Eastern District of Kentucky

LEXINGTON, Ky. – An Olive Hill, Ky., man, who previously admitted that he possessed thousands of images and hundreds of videos containing child pornography, has been sentenced to 11 years in federal prison.

 

Today, U.S. District Judge David L. Bunning sentenced James Keith Wolfe, 55, for receipt of child pornography and also ordered him to serve a 20year term of supervised release following the completion of his sentence. Under federal law, Wolfe must serve at least 85 percent of his prison sentence.

 

Wolfe pleaded guilty in August of 2016 to a single count of receipt of child pornography.

 

In September of 2015, FBI and other law enforcement agents executed a search warrant at his Olive Hill residence, seizing several laptop computers, multiple thumb drives, and two Dell towers. Law Enforcement agents discovered that Wolfe’s computer and other electronic media contained more than 3,800 still images and 670 videos of children engaged in sexually explicit conduct.

 

The investigation began when authorities made a direct connection to Wolfe’s computer while he was using a peer to peer (P2P) file sharing network to download child pornography images.

 

Carlton S. Shier, IV, Acting United States Attorney for the Eastern District of Kentucky, and Amy Hess, Special Agent in Charge, Federal Bureau of Investigation, jointly announced the sentence.

 

The investigation was conducted by the FBI. Assistant U.S. Attorney David Marye prosecuted this case on behalf of the federal government.

 

LEXINGTON, Ky. – McKesson Corporation (McKesson), one of the nation’s largest distributors of pharmaceutical drugs, agreed to pay a record $150 million civil penalty for alleged violations of the Controlled Substances Act (CSA), Carlton S. Shier, IV, Acting United States Attorney for the Eastern District of Kentucky, and Drug Enforcement Administration (DEA) Detroit Field Division Special Agent in Charge, Timothy J. Plancon, announced today.

 

Locally, this settlement resolves the U.S. Attorney’s Office for the Eastern District of Kentucky’s and DEA London Resident Office Diversion Group’s joint investigation of McKesson’s Washington Courthouse, Ohio Distribution Center, which distributed pharmaceutical drugs to pharmacies in Kentucky, Ohio, and West Virginia. The settlement further resolves open civil investigations being conducted by eleven other U.S. Attorney’s Offices across the nation and administrative investigations by DEA.

 

“McKesson’s failure to report suspicious orders fueled the opioid epidemic in eastern Kentucky,” said Acting U.S. Attorney Shier. “Opioid abuse has devastated our community, and the investigation of drug distributors, like McKesson, is one aspect of the United States’s multifaceted fight against this epidemic.”

 

DEA Special Agent in Charge Plancon said: “The United States is in the midst of an opiate epidemic which is being fueled by the misuse of opiate painkillers. This historic settlement demonstrates DEA’s commitment to the public health and safety by holding the McKesson Corporation accountable for their actions. It doesn’t matter if the violator is a multi-billion dollar corporation, or an individual selling smaller amounts of drugs on the street, DEA is committed to fighting this epidemic from all angles.”

 

The nationwide settlement requires McKesson to suspend sales of controlled substances from its Washington Courthouse Distribution Center and distribution centers in Colorado, Michigan, and Florida for multiple years. The staged suspensions are among the most severe sanctions ever agreed to by a DEA registered distributor. The settlement also imposes new and enhanced compliance obligations on McKesson’s distribution system.

 

In 2008, McKesson agreed to a $13.25 million civil penalty and administrative agreement for similar violations. In this case, the government alleged again that McKesson failed to design and implement an effective system to detect and report “suspicious orders” for controlled substances distributed to its independent and small chain pharmacy customers – i.e. orders that are unusual in their frequency, size, or other patterns. From 2008 until 2013, McKesson supplied various U.S. pharmacies an increasing amount of oxycodone and hydrocodone pills, frequently misused products that are part of the current opioid epidemic.

 

The government’s investigation developed evidence that even after designing a compliance program after the 2008 settlement, McKesson did not fully implement or adhere to its own program. For example, from January 1, 2009 to August 1, 2013, McKesson’s Washington Courthouse Distribution Center failed to report suspicious orders of controlled substances to DEA.

 

In addition to the monetary penalties and suspensions, the government and McKesson agreed to enhanced compliance terms for the next five years. Among other things, McKesson has agreed to specific, rigorous staffing and organizational improvements; periodic auditing; and stipulated financial penalties for failing to adhere to the compliance terms. Critically, the settlement will require McKesson to engage an independent monitor to assess compliance – the first independent monitor of its kind in a CSA civil penalty settlement.

 

Locally, the civil penalty investigation was conducted by the U.S. Attorney’s Office for the Eastern District of Kentucky and DEA Detroit Field Division’s London Resident Office’s Diversion Group. This multi-district investigation also involved the following DEA Offices: Boston Field Division, Chicago Field Division, Denver Field Division, Miami Field Division, Newark Field Division, San Francisco Field Division, St. Louis Field Division, and Washington District Office. The following U.S. Attorney’s Offices also participated in the case: Central District of California, Eastern District of California, District of Colorado, Middle District of Florida, Northern District of Illinois, District of Massachusetts, Eastern District of Michigan, District of Nebraska, District of New Jersey, Northern District of West Virginia, and Western District of Wisconsin.

 

U.S. Attorneys’ Offices for the District of Colorado and the Northern District of West Virginia, along with DEA Office of Chief Counsel and Diversion Control Division, led the civil settlement negotiations. DEA’s Denver, Detroit, and Miami Field Divisions, and its Washington Division Office led the administrative and civil investigation. The Criminal Division’s Narcotic and Dangerous Drug Section (NDDS) also coordinated and assisted in negotiating certain portions of the settlement. Assistant United States Attorneys Amanda Rocque (Colorado), Alan McGonigal (Northern District of West Virginia), and Katherine Crytzer (Eastern District of Kentucky) represented the United States in the civil penalty investigations and negotiations. Associate Chief Counsel Lee Reeves and Senior Attorneys Dedra Curteman, Dana Hill, and Krista Tongring represented DEA. Trial Attorneys Harry Matz and Kirtland Marsh were involved for NDDS.

 

LEXINGTON, Ky. – A Lexington man faces life in prison after a jury convicted him of distributing fentanyl that resulted in the overdose death of a 37 year-old Fayette County resident.

 

On Thursday, Joshua Donald Ewing, 28, was convicted of distribution of a controlled substance resulting in death. The jury returned the verdict after seven hours of deliberation following two days of trial. Because of Ewing’s criminal history, he is subject to a mandatory life sentence under the federal overdose death law. Sentencing is scheduled for February 6.

 

“The drug dealers who sell heroin and fentanyl in our communities know full well that, sooner or later, the result of their criminal conduct is likely a tragic and unnecessary death,” said Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky. “Overdose victims are not merely statistics-they leave behind grieving parents, siblings, and children who deserve justice. While we take no joy in these cases, we are committed to using every available tool to combat the opioid epidemic which so afflicts our Commonwealth. All of us owe a debt of gratitude to the local and federal law enforcement officers who do the hard work that has made our Overdose Prosecution Initiative so successful.”

 

According to evidence presented at trial, in February of 2016, Ewing sold fentanyl to Jeremy Deaton, who was expecting heroin. Deaton consumed the drug, and died of an overdose. A toxicologist testified that, had it not been for the fentanyl, Deaton would not have died. The toxicologist further testified that Deaton had more than five times the therapeutic range of fentanyl in his blood.

 

Ewing was on probation for possession of heroin at the time he sold the fentanyl to Deaton.

 

U.S. Attorney Harvey; Timothy J. Plancon, Special Agent in Charge of the Detroit Field Division of the Drug Enforcement Administration; and Mark Barnard, Chief of Lexington Police, jointly made the announcement.

 

The investigation was conducted by the Lexington Police and the DEA. Assistant U.S. Attorney Todd Bradbury prosecuted this case on behalf of the federal government

PIKEVILLE, Ky. – Former Paintsville Mayor, Robert Porter, has been sentenced to 48 months for misappropriating property and city resources.

 

On Thursday, U.S. District Judge Reeves sentenced Porter for misappropriating federal property belonging to a city that received substantial federal funding. Judge Reeves also ordered that Porter pay a $4,000 fine.

 

In September of 2016, a federal jury, in London, Ky., convicted Porter on those charges.

 

Evidence presented at the trial established that, from 2009 until 2012, Porter, with the knowledge, approval and assistance of Larry Herald, the former general manager of the Paintsville Utilities Commission, did not pay for utilities services provided to residences that he owned in Paintsville. The total delinquency was in excess of $7,000. The evidence also revealed that Porter used thousands of dollars in city and federal funds to pay for personal expenses, such as maintenance and repairs on his personal automobiles, gasoline for personal trips, and shipping fees for personal items.

 

Evidence at the trial also established that Porter used a city owned vehicle, seized from a drug investigation by the Paintsville Police Department, for personal trips.

 

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky; Amy Hess, Special Agent in Charge, FBI; and Richard W. Sanders, Kentucky State Police Commissioner, jointly made the announcement.

 

The investigation was conducted by the FBI and the Kentucky State Police. Assistant U.S. Attorneys Ken Taylor, Kate Smith and Andrew Boone prosecuted this case on behalf of the federal government.

FRANKFORT, Ky. – A Shelbyville, Ky., woman, previously convicted of photographing images of children engaged in sexually explicit conduct, has been sentenced to 25 years in federal prison.

 

On Wednesday, U.S. District Judge Gregory F. Van Tatenhove sentenced Melissa Torres, 37, for enticing a minor to engage in sexually explicit conduct for the purpose of producing a visual depiction of that conduct. He also ordered her to serve a lifetime of supervised release following the completion of her sentence. Under federal law, Torres must serve at least 85 percent of her prison sentence.

 

Torres admitted that, on September 22, 2014, she coerced two children under the age of 10 to engage in sexually explicit conduct and took video of the encounter. She later distributed the video.

 

The Shelbyville Police Department began an investigation after someone found the child pornography images and notified the police.

 

Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky; Amy Hess, Special Agent in Charge, FBI; and Danny Goodwin, Shelbyville Police Chief, jointly made the announcement.

 

The investigation was conducted by the FBI and the Shelbyville Police. Assistant U.S. David Marye prosecuted this case on behalf of the federal government.

LEXINGTON, Ky. – A North Carolina man, previously convicted of enticing a minor in Danville, Ky., to engage in sexually explicit conduct, was sentenced on Tuesday to 262 months in federal prison.

 

U.S. District Judge Danny C. Reeves sentenced James Matthew Shelton, 30, and also ordered him to serve a lifetime term of supervised release following the completion of his sentence. Under federal law, Shelton must serve at least 85 percent of his prison sentence.

 

Shelton admitted at his guilty plea that, from July 1, 2014 to August 23, 2014, he persuaded a 13-year-old female in Danville to send sexually explicit photos of herself to his cell phone.

 

In April of 2015 an investigator with the Office of the Kentucky Attorney General, and other law enforcement agents, executed a search warrant at Shelton’s residence in North Carolina and seized his cell phone. The phone contained images of child pornography. The investigation started in September of 2014, when the Boyle County Sheriff’s Office received a complaint that Shelton had threatened one or more minors in Boyle County.

 

Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky; Amy Hess, Special Agent in Charge, FBI; Andy Beshear, Attorney General of Kentucky; and Derek Robbins, Boyle County Sheriff, jointly made the announcement.

 

The investigation was conducted by the FBI, the Office of the Kentucky Attorney General, and the Boyle County Sheriff’s Office.

 

Case represents first time in eastern Kentucky that a life sentence was imposed as a result of

an overdose of fentanyl and that federal overdose penalties were applied to out-of-state

defendants from Detroit, a major source for illicit drugs

 

LEXINGTON, Ky. — The leader of a drug trafficking organization that brought significant amounts of heroin and fentanyl, from Detroit, Mich., to Richmond, Ky., has been sentenced to life imprisonment for distributing fentanyl that resulted in the overdose death of a Madison County resident.

 

On Monday, U.S. District Judge Danny Reeves sentenced Navarius Westberry, 38, originally from Michigan, but living in Lexington, for distributing a controlled substance resulting in an overdose death. Anyone convicted under this law is subject to a prison term of 20 years to life. After an extensive hearing, the Court imposed a term of life imprisonment.

 

“The facts of this case are particularly disturbing,” said Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky. “Mr. Westberry and his co-conspirators moved to Kentucky from Michigan for the sole purpose of establishing a large scale distribution network for heroin and fentanyl. The organization which he led was among the first to introduce large quantities of fentanyl to the Richmond community. The drugs sold by the Westberry organization caused multiple overdoses, including fatalities. The evidence indicates that Mr. Westberry knew the drugs sold by his organization were particularly dangerous. Mr. Westberry exhibited a callous disregard for human life in his quest for easy money. The Court determined that his freedom must be forever forfeited as a result of his criminal conduct. I hope that those inclined toward this sort of destructive conduct, whether they live in Kentucky or occupy a higher position in the drug distribution network, take heed – the people of Kentucky have had enough. The drugs you are peddling will kill people and the price you will pay for that is steep – whether ether you are the street level dealer, or a leader of the criminal organization.”

 

Westberry admitted that, from January 2014 until August 2015, he organized and operated a drug trafficking organization in Richmond that distributed between 750 grams and one kilogram of heroin and 50 grams of fentanyl. Fentanyl, which is many times stronger than heroin, can be lethal in the 2 mg range.

 

Westberry also admitted that, in March 2015, he supplied heroin and fentanyl to others, which then led to the overdose death of 25 year-old Cory Brewer. The toxicology report and autopsy showed that Brewer’s death was caused by toxic levels of fentanyl.

 

This case marks the first time in the Eastern District of Kentucky that the federal overdose penalties were applied in a case involving defendants from Michigan, whose distribution of drugs in Kentucky caused an overdose.

 

Four other co-conspirators have pleaded guilty and been sentenced, including co-defendant, Benjamin Fredrick Charles Robinson, 21, also from Detroit, who was sentenced to 20 years for distributing a controlled substance that caused another overdose. In that case, the victim survived due to medical assistance.

 

U.S. Attorney Harvey; Timothy J. Plancon, Special Agent in Charge, Drug Enforcement Administration; and James Ebert, Chief of Police, Richmond Police Department, jointly made the announcement.

 

The investigation was conducted by the DEA and the Richmond Police. Assistant U.S. Attorney Todd Bradbury prosecuted this case on behalf of the federal government.

LEXINGTON, Ky. – Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky, has announced his resignation, effective Friday, January 13, 2017.  U.S. Attorney Harvey has served in office since May 14, 2010.

“The opportunity to serve as United States Attorney for the Eastern District of Kentucky has been a distinct honor,” United States Attorney Harvey said today.  “I will be forever grateful for the trust placed in me by President Obama and the opportunity to serve in the Department of Justice during such consequential times.  I am inspired by the tremendous work of the state, local and federal law enforcement communities with which I have served, and I will always treasure the chance to work alongside the exceptional staff of the United States Attorney’s Office for the Eastern District of Kentucky.  We have accomplished a great deal together, and their commitment to the cause of justice will continue.”

“As United States Attorney for the Eastern District of Kentucky since 2010, Kerry Harvey has been an indispensable partner in our work to build a stronger and safer nation for all Americans," said Attorney General Loretta E. Lynch. "Under Kerry's leadership, his office has played a crucial role in the Justice Department's initiatives to prosecute fraud, corruption, and white-collar crime.  And he has been a visionary leader in our work to end the devastating opioid epidemic, joining with state and local authorities to hold accountable those who illegally distribute heroin, prescription drugs, and other substances that ravage our communities.  Kerry's work with the families of those who have fallen victim to this epidemic has given voice to those who have suffered and helped to steer countless others way from the same path.  His efforts are in the highest traditions of the Department of Justice.  I want to thank Kerry for his tireless efforts on behalf of the American people over the last seven years, and I wish him the very best as he begins the next chapter of his distinguished career."

Harvey’s efforts include serving on the National Heroin Task Force; serving three years on the Attorney General’s Advisory Committee (AGAC), a select group appointed by the Attorney General to serve as advisors to the Attorney General and as the voice for all United States Attorneys nationwide; serving as Co-Chairman of the AGAC’s Healthcare Fraud Working Group; establishing the highly successful U.S. Attorney’s Heroin Education Action Team (“USA HEAT”), an initiative to increase public awareness of the opioid epidemic in Kentucky; achieving landmark criminal convictions and civil recoveries for fraudulent healthcare practices; prosecuting significant public corruption cases; and prosecuting large-scale drug trafficking organizations.  Under Harvey’s leadership, his office has become a national leader in federal prosecution of drug-overdose cases.  His time in office has seen significant change – twenty-one of the forty-four Assistant United States Attorneys allocated to the office have been hired under Harvey’s leadership.

Signature achievements under Harvey’s leadership include:

Securing a number of public-corruption convictions against former state and local officials, including Richie Farmer, former Kentucky Commissioner of Agriculture; Timothy Longmeyer, former Secretary of the Commonwealth of Kentucky’s Personnel Cabinet and former Deputy Attorney General of Kentucky; Timothy Conley, former County Judge -Executive of Morgan County; Keith Hall, former member of the Kentucky House of Representatives; Robert Porter, former Mayor of Paintsville; Arch Turner, former superintendent of the Breathitt County Public Schools, and Tim Fegan, former Director of the Buffalo Trace Narcotics Task Force;

Securing landmark civil recoveries under the False Claims Act against two hospitals – $40.9 million from King’s Daughters Medical Center in Ashland and $16.5 million from Saint Joseph’s Hospital in London – to settle allegations of unnecessary cardiac procedures; and securing the criminal convictions of Dr. Richard Paulus and Dr. Sandesh Patil for their roles in performing unnecessary cardiac procedures;

Securing a $15.75 million civil recovery against an addiction treatment center (“SelfRefind”), a clinical laboratory (“PremierTox”), and two physician owners to resolve allegations that they fraudulently billed federal healthcare programs for medically unnecessary and excessive urine screens;

Securing a $16 million civil judgment against Nurses’ Registry Home Health Corporation and the estate of its former owner Lennie House, resolving allegations of widespread healthcare fraud;

Collecting more than $182 million on behalf of taxpayers during 2014 alone, an amount that represents the highest annual recovery in the Office’s history and more than twenty times the Office’s annual budget;

Securing criminal convictions of numerous pain clinic owners, pharmacists, doctors, and other health care professionals for the illegal distribution of prescription pain medication and other controlled substances, including pain-clinic owners William Singleton, Joel Shumrack and Michael Leman, pharmacist Charles Terry Tenhet, and Dr. James “Ace” Chaney;

Securing the criminal conviction of Lexington attorney Bryan Coffman and his co-defendant Gary Milby on charges relating to a fraudulent $36-million-dollar oil-and-gas investment scheme;

Developing an Overdose Prosecution Initiative to combat Kentucky’s opioid epidemic.  The Initiative employs significant federal penalties for drug trafficking that results in death or serious bodily injury.  It has resulted in dozens of prosecutions involving overdoses and has become a national model for other U.S. Attorney’s Offices; and

Creating the Office’s Civil Rights Program to prosecute criminal and civil violations of federal civil rights law, including prosecution of the first case in the nation charged under the Shepard-Byrd Hate Crimes Act.

As of January 14, 2017, Carlton S. Shier, IV, will assume leadership of the Office as Acting United States Attorney.  Shier has been the First Assistant United States Attorney since April of 2013 and has been with the Department of Justice since 2010.

LEXINGTON, Ky. —  U.S. Attorney Kerry B. Harvey announced today that his office collected more than $15,765,000 in Fiscal Year 2016.  Of this amount, more than $8,214,000 was collected in criminal actions and more than $7,551,000 was collected in civil actions.  

In addition to funds collected solely by the United States attorney’s Office for the Eastern District of Kentucky, Harvey’s office worked with other U.S. Attorney’s Offices and components of the Department of Justice to collect $3,353,000 in cases pursued jointly with those offices.  Of this amount, $2,370,500 was collected in criminal actions and more than $982,000 was collected in civil actions.  Federal FY 2016 ran from October 1, 2015 to September 30, 2016.  

“Federal law enforcement in the Eastern District of Kentucky is a wise investment for the taxpayers,” said Harvey.  “Our top priority will always be to enforce the laws which keep Americans safe.  We are pleased, however, that our efforts also enhance and protect the public treasury, while securing restitution for crime victims.  Last year, we recovered an amount representing more than twice our office’s annual budget in fines, forfeitures, and restitution.  We will continue to work hard every day to be good stewards of the resources allocated for our use.”       

Attorney General Loretta E. Lynch announced earlier this month that the U.S. Department of Justice collected nearly $15.4 billion in civil and criminal actions in FY 2016.  This amount represents more than five times the 2016 appropriated $2.93 billion budget for the 94 U.S. Attorneys’ offices and the litigating divisions of the Justice Department, combined.

“Every day, the men and women of the Department of Justice work tirelessly to enforce our laws, ensuring that taxpayer dollars are used properly and that the American people are protected from exploitation and abuse,” said Attorney General Lynch.  “Today’s announcement is a testament to that work, and it makes clear that our actions deliver a significant return on public investment.  I want to thank the prosecutors and trial attorneys who made this year’s collections possible, and I want to emphasize that the department remains committed to the well-being of our people and our nation.”

The U.S. Attorneys’ Offices, along with the department’s litigating divisions, are responsible for enforcing and collecting civil and criminal debts owed to the United States and criminal debts owed to federal crime victims.  The law requires defendants to pay restitution to victims of certain federal crimes who have suffered a physical injury or financial loss.  While restitution is paid to the victim, criminal fines and felony assessments are paid to the department’s Crime Victims’ Fund, which distributes the funds to state victim compensation and victim assistance programs. 

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

In addition to these collections, the U.S. Attorney’s Office for the Eastern District of Kentucky, working with partner agencies and divisions, also collected more than $12,356,000 in asset forfeiture actions in FY 2016.  Forfeited assets deposited into the Department of Justice Assets Forfeiture Fund are used to restore funds to crime victims and for a variety of law enforcement purposes.

The last defendant in a domestic and international, multimillion-dollar cigarette tax fraud scheme has been sentenced, the Department of Justice announced today.

On Thursday, U.S. District Judge David L. Bunning sentenced Anthony Cosica, 54, of Pinetop, Ariz., to 24 months in federal prison.  Eight other defendants, including three from eastern Kentucky and two from Russia, have already been sentenced, for charges including conspiracy to commit mail fraud, wire fraud and money laundering and violations of the PACT Act.  

This case marks the first prosecution in the nation for violations of the PACT Act, which is a 2010 federal law enacted to prevent trafficking in untaxed cigarettes. 

According to court documents and evidence presented at trial, from 2008 to 2013, the defendants devised a scheme that defrauded federal, state and local governments across the country, out of cigarette excise taxes totaling approximately $48 million.   Specifically, the defendants operated mail order and internet businesses engaged in the delivery sales of untaxed cigarettes to customers in all 50 states. 

“This case represents a milestone in enforcement of the PACT Act,” said Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky. “Mr. Cosica and his co-conspirators devised a complex criminal enterprise of international proportions which cost public treasuries millions of dollars. Congratulations to the law enforcement agencies and our trial team for their superb work in unwinding this criminal scheme.”

The leader of the conspiracy, John Maddux Jr., 56, formerly of Russell, Ky., operated mail order/online businesses that sold the cigarettes at discount prices.  Maddux executed the scheme by forming a business with two Russian nationals, Alexander Sergeev and Mikhail Serov.  Sergeev and Serov shipped cigarettes from Russia directly to customers of Maddux and his co-conspirators.  Evidence at trial further established that Maddux also fulfilled cigarette orders for other co-conspirators, who were also operating similar mail/online businesses.  To get the cigarettes through U.S. Mail, the defendants disguised and marked the cigarettes as gift items, which is a violation of the PACT Act. 

Under the PACT Act, businesses are required to register and report cigarette and tobacco sales to state tax administrators, allowing States to properly collect required excise taxes from the businesses.  The defendants intentionally avoided these requirements and millions of dollars in taxes during the scheme. 

The defendants received the following prison sentences:  John Maddux 10 years; Christina Carmen, formerly of Russell, Ky., 60 months; David H. White, formerly of Ashland, Ky., 24 months; Julie Coscia, of Pinetop, Ariz., 36 months; Michael E. Smith, of Escondido, Calif., 42 months; Alexander Sergeev, 46 months; Mikhail Serov, 46 months; and Barbara Routh, of Prospect, Ky., two years’ probation.  Under federal law, all defendants must serve at least 85 percent of their prison sentence.

Domestic and International trafficking in untaxed cigarettes via mail order or the Internet defrauds the federal and state governments of hundreds of millions of dollars in tobacco taxes and frequently funds other criminal activity.

U.S. Attorney Harvey; Stewart Lowrey, Special Agent in Charge, Louisville Field Division, Alcohol Tobacco Firearms and Explosives; Tracey Montano, Special Agent in Charge, Nashville Field Office, Internal Revenue Service-Criminal Investigations; Richard Deer, Acting Special Agent in Charge, Philadelphia Regional Office of the U.S. Department of Labor, Office of Inspector General, Office of Labor Racketeering and Fraud Investigations; and Mark McCormack, Special Agent in Charge, Metro Washington Field Office, U.S. Food and Drug Administration, jointly announced the sentence.

The investigation was conducted by the Bureau of Alcohol Tobacco Firearms and Explosives, the Internal Revenue Service-Criminal Investigations, the United States Department of Labor, Office of Inspector General, and U.S. Food and Drug Administration. Assistant United States Attorneys Laura K. Voorhees and Wade T. Napier, and ATF Associate Chief Counsel, Jeffery A. Cohen, prosecuted this case on behalf of the federal government.

COVINGTON, Ky. —  The last defendant in a domestic and international, multimillion-dollar cigarette tax fraud scheme has been sentenced.

On Thursday, U.S. District Judge David L. Bunning sentenced Anthony Cosica, 54, of Pinetop, Ariz., to 24 months in federal prison.  Eight other defendants, including three from eastern Kentucky and two from Russia, have already been sentenced, for charges including conspiracy to commit mail fraud, wire fraud and money laundering and violations of the PACT Act.  

This case marks the first prosecution in the nation for violations of the PACT Act, which is a 2010 federal law enacted to prevent trafficking in untaxed cigarettes. 

According to court documents and evidence presented at trial, from 2008 to 2013, the defendants devised a scheme that defrauded federal, state and local governments across the country, out of cigarette excise taxes totaling approximately $48 million.   Specifically, the defendants operated mail order and internet businesses engaged in the delivery sales of untaxed cigarettes to customers in all 50 states. 

“This case represents a milestone in enforcement of the PACT Act,” said Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky. “Mr. Cosica and his co-conspirators devised a complex criminal enterprise of international proportions which cost public treasuries millions of dollars. Congratulations to the law enforcement agencies and our trial team for their superb work in unwinding this criminal scheme.”

The leader of the conspiracy, John Maddux Jr., 56, formerly of Russell, Ky., operated mail order/online businesses that sold the cigarettes at discount prices.  Maddux executed the scheme by forming a business with two Russian nationals, Alexander Sergeev and Mikhail Serov.  Sergeev and Serov shipped cigarettes from Russia directly to customers of Maddux and his co-conspirators.  Evidence at trial further established that Maddux also fulfilled cigarette orders for other co-conspirators, who were also operating similar mail/online businesses.  To get the cigarettes through U.S. Mail, the defendants disguised and marked the cigarettes as gift items, which is a violation of the PACT Act. 

Under the PACT Act, businesses are required to register and report cigarette and tobacco sales to state tax administrators, allowing States to properly collect required excise taxes from the businesses.  The defendants intentionally avoided these requirements and millions of dollars in taxes during the scheme. 

The defendants received the following prison sentences:  John Maddux 10 years; Christina Carmen, formerly of Russell, Ky., 60 months; David H. White, formerly of Ashland, Ky., 24 months; Julie Coscia, of Pinetop, Ariz., 36 months; Michael E. Smith, of Escondido, Calif., 42 months; Alexander Sergeev, 46 months; Mikhail Serov, 46 months; and Barbara Routh, of Prospect, Ky., two years’ probation.  Under federal law, all defendants must serve at least 85 percent of their prison sentence.

Domestic and International trafficking in untaxed cigarettes via mail order or the Internet defrauds the federal and state governments of hundreds of millions of dollars in tobacco taxes and frequently funds other criminal activity.

U.S. Attorney Harvey; Stuart Lowrey, Special Agent in Charge, Louisville Field Division, Alcohol Tobacco Firearms and Explosives; Tracey Montano, Special Agent in Charge, Nashville Field Office, Internal Revenue Service-Criminal Investigations; Richard Deer, Acting Special Agent in Charge, Philadelphia Regional Office of the U.S. Department of Labor, Office of Inspector General, Office of Labor Racketeering and Fraud Investigations; and Mark McCormack, Special Agent in Charge, Metro Washington Field Office, U.S. Food and Drug Administration, jointly announced the sentence.

The investigation was conducted by the Bureau of Alcohol Tobacco Firearms and Explosives, the Internal Revenue Service-Criminal Investigations, the United States Department of Labor, Office of Inspector General, and U.S. Food and Drug Administration. Assistant United States Attorneys Laura K. Voorhees and Wade T. Napier, and ATF Associate Chief Counsel, Jeffery A. Cohen, prosecuted this case on behalf of the federal government.

 

LEXINGTON, Ky. – A Lexington man, who pled guilty to distributing fentanyl which caused the overdose death of a pregnant Fayette County woman, has been sentenced to 30 years in federal prison.

On Tuesday, Senior U.S. District Judge Joseph Hood sentenced Fred Rebmann, 31, to 360 months’ imprisonment for distributing a controlled substance that resulted in death.  Under federal law, Rebmann must serve at least 85 percent of his sentence. 

Rebmann previously admitted that, in February of this year, he sold the pregnant woman a controlled substance that was believed to be heroin.  Instead, however, the drug was fentanyl, an extremely powerful opioid that can be as much as 50 times more potent than heroin.  She consumed the drugs and died. 

Toxicology reports confirmed that she had five times the therapeutic dose of fentanyl in her system and no traces of heroin or other controlled substances.  The report also concluded that, had it not been for the fentanyl, she would not have died.

“This case demonstrates why we use tough federal laws to prosecute drug dealers who sell poison that kills,” said Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky. “For less than $100, the Defendant sold an obviously pregnant woman one of the deadliest drugs commonly available on our streets. The tragic result was all too predictable. Moreover, it is unacceptable, and we will use every prosecutorial tool available to us in order to protect our community from this predatory criminal conduct.”

U.S. Attorney Harvey, Timothy J. Plancon, Special Agent in Charge, Drug Enforcement Administration, and Mark Barnard, Chief of Police, Lexington Police Department, jointly announced the sentence.

The investigation was conducted by DEA and the Lexington Police Department.  Assistant U.S. Attorney Todd Bradbury prosecuted this case on behalf of the federal government.

LEXINGTON, Ky. — Travis B. Preston, 28, and Tiffany L. Griffith, 25, both of Stanford, Ky., pleaded guilty today to conspiring to distribute large quantities of fentanyl.

Preston admitted to conspiring to distribute 40 grams or more of a mixture or substance containing a detectable amount of fentanyl.   Griffith admitted to aiding and abetting the distribution of 40 grams or more of fentanyl.

In the course of their guilty pleas, Preston and Griffith admitted possessing approximately 121 grams of fentanyl.   The fentanyl was discovered in Griffith’s purse, during a traffic stop that occurred on April 5, 2016, in Lancaster.  Fentanyl can be lethal in the two milligram range. 

Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky; Timothy J. Plancon, Special Agent in Charge, Drug Enforcement Administration; Richard W. Sanders, Commissioner, Kentucky State Police; and Tim Davis, Garrard County Sheriff, jointly made the announcement.

The investigation was conducted by the Drug Enforcement Administration, the Kentucky State Police, and the Garrard County Sheriff’s Office.   The United States was represented in the case by Assistant United States Attorney Robert M. Duncan, Jr.

Preston and Griffith are currently scheduled to appear for sentencing before United States Senior District Judge Joseph M. Hood on March 6,2016.   Because of a prior felony drug conviction, Preston faces a minimum sentence of imprisonment of 10 years, and maximum sentence of Life imprisonment.  Griffith faces a mandatory minimum sentence of not less than 5 years and not more than 40 years imprisonment.   However, any sentence imposed by the court would come after consideration of the United States Sentencing Guidelines and the applicable federal statutes.

LEXINGTON, Ky. – A former counselor at the federal prison in Lexington has pleaded guilty to smuggling tobacco into the prison in exchange for payments from inmates.

On Friday, 43 year-old Elianna D. Gill, formerly employed as a counselor at the Federal Medical Center in Lexington, pleaded guilty to receiving a bribe as a public official.  Gill waived her right to be indicted by a grand jury and pleaded guilty to the charges brought by Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky.

According to her plea agreement, from February 2014 to August 2015, Gill smuggled tobacco into the prison facility for multiple inmates who paid her a total of $5,500 in return.  Prisoners incarcerated in federal correctional facilities, including FMC Lexington, are prohibited from possessing tobacco. 

U.S. Attorney Harvey; John F. Oleskowicz, Special Agent in Charge, Department of Justice, Office of the Inspector General, Chicago Field Office; and Amy Hess, Special Agent in Charge, Federal Bureau of Investigation, jointly made the announcement.

The investigation was conducted by the Department of Justice, Office of the Inspector General and the Federal Bureau of Investigation.  Assistant U.S. Attorney Andrew E. Smith prosecuted this case on behalf of the federal government.

Gill is scheduled to appear before U.S. District Judge Danny C. Reeves for sentencing on March 24, 2017.  She faces a maximum sentence of 15 years of imprisonment, a $250,000 fine, and three years of supervised release.  As a condition of her plea agreement, Gill must also repay all of the money she received from the offense.

COVINGTON, Ky. — A Cincinnati, Ohio man has been sentenced to 300 months in federal prison for selling fentanyl that resulted in a near-fatal overdose.

Today, U.S. District Judge Amul Thapar sentenced Antoine Dudley, 32, for distribution of fentanyl causing serious bodily injury.  Dudley must serve at least 85 percent of his prison sentence and will be on supervised release for fifteen years after he completes his prison sentence. 

Dudley pleaded guilty on October 27, 2016 in the middle of his trial.  According to testimony at trial, Dudley regularly sold both heroin and fentanyl to multiple customers throughout Northern Kentucky, between September 1, 2014 and his arrest on May 8, 2015.  Evidence also showed that he distributed fentanyl, on November 21, 2014 in Covington, that caused the user to overdose and stop breathing.

Paramedics of the Covington Fire Department responded to the call and were able to revive the victim of the overdose through repeated administration of naloxone (Narcan®).  The victim has made a full recovery, but evidence showed that she would have died if not for the actions of the responding paramedics.    

Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky, and Amy Hess, Special Agent in Charge, Federal Bureau of Investigation, jointly announced the sentence. 

The investigation was conducted by the FBI Safe Streets Task Force.  Assistant U.S. Attorney Tony Bracke prosecuted this case on behalf of the federal government.

COVINGTON, Ky. — A Cincinnati, Ohio man has been sentenced to 26 years in federal prison for providing drugs to someone who died of an overdose in the Kenton County jail.

Today, U.S. District Judge Amul Thapar sentenced Michael Howard, 42, for conspiracy to distribute fentanyl and morphine that resulted in an overdose death.  Three of Howard’s co-defendants, Kimberly Mullins, Lisa Lattimore and Lynette Ball, received sentences of 244, 160, and 144 months, respectively, for their roles in the drug conspiracy.  All four defendants must serve at least 85 percent of their sentences. 

Howard pleaded guilty in June 2016 and admitted that he had been supplying heroin to Jamie Green for several months while Green was in custody in Campbell and Kenton Counties.  Mullins arranged for the substances to be delivered to her daughter, Jamie Green, through other inmates on work release.  Howard admitted supplying a substance that contained fentanyl and morphine to Mullins on September 4, 2014 for delivery to Green.  Mullins delivered the substance to Green in the Kenton County Jail through the assistance of co-defendants Ball and Lattimore.  Green used the substance and died of an overdose shortly thereafter on September 5, 2014.    

A federal grand jury in Covington returned an indictment on November 12, 2015 charging Howard, Mullins, Lattimore, and Ball with conspiracy to distribute controlled substances resulting in death.  Mullins, Lattimore, and Ball pleaded guilty on March 29, 2016 to this offense. 

Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky, and Timothy J. Plancon, Special Agent in Charge, Drug Enforcement Administration, jointly announced the sentence.  The investigation was conducted by the Drug Enforcement Administration and the Kenton County Police Department.  Assistant U.S. Attorney Tony Bracke represented the federal government in this matter.

LEXINGTON, Ky. — A Winchester, Ky., man has admitted to conspiring to hack into a website dedicated to athletics at an Ohio high school, and using the site to defame the website owner and threaten and intimidate other people. 

Today, in federal court, Deric Lostutter, 29, pleaded guilty to conspiring to illegally access a computer without authorization, and to lying to an FBI agent.  Noah McHugh, Lostutter’s co-conspirator, previously pleaded guilty in September 2016 to accessing a computer without authorization.

Lostutter admitted that in December 2012, he and McHugh hacked into a fan’s website, created for Steubenville High School sports teams, to bring attention to a rape for which two Steubenville High School football players had been arrested in August 2012 and were being held in custody.  Lostutter filmed a video wearing a mask and wrote a manifesto, which were both posted on the website to harass and intimidate people, and to gain publicity for Lostutter’s and McHugh’s online identities.  Specifically, the messages threatened to reveal personal identifying information of Steubenville High School students, and made false claims that the administrator of the fan website was involved in child pornography and directed a “rape crew.” 

As part of the same hack, Lostutter and McHugh accessed the administrator’s private email account, and then publicly posted a link to download the administrator’s emails on the fan website.  Lostutter and McHugh changed the website so no one could access anything regarding athletics and could only view the video, the manifesto, and the link to the administrator’s private emails.  Lostutter and McHugh then used their online identities in social media and news interviews to promote themselves and their hack.

In 2013, Lostutter lied to the FBI by stating in an investigative interview that he had not written the manifesto posted to the website, that he had not accessed the password-protected section of the fan website, and that he had not changed the administrator password for the website, which prevented the administrator from regaining control of his own website. 

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, and Amy Hess, Special Agent in Charge, Federal Bureau of Investigation, jointly announced the plea.  

The investigation was conducted by the FBI.  Assistant U.S. Attorney Neeraj Gupta prosecuted this case on behalf of the federal government.

Lostutter is scheduled to appear before Judge Danny C. Reeves for sentencing on March 8, 2017.  Under federal law, each count carries a maximum of 5 years in prison.  Any sentence will be imposed by the Court after consideration of the U.S. sentencing guidelines and the applicable federal statutes.

COVINGTON, Ky. — A Milford, Ohio woman, who possessed heroin and crack cocaine with the intent to distribute them, and used a firearm to further her drug trafficking, was sentenced today to 78 months in federal prison.

U.S. District Court Judge Amul Thapar sentenced 28 year-old Courtney Kolb and ordered her to serve 10 years of supervised release following her sentence.  Under federal law, Kolb must serve at least 85 percent of her prison sentence.

In August 2016, Kolb pleaded guilty and admitted that she had quantities of heroin and crack cocaine that she intended to distribute in the Greater Cincinnati area and possessed a firearm in order to protect her drugs and drug proceeds. 

Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky, and Timothy J. Plancon, Special Agent in Charge, Drug Enforcement Administration, jointly announced the sentence.

The investigation was conducted by the Ft. Thomas Police Department and the Drug Enforcement Administration.  The U.S. Attorney’s Office was represented by Assistant U.S. Attorney Tony Bracke.

COVINGTON, Ky. — A Milford, Ohio, man who previously admitted to possessing heroin with the intent to distribute it, has been sentenced 168 months in federal prison.

On Monday, U.S. District Court Judge Amul Thapar sentenced 34 year-old Thomas Kimbro for the offense.  The sentence was enhance because of Kimbro’s  criminal record.  Under federal law, Kimbro must serve at least 85 percent of his prison sentence. 

Kimbro pleaded guilty in August 2016 and admitted that he possessed approximately six grams of heroin with the intent to distribute it in Kenton County.             

Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky, and Amy Hess, Special Agent in Charge, Federal Bureau of Investigation, jointly announced the sentence.

The investigation was conducted by the Covington Police Department and the Federal Bureau of Investigation’s Safe Streets Task Force.  The U.S. Attorney’s Office was represented by Assistant U.S. Attorney Tony Bracke.

COVINGTON, Ky. — A Florence, Ky., man, who previously admitted to conspiring to distribute over 50 grams of methamphetamine and possessing a firearm to further his drug trafficking, has been sentenced to 180 months in federal prison.

U.S. District Court Judge Amul Thapar formally sentenced 44 year-old Domingo Garcia yesterday.  Under federal law, Garcia must serve 85 percent of his prison sentence. 

Garcia previously admitted that he conspired with others to distribute between 50 and 150 grams of crystal methamphetamine and possessed a firearm in order to protect his drugs and drug proceeds. 

Garcia pleaded guilty in August of 2016. 

Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky, and Timothy J. Plancon, Special Agent in Charge, Drug Enforcement Administration, jointly announced the sentence.

The investigation was conducted by the Drug Enforcement Administration.  The U.S. Attorney’s Office was represented by Assistant U.S. Attorney Tony Bracke.

LEXINGTON, Ky. — A Lexington man, who was convicted earlier this year of receiving thousands of child pornography images, has been sentenced to 78 months in federal prison.

Today, Chief U.S. District Judge Karen K. Caldwell sentenced Xiang Wang, 32, for receipt of child pornography, and ordered him to serve 10 years of supervised release following the completion of his sentence.  Under federal law, Wang will have to serve at least 85 percent of his prison sentence.

Wang previously admitted to possessing a computer that contained approximately 7,900 images depicting children engaged in sexually explicit conduct.

The investigation started in September of 2015, when an Internet Crimes Against Children (ICAC) Task Force Officer identified an internet user who was making child pornography pictures and videos available for download on the internet.  The detective discovered the user was Wang.  In December of 2015, law enforcement officers executed a search warrant at Wang’s residence and seized a computer and two external hard drives that contained the child pornography. 

Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky; James M. Gibbons, Special Agent in Charge, Department of Homeland Security, Homeland Security Investigations; and Richard W. Sanders, Kentucky State Police Commissioner, jointly made the announcement.

The investigation was conducted by the Department of Homeland Security (DHS and the Kentucky State Police’s Electronic Crime Branch.  Assistant U.S. Attorney David Marye prosecuted this case on behalf of the federal government.

LEXINGTON, Ky. — Marvin J. Lipfird, the former Sheriff of Harlan County, has been indicted for the theft of public funds and property. 

On Thursday, a federal grand jury in Lexington returned an indictment charging Lipfird, 58, with theft of property from a federally funded program. 

The indictment alleges that Lipfird abused his former position by misusing funds and property belonging to the Harlan County government.  For example, the indictment alleges that Lipfird stole money from a fund that was intended for use in controlled drug purchases.  Additionally, the indictment alleges that Lipfird sought reimbursement from the Harlan County government for numerous personal expenses, including food, alcohol, hotel rooms, and a subscription to a dating website. 

The indictment also alleges that Lipfird caused Harlan County to pay a number of other fraudulent expenses, including duplicate payments for travel reimbursements and subscriber fees for a mobile telephone issued to a personal acquaintance.  Overall, Lipfird is alleged to have taken thousands of dollars’ worth of funds, goods, and services during his tenure as Harlan County Sheriff. 

Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky, and Amy Hess, Special Agent in Charge, Federal Bureau of Investigation, jointly announced the indictment.

The investigation preceding the indictment was conducted by the Federal Bureau of Investigation.  The indictment was presented to the grand jury by Assistant U.S. Attorney Andrew T. Boone.  A date for Lipfird to appear in court has not yet been scheduled.  He faces up to 10 years in prison and a maximum fine of $250,000.  However, any sentence following a conviction would be imposed by the Court after consideration of the U.S. Sentencing Guidelines and the federal statutes. 

Any indictment is an accusation only.  A defendant is presumed innocent and is entitled to a fair trial at which government must prove guilt beyond a reasonable doubt.

COVINGTON, Ky. — A Cincinnati man will serve 25 years in federal prison, after admitting in federal court that he distributed fentanyl to an individual in northern Kentucky, who overdosed, but survived after receiving medical treatment.

On Thursday, during the fourth day of trial, held in Covington, Antoine Dudley, 32, pleaded guilty to distributing a controlled substance that caused serious bodily injury.  U.S. District Judge Amul Thapar accepted a binding plea agreement that will require Dudley to serve 25 years in prison and 15 years of supervised release.  He is scheduled to be sentenced on December 1, 2016; and he must serve at least 85 percent of his prison sentence.  Dudley also agreed to forfeit money and two cellular phones seized at the time of his arrest.      

“The increasing use of naloxone saves lives that would otherwise be lost to drug overdoses,” said Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky.  “Happily, that was the case here, but the severe penalty for selling drugs that result in an overdose applies, even if the victim survives.  We intend to use every tool available to us in order to combat Kentucky’s opioid epidemic-including the mandatory sentence of 20 to life in cases such as this one.”

According to testimony at trial, Dudley regularly sold both heroin and fentanyl, to multiple customers throughout northern Kentucky, during a period of time between September 1, 2014 and his arrest on May 8, 2015.  Evidence showed that he distributed fentanyl, in Kenton County, on November 21, 2014 that caused the user to overdose and stop breathing.  Paramedics of the Covington Fire Department responded to the call and were able to revive the victim of the overdose through the administration of naloxone (Narcan).  The victim has made a full recovery, but evidence showed that she would have died if not for the actions of the responding paramedics.     

Dudley was on trial for conspiracy to distribute heroin and fentanyl and related distribution offenses. Dudley was initially charged in September of 2015. 

Dudley was prosecuted under the U.S. Attorney’s Office Overdose Prosecution Initiative, which has become an important tool in the battle against the heroin and opioid epidemic. 

For more information visit https://www.justice.gov/usao-edky/pr/united-states-attorneys-office-announces-successful-results-overdose-prosecution

U.S. Attorney Harvey, and Jennifer Moore, Acting Special Agent in Charge, Federal Bureau of Investigation, jointly announced the conviction.

The investigation was conducted by the F.B.I. Safe Streets Task Force and the Covington Police Department.  The U.S. Attorney’s Office was represented in the case by Assistant U.S. Attorney Tony Bracke. 

COVINGTON, Ky. — A federal jury has found a cardiologist from Ashland, Ky., guilty of charges that he fraudulently billed Medicare, Medicaid, and private insurers for invasive heart procedures that were medically unnecessary.

On Thursday afternoon, Richard E. Paulus was found guilty of health care fraud and making false statements relating to health care matters, following a seven-week trial.  According to evidence presented at trial, from 2008 to 2013, Paulus performed numerous invasive heart procedures on patients who did not need them.  In order to justify these unnecessary procedures, Paulus falsified patients’ medical records, to exaggerate their medical condition and to make it appear that the heart procedures were necessary and qualified for payment.

Specifically, Paulus was convicted of placing unnecessary coronary stents and performing unnecessary diagnostic catheterizations in patients.  Medicare, Medicaid, and private insurers will only reimburse for medically necessary procedures.  Under medical standards of care, government and private insurers generally reimburse medical providers who place coronary stents in patients whose arteries are at least 70 percent blocked plus symptoms.  According to the evidence, Paulus placed stents in over seventy patients whose blockages were significantly less than 70 percent – in some cases very little blockage at all; but Paulus recorded them at or near 70 percent in the records, in order to get paid for the procedures.  Ten cardiologists testified on behalf of the United States.  These medically unnecessary procedures were performed during his tenure at King’s Daughters Medical Center in Ashland.

“All of us rely on our healthcare providers to make treatment decisions based solely on medical considerations, untainted by financial considerations,” said Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky.  The jury determined that Dr. Paulus dishonored this fundamental duty to many of his patients in order to defraud federal healthcare programs.  This is entirely unacceptable conduct, particularly in relation to invasive medical procedures, and justice has been served in this case.  The overwhelming majority of healthcare providers put the best interest of their patients first; the failure to do so in this matter demands accountability.  This victory is a milestone in an investigation spanning several years – the citizens of the United States have been well-served by our extraordinary trial team, law enforcement partners, and all of our staff who contributed to this result.”

From 2006 to 2012, Paulus billed Medicare for more heart procedures than any other cardiologist in Kentucky and was number 5 in the nation in terms of amount paid by Medicare for stent procedures.

In May of 2014, King’s Daughters Medical Center agreed to pay the U.S. Government $40.9 million to resolve civil allegations that it made millions of dollars by falsely billing federal health care programs for performing medically unnecessary heart procedures on patients.

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, Jennifer Moore, Acting Special Agent in Charge, FBI; and Derrick Jackson, Special Agent in Charge, U.S. Department of Health and Human Services, Office of Inspector General, Atlanta Region; and Andy Beshear, Kentucky Attorney General, jointly announced the verdict.

The investigation was conducted by FBI and the Department of Health and Human Services, and the Kentucky Office of Attorney General-Medicaid Fraud and Abuse Control Unit. Assistant United States Attorneys Andrew Sparks and Kate Smith prosecuted the case on behalf of the federal government.  Paulus is scheduled to be sentenced on April 25, 2017.  He faces a maximum of 20 years for health care fraud and up to five years for making false statements.

          United States Attorneys Kerry B. Harvey and John E. Kuhn Jr., announced today that Assistant United States Attorney (AUSA) Ken Taylor and Assistant United States Attorney Tom Dyke, will lead the efforts of their Offices in connection with the Justice Department’s nationwide Election Day Program for the upcoming November 8, 2016, general elections.  AUSA Taylor has been appointed to serve as the District Election Officer (DEO) for the Eastern District of Kentucky and AUSA Dyke has been appointed to serve as the DEO for the Western District of Kentucky, and in that capacity they are responsible for overseeing the Districts’ handling of complaints of election fraud and voting rights abuses in consultation with Justice Department Headquarters in Washington.

            United States Attorney Kuhn said, “Ensuring free and fair elections depends in large part on the cooperation of the American electorate.  It is imperative that those who have specific information about discrimination or election fraud make that information available immediately to one of the U.S. Attorneys’ Offices, the FBI, or the Civil Rights Division.”           

            Every citizen has a right to vote without interference or discrimination and to have that vote counted in a fairly conducted election,” stated Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky.  “The Department of Justice will act promptly and aggressively to protect the integrity of the election process.” 

            The Department of Justice has an important role in deterring election fraud and discrimination at the polls, and combating these violations whenever and wherever they occur.  The Department’s long-standing Election Day Program furthers these goals, and also seeks to ensure public confidence in the integrity of the election process by providing local points of contact within the Department for the public to report possible election fraud and voting rights violations while the polls are open on election day.

            Federal law protects against such crimes as intimidating or bribing voters, buying and selling votes, impersonating voters, altering vote tallies, stuffing ballot boxes, and marking ballots for voters against their wishes or without their input.  It also contains special protections for the rights of voters and provides that they can vote free from acts that intimidate or harass them.  For example, actions of persons designed to interrupt or intimidate voters at polling places by questioning or challenging them, or by photographing or videotaping them, under the pretext that these are actions to uncover illegal voting may violate federal voting rights law.  Further, federal law protects the right of voters to mark their own ballot or to be assisted by a person of their choice.

            The franchise is the cornerstone of American democracy.  We all must ensure that those who are entitled to the franchise exercise it if they choose, and that those who seek to corrupt it are brought to justice.  In order to respond to complaints of election fraud or voting rights abuses on November 8, 2016, and to ensure that such complaints are directed to the appropriate authorities, AUSA/DEO Ken Taylor will be on duty in Lexington, while the polls are open.  He can be reached by the public at the following telephone numbers: (859) 685-4874 or (859) 321-9488.  AUSA/DEO Tom Dyke will be on duty in Louisville, while the polls are open. He can be reached by the public at the following telephone numbers: (502) 625-7042 or (502) 381-1886.

            In addition, the FBI will have special agents available in each field office and resident agency throughout the country to receive allegations of election fraud and other election abuses on election day.  The local FBI field offices can be reached by the public at (859) 246-4700 in Lexington and (502) 263-6000 in Louisville.

            Complaints about possible violations of the federal voting rights laws can be made directly to the Civil Rights Division’s Voting Section in Washington, DC by phone at 1-800-253-3931 or (202) 307-2767, by fax at (202) 307-3961, by email to voting.section@usdoj.gov or by complaint form at http://www.justice.gov/crt/complaint/votintake/index.php.

COVINGTON, Ky. — A federal grand jury has charged a Cincinnati man and a Morehead, Ky., man with distributing carfentanil that resulted in multiple overdoses in Rowan County, Ky.

On Thursday, Travis Clark, 28, of Cincinnati, and Matthew Bowman, 27, of Morehead, were indicted for one count each of conspiring to distribute carfentanil, which is a fentanyl analogue, and distribution of carfentanil, resulting in serious bodily injury.

Carfentanil is an extremely powerful synthetic opioid that is 10,000 times more potent than morphine and 100 times more potent than fentanyl – which is itself 50 times more potent than heroin.  Carfentanil is a controlled substance typically used as a tranquilizing agent for elephants and other large mammals.  Recently, the Drug Enforcement Administration issued a warning to the general public and to law enforcement personnel nationwide about the health and safety risks associated with carfentanil.

According to the indictment, on September 7th and 8th of this year, Clark and Bowman illegally distributed carfentanil that resulted in seven drug overdoses.

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky; Timothy J. Plancon, Special Agent in Charge, DEA; and Derrick Blevins, Chief of the Morehead Police Department, jointly announced the indictment.

The investigation was conducted by the DEA and the Morehead Police Department.

The overdose charge carries a minimum of 20 years and up to Life in prison, upon conviction; the conspiracy charge carries a minimum of five years and up to 40 years.  Any sentence following a conviction, however, would be imposed after the Court considers the U.S. Sentencing Guidelines and the applicable law.

An indictment is an allegation only.  All defendants are presumed innocent and are entitled to a fair trial, at which the government must prove their guilt beyond a reasonable doubt.

Video links will be sent to hundreds of school administrators,
in more than 60 counties in Kentucky Videos have potential to reach 1.7 million people on Facebook Videos include perspectives from parents, a federal prison inmate,
a recovering addict, medical and health professionals, and more.

LEXINGTON, Ky. — The U.S. Attorney’s Office for the Eastern District of Kentucky is announcing the launch of a video campaign to better educate communities on the opioid and heroin epidemic and address misperceptions about the problem. The office has created four videos that are now available on its website: justice.gov/usao-edky/heat. The videos will be promoted using social media, and links to the videos will be sent to over a thousand school and community leaders, including mayors, county judge executives, and school resource officers, across the 67 counties comprising the eastern half of the state.

The videos include a wide variety of perspectives on the opiate issue – including that of a federal prison inmate, an addict in recovery, parents who have lost a child to an overdose, a nurse-manager of a hospital Emergency Department, one of the nation’s top physician addiction specialists, a public health official, a federal prosecutor, the head of the DEA in Kentucky, and U.S. Attorney Harvey.

The videos will address topics such as the origin and escalation of the opiate epidemic; why a person turns to opiates; the nature of opiate addiction; what parents need to know to educate their children concerning the danger of opiate abuse, and law enforcement efforts to combat the problem.

"To win this fight, we must clearly understand what we’re up against," said U.S. Attorney Harvey. "We must acknowledge that the opioid epidemic threatens every segment of our community and we must eliminate the false stereotypes and misperceptions that hamper our efforts. These videos provide important insights from those who, in one way or another, have been deeply affected by this epidemic. These videos will compliment what our families from the USA HEAT program are already doing in their presentations to community."

The campaign includes a social media strategy that has the potential to reach 1.7 million people in the eastern half of Kentucky using Facebook.

Below is a list and description of the videos:

Heroin’s Hold (22:30): A history and current state of the opioid epidemic. Medical, public health, and law enforcement professionals explore the relationship between widespread use of prescription opioids and the heroin epidemic. Addicts tell their stories of the power of addiction. Families share their stories and advice after overdose deaths.

 

Heroin is Here (4:09): Federal prosecutor and DEA Special Agent explore the history and current state of the opioid epidemic, including the prevalence of heroin and fentanyl, and the federal government’s drug enforcement response.
 

 

Heroin is Hell (4:09): Recovering addicts and their families share their stories of the path and power of opioid addiction and the struggle to overcome addiction.
 

 

Heroin Hurts (4:19): Families tell about the struggle of opioid addiction and tragedy of heroin and fentanyl overdose deaths.
 

 

 

To learn more about the United States Attorney’s fight against Kentucky’s heroin epidemic, please visit USA HEAT at justice.gov/usao-edky/heat, or Google "U.S. Attorney’s HEAT."

The defendant sold fentanyl that was disguised as a pain pill

 

 LEXINGTON, Ky. — A Lexington, Ky., man, who previously admitted to distributing fentanyl, that was disguised as a pain pill and caused the overdose death of a Woodford County woman, has been sentenced to 20 years in federal prison.

On Thursday, U.S. District Judge Karen Caldwell sentenced Gill Dewayne Garrett for distribution of a controlled substance resulting in death.  Under federal law, anyone convicted of this offense faces a minimum of 20 years and a maximum of life in prison, without parole.  Garrett’s drug supplier and co-defendant, Luis Aguierre-Jerardo has entered into a binding plea agreement with the federal government that will result in a sentence of at least 28 years and no more than 33 years.  He will be sentenced on December 8, 2016.

“Mr. Garrett sold the fentanyl, a deadly drug, that killed a woman who was seeking a pain pill,” said Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky.  “He exploited her addiction in order to make a few dollars without regard for the tragic consequences of his criminal behavior.  His sentence is entirely appropriate and demonstrates the powerful impact of our Overdose Prosecution Initiative which brings together state, local and federal authorities to prosecute professional drug dealers who cause death and serious injury.”

Garrett, pleaded guilty to the offense in April and admitted that, in July 2015, Aguirre-Jerardo had provided him with a counterfeit pain pill.  The pill looked like Oxycodone, but contained fentanyl, and Garrett distributed it to Jolene Bowman knowing it was fentanyl.  Bowman consumed the pill, and subsequently died of an overdose.  Illicitly manufactured fentanyl is increasingly the cause of overdose deaths in Kentucky.

Versailles Police used Ms. Bowman’s cell phone to trace the source of the fentanyl pill to Garrett and later found that Aguirre-Jerardo had supplied Garrett with the fentanyl pill.

An autopsy confirmed that the cause of death was a drug overdose and toxicologists concluded that had it not been for the fentanyl in the pill, Bowman would not have died.

U.S. Attorney Harvey, Timothy J. Plancon, Special Agent in Charge, Drug Enforcement Administration, and James Fugate, Chief of Police, Versailles Police Department, jointly made the announcement.

The investigation was conducted by the Versailles Police and the DEA.  Assistant U.S. Attorney Todd Bradbury prosecuted this case on behalf of the federal government.

 

Partnership focuses on more training for investigators, more prosecutions of high-level dealers, and intervention.

 

LEXINGTON, Ky. — U.S. Attorney Kerry B. Harvey, the Drug Enforcement Administration (DEA), and Lexington Police Chief Mark Barnard  jointly announce a new initiative  aiming to implement a comprehensive approach to  central Kentucky’s opioid epidemic. 

As part of the plan, the Lexington Police have added officers to its narcotics unit with an enhanced focus on investigating overdose cases.  Certain of these officers will exclusively investigate overdose cases, that result in either death or serious bodily injury, in conjunction with the U.S. Attorney’s Office’s overdose prosecution initiative.  That initiative focuses on prosecuting dangerous drug dealers and their suppliers, who distribute heroin,  fentanyl and other opioids that cause overdoses, under a federal statute that imposes  a mandatory minimum of 20 years in prison and up to life imprisonment upon conviction.  Prosecutors with the U.S. Attorney’s Office and officers of the Lexington Police Department will jointly train on best practices in the investigation and prosecution of overdose cases.

Beginning this month, Lexington Police are carrying naloxone, a life-saving medication used to revive individuals who have overdosed on opioids such as oxycodone, heroin or fentanyl.  The new initiative plans to provide treatment information to survivors of an overdose who suffer from addiction. The Lexington Police Department is currently working with the City’s Substance Abuse and Violence Intervention program to identify medical providers and recovery specialists who can partner in this initiative.

“Kentucky’s opioid epidemic requires an all hands on deck approach,” said U.S. Attorney Harvey. We must make central Kentucky an inhospitable environment for drug dealers and their suppliers.  Our deepening partnership with the Lexington Police is a potential game changer in combatting this scourge in our community.   Prosecutions alone cannot solve this problem, however, and  we must create partnerships that make effective, affordable addiction treatment available   to those in need on a timely basis.  Prevention and education efforts must be intensified as well.  I applaud Chief Barnard’s leadership on this issue, and look forward to working closely with him as we convene community stakeholders in order to devise innovative responses to this threat.”

“We have nearly doubled the number of personnel assigned to our Narcotics Enforcement Unit because the problem we’re seeing in our community is that significant,” Chief Barnard said. “Two detectives focus specifically on overdose cases. The goal is to track down drug dealers who are preying on individuals suffering from addiction and destroying families, while also making sure victims are connected with the resources they need to get help.”

LEXINGTON, Ky. —Timothy M. Longmeyer, the former Secretary of the Kentucky Personnel Cabinet, who previously admitted that he solicited and accepted over $200,000 in kickbacks from a private consultant during his tenure, has been sentenced to 70 months in federal prison.

U.S. District Judge Karen Caldwell sentenced Longmeyer, 48, for bribery of a public official.  Judge Caldwell also ordered Longmeyer to pay $203,500 in restitution.  Under federal law, Longmeyer must serve at least 85 percent of his prison sentence.  

Longmeyer pleaded guilty in April of this year and admitted that, while serving as Secretary of the Personnel Cabinet, he solicited and agreed to accept $212,500, in exchange for assistance in securing multimillion-dollar contracts for a consultant.  Over the course of the scheme, Longmeyer received $197,500 in cash and $6,000 in straw campaign contributions to various political campaigns, for a total of $203,500.

“We appreciate the Court’s thoughtful decision in this matter and we are satisfied with the result,” said Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky. “No cases have a higher priority in our office than those involving public corruption, and we are committed to protecting the public from those who seek to unlawfully enrich themselves at the taxpayers’ expense.”

The sentencing today of Timothy Longmeyer, the guilty plea of co-conspirator Larry O’Bryan yesterday, along with the guilty verdicts returned Tuesday against Paintsville Mayor Robert Porter and on August 12 against Magoffin County Magistrate Gary Risner and others, are an indication of the FBI’s commitment to the citizens of the Commonwealth of Kentucky to combat corruption of public officials at all levels," said Howard Marshall, Special Agent in Charge of the FBI.

Longmeyer oversaw the Kentucky Employees’ Health Plan ("KEHP") and used his position to persuade insurance companies, who provided KEHP healthcare coverage, to hire the consultant to organize focus groups and telephone surveys.  In return, Longmeyer accepted recurring payments from the consultant, including cash and straw contributions.

According to the plea agreement, Longmeyer agreed to accept $90,000 from the consultant in November 2014 and $100,000 from the consultant in December 2014.  The consultant later used the proceeds from contracts with Humana, Inc., to make a series of payments to Longmeyer between November 2014 and June 2015, totaling $175,000 in cash and $6,000.00 in straw contributions.

In addition, in September 2015, Longmeyer agreed to accept approximately $22,500 from the consultant.  The consultant used the proceeds from a contract with Anthem Blue Cross Blue Shield to make two cash payments to Longmeyer, totaling $22,500.

Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky, and Howard Marshall, Special Agent in Charge, Federal Bureau of Investigation, jointly announced the sentence. Assistant U.S. Attorneys Andrew T. Boone and Kathryn M. Anderson prosecuted the case on behalf of the federal government.

LEXINGTON, Ky — Lawrence J. O’Bryan, a business owner from Louisville, Ky., admitted in federal court today that he participated in a kickback scheme involving the former Secretary of the Kentucky Personnel Cabinet, Timothy Longmeyer. 

O’Bryan, 57, pleaded guilty to three counts charging bribery of a public official, before U.S. District Judge Karen Caldwell.  O’Bryan waived his right to be indicted by a grand jury and pleaded guilty to the charges brought by Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky.’

O’Bryan admitted that he worked with Longmeyer to formulate the kickback scheme beginning in 2009.  Longmeyer agreed to use his position to persuade Humana, Inc., to hire MC Squared Consulting, LLC for consulting services related to the Kentucky Employees’ Health Plan, which Longmeyer oversaw.  The owner of MC Squared agreed to pay O’Bryan approximately half of MC Squared’s proceeds from its contracts with Humana.  Upon receiving payments from MC Squared and withholding the portions he believed were payable as taxes, O’Bryan would then kick back fifty percent of the remaining funds to Longmeyer. 

Between October 2011 and March 2014, O’Bryan accepted $642,201.50 in payments from the owner of MC Squared.  O’Bryan withheld a portion of each such payment and then used various methods to pay Longmeyer fifty percent of the remaining funds.  O’Bryan’s role as the intermediary for money paid by MC Squared to Longmeyer ended in approximately March 2014.  O’Bryan owned Proactive Media, a consulting business in Louisville.

United States Attorney Harvey and Howard Marshall, Special Agent in Charge, Federal Bureau of Investigation, jointly announced the guilty plea.  The U.S. Attorney’s Office was represented by Assistant U.S. Attorneys Andrew T. Boone and Kathryn M. Anderson. 

O’Bryan is scheduled to be sentenced on January 19, 2017. He faces up to 10 years in prison and a maximum fine of $250,000 for each count.  However, any sentence following a conviction would be imposed by the Court after consideration of the U.S. Sentencing Guidelines and the federal statutes.

The defendant used city funds for personal expenses

LONDON, Ky. —Paintsville Mayor Robert Porter has been found guilty of misappropriating property and city resources.

A federal jury in London, Ky., convicted Porter on 2 of the three counts of theft of federal funds and one count of bribery.  The jury returned the verdict after more than three hours of deliberation, following four days of trial. 

One of Porter’s co-defendants, Larry Herald, the former general manager of the Paintsville Utilities Commission, previously pleaded guilty to lying to an FBI agent about his knowledge of Porter’s delinquent utility bills.

Evidence presented at the trial established that, from 2009 until 2012, Porter, with the knowledge, approval and assistance of Herald, did not pay for utilities services provided to residences that he owned in Paintsville.  The total delinquency was in excess of $7,000.  The evidence also revealed that Porter used thousands of dollars in city and federal funds to pay for personal expenses, such as: maintenance and repairs on his personal automobiles, gasoline for personal trips, and shipping fees for personal items.  Evidence at the trial also established that Porter used a city owned vehicle, seized from a drug investigation by the Paintsville Police Department, for personal trips.

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, Howard S. Marshall, Special Agent in Charge, FBI, and Richard W. Sanders, Kentucky State Police Commissioner, jointly made the announcement. 

The investigation was conducted by the FBI and the Kentucky State Police.  Assistant U.S. Attorneys Ken Taylor and Andrew Boone are prosecuting this case on behalf of the federal government.  Porter is scheduled to be sentenced on January 12.  Misappropriating federal property and bribery of a public official each carries a maximum penalty of 10 years and making false statements to a federal agent carries a maximum penalty of five years.  However, any sentence following a conviction will be imposed after the Court carefully considers the U.S. Sentencing Guidelines and the federal statutes.

LEXINGTON, Ky, — A Lexington man, who will appear in Court this afternoon, has been charged with possession with intent to distribute large quantities of fentanyl in Fayette County.

William S. Dixon, 55, was indicted on September 9, 2016, by a federal grand jury, for one count of possession with intent to distribute fentanyl and one count of possession with intent to distribute acylfentanyl, fentanyl and heroin.

According to the indictment, in July of this year, Lexington Police conducted a search at Dixon’s residence and discovered at least 40 grams of pure fentanyl. 

“We are fortunate to have seized this fentanyl before it was distributed,” said Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky.  “ Minute quantities of  fentanyl can be deadly. Given the damage fentanyl has caused in central Kentucky, it’s staggering to consider the harm that would have been done by these drugs on the streets of our community.”

“This case represents the largest seizure of pure fentanyl to date for our agency,” Lexington Police Chief Mark Barnard said.  “Families are hurting because of the abuse of fentanyl, heroin, and other opioids.  We are continuing to investigate this case.  This problem needs to be attacked from all sides.  We’re working to bring drug dealers and their suppliers to justice, and we’re working with addiction intervention experts to help connect victims with the help they need.”

Dixon is an employee of the city’s Division of Water Quality. He is currently on paid leave due to an on-the-job injury that occurred in April.

U.S. Attorney Harvey; Timothy J. Plancon, Special Agent in Charge of the Detroit Field Division of the Drug Enforcement Administration; and Mark Barnard, Chief of Lexington Police, jointly made the announcement.

The investigation was conducted by Lexington Police and the DEA.  Assistant U.S. Attorney Cindy Rieker is prosecuting this case on behalf of the federal government.

Dixon is scheduled for a detention hearing today at 2:00 in Lexington.  At this hearing the Court will determine whether Dixon will remain in custody pending trial.  If convicted, Dixon faces a minimum of 5 years and a maximum of 40 years in federal prison.  However, any sentence imposed, upon a conviction, would come after the Court carefully considers the U.S. Sentencing Guidelines and the applicable statutes.

An indictment is an allegation only.  All defendants are presumed innocent and are entitled to a fair trial, at which the government must prove their guilt beyond a reasonable doubt.

 

COVINGTON, Ky. — On September 8, 2016, the FBI arrested Marie A. Castelli, 55, of Maysville, Kentucky, pursuant to a federal indictment and arrest warrant.  The indictment alleges that Castelli knowingly transmitted communications intended to be a threat to injure the person of another in violation of 18 U.S.C. §§ 875(c) and (2).  The indictment further alleges that Castelli willfully and knowingly made materially false statements to the FBI in violation of 18 U.S.C. § 1001(a)(2).  Today, September 9, 2016, Castelli appeared before a federal judge for an arraignment.  The court ordered Castelli detained pending any further orders of the court.

There is no current threat to public safety related to this arrest, and it is not related to the upcoming anniversary of the terrorist attacks of September 11, 2001.  The FBI and its federal, state, and local partners remain vigilant in keeping the public from harm.

An indictment is an allegation only.  All defendants are presumed innocent and are entitled to a fair trial, at which the government must prove their guilt beyond a reasonable doubt.

LEXINGTON — A Lexington man has been sentenced to 365 months in federal prison, for distributing heroin and fentanyl that resulted in the death of a 29 year-old woman, who had given birth just two weeks before her death.

On Thursday, U.S. District Judge Danny Reeves sentenced 44 year-old Christopher Allen for distributing a controlled substance resulting in death.  Under federal law, Allen must serve at least 85 percent of his prison sentence.

 In May of this year, a jury convicted Allen of distributing heroin and fentanyl resulting in death, conspiracy to distribute heroin and fentanyl, and possession with intent to distribute heroin and fentanyl. 

“It’s hard to imagine a greater issue facing our commonwealth than this opiate crisis that continues to take lives and devastate families,” said Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky.  “The people responsible for these tragedies, like Mr. Allen, have a heavy price to pay for their decision to pedal these poisons.  This is a crisis that requires us to use every available tool to fight back.  One such tool is our federal law that imposes a prison sentence of 20 years to life, with no parole, on those professional drug dealers and suppliers that sell heroin, fentanyl or other opiates, which result in death or serious bodily injury.  We are working closely with our law enforcement partners to find those dealers we consider to be the worst the worst, and apply this law when necessary.”  

According to trial testimony, in September of 2015, Allen distributed heroin and fentanyl to Nicole Alvarez, who had given birth to a baby two weeks before her overdose.  Alvarez was found by her boyfriend in her home. 

Authorities were able to verify that Allen supplied the drugs to Alvarez.  A toxicologist testified that Alvarez died as a result of the toxic effects of the heroin and fentanyl and that the level of fentanyl in her system was three times the therapeutic range. 

U.S. Attorney Harvey; Timothy J. Plancon, Special Agent in Charge of the Detroit Field Division of the Drug Enforcement Administration; and Mark Barnard, Chief of Lexington Police, jointly made the announcement.

The investigation was conducted by the Lexington Police and DEA.  Assistant U.S. Attorneys Todd Bradbury and Cindy Rieker prosecuted this case on behalf of the federal government.  

LEXINGTON, Ky. – A Morehead, Ky., man has been sentenced to 35 years in federal prison for video recording himself engaged in sexually explicit conduct with a minor, under the age of 12 years old.

On Monday, August 15, U.S. District Judge David L. Bunning sentenced Steven Michael Rose, 44, for the offense. Under federal law, Rose must serve at least 85 percent of his prison sentence. Upon his release, he will then be under the supervision of the U.S. Probation Office for 15 years.

At his guilty plea, in April of this year, Rose admitted that he coerced the minor to engage in sexually conduct with him and he made a video of the encounter on his cell phone.

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, and Howard Marshall, Special Agent in Charge, FBI, jointly announced the sentence.

The investigation was conducted by the FBI. Assistant U.S. Attorney David A. Marye prosecuted this case on behalf of the federal government.

Guilty plea marks the first case in Central Kentucky in which multiple defendants have been convicted of distributing opiates that caused an overdose death

LEXINGTON, Ky. – The leader of a drug conspiracy in Versailles, Ky., is the second defendant to plead guilty to distributing fentanyl that caused the overdose death of a Woodford County woman.

On Monday, Luis Aguirre-Jerardo, 28, pleaded guilty before U.S. District Judge Karen Caldwell to distribution of a controlled substance resulting in death. Under federal law, anyone convicted of this offense faces a minimum of 20 years and a maximum of life in prison, without parole. Aguierre-Jerardo has entered into a binding plea agreement with the federal government that will result in a sentence of at least 28 and no more than 33 years. He will be sentenced on December 8, 2016.

A co-defendant, Gill Dewayne Garrett, 30, of Lexington, Ky., pleaded guilty in April to the same offense and faces a minimum of 20 years in prison. A third co-defendant, Allen P. White, 24, of Versailles previously pleaded guilty to a conspiracy charge.

“This case demonstrates the power of our initiative to aggressively use tough federal laws punishing those that illegally distribute drugs that result in overdoses,” said Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky. “As a result of our overdose prosecution initiative, we removed from our streets both the retail drug dealer and his up-the-chain supplier as well. Mr. Aguirre-Jerardo was distributing substantial quantities of counterfeit pills containing fentanyl, a powerful drug killing hundreds throughout the Eastern District of Kentucky. Absent our overdose initiative and the great work of our law enforcement partners, Mr. Aguirre-Jerardo and Mr. Garrett would likely remain engaged in their deadly trade.”

Aguirre-Jerardo admitted that, in July 2015, he provided a counterfeit pain pill to Garrett who distributed the pill to Jolene Bowman. Bowman consumed the pill, and subsequently died of an overdose. The pill looked like Oxycodone but instead contained fentanyl, a powerful opioid as much as 100 times more potent than morphine. Illicitly manufactured fentanyl is increasingly related to overdose deaths in Kentucky. Woodford County Police used Ms. Bowman’s cell phone and traced the source of the fentanyl pill to Garrett and later found that Aguirre-Jerardo had supplied Garrett with the fentanyl that he gave to Bowman.

The autopsy confirmed that the cause of death was a drug overdose. Toxicologists concluded that had it not been for the fentanyl in the pill, Bowman would not have fatally overdosed.

U.S. Attorney Harvey, Timothy J. Plancon, Special Agent in Charge, Drug Enforcement Administration, and James Fugate, Chief of Police, Woodford County Police Department, jointly announced the plea.

The investigation was conducted by the Woodford County Police and the DEA. Assistant U.S. Attorney Todd Bradbury prosecuted this case on behalf of the federal government.

Garrett will be sentenced on December 8, 2016. Aguirre-Jerardo and Garrett must serve at least 85 percent of their prison sentences. Any sentence imposed by the Court will come after consideration of the U.S. Sentencing Guidelines and the federal statutes.

A centerpiece of the office’s comprehensive approach to combatting the opioid epidemic, the initiative has resulted in important convictions in three local cases

                                                                                                

LEXINGTON, Ky. – As part of a comprehensive approach to combatting the opioid epidemic facing the Commonwealth, in early 2015 the United States Attorney’s Office established an Overdose Prosecution Initiative, which has become an important tool in the battle against illegal drug trafficking in Kentucky.

Under federal law, defendants convicted of drug trafficking involving a Schedule I or Schedule II drug, that results in a death or serious bodily injury (i.e., an overdose), are subject to a mandatory minimum sentence of twenty years or, if they have a qualifying prior conviction, a mandatory term of life imprisonment.  This significant penalty has two practical effects on many drug dealers:  it gives them an enormous incentive to assist law enforcement in the investigation and prosecution of others, and it represents a potentially enormous deterrent to dealing drugs.

Relying on this impactful sentencing provision, the United States Attorney’s Office, in partnership with the Drug Enforcement Administration, developed a considered plan to increase the use of this penalty provision, to increase the cooperation between federal and state law enforcement and community partners, to train state and local partners on building effective cases for prosecution, and to enhance the law enforcement response to this growing epidemic.

On Monday, three important convictions were obtained in local overdose cases, evidencing the effectiveness of this valuable law enforcement tool.  Each of the cases highlights an important aspect of the prosecution initiative and the critical nature of the opioid epidemic.

First, in a case from Woodford County, the initiative resulted in the conviction of both Luis Aguirre-Jerardo and Gill Dewayne Garrett.  These men admitted that, in July 2015, they distributed a counterfeit pain pill to a Woodford County woman, who consumed the pill and subsequently died of an overdose.  The pill, made to look like Oxycodone, instead contained fentanyl, a powerful opioid as much as 100 times more potent than morphine.  The investigation established that Aguirre-Jerardo was a major distributor of these deadly counterfeit pills in Central Kentucky.  This case, one of the first to arise from the training provided under the initiative, represents the first time the office has prosecuted not only the street-level dealer, but also his up-the-chain source of supply, for the same overdose.  Both men now face more than twenty years in federal prison.

Next, the initiative has now produced the conviction of several members of an organization responsible for trafficking in large amounts of heroin and fentanyl in Madison County.  Two of these defendants, Navarius Westberry and Benjamin Fredrick Charles Robinson, both from Michigan, were convicted of distributing drugs that resulted in an overdose – in Westberry’s case, a fatal overdose.  Collectively, this organization was responsible for distributing between 750 and 1,000 grams of heroin and 50 grams of fentanyl in Madison County.  The investigation revealed that Westberry and Robinson relocated to Kentucky for the sole purpose of establishing a heroin distribution network.  Both also face at least twenty years in federal prison.

 The Detroit area is a significant source of supply for the growing amounts of heroin, fentanyl, and other narcotics being distributed throughout the Eastern District of Kentucky.  This Madison County case marks the first time the office has applied the federal overdose provisions to Michigan defendants who distributed drugs in Kentucky causing an overdose.  This case represents an important success in the effort to disrupt the pipeline of illicit drugs that flows from Detroit, into Kentucky.

Finally, in a case from Lexington/Fayette County, the initiative produced the conviction of Fred Rebmann.  Rebmann admitted that he distributed fentanyl to a Lexington woman, who was several months pregnant at the time, causing her death.  This case places the tragic scope of this epidemic in clear focus and underscores the critical need to continue efforts to educate the public and enhance law enforcement efforts to battle this growing problem.

“We are committed to using every tool available in combatting this terrible epidemic,” said Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky.  “We employ the tough federal law regarding overdoses advisedly, in order to prosecute those who engage in truly predatory behavior, with tragic results.  Our initiative is succeeding because of the skill and dedication of our local law enforcement partners, county coroners, and the DEA.” 

Since its inception, the Overdose Prosecution Initiative has been the direct source of several important prosecutions and has led to convictions against numerous drug traffickers who, collectively, are responsible for enormous quantities of very dangerous drugs and many overdose deaths in our community.  Convictions have been won in every case prosecuted under the initiative that has reached a conclusion.   These most recent successes evidence the scope of this growing problem, the effectiveness of the Overdose Prosecution Initiative, and the need for a comprehensive approach to combatting this serious opioid epidemic.

LEXINGTON, Ky. – A Lexington man has admitted that he distributed fentanyl, which caused the overdose death of a Fayette County woman who was several months pregnant.

On Monday, Fred Rebmann, 31, pleaded guilty to distributing a controlled substance that resulted in death. Under federal law, Rebmann will face a minimum of 20 years in prison and a maximum of life imprisonment and must serve at least 85 percent of his sentence.

Rebmann admitted that, in February of this year, he sold the pregnant woman what she thought was heroin. Instead, what he sold her was fentanyl, a powerful opioid as much as 100 times more potent than morphine. She consumed the drugs and died.

Toxicology reports confirmed that she had five times the therapeutic dose of fentanyl in her system and no traces of heroin or other controlled substances. The report also concluded that, had it not been for the fentanyl, she would not have died.

“This case starkly demonstrates the predatory nature of heroin trafficking,” said Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky. “For less than $100, the Defendant sold an obviously pregnant woman the most deadly drug commonly available on our streets. The tragic result was all too predictable.”

U.S. Attorney Harvey, Timothy J. Plancon, Special Agent in Charge, Drug Enforcement Administration, and Mark Barnard, Chief of Police, Lexington Police Department, jointly announced the plea.

The investigation was conducted by DEA and Lexington Police. Assistant U.S. Attorney Todd Bradbury prosecuted this case on behalf of the federal government.

Rebmann is scheduled to be sentenced on November 14, 2016. Any sentence imposed by the Court will come after consideration of the U.S. Sentencing Guidelines and the federal statutes.

The guilty plea serves as a landmark prosecution in the efforts to disrupt Detroit’s drug pipeline to Kentucky

LEXINGTON, Ky. – The leader of a drug trafficking organization that brought significant amounts of heroin and fentanyl from Detroit, Mich., to Richmond, Ky., has admitted that he distributed fentanyl that caused the overdose death of a Madison County resident earlier this year.

On Monday, Navarius Westberry, 38, originally from Michigan, but living in Lexington, pleaded guilty to distributing a controlled substance resulting in an overdose death. Westberry faces a minimum of 20 years and a maximum of life in prison, without parole. He will be sentenced on November 8, 2016.

Westberry admitted that, from January 2014 until August 2015, he organized and operated a drug trafficking organization in Richmond that distributed between 750 and 1,000 grams of heroin and 50 grams of fentanyl. Westberry also admitted that, in March 2016, he supplied heroin and fentanyl that led to the overdose death of 25 year-old Corey Brewer. The toxicology report and autopsy showed that Brewer’s death was caused by toxic levels of fentanyl.

One of Westberry’s co-defendants, Benjamin Fredrick Charles Robinson, 21, also from Detroit, previously pleaded guilty to distributing fentanyl that caused another overdose. That victim survived the overdose after receiving medical treatment. Robinson is subject to the same penalty range, as Westberry. Both defendants must serve at least 85 percent of the prison sentences imposed at their upcoming sentencing hearings.

“We have known for some time that the Detroit area is a significant source of supply for the growing amounts of heroin, fentanyl, and other narcotics that are devastating so many Kentucky communities,” said Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky. “The evidence indicates that the leaders of this conspiracy relocated to Central Kentucky for the sole purpose of establishing a heroin distribution network in our communities. The results, were deadly. This case represents a significant victory in our ongoing efforts to disrupt the “Detroit Pipeline” and is a shining example of effective collaboration between federal and local law enforcement agencies.”

This case marks the first time the U.S. Attorney’s Office for the Eastern District of Kentucky has applied the federal overdose provisions in a case involving defendants from Michigan whose distribution of drugs in Kentucky caused an overdose.

Three others, including Kevin Feltner, 24, of Richmond, Dion Terry Taylor, 23, from Detroit, and Kathy Lashell Brown Miller, 30, also of Richmond, have previously pleaded guilty to their roles in the drug conspiracy and are awaiting sentences.

U.S. Attorney Harvey, Timothy J. Plancon, Special Agent in Charge, Drug Enforcement Administration, and Robert Mott, Acting Police Chief, Richmond Police Department, jointly announced the plea.

The investigation was conducted by the DEA and the Richmond Police. Assistant U.S. Attorney Todd Bradbury prosecuted this case on behalf of the federal government.

Any sentence imposed will come after the Court considers the U.S. Sentencing Guidelines and the federal statutes.

COVINGTON, Ky. — A Crittenden, Ky., woman has been sentenced to 224 months in federal prison for providing illegal drugs to her daughter, an inmate in the Kenton County Jail, who subsequently died of an overdose.

Today, U.S. District Judge Amul Thapar sentenced Kimberly Mullins, 44, for conspiracy to distribute fentanyl and morphine that resulted in an overdose death.  Two co-defendants, Lisa Lattimore and Lynette Ball, received 160 and 144 months, respectively, for their roles in the conspiracy.  Under federal law, all three must serve at least 85 percent of their prison sentences.  A fourth defendant, Michael Howard, who supplied the drugs to Mullins, has pleaded guilty and is awaiting sentencing.

Mullins, Lattimore, and Ball admitted that, on September 4, 2015, they conspired to bring illegal drugs into the Kenton County Jail.  Mullins bought what she thought was heroin from Howard that day; but the substance actually contained a combination of fentanyl and morphine.  Mullins arranged for the substance to be delivered to her daughter, Jamie Green, through co-defendants Ball and Lattimore, fellow inmates in the Kenton County Jail. 

During the early morning hours of September 5, 2015, Green took the substance and died of an overdose shortly thereafter.  Mullins admitted that she had been regularly arranging deliveries of heroin to her daughter, while her daughter was incarcerated.  

Mullins, Lattimore, and Ball pleaded guilty on March 29, 2016.  Two other individuals, Mabry Baioni and Heather Tucker, were later charged and pleaded guilty to conspiring with Howard and Mullins to distribute heroin to Green, while Green was in the Campbell County Detention Center.  Baioni and Tucker did not take part in the Kenton County events that led to Green’s death.

Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky, and Timothy J. Plancon, Special Agent in Charge, Drug Enforcement Administration, jointly announced the sentences.  The investigation was conducted by the Cincinnati Field Office of the Drug Enforcement Administration and the Kenton County Police Department.  Assistant U.S. Attorney Tony Bracke represents the federal government in this case.

Howard is scheduled to be sentenced on September 23, 2016.  He faces up to life in prison and a fine of $1,000,000.00.  Any sentence, however, will be imposed by the Court after consideration of the U.S. Sentencing Guidelines and the federal statutes.

COVINGTON, Ky. – A Dayton, Ky., man has been sentenced to 20 years in federal prison for distributing child pornography. 

On Wednesday, U.S. District Judge Amul Thapar formally sentenced Paul Morris, 40, and also ordered him to serve a lifetime of supervised release, upon his release from prison.   Under federal law, Davis must serve at least 85 percent of his prison sentence.

At his guilty plea in March of this year, Morris admitted that he had uploaded videos and images that depicted minors engaged in sexually explicit conduct to an online messaging application, back in July of 2015.

Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky, and James M. Gibbons, Special Agent in Charge, Homeland Security Investigations (Chicago Field Division), jointly announced the sentence.

The investigation was conducted by HSI.  Assistant United States Attorney Elaine K. Leonhard prosecuted this case on behalf of the federal government.

LEXINGTON, Ky. – The United States Government has sued a Lexington man, and the Lexington-based medical device company he owns, for violations of the False Claims Act, a federal law that prohibits people from submitting false or fraudulent claims for payment to the federal government.

On Tuesday, July 26, 2016, the United States filed a civil suit against Jerome Hahn and Telehealth Holdings, LLC, alleging that they defrauded the government by submitting false claims in connection with federal grants.  According to the Complaint, filed in U.S. District Court, Telehealth received three grants from the federal government, worth over $600,000, to support the development of a sleep apnea monitoring system and the development of electronic pillboxes customized for specific patient populations, including cancer patients.

The Complaint alleges that Hahn and Telehealth committed fraud in connection with these grants, including by making false statements in the grant applications about Telehealth’s personnel, facilities, and accounting systems.

The Complaint also alleges that Hahn and Telehealth falsely stated in grant reports that they had spent the grant funds for purposes of the grants and in compliance with grant regulations.  Instead, Hahn and Telehealth allegedly spent the grant money on personal expenses, such as meals at restaurants, a trip to Keeneland Racecourse, and interest payments on personal credit cards.  Hahn and Telehealth also allegedly used grant money on business expenses not allowed under the grant regulations, including costs associated with marketing and promoting their products.  Additionally, Hahn and Telehealth allegedly spent over $100,000 in grant funds purchasing foreign goods and services, even though grant regulations require grant recipients to use American goods and workers.

According to the Complaint, Telehealth also falsified entries in its accounting ledgers and created false invoices in order to conceal from the government that the federal grant funds had been misspent.

The Government contends that the false statements made in the grant applications, the grant reports, and the accounting ledgers constitute violations of the False Claims Act.  If the defendants are found liable at trial, they would be responsible for paying three times the amount of loss proven at trial, plus additional penalties for each false claim.

In a related criminal case, Mr. Hahn pleaded guilty to conspiring to defraud the United States by making false claims in connection with grants that were awarded to Telehealth.  On June 13, 2016, U.S. District Judge Danny C. Reeves sentenced Hahn to four months in prison and an additional six months on home detention.  Hahn was also ordered to pay $222,037 in restitution to the National Institutes of Health.

The investigation was conducted by the United States Attorney’s Office for the Eastern District of Kentucky; the Federal Bureau of Investigation; the U.S. Department of Health and Human Services, Office of Inspector General; and the Internal Revenue Service, Criminal Investigation Division.  Assistant U.S. Attorney Kate K. Smith represented the United States in the related criminal case.  Assistant United States Attorneys Christine Corndorf and Carrie B. Pond are litigating the False Claims Act case on behalf of the Government.

LEXINGTON, Ky. – The United States Government has sued a Lexington man, and the Lexington-based medical device company he owns, for violations of the False Claims Act, a federal law that prohibits people from submitting false or fraudulent claims for payment to the federal government.

On Tuesday, July 26, 2016, the United States filed a civil suit against Jerome Hahn and Telehealth Holdings, LLC, alleging that they defrauded the government by submitting false claims in connection with federal grants.  According to the Complaint, filed in U.S. District Court, Telehealth received three grants from the federal government, worth over $600,000, to support the development of a sleep apnea monitoring system and the development of electronic pillboxes customized for specific patient populations, including cancer patients.

The Complaint alleges that Hahn and Telehealth committed fraud in connection with these grants, including by making false statements in the grant applications about Telehealth’s personnel, facilities, and accounting systems.

The Complaint also alleges that Hahn and Telehealth falsely stated in grant reports that they had spent the grant funds for purposes of the grants and in compliance with grant regulations.  Instead, Hahn and Telehealth allegedly spent the grant money on personal expenses, such as meals at restaurants, a trip to Keeneland Racecourse, and interest payments on personal credit cards.  Hahn and Telehealth also allegedly used grant money on business expenses not allowed under the grant regulations, including costs associated with marketing and promoting their products.  Additionally, Hahn and Telehealth allegedly spent over $100,000 in grant funds purchasing foreign goods and services, even though grant regulations require grant recipients to use American goods and workers. 

According to the Complaint, Telehealth also falsified entries in its accounting ledgers and created false invoices in order to conceal from the government that the federal grant funds had been misspent.

The Government contends that the false statements made in the grant applications, the grant reports, and the accounting ledgers constitute violations of the False Claims Act.  If the defendants are found liable at trial, they would be responsible for paying three times the amount of loss proven at trial, plus additional penalties for each false claim.

In a related criminal case, Mr. Hahn pleaded guilty to conspiring to defraud the United States by making false claims in connection with grants that were awarded to Telehealth.  On June 13, 2016, U.S. District Judge Danny C. Reeves sentenced Hahn to four months in prison and an additional six months on home detention.  Hahn was also ordered to pay $222,037 in restitution to the National Institutes of Health.  

The investigation was conducted by the United States Attorney’s Office for the Eastern District of Kentucky; the Federal Bureau of Investigation; the U.S. Department of Health and Human Services, Office of Inspector General; and the Internal Revenue Service, Criminal Investigation Division.  Assistant U.S. Attorney Kate K. Smith represented the United States in the related criminal case.  Assistant United States Attorneys Christine Corndorf and Carrie B. Pond are litigating the False Claims Act case on behalf of the Government.

LEXINGTON, Ky. – A Lexington man has been sentenced to 75 months in federal prison for wire fraud, aggravated identity theft, and money laundering.

On Saturday, U.S. District Judge Danny C. Reeves formally sentenced 37 year-old Adam Sloan for his offenses.  He also sentenced Sloan’s girlfriend, Jennifer Houska, 30, to thirty months in federal prison for wire fraud and aggravated identity theft.  Under Federal law, Sloan and Houska must serve at least 85 percent of their sentences.

According to Sloan’s plea agreement, from January 2011 to September 2015, Sloan developed and executed a scheme to defraud Chronic Disease Fund, Inc. d/b/a Good Days from CDF (“Good Days”).  Good Days was a Section 501(c)(3) charitable organization based in Plano, Texas that provided copayment assistance for low income individuals suffering from chronic diseases, including cancer.

As part of the scheme, Sloan used real patient information he acquired through Bluegrass Pharmacy of Lexington, a legitimate business he co-owned until June 30, 2015.  Sloan used names, social security numbers, medical benefit cards, and documentation reflecting the patients’ income to fraudulently enroll patients for benefits from Good Days, based on false diagnoses and prescriptions.  He would then withdraw the funds allocated to those patients to his personal bank account.  Sloan submitted 260 fraudulent applications to Good Days, using personal identifying information for at least 125 real patients, and fraudulently stole approximately $1,129,264.

According to Houska’s plea agreement, she assisted in the scheme by using real patient information to fill out 26 applications for fraudulent benefits.

Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky, and Howard S. Marshall, Special Agent in Charge, FBI, jointly announced the sentences.

The investigation was conducted by the FBI.  Assistant U.S. Attorneys Kate Smith and Kate Anderson prosecuted the case on behalf of the federal government.

LEXINGTON, Ky. – A Lexington man has been sentenced to 40 years in federal prison, for possessing and distributing child pornography.

On Thursday, Chief U.S. District Judge Karen Caldwell formally sentenced 64 year-old Kevin Labona for his offenses.  Labona, who has a criminal history of illegal sexual contact with minors that dates back to 1986, received an enhanced sentence.  Under Federal law, he must serve at least 85 percent of his sentence.

Labona was convicted in a bench trial, on March 2, 2016.  At trial, the evidence established that, beginning in 2013, Labona distributed images of child pornography that were violent, sadistic, and masochistic in nature.  The evidence further established that he distributed images, by showing them on his phone to four minors, as a way to entice minors into having sexual contact with him.  Labona sexually exploited more than one of these minors in 2014.

Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky; Howard S. Marshall, Special Agent in Charge, FBI (Louisville Division); Angela L. Byers, Special Agent in Charge, FBI (Cincinnati Division); and Andrew J. Smith, Sheriff, Logan County, Ohio, jointly announced the sentence.

The investigation was conducted by the FBI and the Logan County, Ohio Sheriff’s Office.  Assistant U.S. Attorneys David Marye and Neeraj Gupta prosecuted the case on behalf of the federal government.

LEXINGTON – The U.S. District Court has entered a civil judgment of $4,506,267 in favor of the United States and against a Lexington woman, and the medical device companies she owns, holding them liable for making false statements that allowed them to receive millions of dollars in federal grants from the National Institutes of Health (NIH).

This civil judgment, announced today by the U.S. Attorney’s Office, is part of a settlement agreement resolving False Claims Act allegations that Vesta Blue, 70, and her companies, LifeTechniques, Inc. and Care Team Solutions LLC, defrauded NIH of millions of dollars over the course of eight years.

“Ms. Brue defrauded the government in two ways, each of which cost taxpayers,” said United States Attorney Kerry B. Harvey.  “By including false statements in grant applications, her companies received grants to which they were not entitled, thereby depriving qualified small businesses of those funds.  Ms. Brue then diverted the funds – which should have been used to develop new healthcare technologies – to support herself and her businesses.  Her scheme to defraud undermined the integrity of the grant process.  Our office will continue to vigorously pursue fraud against the government, and will work to ensure that companies and their leaders who receive taxpayer dollars are truthful and accurate in their dealings with federal agencies like NIH.”

According to the settlement agreement, NIH awarded Brue and her companies five Small Business Innovation Research grants, worth millions of dollars, to support the development of electronic pillboxes customized for specific patient populations, including HIV and pediatric patients.

In the settlement agreement, Brue and her companies acknowledge that they made false statements on the grant applications about their personnel, facilities, and accounting systems.

Brue and the companies also acknowledge that they falsely stated on grant reports that they had spent the grant funds for purposes of the grants and in compliance with grant regulations.  In fact, Brue spent the grant money on personal expenses, such as plastic surgery, jewelry, home renovations, and massages, among other expenses.  She also used grant money on business expenses not allowed under the grant regulations, such as costs associated with marketing and promoting her businesses.  The false statements made in the grant applications and in the grant reports constitute violations of the False Claims Act.

According to the government’s complaint, Brue also falsified entries in her companies’ accounting ledgers in order to conceal from NIH auditors that the federal funds had been misspent.

Under the terms of the settlement agreement, Brue will have one year to sell her real properties and will pay 80 percent of the net sale proceeds to the government.  For a period of four years, Brue will also pay 70 percent of the net profit of her businesses to the government.  These payments will be applied to satisfy the civil judgment entered by the U.S. District Court.

In a related criminal case, Ms. Brue pleaded guilty to making a false claim to the United States in connection with grants awarded by NIH to her partner’s company, Telehealth Holdings, LLC.  On March 30, 2016, U.S. District Judge Danny C. Reeves sentenced Brue to seven months in prison, and an additional seven months on home detention.  Brue was also ordered to pay $222,037 in restitution to NIH. 

“In a prime example of audacious greed, Ms. Brue accepted sizeable federal grants meant to fund the development of medical devices but instead diverted these taxpayer funds to pay for her personal and company expenses,” said Special Agent in Charge Derrick L. Jackson of the U.S. Department of  Health and Human Services Office of Inspector General.  “The sentence and judgment announced today prove that our agency, along with our law enforcement partners, will not tolerate such behavior and will protect the interests of taxpayers and those served by such federal grants.”

The investigation was conducted by the United States Attorney’s Office for the Eastern District of Kentucky, the Federal Bureau of Investigation, the U.S. Department of Health and Human Services, Office of Inspector General, and the Internal Revenue Service, Criminal Investigation Division.  Assistant U.S. Attorneys Christine Corndorf and Kate K. Smith represented the United States.

 

COVINGTON, Ky. – A Cincinnati man has admitted in federal court that he conspired to provide illicit drugs to a woman who then died of an overdose.

Michael Howard, 41, pleaded guilty yesterday, before U.S. District Judge Amul Thapar, to conspiracy to distribute fentanyl and morphine that resulted in death.

Howard admitted selling heroin to co-defendant Kimberly Mullins on a regular basis, during a four-month period in 2015, knowing that Mullins could arrange to get the drugs to Jamie Green, who was incarcerated.  Howard knew that distributing these drugs could cause death.

Howard further admitted supplying what he believed to be heroin to Mullins, on September 4, 2015, who was to then get the drugs to Green.  The substance actually contained a combination of fentanyl (a dangerous opiate that is much more powerful than heroin) and morphine.

Mullins arranged to deliver the substance to Green though Lynnette Ball and Lisa Lattimore, who were also inmates in the Kenton County Detention Center.  On September 5, 2015, Green took the drugs and died of an overdose.

“Those who traffick in heroin and fentanyl cause tremendous damage to our communities and demonstrate a wanton disregard for human life,” said Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky.  “Our office and our law enforcement partners intend to use every available tool to combat the heroin and fentanyl epidemic that has taken deep root in so many of our communities.  The twenty-year mandatory minimum sentence imposed by federal law on drug dealers who traffick in narcotics that cause a death is one such tool.  Drug dealers should be on notice – we intend to seek these stiff penalties when their criminal conduct results in death or serious injury – an all too predictable occurrence.”

Howard, Mullins, Lattimore, and Ball were charged with their involvement in the conspiracy in November of 2015.  Mullins, Lattimore, and Ball pleaded guilty earlier this year.  Two other individuals, Mabry Baioni and Heather Tucker – who were not involved in the events leading to Green’s death – were later charged and pleaded guilty to conspiring with Howard and Mullins to distribute heroin to Green.

U.S. Attorney Harvey and Timothy J. Plancon, Special Agent in Charge, Drug Enforcement Administration, jointly announced the guilty pleas.  The investigation was conducted by the Cincinnati Resident Office of the Drug Enforcement Administration and the Kenton County Police Department.  The U.S. Attorney’s Office was represented by Assistant U.S. Attorney Tony Bracke.

Howard is scheduled to be sentenced on September 23, 2016.  Mullins, Ball and Lattimore are scheduled to be sentenced on July 21, 2016.  Each faces a maximum of life in prison.  Baioni is set for sentencing on July 21, 2016 and Tucker is set for sentencing on September 15, 2016.  They face up to 20 years in prison.  Any sentences, however, will be imposed by the Court after consideration of the U.S. Sentencing Guidelines and the federal statutes.

LEXINGTON – The United States Government has sued a Breathitt County ambulance company, its owner, and billing manager for violations of the False Claims Act, a federal law that prohibits people from submitting false or fraudulent claims for payment from the federal government.

On Friday, June 3, 2016, the United States filed suit against Arrow-Med Ambulance, Inc. (“Arrow-Med”), Herschel Jay Arrowood, and his wife, Lesa Arrowood, alleging that the company submitted numerous fraudulent claims seeking payment for unnecessary non-emergency ambulance transports, and that the Arrowoods caused the company to make those fraudulent claims. Jay Arrowood is the owner of Arrow-Med and Lesa Arrowood serves as its billing manager. According to the complaint, the false claims caused more than a million dollars in loss to the Medicare and Kentucky Medicaid programs.

The Arrowoods also allegedly instructed and pressured employees to falsify patients’ medical records to justify the unnecessary services to help ensure payment from Medicare and Medicaid. In addition, the complaint describes how the Arrowoods converted hundreds of thousands of dollars from Arrow-Med’s bank accounts to their own use.

According to the complaint, from September 2012 to August 2015, Arrow-Med transported patients, who had no medical need for an ambulance transport, to dialysis clinics and to other medical appointments. Under federal law, Medicare pays for non-emergency ambulance transports only if the patient’s condition is such that taking other forms of transportation would endanger the patient’s health.

The complaint provides examples of unnecessary non-emergency ambulance transports provided to patients who rode in the front seat of the ambulance or to patients who walked a half-mile daily for exercise.

The complaint alleges the defendants caused damages to Medicare and Medicaid in excess of a million dollars. Under the False Claims Act, if the defendants are found liable at trial, they would be responsible for paying three times the amount of loss proven at trial, plus additional penalties of $5,000 to $10,000 for each false claim.

The litigation against Arrow-Med was initiated by Darrell Stephen McIntosh, who filed a complaint against Arrow-Med pursuant to the whistleblower provisions of the False Claims Act in April 2015. The United States’ Complaint in Intervention reflects the government’s intent to pursue allegations of fraudulent claims for medically unnecessary services against the defendants.

The investigation was conducted by the U.S. Department of Health and Human Services, Office of Inspector General, and the Office of the Kentucky Attorney General’s Medicaid Fraud and Abuse Control Unit. Assistant U.S. Attorneys Daniel Hancock and Paul McCaffrey are litigating this case on behalf of the federal government.

LEXINGTON — A Boyle County man has been found guilty on all six counts of an indictment charging various child exploitation offenses.

On Thursday, a federal jury in Lexington, Ky., convicted 54 year-old Mark Andrew Morris of two counts of producing child pornography, two counts of distributing child pornography, and one count each of receiving and possessing child pornography.  The jury returned its verdicts after approximately 35 minutes of deliberation, following two days of trial.

According to evidence presented at trial, Morris used a hidden camera to record a minor female engaged in sexually explicit conduct.  The evidence further revealed that Morris had downloaded numerous images of child pornography from the internet.

The investigation started when an investigator with the Kentucky Attorney General’s Cyber Crimes Unit discovered images of child pornography being made available through a peer to peer (P2P) network on the internet.  The investigator collected the child pornography images, obtained the subscriber information for the Internet Protocol (IP) address, and traced the source of the images to Morris’s computer.  In June 2014, a search warrant was conducted at Morris’ residence and authorities found the child pornography images on his computer and other electronic media.

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky; Howard Marshall, Special Agent in Charge, Federal Bureau of Investigation; and Andy Beshear, Kentucky Attorney General, jointly made the announcement.

The case was investigated by the Office of the Kentucky Attorney General, Cyber Crimes Unit, and the FBI.  Assistant U.S. Attorney David Marye prosecuted the case on behalf of the federal government.

Morris is scheduled to be sentenced on August 29, 2016.  Production of Child Pornography carries a minimum sentence of 15 years and a maximum of 30 years; receipt and distribution of child pornography carry a minimum of 5 years in prison and a maximum of 20 years; and possession of child pornography carries a maximum penalty of 10 years in prison.