guilty to the charge on September 6, 2012. According to the written plea agreement, Pantazelos was the owner and CEO of an entity known as Destiny’s Partners, Inc. Pantazelos admitted that he and his associates invited individuals to attend conferences to learn about investment opportunities with Destiny’s Partners. These conferences were held at various locations in the United States, including Milwaukee, Dallas, and San Diego. Pantazelos and his associates told the potential investors that Destiny’s Partners placed its investors’ funds in “Private Investment Trading Platforms” which traded bank notes in foreign markets. Pantazelos also claimed that Destiny’s Partners donated a substantial portion of its profits to charitable and humanitarian causes. In addition, Pantazelos promised the investors that their funds would be safe, because the investments would be deposited into and kept in an escrow account. Pantazelos guaranteed the investors would receive their principal investment back, and offered the investors a variety of investment “options,” for periods ranging from 90 to 365 days, promising returns of up to 200%. As Pantazelos admitted in his plea agreement, all of his representations to the investors were false.

Instead of investing the funds as promised, Pantazelos used most of the investors’ funds to pay for his own personal expenses, including purchasing a home for a family member, purchasing expensive automobiles for himself and family members, and attempting to open a restaurant that was to be known as “Jimmy P’s.” Further, Pantazelos used some of the funds received by Destiny’s Partners from newer investors to make Ponzi-type payments to some of the prior investors, deceiving these investors into believing that their investments had been successful. Pantazelos then used these prior investors who received Ponzi-type payments to recruit additional investors for Destiny’s Partners.

Pantazelos admitted that when the investment terms expired he failed to pay the investors the promised rates of return and failed to return their principal to them. In order to conceal his fraud, Pantazelos made false statements to the investors about why he could not pay them, such as that the United States government had frozen funds coming in to Destiny’s Partners from foreign countries. According to the plea agreement, Pantazelos knew these excuses were false and that the reason he could not repay the investors was that he had spent the majority of their funds on his own personal expenses and making Ponzi-type payments to other investors.

In order to further conceal his fraudulent scheme, defendant repeatedly told the investors that funds were about to be released to Destiny's Partners and he would be able to repay the investors in the near future. Pantazelos admitted that during the course of his scheme he received approximately $4,294,930 from the investors, and returned approximately $872,262.50 in Ponzi-type payments to some of these investors.

The Financial Fraud Enforcement Task Force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit: StopFraud.gov.

The sentencing was announced today by Gary S. Shapiro, United States Attorney for the Northern District of Illinois; Thomas P. Brady, Postal Inspector-in-Charge of the Chicago Division of the United States Postal Inspection Service; Steven L. Haugen, Director of the Chicago Region of the U.S. Department of Labor - Employee Benefits Security Administration; and Jesse White, Illinois Secretary of State.

The government was represented by Assistant U.S. Attorney Scott A. Verseman.

ROCKFORD — The former comptroller of the City of Dixon, Ill., RITA A. CRUNDWELL, was sentenced today to 19 years and 7 months, nearly the 20-year maximum, in federal prison for stealing $53.7 million from the city over two decades. Crundwell was taken into custody to immediately begin her sentence, which was imposed by U.S. District Judge Philip G. Reinhard in Federal Court in Rockford.

Crundwell, 60, formerly of Dixon, pleaded guilty on Nov. 14, 2012, to wire fraud, and agreed she also engaged in money laundering, in connection with stealing more than $53 million from the city since 1990 and using the proceeds to finance her quarter horse farming business and life of luxury. It is believed to be the largest theft of public funds in state history.

“This has been a massive stealing of public money – monies entrusted to you as a public guardian of Dixon, Ill.,” Judge Reinhard said in imposing sentence. Crundwell showed “greater passion for the welfare of her horses than the people of Dixon who she represented,” he added.

“While the city was suffering, the defendant was living her dreams,” Assistant U.S. Attorney Joseph Pedersen told the judge during a sentencing hearing that lasted more than two hours today. Crundwell’s “conduct in continuing to take millions of dollars from the City of Dixon to support her lavish lifestyle while she knew that Dixon was in dire financial straits was especially egregious,” the government argued.

Crundwell must serve at least 85 percent of her 235-month sentence and there is no parole in the federal prison system.

Judge Reinhard granted the government’s request for an upward variance in the federal sentencing guidelines. In addition to the financial loss, he found that Crundwell caused a significant non-monetary loss, which involved a loss of public confidence in local government and a significant disruption of government function that struck “at the very heart of Dixon’s abilities to provide essentials for its citizenry.”

The judge ordered agreed restitution to the city of Dixon totaling $53,740,394, and he imposed an agreed forfeiture judgment in the same amount. Following her arrest on April 17, 2012, Crundwell agreed to the liquidation of assets that she had acquired with proceeds from her decades-long fraud scheme. To date, the United States Marshals Service has recovered more than $12.38 million from sales, including online and live auctions, of approximately 400 quarter horses, vehicles, trailers, tack, a luxury motor home, jewelry and personal belongings, while sales of real property in Illinois and Florida remain pending. The net proceeds from the forfeited property – nearly $9.5 million so far – are being held in escrow pending further proceedings on restitution to the City of Dixon. Under federal law, the government may continue to seek additional assets of a defendant and obtain restitution for up to 20 years after a defendant is released from prison.

Gary S. Shapiro, United States Attorney for the Northern District of Illinois, praised the FBI agents who conducted the investigation and the U.S. Marshals Service for its efficient management of the seized assets. “We have used criminal and civil forfeiture proceedings to ensure the recovery of as much money as possible for the City of Dixon and its taxpayers,” he said. “Unfortunately, this case serves as a painful lesson that trust, without verification, can lead to betrayal.”

Cory B. Nelson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation, said: “The law is clear. Those who hold positions of trust must not abuse that trust. We remain committed to holding anyone using an official position for personal gain, as Rita Crundwell did for years, fully accountable for their corrupt actions.”

Dixon, with a population of approximately 15,733, is located about 100 miles southwest of Chicago.

According to her guilty plea and sentencing documents, Crundwell began working for Dixon’s finance department in 1970 while still in high school, and she was appointed comptroller/treasurer in 1983. She began the fraud scheme on Dec. 18, 1990, when she opened a secret bank account, which she alone controlled, in the name of the City of Dixon. The name of the account was “RSCDA – Reserve Fund,” known as the RSCDA account. The initials stood for “Reserve Sewer Capital Development Account,” although no such account actually existed for the city, and Crundwell did not disclose the existence of the secret account. At today’s hearing, the government also presented evidence that Crundwell stole at least $25,000 from a separate Dixon bank account for its Sister City program between 1988 and 1990 before the charged fraud scheme began.

Crundwell began transferring money from city accounts to the RSCDA account in January 1991. Subsequently, she used her position as comptroller to transfer funds from Dixon’s Money Market account and various other city accounts to its Capital Development Fund account. She then repeatedly transferred city funds from the Capital Development Account into the RSCDA account and used the money to pay for her personal and private business expenses, including horse farming operations, personal credit card payments, real estate and vehicles.

In 1991, Crundwell transferred more than $181,000 to the RSCDA account. As the fraud scheme continued, the amounts she stole increased to a high of $5.8 million in 2008, and she took an average of more than $2.5 million a year over the 20-year course of the scheme.

While she was taking these large sums of money, Crundwell participated in budget meetings with city council members and various city department heads. She repeatedly stated that the city’s lack of funds was due to a downturn in the economy and because the State of Illinois was behind in its payments. At the time she made those statements, Crundwell was stealing millions of dollars, causing Dixon to cut its budget, which had a significant impact on city operations.

As part of the fraud scheme, Crundwell created 159 fictitious invoices purported to be from the State of Illinois to show the city’s auditors that the funds she was fraudulently depositing into the RSCDA account were being used for a legitimate purpose. In one instance, on Sept. 8, 2009, Crundwell wrote checks for $150,000 and $200,000 drawn on two of the city’s multiple bank accounts. She deposited both checks into Dixon’s Capital Development Fund account and, later the same day, wrote a check for $350,000 payable to “Treasurer” and deposited that check into the secret RSCDA account. Crundwell created a fictitious invoice to support the payment of $350,000 to the State of Illinois that falsely indicated the payment was for a sewer project in Dixon that the state completed. Later on Sept. 8, 2009, Crundwell wrote a check drawn on the RSCDA account for $225,000, which she deposited into her personal RC Quarter Horses account. She used that money to cover a $225,000 check, dated Sept. 1, 2009, drawn on the RC Quarter Horses account to purchase a quarter horse named Pizzazzy Lady. The purchase check would not have cleared if Crundwell had not deposited $225,000, using city funds, into her horse account on Sept. 8.

To conceal the scheme, Crundwell picked up the city’s mail, including bank statements for the RSCDA account, to prevent other employees from learning about the secret account. When she was away, she asked a relative or other city employees to pick up the mail and separate any of her mail, including the statements for the RSCDA account, from the rest of the city’s mail.

Dixon’s mayor reported Crundwell to law enforcement authorities in the fall of 2011 after another city employee assumed her duties during an extended unpaid vacation. Crundwell, whose annual salary was $80,000 annually at the time, received four weeks of paid vacation and she took an additional 12 weeks of unpaid vacation in 2011. While Crundwell was absent, her replacement requested all of the city’s bank statements. After reviewing them, the employee brought the records of the RSCDA account to the attention of the mayor, who was unaware of the account’s existence.

While serving as Dixon’s comptroller, Crundwell also owned RC Quarter Horses, LLC, and kept her horses at her ranch on Red Brick Road in Dixon and the Meri-J Ranch in Beloit, Wis., as well as with various trainers across the country. In addition to the horses and all of their equipment, among the assets seized or restrained were Crundwell’s two residences and horse farm in Dixon, a home in Englewood, Fla., 80 acres of vacant land in Lee County, a 2009 luxury motor home, more than four dozen trucks, trailers and other motorized farm vehicles, a 2005 Ford Thunderbird convertible, a 1967 Chevrolet Corvette roadster, a pontoon boat, jewelry, and approximately $224,898 in cash from two bank accounts.

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

CHICAGO — Two former top executives of a defunct general contractor, Krahl Construction, were sentenced to prison terms after pleading guilty to engaging in a $10.4 million fraudulent billing and kickback scheme. Five additional employees of Krahl and two individuals who received kickbacks – all of whom also pleaded guilty – are scheduled to be sentenced on various dates beginning today through mid-March in U.S. District Court.

JOHN PADERTA, 54, of Fontana, Wis., and formerly of Burr Ridge, Krahl’s former president who owned at least 80 percent of the company, was sentenced to five years in prison. DOUG HARNER, 48, of Chicago, Krahl’s former executive vice president and part owner, was sentenced to four years in prison. The sentences were imposed last week by U.S. District Judge Matthew Kennelly, who also will sentence the remaining defendants.

Paderta was ordered to pay restitution of $9,987,463 to Digital Realty Trust, of San Francisco, which hired Krahl to renovate portions of an eight-story building located at 350 E. Cermak, Chicago, and $433,059 to Berwind Property Group, a Chicago firm that hired Krahl to develop commercial property in Bolingbrook known as the Tallgrass project. Paderta was ordered to begin serving his sentence on May 7.

Harner was ordered to pay restitution of $9,471,908 to Digital, and $100,000 to Berwind. He was ordered to begin serving his sentence on May 8. Paderta and Harner were each ordered to also forfeit $9 million in fraudulent proceeds to the government.

The sentences were announced today by Gary S. Shapiro, United States Attorney for the Northern District of Illinois, and Cory B. Nelson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation.

The fraud scheme caused actual losses of nearly $10 million to Digital and $433,000 to Berwind, while two former employees of those firms allegedly received kickbacks valued at $625,000 and $119,500, respectively. Krahl, which specialized in interior construction, closed its Chicago office at 322 S. Green St., in January 2010, less than a week after FBI agents executed a federal search warrant. The judge noted that 180 Krahl employees who lost their jobs as a result of the fraud scheme were also victims, as were the company’s customers and sub-contractors whose projects were adversely affected when Krahl closed.

According to court records, between 2005 and 2009, certain defendants fraudulently inflated the cost of renovation projects being performed by Krahl and caused the creation of false documents to support the inflated costs, resulting in over-billing Digital and Berwind a combined total of approximately $15 million. At the same time, the two clients’ employees secretly used their positions to solicit and accept bribe/kickback payments and home improvements in exchange for favorable action to help Krahl obtain contracts with those companies.

The remaining Krahl defendants who admitted roles in the scheme and are awaiting sentencing are: Thaddeus Stepniewski, 52, of Lisle, Krahl’s chief financial officer; Scott Mousel, 49, of New Orleans and formerly of Lisle, a Krahl project manager for two portions of the Cermak project; John Bak, 38, of Ringwood, Ill., also a Krahl project manager on portions of the Cermak project; Heather Ellis, 36, of Midlothian, a Krahl project manager assistant on portions of the Cermak project; and Erin Scott, 37, of Clarendon Hills, also a Krahl project manager assistant on the Cermak project.

Also awaiting sentencing are Scott Solano, 41, of Burr Ridge, a Digital employee who managed the Cermak building, and Timothy Scannell, 49, of Chicago, a Berwind vice president who managed the Tallgrass renovation of a three-story office building and warehouse in Bolingbrook.

Solano solicited and accepted kickbacks from Krahl, including payments totaling approximately $500,000 and renovations on his home totaling approximately $125,000. In exchange for the kickbacks, Solano promised to, and did, take favorable action on behalf of Krahl as requested and as opportunities arose, including helping Krahl obtain contracts from Digital.

Scannell also solicited and accepted kickbacks from Krahl, including payments totaling approximately $100,000, as well as renovations on his home totaling approximately $19,500. In exchange for the kickbacks, Scannell promised to take favorable action on behalf of Krahl as requested and as opportunities arose, including agreeing to help Krahl obtain contracts from Berwind.

The government is being represented by Assistant U.S. Attorneys Stephen Heinze and Jacqueline Stern.

CHICAGO – A suburban immigration consultant is among two defendants who were arrested after being indicted for allegedly conspiring to arrange fraudulent marriages to evade immigration laws and enable foreign nationals to illegally become U.S. legal permanent residents. The pair allegedly arranged at least four fraudulent marriages and attempted to arrange a fifth between foreign national and undercover agent who was posing as a U.S. citizen.

TERESITA ZARRABIAN, 60, of Des Plaines, a naturalized U.S. citizen who owns Zarrabian and Associates, an immigration consulting business in Arlington Heights, and MICHAEL SMITH, 41, of Bellwood, a U.S. citizen, were each charged with conspiracy to commit marriage fraud, marriage fraud and visa fraud, and Zarrabian was also charged with obstruction of justice in a seven-count indictment that was returned on Jan. 31 and unsealed when they were arrested last Thursday.

Zarrabian and Smith pleaded not guilty when they appeared Thursday and Friday, respectively, in U.S. District Court and were released on their own recognizance.

The indictment and arrests were announced today by Gary S. Shapiro, United States Attorney for the Northern District of Illinois, and Gary J. Hartwig, Special Agent-in-Charge of Homeland Security Investigations in Chicago. The charges resulted from an investigation conducted by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) and its partner agencies on the Chicago Document and Benefit Fraud Task Force, including U.S. Citizenship and Immigration Service's Fraud Detection and National Security Unit.

“Marriage fraud is a serious crime that exploits our nation’s immigration system and poses a vulnerability to our security,” Mr. Hartwig said. “HSI will continue its efforts to identify and arrest individuals whose actions allegedly show a complete disregard for U.S. immigration laws and undermine the legitimate immigration process.”

According to the indictment, between 2005 and 2012, Zarrabian assisted foreign-born clients complete the necessary forms to become legal permanent residents on the basis of marriage to a U.S. citizen. Clients paid Zarrabian between $8,000 and $15,000 in exchange for arranging fraudulent marriages to U.S. citizens recruited by Zarrabian and Smith, the charges allege. Foreign nationals who marry U.S. citizens legitimately may become legal permanent residents of the United States but not if the marriage was a sham solely to evade immigration laws.

Zarrabian allegedly paid Smith a portion of the money she received from foreign national clients for Smith’s recruitment of U.S. citizen spouses. In turn, Zarrabian allegedly promised to pay approximately $5,000 to the U.S. citizen spouses for their participation in a sham marriage. Both defendants arranged to have individuals travel to Las Vegas for a fraudulent wedding and also took photos of the “couple” and other steps to create the false impression that the sham marriages were legitimate. Zarrabian also met with the couples and told them what actions they needed to take to make their marriages appear legitimate during marriage interviews with officials, according to the indictment.

The obstruction count alleges that Zarrabian attempted to persuade a U.S. citizen involved in a fraudulent marriage from communicating information to law enforcement.

The government is being represented by Assistant U.S. Attorney Tony Iweagwu.

Conspiracy to commit marriage fraud and each count of marriage fraud carry a maximum penalty of five years in prison and a $250,000 fine. Visa fraud carries a maximum penalty of 10 years in prison and a $250,000 fine, and the obstruction count against Zarrabian carries a maximum 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 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 — The second highest-ranking leader nationwide of the Latin Kings street gang was sentenced to 40 years in federal prison after being convicted at trial in 2011 of racketeering conspiracy (RICO) and related charges involving narcotics trafficking and violence that plagued numerous neighborhoods on the city’s north, south and west sides. The defendant, VICENTE GARCIA, Jr., 35, the “Supreme Regional Inca” of the Almighty Latin King Nation, who oversaw the day-to-day illegal activities of all factions of the gang with some 10,000 members in Illinois alone, has been in federal custody since late 2008 and must serve at least 85 percent of his sentence.

The sentence was imposed Friday by U.S. District Judge Charles Norgle, who also ordered five years of supervised release after Garcia’s prison term ends.

Garcia, also known as “DK” or “Disciple Killer,” together with Augustin Zambrano, the leader or “Corona” of the Latin Kings, and two additional defendants were found guilty in April 2011 of running a criminal enterprise to enrich themselves and others through drug-trafficking and preserving and protecting their power, territory and revenue through acts of murder, attempted murder, assault with a dangerous weapon, extortion, and other acts of violence.

“This sentence holds Garcia accountable for the barbaric enterprise known as the Latin Kings and his role in murder, attempted murder, shootings, beatings, drug trafficking, and other crimes,” said Gary S. Shapiro, United States Attorney for the Northern District of Illinois.

Zambrano, 52, was sentenced to 60 years in prison in January 2012. Two other co-defendants convicted at the same trial also received substantial prison terms. Jose Guzman, a former “Nation Enforcer” in the 26th Street, or Little Village, faction, was sentenced to 35 years in prison, and Alphonso Chavez, the “Inca,” or leader of the gang’s 31st and Drake faction, was sentenced to 30 years in prison. Another co-defendant, Fernando “Ace” King, who preceded Garcia as Supreme Regional Inca and pleaded guilty, was sentenced in October 2011 to 40 years in prison.

Trial evidence included audio and video recordings of three beatings inflicted upon gang members for violating the rules and testimony documenting three murders and 20 shootings in the Little Village area. In addition to RICO conspiracy, Garcia was convicted of assault with a dangerous weapon and using a firearm during a violent crime.

Garcia was among a total of 31 co-defendants who were indicted in September 2008 or charged in a superseding indictment in October 2009. Of those 31 defendants, 24 pleaded guilty, four were convicted at trial, and three remain fugitives. From its origin and base in the west side Little Village community, 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 the evidence in the five-week federal trial.

The sentence was announced by Gary S. Shapiro, United States Attorney for the Northern District of Illinois, together with Cory B. Nelson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation, and Larry Ford, 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, and the Cook County Sheriff’s Police 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 a dozen of the Zambrano co-defendants. In total, more than 80 Latin Kings members and associates have faced state or federal charges since 2006. The convictions result 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.

Garcia and Zambrano were the highest-ranking Latin Kings 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 Tinos Diamantatos.

For further information about the Garcia trial, see the government’s previous press release at: Latin Kings’ Nationwide Leader, Augustin Zambrano, and Three Other High-ranking Gang Members Convicted of RICO Conspiracy and Related Crimes in Federal Trial.

ROCKFORD C A Rockford, Ill. man was sentenced yesterday in federal court on drug conspiracy charges. STEVEN T. McDOWELL, 38, of Rockford, also known as “Ty,” was sentenced by U.S. District Judge Frederick J. Kapala to 315 months in federal prison for his role in a conspiracy to distribute at least one kilogram of heroin, and ordered to serve 5 years of supervised release following his imprisonment. McDowell was convicted on June 14, 2012, after a nine-day jury trial in U.S. District Court in Rockford, of one count of conspiracy to distribute heroin, and six counts of distribution of heroin.

According to the indictment and evidence at trial, McDowell 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. 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 used or possessed firearms for protection during their operations.

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

JEREMY COOPER, 24, 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.

ROBERT PRESLEY, 33, also known as “Munchie,” was convicted 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. Presley is awaiting sentencing.

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

MURRAY STEVE HARRIS, JR., 36, 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, 47, 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 Gary S. Shapiro, United States Attorney for the Northern District of Illinois; Cory B. Nelson, 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 — A correctional guard at the federal Metropolitan Correctional Center in Chicago was indicted on bribery charges for allegedly violating Federal Bureau of Prisons rules regarding inmate possession of contraband. The defendant, TONY HENDERSON, was charged with five counts of bribery in an indictment returned by a federal grand jury. The charges are not related to the Dec. 18, 2012, escape of two inmates, both of whom were later captured, from the federal facility in downtown Chicago.

Henderson, 51, of Portage, Ind., an MCC correctional guard since 1996, was placed on administrative leave last September. No date has been set yet for his arraignment in U.S. District Court.

The charges, returned yesterday, were announced today by Gary S. Shapiro, United States Attorney for the Northern District of Illinois, and John F. Oleskowicz, Special Agent-in-Charge of the Chicago Field Office of the U.S. Department of Justice Office of the Inspector General.

According to the indictment, on five different dates in July and August 2012 – July 12 and 28 and Aug. 4, 18 and 31 – Henderson accepted a bribe to violate BOP rules and regulations regarding inmate possession of contraband.

The Metropolitan Correctional Center, or MCC Chicago, located at 71 West Van Buren St., is an administrative detention facility operated by the Federal Bureau of Prisons.

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

Each count of bribery carries a maximum penalty of 15 years in prison and a $250,000 fine, or a fine of up to three times the value of the bribe. 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 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

HAMMOND, IND. – An East Chicago, Ind., police detective was indicted on federal fraud charges for allegedly engaging in a ghost-payroll scheme for nearly three years while he worked three different part-time security jobs in addition to his full-time law enforcement duties. The defendant, ROBERT APONTE, was charged with six counts of mail fraud and six counts of wire fraud in an indictment returned by a federal grand jury in Hammond.

Aponte, 42, of Chesterton, Ind., is scheduled to be arraigned at 9 a.m. on Monday in U.S. District Court in Hammond. Aponte has been an East Chicago police officer for 19 years, and during that time, he also served approximately eight years as an officer with the High Intensity Drug Trafficking Area (HIDTA) task force in Crown Point, Ind.

The charges, returned yesterday, were announced today by Gary S. Shapiro, United States Attorney for the Northern District of Illinois. The case was investigated by the Federal Bureau of Investigation. The U.S. Attorney’s Office in Chicago is handling the prosecution in the Northern District of Indiana.

According to the indictment, between January 2009 and September 2011, Aponte defrauded his employers by receiving inflated wages from his private security side jobs by submitting time sheets that falsely overstated the hours he had worked. While working full time for the East Chicago Police Department, Aponte also held three part-time jobs as a security officer: at the East Chicago Housing Authority’s West Calumet Housing Complex; at Trillium Properties’ Lakeside Gardens and Harborside Apartments; and at Safety Training and Tracing, controlling and directing traffic at the BP refinery in Whiting, Ind.

Aponte allegedly scheduled shifts at West Calumet that overlapped with his shifts at the two Trillium properties and the BP refinery. He then caused the East Chicago Housing Authority to pay him for security patrols at West Calumet, when, instead, he was actually patrolling at either Lakeside Gardens or Harborside Apartments, or controlling refinery traffic, the charges allege. In addition, Aponte allegedly inflated the hours he worked for the housing authority and Trillium when he actually went off-duty for lengthy periods during his shifts and departed his duty station before his shifts ended.

The government is being represented by Chicago Assistant U.S. Attorney Patrick Otlewski, who is serving as a Special Assistant U.S. Attorney in Northern Indiana.

Each count of mail or wire fraud 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 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 north suburban man was sentenced today to five years in federal prison for amassing a staggering collection of child pornography over a decade. The defendant, DANIEL BERMAN, 49, of Northbrook and formerly of Buffalo Grove, pleaded guilty last July to receiving child pornography, admitting that he had collected more than 100,000 illicit images.

Berman was formerly a police dispatcher in Northbrook and a paramedic in Northfield, however, his public safety employment played no role in the offense. There were no allegations or indications of any sexual contact with minors.

Berman was also fined $85,000 and placed on supervised release for 15 years following his prison term by U.S. District Judge Matthew Kennelly. Berman was ordered to surrender on May 14 and must serve at least 85 percent of his sentence before he is eligible for release. There is no parole in the federal prison system.

“The children depicted in these images experienced immeasurable harm,” Judge Kennelly said, adding “it’s anything other than a victimless crime.”

According to court documents, Berman was charged after U.S. Immigration and Customs Enforcement’s Homeland Security Investigations agents received information from Italian authorities that a website containing child pornography had been accessed by a computer with an internet address located in Buffalo Grove. Agents executed a search warrant at Berman’s Buffalo Grove home in May 2011 and seized computer equipment, including three external hard drives, 14 DVDs containing child pornography and 15 binders containing 611 categorized images of child pornography. The computer hard drives and DVDs were found to contain virtually countless illicit images and videos. Authorities tabulated approximately 100,000 images and videos with known victims identified by the National Center for Missing and Exploited Children.

In addition to the sheer volume of child pornography that Berman accumulated between 2001 and 2011, Assistant U.S. Attorney Andrianna D. Kastanek noted that he maintained his collection in a systematic and organized manner over a lengthy period of time.

In pleading guilty, Berman also admitted that he used peer-to-peer file sharing programs to acquire child pornography from other Internet users, who also had access to images and videos of child pornography stored in shared files on his computer.

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

ROCKFORD C A Rockford, Ill. woman was sentenced today in federal court for bank robbery. LATOYA SHAUNTA BURROWS, 32, of Rockford, was sentenced to 30 months in federal prison by U.S. District Judge Frederick J. Kapala for the robbery of Associated Bank, 612 North Main St., Rockford, Ill., on March 20, 2012.

Burrows pled guilty to the charge on Oct. 29, 2012. According to the written plea agreement, Burrows entered Associated Bank through the west doors at about 10:57 a.m. on March 20, 2012, wearing pink pants and a black t-shirt. Burrows immediately approached the teller counter, by passing the roped off waiting line, and handed the teller a folded piece of paper, which read: APut the money in the bag and nobody will get hurt.@ The teller removed cash from the teller drawer, but told Burrows that he did not have a bag to put the money into. Burrows took the money from the teller=s hand, stuffed the cash into her bra, and walked out of the bank. Shortly after the robbery, Burrows was arrested by the Rockford Police Department in the vicinity of the bank. She has been held in federal custody since her arrest.

The sentencing was announced by Gary S. Shapiro, United States Attorney for the Northern District of Illinois; Cory B. Nelson, Special Agent in Charge of the Chicago Office of Federal Bureau of Investigation; and Chet Epperson, Chief of the Rockford Police Department.

The government was represented by Assistant U.S. Attorney Scott A. Verseman.

CHICAGO — A suburban Chicago lawyer who hosts a national radio talk show was indicted on federal charges for allegedly engaging in two mortgage fraud schemes that defrauded lenders of a total of approximately $9.7 million. The defendant, WARREN BALLENTINE, allegedly schemed with others to obtain more than two dozen fraudulent mortgage loans and represented buyers at multiple closings, knowing that they were fraudulently qualified for loans to purchase homes in Chicago and various southern suburbs.

Ballentine, 41, of Durham, N. Car., and formerly of Country Club Hills, owns the Law Office of Warren Ballentine, LLC, in Country Club Hills. He was charged with two counts of bank fraud, two counts of making false statements to lenders, and one count each of mail fraud and wire fraud in a six-count indictment returned last Thursday by a federal grand jury. The indictment also seeks forfeiture of approximately $9,775,000 in alleged fraud proceeds.

Ballentine is scheduled to be arraigned at 9:30 a.m. on Feb. 5 before U.S. District Judge Matthew Kennelly in Federal Court in Chicago.

The indictment was announced today by Gary S. Shapiro, United States Attorney for the Northern District of Illinois; Cory B. Nelson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation; and Thomas P. Brady, Inspector-in-Charge of the U.S. Postal Inspection Service in Chicago.

According to the indictment, between December 2004 and February 2005, Ballentine schemed with others to fraudulently cause various lenders to make at least eight loans totaling approximately $3.6 million by making false statements in loan documents, including applications, HUD-1 settlement statements, and occupancy statements concerning the buyers’ intention to occupy the homes they purchased as a primary residence. Ballentine then represented buyers recruited by others at real estate closings, knowing that they had signed and submitted false documents and had been fraudulently qualified to purchase the properties in Chicago, Monee, Woodridge, and Mokena.

Between February 2005 and May 2006, Ballentine allegedly engaged in a similar, separate scheme with others to fraudulently cause various lenders to make at least 20 loans totaling approximately $6.1 million by making false statements in mortgage documents, including the buyers’ intention to occupy the homes as a primary residence. Ballentine also represented these buyers at closings, knowing that they had been fraudulently qualified for the loans based on false documents, including some that Ballentine advised them to sign at closings. These homes were scattered throughout Chicago and other suburbs, including Country Club Hills, Richton Park, and Markham.

Each count of the indictment carries a maximum penalty of 30 years in prison and a $1 million fine or, as an alternative, the Court may impose a fine of twice the gross gain or twice the loss, 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 government is being represented by Assistant U.S. Attorney Jason Yonan.

The Financial Fraud Enforcement Task Force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit: www.StopFraud.gov.

Indictment

CHICAGO — A former Chicago police officer was charged today with attempting to extort a cash bribe to steer business to a tow truck owner and also with selling three firearms to the same towing operator, who is also a convicted felon. The defendant, ALI HALEEM, was charged as part of Operation Tow Scam, a federal investigation of past bribery and extortion involving police officers and towing operators in several Chicago police districts.

Haleem is the 11th Chicago police officer to be charged in the corruption probe since 2008. So far, seven officers and three civilians, including two tow truck drivers, have been convicted. Charges are pending against three other officers who were charged last fall.

Haleem, 45, of Chicago, a police officer from 1994 to 2012, was assigned to the 8th District, also known as Chicago Lawn. He was assigned to desk duty after being confronted by law enforcement authorities in 2008 until he resigned last September. He was charged with one count of attempted extortion and two counts of selling firearms to a convicted felon in a criminal information that was filed today. No date has been set yet for his arraignment in U.S. District Court.

The charges were announced by Gary S. Shapiro, United States Attorney for the Northern District of Illinois; Cory B. Nelson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation; and Garry McCarthy, Superintendent of the Chicago Police Department.

According to the charges, between March 13 and 20, 2008, Haleem attempted to extort Individual A, who owned a towing business, and who unbeknownst to Haleem was cooperating with law enforcement at the time.

On Dec. 11, 2007, Haleem allegedly sold a .32 caliber semi-automatic pistol and a .25 caliber semi-automatic pistol to Individual A, knowing that Individual A was a convicted felon. On March 13, 2008, Haleem allegedly sold a 9 mm semi-automatic pistol to Individual A, knowing that Individual A was a convicted felon. The indictment seeks forfeiture of the three firearms.

The government is being represented by Assistant U.S. Attorney Michael Donovan.

Attempted extortion carries a maximum penalty of 20 years in prison, while each count of delivering a firearm to a convicted felon carries a maximum of 10 years in prison, and all three 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 public is reminded that the charges are 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 disbarred Chicago lawyer was indicted in a new federal case for allegedly failing to surrender to begin serving a federal fraud sentence in 2006. The defendant, STEVEN J. DELLA ROSE, surrendered to authorities in Puerto Vallarta, Mexico, on Dec. 11, 2012, more than six years after he was ordered to self-surrender to begin serving a 41-month sentence for defrauding a client of $64,000.

Della Rose, 61, formerly of Chicago, was charged with failing to surrender to begin serving a sentence in a single-count indictment returned yesterday by a federal grand jury. The indictment was announced today by Gary S. Shapiro, Acting United States Attorney for the Northern District of Illinois, and Darryl McPherson, United States Marshal for the Northern District of Illinois.

Della Rose was returned to the U.S. and immediately began serving his original sentence once he was in U.S. custody last month. No date has been set yet for his arraignment on the new charge in U.S. District Court.

According to the indictment, Della Rose was released on his own recognizance after he was charged with mail fraud in 2002. After a trial in March 2003, a jury found him guilty of defrauding a client of $64,000 in a worker’s compensation case. On Dec. 5, 2003, a judge sentenced him to serve 41 months in prison. Service of the sentence was delayed by two appeals, and on June 22, 2006, Della Rose was ordered to surrender to a designated U.S. Bureau of Prisons facility on Aug. 7, 2006. He allegedly failed to self-surrender at a prison on that date and he remained a fugitive until he turned himself in to authorities in Mexico last month.

The new charge 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, and any new sentence must be served consecutively to the original sentence.

The Government is being represented in court by Assistant U.S. Attorney Clifford Histed.

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 — DAVID COLEMAN HEADLEY, a U.S. citizen partly of Pakistani descent, was sentenced today to 35 years in prison for a dozen federal terrorism crimes relating to his role in planning the November 2008 terrorist attacks in Mumbai, India and a subsequent proposed attack on a newspaper in Denmark. Headley pleaded guilty in March 2010 to all 12 counts that were brought against him following his arrest in October 2009 as he was about to leave the country. Immediately after his arrest, Headley began cooperating with authorities.

Headley, 52, was ordered to serve 35 years, followed by five years of supervised release by U.S. District Judge Harry Leinenweber. There is no federal parole and defendants must serve at least 85 percent of their sentence.

“Mr. Headley is a terrorist,” Judge Leinenweber said in imposing the sentence.

“There is little question that life imprisonment would be an appropriate punishment for Headley’s incredibly serious crimes but for the significant value provided by his immediate and extensive cooperation,” the government argued in seeking a sentence of 30 to 35 years.

In pleading guilty and later testifying for the government at the trial of a co-defendant, Headley admitted that he attended training camps in Pakistan operated by Lashkar e Tayyiba, a terrorist organization operating in that country, on five separate occasions between 2002 and 2005. In late 2005, Headley received instructions from three members of Lashkar to travel to India to conduct surveillance, which he did five times leading up to the Mumbai attacks in 2008 that killed approximately 164 people, including six Americans, and wounded hundreds more. Headley’s plea agreement in March 2010 stated that he “has provided substantial assistance to the criminal investigation, and also has provided information of significant intelligence value.”

In consideration of Headley’s past cooperation and anticipated future cooperation, which would include debriefings for the purpose of gathering intelligence and national security information, as well as testifying in any foreign judicial proceedings held in the United States by way of deposition, video-conferencing or letters rogatory, the Attorney General of the United States authorized the U.S. Attorney’s Office not to seek the death penalty.

“Today’s sentence is an important milestone in our continuing efforts to hold accountable those responsible for the Mumbai terrorist attacks and to achieve justice for the victims. Our investigations into Mumbai attacks and the Denmark terror plot are ongoing and active. I thank the many agents, analysts and prosecutors responsible for this investigation and prosecution,” said Lisa Monaco, Assistant Attorney General for National Security.

Headley was convicted of conspiracy to bomb public places in India; conspiracy to murder and maim persons in India; six counts of aiding and abetting the murder of U.S. citizens in India; conspiracy to provide material support to terrorism in India; conspiracy to murder and maim persons in Denmark; conspiracy to provide material support to terrorism in Denmark; and conspiracy to provide material support to Lashkar.

According to Headley’s guilty plea and testimony, he attended the following training camps operated by Lashkar: a three-week course starting in February 2002 that provided indoctrination on the merits of waging jihad; a three-week course starting in August 2002 that provided training in the use of weapons and grenades; a three-month course starting in April 2003 that taught close combat tactics, the use of weapons and grenades, and survival skills; a three-week course starting in August 2003 that taught counter-surveillance skills; and a three-month course starting in December 2003 that provided combat and tactical training.

Mumbai Terror Attacks

After receiving instructions in late 2005 to conduct surveillance in India, Headley changed his given name from Daood Gilani in February 2006 in Philadelphia to facilitate his activities on behalf of Lashkar by portraying himself in India as an American who was neither Muslim nor Pakistani. In the early summer of 2006, Headley and two Lashkar members discussed opening an immigration office in Mumbai as a cover for his surveillance activities.

Headley eventually made five extended trips to Mumbai — in September 2006, February and September 2007, and April and July 2008 — each time making videotapes of various potential targets, including those attacked in November 2008. Before each trip, Lashkar members and associates instructed Headley regarding specific locations where he was to conduct surveillance. After each trip, Headley traveled to Pakistan to meet with Lashkar members and associates, report on the results of his surveillance, and provide the surveillance videos.

Before the April 2008 surveillance trip, Headley and co-conspirators in Pakistan discussed potential landing sites in Mumbai for a team of attackers who would arrive by sea. Headley returned to Mumbai with a global positioning system device and took boat trips around the Mumbai harbor and entered various locations into the device.

Between Nov. 26 and 28, 2008, 10 attackers trained by Lashkar carried out multiple assaults with firearms, grenades and improvised explosive devices against multiple targets in Mumbai, including the Taj Mahal and Oberoi hotels, the Leopold Café, the Chabad House and the Chhatrapati Shivaji Terminus train station, each of which Headley had scouted in advance, killing approximately 164 victims and wounding hundreds more.

The six Americans killed during the siege were Ben Zion Chroman, Gavriel Holtzberg, Sandeep Jeswani, Alan Scherr, his daughter Naomi Scherr, and Aryeh Leibish Teitelbaum.

In March 2009, Headley made a sixth trip to India to conduct additional surveillance, including of the National Defense College in Delhi, and of Chabad Houses in several cities.

Denmark Terror Plot

Regarding the Denmark terror plot, Headley admitted and testified that in early November 2008, he was instructed by a Lashkar member in Pakistan, to conduct surveillance of the Copenhagen and Aarhus offices of the Danish newspaper Morgenavisen Jyllands-Posten in preparation for an attack in retaliation for the newspaper’s publication of cartoons depicting the Prophet Mohammed. After this meeting, Headley informed co-defendant Abdur Rehman Hashim Syed (Abdur Rehman), also known as “Pasha,” of his assignment. Abdur Rehman told Headley words to the effect that if Lashkar did not go through with the attack, Abdur Rehman knew someone who would. Although not identified by name at the time, Headley later learned this individual was co-defendant Ilyas Kashmiri. Abdur Rehman previously told Headley that he was working with Kashmiri and that Kashmiri was in direct contact with a senior leader of Al Qaeda.

While in Chicago in late December 2008 and early January 2009, Headley exchanged emails with Abdur Rehman to continue planning for the attack and to coordinate his travel to Denmark to conduct surveillance. In January 2009, at Lashkar’s direction, Headley traveled from Chicago to Copenhagen to conduct surveillance of the Jyllands-Posten newspaper offices in Copenhagen and Aarhus and scouted and videotaped the surrounding areas.

In late January 2009, Headley met separately with Abdur Rehman and a Lashkar member in Pakistan, discussed the planned attack on the newspaper, and provided them with videos of his surveillance. About the same time, Abdur Rehman provided Headley a video produced by the media wing of Al Qaeda in approximately August 2008, which claimed credit for the June 2008 attack on the Danish embassy in Islamabad, Pakistan, and called for further attacks against Danish interests to avenge the publication of the offending cartoons.

In February 2009, Headley and Abdur Rehman met with Kashmiri in the Waziristan region of Pakistan, where they discussed the video surveillance and ways to carry out the attack. Kashmiri told Headley that he could provide manpower for the operation and that Lashkar’s participation was not necessary. In March 2009, a Lashkar member advised Headley that Lashkar put the newspaper attack on hold because of pressure resulting from the Mumbai attacks. In May 2009, Headley and Abdur Rehman again met with Kashmiri in Waziristan. Kashmiri told Headley to meet with a European contact who could provide Headley with money, weapons and manpower for the Denmark attack, and relate Kashmiri’s instructions that this should be a suicide attack and the attackers should prepare martyrdom videos beforehand. Kashmiri also stated that the attackers should behead captives and throw their heads on to the street in Copenhagen to heighten the response from Danish authorities, and added that the “elders,” whom Headley understood to be Al Qaeda leadership, wanted the attack to happen as soon as possible.

In late July and early August 2009, Headley traveled from Chicago to various places in Europe, and met with and attempted to obtain assistance from Kashmiri’s contacts and, while in Copenhagen, he made approximately 13 additional surveillance videos. When he returned to the United States on Aug. 5, 2009, Headley falsely told a U.S. Customs and Border Protection inspector in Atlanta that he had visited Europe for business reasons. On Oct. 3, 2009, Headley was arrested at O’Hare International Airport in Chicago, intending ultimately to travel to Pakistan to deliver the approximately 13 surveillance videos to Abdur Rehman and Kashmiri.

One of Headley’s co-defendants, Tahawwur Rana, 52, of Chicago, was sentenced last week to 14 years in prison for conspiracy to provide material support to the Denmark terror plot and providing material support to Lashkar. Headley testified for the government at Rana’s trial in June 2011.

The government is being represented by Assistant U.S. Attorneys Daniel Collins and Sarah E. Streicker, with assistance from the Counterterrorism Section of the Justice Department’s National Security Division. Federal prosecutors in Los Angeles have worked on a broader investigation of the Mumbai attacks. The investigation was conducted by the Chicago Joint Terrorism Task Force, led by the Chicago Office of the Federal Bureau of Investigation, with assistance from FBI offices in Los Angeles, Philadelphia, and Washington, D.C., as well as both U.S. Customs and Border Protection and the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI).

CHICAGO — Three Chicago men were indicted on federal robbery conspiracy and other charges relating to series of a dozen armed hold-ups of retail stores and businesses last year in Chicago. In all, tens of thousands of dollars were taken in 12 robberies on the city’s northwest side between January and October 2012.

The defendants, ROBERT L. BERRIOS, 45; JULIO RODRIGUEZ, 31; and DAVID REVIS, 32, all of Chicago, were charged in a 19-count indictment that was returned yesterday by a federal grand jury. The charges were announced today by Gary S. Shapiro, Acting United States Attorney for the Northern District of Illinois, and Cory B. Nelson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation. The Chicago Police Department assisted in the investigation.

The defendants, ROBERT L. BERRIOS, 45; JULIO RODRIGUEZ, 31; and DAVID REVIS, 32, all of Chicago, were charged in a 19-count indictment that was returned yesterday by a federal grand jury. The charges were announced today by Gary S. Shapiro, Acting United States Attorney for the Northern District of Illinois, and Cory B. Nelson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation. The Chicago Police Department assisted in the investigation.

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

Berrios, also known as “Chazzo,” and Revis, aka “Red,” were arrested together on Nov. 6, 2012, as they were about to rob a currency exchange, according to court documents. Rodriguez, aka “Jelly,” was arrested on Dec. 17, 2012. All three were ordered detained in federal custody without bond.

As part of the conspiracy, the defendants allegedly identified commercial establishments as targets, obtained intelligence on the businesses before striking, and brandished firearms during the robberies. They allegedly agreed to, and did, physically restrain some employees of the victim businesses with zip ties, and concealed their identity by wearing masks and gloves.

The indictment seeks forfeiture of a .22 caliber semi-automatic handgun and 94 rounds of .22 caliber long rifle ammunition that were seized.

The indictment alleges the following robberies in which Berrios was charged alone or together with one of the co-defendants, as noted:

Jan 23, 2012 — Walgreens, 5140 W. Diversey; July 1, 2012 — Walgreens, 5935 W. Addison; July 28, 2012 — a currency exchange located at 2753 N. Ashland; Aug. 15, 2012 — a currency exchange located at 2814 N. Milwaukee; Berrios and Revis; Sept. 2, 2012 — a cellular telephone store located at 5355 W. Diversey; Sept. 19, 2012 — a cellular telephone store located at 1552 W. Chicago; Berriois and Rodriguez; Sept. 28, 2012 — a cellular telephone store located at 1958 W. Irving Park; Oct. 2, 2012 — a cellular telephone store located at 4000 W. Fullerton; Berrios and Revis; Oct. 13, 2012 — a cellular telephone store located at 3951 N. Kimball; Berrios and Rodriguez; Oct. 16, 2012 — a cellular telephone store located at 3200 W. Armitage; Berrios and Rodriguez; Oct. 22, 2012 — a cellular telephone store located at 3935 W. Belmont; Berrios and Rodriguez; and

Oct. 27, 2012 — a cellular telephone store located at 5355 W. Diversey.

The robbery conspiracy count and each count of intestate robbery carry a maximum sentence of 20 years in prison. The felon-in-possession of a firearm or ammunition counts carry a maximum sentence of 10 years in prison, and brandishing a firearm during a violent crime carries a mandatory consecutive term of 7 years and a maximum of life in prison, and each count carries a maximum fine of $250,000. If convicted, the Court must impose a reasonable sentence under federal sentencing statutes and the advisory United States Sentencing Guidelines.

The Government is being represented in court by Assistant U.S. Attorney Angel Krull.

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

CHICAGO — Thirty-two Chicago area defendants have been charged separately with fraudulently obtaining thousands of dollars each in unemployment benefits from the Illinois Department of Employment Security (IDES), federal law enforcement officials announced today. In each case, the defendants allegedly lied about their eligibility for benefits by either falsely claiming to be unemployed or underreporting their income, and fraudulently obtained benefits ranging from $19,399 to $38,798. Altogether, the charges allege that IDES was defrauded out of nearly $874,000.

Twenty-seven of the defendants were charged with felony theft of federal funds, and five were charged with misdemeanor theft counts in 32 separate criminal informations or grand jury indictments filed as recently as yesterday in U.S. District Court in Chicago. According to the charges, each defendant applied for unemployment insurance benefits, falsely certified their continuing eligibility to receive payments, and fraudulently collected benefits to which they were not entitled while gainfully employed in various occupations.

In Illinois, unemployment insurance benefits typically are funded primarily by contributions from employers, with IDES’ administrative costs funded primarily by the federal government. During periods of high unemployment, however, the U.S. Treasury also funds unemployment payments.

The charges were announced by Gary S. Shapiro, Acting United States Attorney for the Northern District of Illinois; James Vanderberg, Special Agent-in-Charge of the Chicago Regional Office of the U.S. Department of Labor Office of Inspector General; and Thomas P. Brady, Inspector-in-Charge of the U.S. Postal Inspection Service in Chicago. The U.S. Postal Service Office of Inspector General assisted with the investigation of one defendant, a mail carrier. The federal agencies conducted the criminal investigations following referrals of suspected fraud from IDES.

“The unemployment insurance program is intended to provide financial assistance to workers who are unemployed due to no fault of their own. We will continue to work with our law enforcement partners to investigate those who allegedly engage in fraudulent schemes against this and other Department of Labor programs,” Mr. Vanderberg said.

“Unemployment insurance benefits provide assistance to families during difficult times. When a person is not entitled to use these benefits, and they mislead and misuse the system, they jeopardize the integrity of a program meant for honest and deserving families. There are consequences for committing unemployment insurance fraud and the U.S. Postal Inspection Service takes this alleged criminal activity very seriously,” Mr. Brady said.

In each case, restitution is mandatory and the felony theft counts carry a maximum penalty of 10 years in prison and a $250,000 fine, while the misdemeanor theft counts carry a maximum penalty of a year in prison and a $100,000 fine. The indictments and informations contain only charges and are not evidence of guilt. The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.

The defendants and alleged fraud amount in each case follow:

KANYA BOOSE, 37, of Chicago, $32,567; (AUSA Philip Fluhr, Jr.); ANTOINETTE BURRELL, 63, of Chicago, $29,652 (AUSA Naana Frimpong); ANTHONY COLLINS, 56, of Chicago, $25,280; (AUSA Raj Laud); ERIC CRIBBS, 40, of Matteson, $20,423; (AUSA Katherine Sawyer); JEREMIAH DOBINE, 32, of Chicago, $25,600 (AUSA Matthew Hiller); MARIA GUZMAN, 48, of Chicago, $38,271 (AUSA Ryan Fayhee); MANUSYA HEINRICHS, 44, of Buffalo Grove, $27,950, misdemeanor (AUSA Paul Tzur); LASANDRA HERRON, 45, of Chicago, $20,200 (AUSA Boling Haxall); NICOLE HOLCOMB, 30, of Chicago, $27,168 (AUSA Sawyer); NICOLE HOWELL, 40, of Park Forest, $25,985 (AUSA Sawyer); ALLEN JONES, 45, of Kankakee, $21,242. Jones was charged with, and pleaded guilty to, a misdemeanor, and is awaiting sentencing on March 26. (AUSA Nicole Kim); THEARS JUDKINS IV, 29, of Chicago, $32,831 (AUSA Frimpong); JOSEPH J. KUBAT III, 51, of Westmont, $28,222, misdemeanor (AUSA Kate Zell); OLYMPIA LOVE, 31, of Flossmoor, $26,562 (AUSA Hiller); JAMIE MASTERSON, 26, of Carpentersville, $27,049 (AUSA Tzur); CHRISTOPHER McDONALD, 34, of Chicago, $20,740 (AUSA Laud); DARLENE McGEE, 41, of Joliet, $23,560 (AUSA Haxall); JOSEPH MORGANFIELD, 48, of Bolingbrook, $26,054 (AUSA Zell); MANUEL NIEVES, 35, of LaGrange, $25,216 (AUSA Haxall); THEAROS NOU, 40, of Chicago, $27,170 (AUSA Christopher Stetler); TONY ROBINSON, 50, of Chicago, $25,935 (AUSA Hiller); CAREY SILLS, 64, of Chicago, $36,615 (AUSA Fayhee); COURTNEY SMITH, 41, of Lockport, $31,055 (AUSA Fluhr); CURTIS SMITH, 58, of Chicago, $32,494 (AUSA Laud); STEVEN STEINBERG, 61, of Buffalo Grove, $19,680. Steinberg was charged with, and pleaded guilty to, a misdemeanor. He paid full restitution and was sentenced to a year’s probation. (AUSA Stetler); LAUREL STEVENS, 46, of Chicago, $23,392 (AUSA Stetler); SHAWN SUTTON, 46, of Chicago, $24,257 (AUSA Fluhr); MICHAEL THORNTON, 47, of Chicago, $35,697 (AUSA Frimpong); GREGORY THRASHER, 36, of Calumet, $25,240 (AUSA Sawyer); MARK VANDENBARK, 38, of Naperville, $19,399, misdemeanor (AUSA Zell); NELDA WARD, 41, of Chicago, $38,798 (AUSA Bill Thomas); and

LORETTA WASHINGTON, 35, of Alsip, $29,685 (AUSA Fayhee).

ROCKFORD — The former Energy Director for the City of Rockford was indicted today on federal charges of public corruption. MARK E. BIXBY, 57, of Rockton, Ill. was charged with two counts of mail fraud, two counts of bribery, two counts of extortion, and one count of making false statements to the Federal Bureau of Investigation.

According to the indictment, Bixby, as the Energy Director, managed the City of Rockford’s Energy Division. The Energy Division operated the Illinois Home Weatherization Assistance Program in Winnebago and Boone counties. The purpose of the weatherization program was to help low-income residents save energy and money by providing services that included repairing and replacing heating systems, windows and doors. The indictment alleges that from at least December 2006 to March 2010, Bixby defrauded a heating contractor and a window contractor, both of whom did work under the weatherization program, out of at least $53,101.33 in funds and benefits. The indictment also charges that Bixby accepted bribes from the contractors and extorted the heating contractor out of $2,980.

According to the indictment, the funds and benefits that Bixby obtained from the two contractors via fraud, extortion, and bribes, included the following: (1) a new 2007 two-door, red convertible Pontiac Solstice; (2) a total of $18,440 in donations to “charities,” which were deposited into bank accounts controlled by Bixby and a family member, and used to pay their personal expenses; (3) $2,980 for the “sale” of cemetery plots by Bixby to the heating contractor, for which Bixby never turned over the titles or deeds to the heating contractor; and (4) a $2,000 “loan” from the window contractor, which Bixby never repaid.

Each count of mail fraud, bribery, and extortion carries a maximum penalty of 20 years in prison. The false statements count carries a maximum penalty of 5 years in prison. All of the counts carry a maximum fine of $250,000 fine, or an alternate fine totaling twice the loss or twice the gain derived from the offense, whichever is greater, and restitution. If convicted, the Court must impose a reasonable sentence under the advisory United States Sentencing Guidelines.

Bixby is scheduled to be arraigned on the indictment on Monday, January 28, 2013, at 11:15 a.m., at the federal courthouse in Rockford. The arraignment will be conducted by U.S. Magistrate Judge P. Michael Mahoney.

The indictment was announced by Gary S. Shapiro, Acting United States Attorney for the Northern District of Illinois; and Cory B. Nelson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation. The Winnebago County State’s Attorney’s Office and the Rockford Police Department assisted in the investigation.

The government is represented by Assistant U.S. Attorney Scott A. Verseman.

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 Joliet man is facing an agreed maximum 10-year prison sentence after pleading guilty today to a federal civil rights crime for setting fire to the home of an African- American family on his street in 2007. The defendant, BRIAN JAMES MOUDRY, admitted that at approximately 4 a.m. on June 17, 2007, he carried a can containing gasoline to the home, splashed the gasoline on the residence and ignited it. No one was injured, although the home was occupied by eight children and an adult at the time of the fire.

Moudry, 36, formerly of the 300 block of South Reed Street, Joliet, pleaded guilty to using fire to interfere with the housing rights on the basis of race under the terms of an agreement that, if accepted, provide he will be sentenced to the maximum of 10 years on that count. U.S. District Judge Robert Gettleman scheduled sentencing for 10 a.m. on April 26.

Moudry has remained in federal custody without bond since he was arrested on May 30, 2012.

“One of our most important responsibilities is to protect members of all racial and ethnic groups from intimidation and violence,” said Gary S. Shapiro, Acting United States Attorney for 2 the Northern District of Illinois, who announced the guilty plea with Cory B. Nelson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation.

According to the plea agreement, Moudry was upset that an African-American family rented a house at 318 South Reed St., on the same block as his house. He admitted that he set the fire because African-Americans were occupying the home, and that he intended to interfere with their continued ability to rent the residence and to intimidate the owner from continuing to rent to African-Americans.

The government is being represented by Assistant U.S. Attorneys Nancy DePodesta and Steven Dollear.

Plea Agreement

CHICAGO — A former Chicago man was taken into custody after he was sentenced today to 12 years in federal prison for an investment and tax fraud scheme in which he swindled 57 investors, some of whom he had purported to befriend, of just under $8 million and failed to pay nearly $1.5 million in federal income taxes. The defendant, RANDY M. CHO, falsely caused investors to believe they were buying discounted shares of stock in well-known companies. He then misused a significant portion of the $9.6 million he raised from investors for his own personal benefit, while using approximately $1.68 million he fraudulently obtained from new investors to make Ponzi-type payments to previous investors. Cho pleaded guilty to wire fraud and tax fraud last August, resolving an indictment that was returned in December 2010 in U.S. District Court.

Cho, 41, of Seattle, and formerly of Chicago and Newton, Mass., was ordered to pay $7,995,707 in restitution to investors, and $1,496,339 to the Internal Revenue Service by U.S. District Judge James Zagel, who ordered Cho to begin serving his sentence immediately. Cho was also placed on three years of supervised release following his sentence.

In imposing sentence, Judge Zagel noted the unlikelihood that victims will receive any restitution. The judge heard from two investors, and received letters from numerous others, who said that Cho’s crimes had irreparably damaged their lives and retirement security. Cho used the misappropriated funds for himself and his business by making payments for his home and furnishings, automobiles, and jewelry, among other things. He never invested in any shares of stock on behalf of any of his investors.

The sentence was announced by Gary S. Shapiro, Acting United States Attorney for the Northern District of Illinois; Cory B. Nelson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation; and Thomas Jankowski, Acting Special Agent-in-Charge of the Internal Revenue Service Criminal Investigation Division in Chicago.

“There was no good reason for this fraud, and the defendant, who was skilled in the world of finances, could have gotten a legitimate job,” the government argued at sentencing. “The defendant caused enormous pain and suffering to many of the victims. Cho took life savings, retirement funds, business funds, and other money that victims could not afford to lose.”

Cho held himself out as a self-employed securities trader, who, from approximately 2001 to 2009, falsely represented that he would purchase at least $9.6 million in shares of stock in well-known companies for U.S. and foreign investors, including some in the Chicago area. Cho claimed to have access to sell stock in these companies, which he offered as part of a “friends and family” investment pool, often in anticipation of purported initial public offerings. Cho misrepresented that he had a special relationship with Goldman Sachs and was able to purchase discounted shares, and further misrepresented the timing or existence of public offerings, the potential profitability and safety of investments, and the use of the funds obtained from investors.

At various times, Cho falsely told investors that he could purchase specially-discounted shares of companies, including AOL/Time Warner, Inc., Google, Inc., Rosetta Stone, Inc., and Facebook, Inc., prior to their initial public offerings. For example, Cho falsely lulled an investor into believing that the victim had made a $1 million profit by investing in shares of Google stock when no such investment or profit existed.

During the investment fraud scheme, Cho failed to report approximately $4.8 million of additional income between 2004 and 2007, resulting in an underpayment of just under $1.5 million in federal income taxes.

The government was represented by Assistant U.S. Attorney Jacqueline Stern. The U.S. Securities and Exchange Commission, which brought a civil enforcement lawsuit against Cho, assisted in the investigation.

The Financial Fraud Enforcement Task Force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit: www.StopFraud.gov.

CHICAGO — A Pakistani native who operated a Chicago-based immigration business was sentenced today to 14 years in prison for conspiracy to provide material support to a terrorist plot in Denmark and providing material support to Lashkar e Tayyiba, a terrorist organization operating in Pakistan that was responsible for the November 2008 attacks in Mumbai, India. The defendant, TAHAWWUR HUSSAIN RANA, was convicted of the charges on June 9, 2011, following a three-week trial in U.S. District Court.

Rana, 52, a Canadian citizen, was ordered to serve 14 years, followed by five years of supervised release by U.S. District Judge Harry Leinenweber. “This certainly was a dastardly plot,” Judge Leinenweber said in imposing the sentence.

Rana was convicted of conspiracy to provide material support to a plot from October 2008 to October 2009 to commit murder in Denmark, including a horrific plan to behead employees of Morgenavisen Jyllands-Posten, a Danish newspaper, and throw their heads on to the street in Copenhagen, as well as providing material support, from late 2005 to October 2009, to Lashkar, a militant jihadist organization operating in Pakistan. Lashkar planned and carried out the November 2008 attacks in Mumbai that killed more than 160 people, including six Americans, before initially planning the terrorist attack in Denmark in retaliation for the newspaper’s publication of cartoons depicting the Prophet Mohammed. Rana was acquitted of conspiracy to provide material support to the Mumbai attacks.

“This serious prison sentence should go a long way towards convincing would-be terrorists that they can’t hide behind the scenes, lend support to the violent aims of terrorist organizations, and escape detection and punishment,” said Gary S. Shapiro, Acting United States Attorney for the Northern District of Illinois.

“Today’s sentence demonstrates that, just as vigorously as we pursue terrorists and their organizations, we will also pursue those who facilitate their violent plots from a safe distance. As established at trial, Tahawwur Rana provided critical support to David Headley and other terrorists from his base in the United States, knowing they were plotting attacks overseas. I thank the many agents, analysts and prosecutors who helped bring about today’s result,” said Lisa Monaco, Assistant Attorney General for National Security.

“It is my hope that the judge’s decision today sends a message to those who plot attacks and those who provide the support to make the plots possible, both here and abroad, that you will be held accountable for your actions. Our mission, detecting and preventing terrorist acts and eliminating the enabling support provided by terrorist sympathizers, remains our top priority,” said Cory B. Nelson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation.

Rana is one of two defendants to be convicted, among a total of eight defendants who have been indicted, in this case since late 2009. Co-defendant David Coleman Headley, 52, pleaded guilty in March 2010 to 12 terrorism charges, including aiding and abetting the murders of the six Americans in Mumbai. Headley, who is scheduled to be sentenced next Thursday, has cooperated with the Government since he was arrested in October 2009, and testified as a Government witness at Rana’s trial. He is facing a maximum of life in prison.

The evidence at Rana’s trial showed that he knew he was assisting a terrorist organization and murderers, knew their violent goals, and readily agreed to play an essential role in achieving their aims. The government contended that Rana knew the objective of his co-conspirators was to retaliate against and influence the Danish government for its perceived role in the publication of the Prophet Mohammed cartoons, and he knew that the goal of Lashkar was to retaliate against and influence the Indian and Danish governments and intended that the support he provided – enabling Headley’s activities – would be used toward that purpose.

In a post-arrest statement in October 2009, Rana admitted knowing that Lashkar was a terrorist organization and that Headley had attended training camps that Lashkar operated in Pakistan. Headley testified that he attended the training camps on five separate occasions between 2002 and 2005. In late 2005, Headley received instructions from members of Lashkar to travel to India to conduct surveillance, which he did five times leading up to the Mumbai attacks three years later that killed more than 160 people and wounded hundreds more.

In the early summer of 2006, Headley and two Lashkar members discussed opening an immigration office in Mumbai as a cover for his surveillance activities. Headley testified that he traveled to Chicago and advised Rana, his long-time friend since the time they attended high school together in Pakistan, of his assignment to scout potential targets in India. Headley obtained approval from Rana, who owned First World Immigration Services in Chicago and elsewhere, to open a First World office in Mumbai as cover for his activities. Rana directed an individual associated with First World to prepare documents supporting Headley’s cover story, and advised Headley how to obtain a visa for travel to India, according to Headley’s testimony, as well as emails and other documents that corroborated his account.

Between Nov. 26-28, 2008, 10 attackers trained by Lashkar carried out multiple assaults with firearms, grenades and improvised explosive devices against multiple targets in Mumbai, some of which Headley had scouted in advance.

Regarding the Denmark terror plot, Headley testified that in the fall of 2008, he met with a Lashkar member in Karachi, Pakistan, and was instructed to conduct surveillance of the Jyllands-Posten newspaper offices in Copenhagen and Aarhus.

In late 2008 and early 2009, after reviewing with Rana how he had performed surveillance of the targets attacked in Mumbai, Headley testified that he advised Rana of the planned attack in Denmark and his intended travel there to conduct surveillance of the newspaper’s facilities. Headley obtained Rana’s approval and assistance to identify himself as a representative of First World and gain access to the newspaper’s offices by falsely expressing interest in placing advertising for First World in the newspaper. Headley and Rana caused business cards to be made that identified Headley as a representative of the Immigration Law Center, the business name of First World, according to the evidence at trial.

The trial evidence also included transcripts of recorded conversations, including those in September 2009, when Headley and Rana spoke about reports that a co-defendant, Ilyas Kashmiri, an alleged Pakistani terrorist leader, had been killed and the implications of his possible death for the plan to attack the newspaper. In other conversations, Rana told Headley that the attackers involved in the Mumbai attacks should receive Pakistan’s highest posthumous military honors. In the late summer of 2009, Rana and Headley agreed that funds that had been provided to Rana could be used to fund Headley’s work in Denmark, and the evidence showed that Rana, pretended to be Headley in sending an email to the Danish newspaper.

The government is being represented by Assistant U.S. Attorneys Daniel Collins and Sarah E. Streicker, with assistance from the Counterterrorism Section of the Justice Department’s National Security Division. Federal prosecutors in Los Angeles have worked on a broader investigation of the Mumbai attacks. The investigation has been conducted by the Chicago Joint Terrorism Task Force, led by the Chicago Office of the Federal Bureau of Investigation, with assistance from FBI offices in Los Angeles, New York and Washington, D.C., as well as both U.S. Customs and Border Protection and the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI).

CHICAGO — A north suburban man with a history of multiple bankruptcies, financial schemes and civil lawsuits that twice resulted in contempt findings, was sentenced today to 10 years in federal prison for fraudulently obtaining more than $4 million from 51 investors in a now-defunct sleep disorder businesses that he operated in Northbrook. The defendant, KENNTH A. DACHMAN, pleaded guilty without a plea agreement last October to 11 counts of wire fraud. The government established that Dachman misappropriated at least $2 million of comingled funds from investors and the companies to benefit himself and his family.

Dachman, 52, of Glencoe and formerly of Lake Forest, was ordered to pay both restitution and forfeiture totaling just over $4 million each by U.S. District Judge James Zagel, who set a hearing for Jan. 30 to decide when Dachman will begin serving his sentence. Judge Zagel also placed Dachman on three years of supervised release following his sentence.

“His business was not sleep apnea but putting money in his pocket,” Judge Zagel said in imposing the sentence. Three investors spoke at the sentencing hearing and told the judge that Dachman’s crimes had seriously affected their lives and retirement security. The sentence was announced by Gary S. Shapiro, Acting United States Attorney for the Northern District of Illinois, and Cory B. Nelson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation.

Dachman operated Central Sleep Diagnostics, LLC, which purported to treat sleep apnea and sleep-related illnesses by conducting diagnostic studies in a patient’s own home instead of a hospital or clinic, and Advanced Sleep Devices, LLC, which purported to sell equipment used to treat sleep disorders to patients. He also operated Key Partners, LLC, to handle marketing for both businesses.

Between June 2008 and September 2010, Dachman fraudulently obtained funds from investors by misrepresenting the use of the funds, the expected return on and risks involved in investments, his business background, the financial condition of Central Sleep and Advanced Sleep and the status of investments. Instead of using the funds to operate the businesses as he promised, Dachman used a significant amount of the investors’ funds to purchase a two-acre mansion in Lake Forest, to operate a tattoo parlor in Chicago that was co-owned by his son-inlaw, to purchase vacations and cruises for himself and his family to Italy, Nevada, Florida and Alaska, to purchase a new sport utility vehicle, to fund personal gambling in Las Vegas and stock trading, and to purchase rare books and antiques.

According to the indictment, Dachman and an individual he retained as director of investor relations offered and sold at least three forms of investments in Central Sleep and Advanced Sleep to the public: an “Assignment of Units” agreement which gave investors units or shares in Central Sleep or Advanced Sleep; a “Convertible Debt Agreement” in which Dachman personally guaranteed he would repay investors’ principal, as well as monthly payments equal to between 5 and 24 percent annually; and an agreement which enabled investors to purchase various sleep-related equipment and lease it back to Central Sleep Diagnostics. Dachman told prospective investors and investors that the funds he raised would be used to purchase sleep-related equipment, to rent office space, to set up the companies’ offices, to hire and pay administrative personnel, and to retain and pay physicians to review sleep diagnostic studies.

From July 2008 through January 2009, Dachman falsely represented to the first 15 investors in Central Sleep that their combined funds of approximately $1.4 million would be used to open and operate Central Sleep. In fact, he intended to and did use almost $1 million of these funds for his own use and benefit, including more than $200,000 for personal stock trading, more than $180,000 to operate the tattoo parlor, Windy City Ink, and more than $160,000 to fund checks made payable to himself and his wife, even though at the time, Central Sleep had not received any income from the operation of its business.

Dachman personally guaranteed to repay certain investors’ principal without disclosing that he had almost no assets to fund the guarantees and that he had declared personal bankruptcy on seven prior occasions. Dachman falsely told victims that he had a PhD from Northwestern University, and that he had invested his own funds in Central Sleep, knowing that he had not done so. To induce additional investments as late as March 2010, Dachman represented to investors that Central Sleep was a successful company and was “on pace to be the most important and largest sleep diagnostic firm in the world,” despite knowing that he was draining the financially-troubled business of previous investor funds.

The government is being represented by Assistant U.S. Attorney Sunil Harjani. The U.S. Securities and Exchange Commission assisted the investigation conducted by the FBI.

The Financial Fraud Enforcement Task Force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit: www.StopFraud.gov.

ROCKFORD — Anthony F. D’Agostino, 79, the former owner, CEO and President of Commercial Mortgage and Finance Co., in Rockford, was found guilty today by U.S. District Judge Frederick J. Kapala on seventeen counts of mail fraud, one count of wire fraud, and one count of securities fraud, in connection with a scheme to defraud investors in Commercial Mortgage. The decision was filed today in U.S. District Court in Rockford, following a six-day bench trial in September 2013.

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.

No sentencing date has been set at this time. Each count of mail fraud and 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. Securities fraud carries a maximum penalty of up to 5 years in prison, and fine of up to $10,000. The Court must impose a reasonable sentence under the advisory United States Sentencing Guidelines, as well as restitution.

The conviction 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.

CHICAGO — The former chief information officer of a Chicago-based international law firm who was charged previously, and the president of a company that provided contract technology workers who was charged for the first time and arrested today, were indicted for allegedly engaging in a fraudulent billing and kickback scheme that netted each of them more than $2 million. NICHOLAS DEMARS, the president of NS Mater, a defunct firm that provided contract employees and technology to assist in office automation, web and database development, and general information technology, was arrested today and indicted with DAVID TRESCH, the former law firm officer who supervised the work and billing related to the contract employees.

For the first six years of the scheme that began in 2004, Demars allegedly paid Tresch a portion of the profits that NS Mater made from work its contract employees performed at the victim law firm. During the last two years ending in June 2012, Tresch allegedly received kickbacks totaling nearly all of the false billings that the law firm paid NS Mater for work that was not performed.

Tresch, 51, and Demars, 57, both of Itasca, were each charged with 10 counts of mail fraud in an indictment that was returned by a federal grand jury yesterday and unsealed today after Demars was arrested. Demars was released on bond after appearing this morning before U.S. Magistrate Judge Sidney Schenkier in U.S. District Court. Tresch, who was released on bond after he was arrested in August, will be arraigned at a later date in Federal Court.

The indictment also seeks forfeiture of $4,819,253 representing the combined net proceeds that both men allegedly obtained from the scheme, as well as their respective homes, Demars’ condominium in Chicago, and a residence in Lake Geneva, Wis., and more than $225,000 that was seized from Tresch along with his camping trailer, a van, and a luxury automobile.

The charges were announced by Gary S. Shapiro, Acting United States Attorney for the Northern District of Illinois, and Thomas R. Trautmann, Acting Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation.

According to the initial complaint, the victim law firm, which was not identified by name, reported Tresch’s alleged criminal activity and cooperated in the investigation. The firm, which has offices worldwide, hired Tresch in May 2004 and he held several positions in the information technology department before he was promoted in July 2011 to chief information officer.

The indictment alleges that between November 2004 and March 2011, the law firm issued checks totaling approximately $7.68 million to NS Mater, and Demars, in turn, kicked back $1.14 million to Tresch. In 2004 and 2005, Demars allegedly paid kickbacks directly to Tresch after paying legitimate NS Mater contract employees and payroll administrators for work they had performed for the law firm. Beginning in April 2006, allegedly to conceal the kickbacks, Demars began paying Tresch by issuing checks to Tresch’s wife and treating her as an employee of NS Mater, even though both defendants knew that she was not an employee and had not performed any work, according to the indictment. Tresch’s wife is not a defendant.

Subsequently, in late 2010, Tresch learned that that the law firm would soon stop using NS Mater contract employees, and, in February 2011, the firm directed Tresch to no longer permit NS Mater to provide personnel for the information technology department. Between November 2011 and June 2012, Demars allegedly continued submitting invoices to Tresch totaling more than $1.1 million, falsely representing that NS Mater performed work that both defendants knew was not performed. Tresch submitted the false invoices, which the firm paid, and of the $1.1 million paid during this period, Demars kicked back approximately $970,000 to Tresch, while retaining the remainder for himself, the indictment alleges.

Each count of mail fraud carries a maximum penalty of 20 years in prison and a $250,000 fine, and restitution is mandatory. The Court may impose an alternative fine totaling twice the loss to the victim or twice the gain to the defendant, whichever is greater. 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 Terra Reynolds.

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

CHICAGO — A Chicago man is facing a mandatory minimum of 10 years and a maximum sentence of life in prison after pleading guilty today to transporting a minor from Wisconsin to Illinois for prostitution. The defendant, CARL BRANDON SMITH, also admitted that he engaged in forced sex-trafficking of the victim, as well as a second minor and two young adult women. Between 2010 and early 2012, Smith forced his victims to engage in commercial sex acts, used physical violence, and threatened to kill them if they ever left him. The guilty plea was announced by Gary S. Shapiro, Acting United States Attorney for the Northern District of Illinois, and Thomas R. Trautmann, Acting Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation.

Smith, also known as “Moo,” 25, of Chicago, is scheduled to be sentenced on April 5 by U.S. District Judge Amy St. Eve. Smith has remained in federal custody since he was arrested last April last and charged with two counts of sex-trafficking of a minor and by force, two counts of sex-trafficking by force, and one count of transporting a minor across state lines to engage in prostitution.

According to a plea agreement, Smith met Victim B 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 Victim B’s residence in Wisconsin, and then drove her from Wisconsin to his apartment in Chicago, acknowledging that she was under 18 at the time.

Once in Chicago, Smith “dated” Victim B for approximately a week before Victim B began working as a prostitute under his employ. Between February and July 2011, Victim B engaged in commercial sex acts at Smith’s direction. Smith acted as Victim B’s pimp, advertised her for commercial sex on internet sites, and instructed her to have sex with customers in his apartment and in area motels. Victim B had sex with numerous men per week and gave a portion of the money she earned to Smith.

As part of the guilty plea, Smith stipulated that he acted as a pimp for Victim A, also a minor, and forced her to engage in prostitution during 2010. Smith inflicted physical violence on Victim A when she gave him “attitude” or when she indicated that she no longer wanted to work as a prostitute. On one occasion, Smith beat Victim A so severely that one eye swelled shut.

Similarly, Smith stipulated to using and threatening violence against both Victims C and D, both adults, while acting as their pimp and forcing them to engage in commercial sex acts in 2011 and early 2012.

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 is being represented by Assistant U.S. Attorney Christopher Grohman and Felicia Manno Alesia.

Plea Agreement

ROCKFORD — A Rockford, Ill. man was sentenced yesterday in federal court before U.S. District Judge Frederick J. Kapala to 10 years in prison without parole, to be followed by 3 years of supervised release, for illegally possessing a firearm as a convicted felon. NICHOLAS STENSON, 29, was convicted on October 3, 2012, after a jury trial in Rockford.

According to the indictment and evidence at trial, on July 10, 2011, shortly after 2:00 am, members of the Rockford Police Department's M3 Unit observed Stenson on Rock Street standing next to a green Pontiac. When officers parked their squad car near the Pontiac and activated the emergency lights, Stenson ran to the back of the Pontiac, reached into his waistband and threw a gun underneath the Pontiac. Officers recovered the gun thrown by Stenson - a black Colt .45 handgun loaded with six rounds of Blazer .45 caliber ammunition.

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

The sentencing was announced by Gary S. Shapiro, Acting United States Attorney for the Northern District of Illinois; W. Larry Ford, Special Agent-in-Charge of the Chicago Field Division of the Bureau of Alcohol, Tobacco, Firearms & Explosives; Joseph Bruscato, Winnebago County State's Attorney; and Chet Epperson, Chief of the Rockford Police Department.

The government was represented by Assistant U.S. Attorneys Scott R. Paccagnini and Monica V. Mallory.

HAMMOND, Ind. — A physician who owned weight loss clinics in northwest Indiana and south suburban Chicago pleaded guilty to illegally dispensing millions of pills containing amphetamine-based controlled substances to patients, and he and his wife also pleaded guilty to federal tax evasion relating to their operation of the clinics, federal law enforcement officials announced today. The defendants, DR. RAKESH ANAND and MEENA ANAND, who owned and managed Doctors Weight Loss Clinics in Merrillville, Ind., and Tinley Park and Orland Park in Illinois, also agreed to forfeiture and restitution totaling nearly $5.2 million.

Rakesh Anand, 57, a licensed physician in Indiana and Illinois, and Meena Anand, 53, both of Tinley Park, entered their guilty pleas yesterday before U.S. District Judge Joseph S. Van Bokkelen in Federal Court in Hammond. The U.S. Attorney’s Office in Chicago is handling the prosecution in the Northern District of Indiana. Judge Van Bokkelen accepted the couple’s guilty pleas to tax evasion and deferred accepting Rakesh Anand’s guilty plea to conspiracy to distribute controlled substances until sentencing, which was scheduled for March 20. The defendants remain free on bond while awaiting sentencing, but the judge yesterday added electronic monitoring to the conditions of Rakesh Anand’s release.

Rakesh Anand’s plea agreement contemplates an advisory federal sentencing guidelines range of 46 to 57 months in prison, while Meena Anand’s plea agreement contemplates a range of 30 to 37 months. Tax evasion carries a maximum penalty of five years in prison and a $250,000 fine, as well as mandatory costs of prosecution. Defendants convicted of tax offenses also remain civilly liable to the Government for any and all back taxes and a civil fraud penalty of up to 75 percent of the underpayment plus interest. Rakesh Anand also faces a maximum of 10 years in prison and a $500,000 fine for conspiracy to distribute controlled substances. On both counts, the court may impose an alternative fine totaling twice the gross gain or loss resulting from the crimes, whichever is greater.

As part of their plea agreements, the Anands agreed to pay restitution of $745,872 to the Internal Revenue Service for taxes they owed on nearly $2 million of unreported income between 2005 and 2008. The restitution is to be paid from funds frozen in a brokerage account when the Anands were indicted in August 2011. In addition, they agreed to forfeit more than $4.45 million in additional funds that were frozen or seized during the investigation, bringing to nearly $5.2 million the total amount of funds being applied to forfeiture and restitution.

Rakesh Anand admitted that between January 2002 and February 2010, he and another physician, Dr. Dinesh Saraiya, purchased and dispensed more than 1 million pills containing Phendimetrazine, a Schedule III controlled substance, and more than 3 million pills containing Phentermine, a Schedule IV controlled substance, and the Anands grossed more than $5 million from their operation of the three weight loss clinics.

(Saraiya, 75, of Tinley Park, cooperated in the case and is awaiting sentencing after pleading guilty in Federal Court in Chicago to conspiracy to distribute controlled substances.)

According to Rakesh Anand’s plea agreement, between 2002 and February 2010, he hired Saraiya, who agreed with him to illegally dispense the amphetamine-based controlled substances as weight loss medications to patients without performing physical examinations or any medical tests, and without reviewing patients’ records, obtaining a complete medical history, or providing any subsequent monitoring. In return, Rakesh Anand paid Saraiya based on how many patients he saw and how many pills he dispensed to patients on a daily basis. In dispensing the medications, Rakesh Anand and Saraiya failed to determine whether patients had first made a reasonable effort to lose weight through diet and exercise, a prerequisite to prescribing controlled substances for weight loss. In some instances, Rakesh Anand employed clerks to dispense the controlled substances even though he was not present and had not consulted with them.

During the course of the investigation, several undercover law enforcement agents, including two with slight builds and body mass indexes well below the obesity level, purchased controlled substances at the clinics without any of the appropriate medical protocols.

The guilty pleas were announced by Gary S. Shapiro, Acting United States Attorney for the Northern District of Illinois. The investigation was conducted by the Federal Bureau of Investigation, the Drug Enforcement Administration, the Internal Revenue Service Criminal Investigation Division, the Food and Drug Administration and the Indiana State Police.

The government is being represented by Assistant U.S. Attorneys Matthew Schneider, Diane Berkowitz, and Orest Szewciw.

Meena Anand Plea Agreement

Rakesh Anand Plea Agreement

CHICAGO — Twelve Chicago and area defendants were indicted on federal bank fraud charges, and five of them were also charged with aggravated identity theft, for their alleged roles in a scheme to obtain more than $1 million from counterfeit personal and corporate checks, and actually obtaining more than $700,000, by cashing the bogus checks at various local banks and sharing the proceeds among themselves.

The defendants were charged in a 37-count federal grand jury indictment that was unsealed last Thursday after the lead defendant, KENNTH PEARSON, was arrested by U.S. Secret Service agents who conducted the investigation with assistance from the Downers Grove Police Department and other suburban police departments. Pearson, 39, of Chicago, was charged with 32 counts of bank fraud and one count of aggravated identity theft. He remains in federal custody pending a detention hearing at 10:30 a.m. tomorrow before U.S. District Judge Virginia Kendall.

A co-defendant, DAVID KOTLICKY, 23, of Downers Grove, was ordered detained without bond after he was arrested on Nov. 27, 2012, on a criminal complaint, which preceded the indictment that was returned under seal last month charging Kotlicky, Pearson and 10 other defendants. Defendant ANTIONE MAHONE, 24, of Chicago, was arrested on Friday and released on bond, and an arrest warrant is outstanding for ERIC JACKSON, 24, of Chicago.

The eight remaining defendants will be arraigned on various dates this month before Judge Kendall in Federal Court.

The indictment was announced today by Gary S. Shapiro, Acting United States Attorney for the Northern District of Illinois, and Frank Benedetto, Special Agent-in-Charge of the Chicago office of the Secret Service.

According to the indictment, between August 2010 and December 2012, the defendants created hundreds of counterfeit checks, with face values totaling more than $1 million, presented them to various banks to be cashed, usually in amounts of approximately $2,500, and kept and shared the proceeds.

Defendant LATRESE LESHORE, 30, of Chicago, through her employment processing individuals’ health insurance applications and payments, allegedly stole bank customers’ authentic checks and account information by making copies at work, and providing them to a codefendant in exchange for cash, knowing that the victims’ accounts would be compromised.

The indictment alleges that Pearson, Kotlicky and Jackson then used the stolen checks and account information to create counterfeit checks. Pearson and Kotlicky then made and caused others to falsely make changes to the bank customers’ account information so that they could monitor the customers’ accounts, intercept bank employees’ questions about account activity, and prevent immediate detection of the alleged scheme.

Pearson, Kotlicky, Jackson, STACEY SANDERS, 38, of Chicago, and DEANGRIA WELLS, 27, of Chicago, allegedly recruited runners to take the counterfeit checks to branches of American Chartered Bank, Chase Bank, Citibank, Fifth Third Bank, First Midwest Bank, BMO Harris Bank, and U.S. Bank to be cashed. Those same defendants then allegedly collected proceeds of the cashed counterfeit checks from runners, paid the runners a fee for cashing the checks, and distributed the remaining proceeds to Pearson.

Also indicted were: ROGER ELAM, 48; his sister, ROSIE ELAM, 59; LYNADA MAHONE, 34, (Antione Mahone’s cousin); TOVISE STONE, 34; and STARLINDA STUBBS, 21, all of Chicago.

All 12 defendants face at least one or more counts of bank fraud. In addition, Pearson, Kotlicky, Jackson, Sanders, and Leshore were each charged with one count of aggravated identity theft, and Kotlicky alone was charged with one count of passing $80 in counterfeit currency. The indictment also seeks forfeiture of approximately $1 million from Pearson and Kotlicky.

Each count of bank fraud carries a maximum penalty of 30 years in prison and a $1 million fine. Aggravated identity theft carries a mandatory consecutive sentence of two years in prison and a maximum $250,000 fine, and passing counterfeit currency carries a maximum 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 government is being represented by Assistant U.S. Attorney Julie Porter.

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 Rockford, Ill. woman pleaded guilty today in federal court before U.S. District Judge Frederick J. Kapala to having embezzled almost $200,000 from a local labor union. GRACE RATHKE, 57, Rockford, pleaded guilty to embezzling monies and funds belonging to Local 32 of the Laborers International Union of North America.

Rathke had been indicted on August 2, 2011, and charged with embezzling approximately $200,000 from Local 32. According to the written plea agreement, Rathke admitted that beginning in November of 2004 and continuing until March 2009, she had embezzled over $190,000 from Local 32, including $1,352 on September 25, 2006. In her plea agreement, Rathke admitted that she had been the office manager of Local 32. Members and apprentices of Local 32 had paid their dues and initiation fees to Local 32. As the office manager, Rathke was to enter the amounts received in the records of Local 32 and deposit the funds in the bank account of Local 32. In November of 2004, she began to secretly embezzle dues and fees from Local 32 and to use those monies for her own purposes. In so doing, Rathke failed to credit union members and apprentices with paying their dues and fees.

The guilty plea was announced by Gary S. Shapiro, Acting United States Attorney for the Northern District of Illinois, and James Vanderberg, Special Agent-In-Charge of the Chicago office of the United States Department of Labor, Office of Inspector General, Office of Fraud and Labor Racketeering Investigations, and Mary Kebisek, District Director of the Chicago office of the United States Department of Labor – Office of Labor-Management Standards.

Sentencing has been set for April 9, 2013, at 2:30 p.m. before Judge Kapala. Rathke faces a maximum sentence of 5 years in prison to be followed by up to 3 years on supervised release. Rathke may also be sentenced to pay a fine of up to $250,000 and must be sentenced to pay restitution of over $190,000 to Local 32.

The government has been represented by Assistants U.S. Attorney John G. McKenzie and Monica V. Mallory.

Plea Agreement