Eastern District of Kentucky

LEXINGTION, KY - A Michigan man, who led a drug conspiracy that brought heroin into eastern Kentucky for distribution, was convicted by a federal jury.

On Tuesday, a federal jury in Lexington convicted 32 year-old Douglas Martin of one count of conspiracy to distribute controlled substances, following an hour and a half of deliberation and two days of trial. Martin was also convicted of witness tampering.

According to the evidence at trial, Martin conspired with others to obtain heroin in Detroit, Mich., and bring it back for distribution in Madison, Fayette and Bourbon Counties in Kentucky. The evidence established that, from June 2012 until March 2013, Martin conspired to distribute 2.7 ounces of heroin, which has a street value of approximately $15,000. It also established that Martin and others conspired to distribute cocaine and that Martin would live in an apartment in Richmond when he came to Kentucky.

The investigation started when officers with the Paris Police Department conducted a routine traffic stop of a vehicle, with Martin and his co-defendants, Andre Hawkins, Ameida Udousoro and Jessica Cavezza inside. The officers subsequently located several thousand dollars, in cash, on the defendants.

Udousoro and Cavezza previously pleaded guilty to their roles in the conspiracy and Hawkins remains a fugitive.

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, Perrye Turner, Special Agent in Charge, FBI, Rodney Brewer, Kentucky State Police Commissioner, and Kevin Sutton, Chief of the Paris Police Department, jointly announced the verdict.

The investigation was conducted by Kentucky State Police, FBI and the Paris Police Department. Assistant U.S. Attorney Todd Bradbury represents the U.S. Attorney’s Office in this case.

Martin will be sentenced on March 19, 2014. He faces a maximum of 30 years in prison, for the drug conspiracy, and 20 years for the witness tampering offense. However, any sentence following conviction would come after the Court considers the U.S. Sentencing Guidelines and the federal statutes governing the imposition of sentences.

Pharmacy owner to forfeit a million dollars, home, and multiple vehicles

LONDON, KY - A Manchester pharmacy owner and his wife will forfeit their home, more than a million dollars and six cars that were proceeds or purchased with proceeds from a drug conspiracy in which the pharmacy owner filled prescriptions for customers without a legitimate medical purpose.

Charles Terry Tenhet, 63, of London, KY., pleaded guilty today to a conspiracy to distribute a controlled substance. U.S. District Judge Amul Thapar sentenced Tenhet to 10 years in prison following the plea. Charles Tenhet’s wife, Melissa Tenhet, 50, was sentenced to 12 months and day in prison for her role in the conspiracy. She pleaded guilty on Monday.

“Mr. Tenhet, with the assistance of Mrs. Tenhet, used his professional license to engage in a massive drug trafficking conspiracy,” said U.S. Attorney Kerry B. Harvey. “In so doing, he inflicted a great deal of pain on his community-one already hard hit by the scourge of prescription drug abuse. The punishment is well-deserved. Those in the healing arts deserve special attention from law enforcement authorities when they choose to betray their professional duties in favor of the ill-gotten gains made from drug trafficking.”

Charles Tenhet admitted he filled out of state prescriptions for large quantities of oxycodone in exchange for cash for eastern Kentuckians who had traveled in groups to pain clinics in Georgia and Tennessee and returned to visit Charles Tenhet’s pharmacies– Community Drug and Medi-Center Drug. Some customers drove as far as 600 miles to visit the clinics.

According to the plea agreement, Tenhet knew the visitors were potential drug traffickers and addicts. The plea agreement describes the Tenhets’ customers as being visibly high, lacking physical pain symptoms and appearing destitute and unemployed.

Melissa Tenhet worked as the office manager for Community Drug and admitted she directed co-workers to fill the prescriptions even when the workers questioned the legality of the prescriptions.

The Tenhets agreed to forfeit approximately a million dollars in cash, six vehicles, numerous luxury watches and a plot of land, all of which the Tenhets obtained or used as part of the conspiracy. The total value of all the assets forfeited was approximately three million dollars.

Under federal law, both defendants will each have to serve at least 85 percent of their respective prison sentence.

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, and Robert L. Corso, Special Agent in Charge of DEA, jointly announced the guilty pleas.

The investigation was conducted by the DEA. Assistant U.S. Attorney Jason Parman represented the U.S. Attorney’s Office in this case.

Defendant used the identity of a five year old to fraudulently obtain loans

FRANKFORT, KY -Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, Perrye Turner, Special Agent in Charge, Federal Bureau of Investigation, and John E. Lucas, Special Agent in Charge, Federal Deposit Insurance Corporation, Office of Inspector General, jointly announced today that a home builder from Georgetown, KY., was sentenced to 69 months in federal prison for fraudulently obtaining more than a million dollars in loans from a Frankfort bank.

On Tuesday, U.S. District Judge Gregory Van Tatenhove sentenced 59 year-old Lee C. Tevis for bank fraud, a false loan application, aiding and abetting bank embezzlement and aggravated identity theft.

In August of 2013, after a five day trial, a federal jury convicted Tevis of the offenses and acquitted him of an additional conspiracy charge.

Evidence at trial established that, beginning in 2006, Tevis fraudulently obtained loans from American Founders Bank (AFB), by setting up bogus corporations in the names of other people to bypass loan limits, while constructing a house.

The evidence further establshed that Tevis used some of the loan money, which the bank intended to be used to fund a home in Frankfort, to pay off his personal loans and debt on other construction projects.

According to trial testimony, when Tevis reached loan limits established by the Bank, he set up a bogus corporation in the name of his company’s foreman, an illegal alien, in order to obtain more loans. After fraudulently qualifying for the loans, Tevis used the social security number of the foreman’s five year-old son to pass the bank’s credit check.

Tevis fraudulently received $1,095,000 in loans from the bank, according to the evidence at trial. The Bank eventually foreclosed on the home for which Tevis received the loans and suffered a significant financial loss.

Additionally, Jim Tate, the AFB president who approved the loans for Tevis, pleaded guilty to bank fraud and received a sentence of 36 months in prison.

Under federal law, Tevis must serve at least 85 percent of his prison sentence.

The investigation was conducted by the FBI and the FDIC-OIG. Assistant U.S. Attorneys Andrew Sparks and Jim Arehart represented the U.S. Attorney’s Office in this case.

LEXINGTON, KY - Timothy Alexander Conley, the Morgan County Judge Executive, has been charged with soliciting and accepting kickbacks from a Salyersville, KY., based bridge contractor, in exchange for contract awards, according to a federal indictment unsealed today.

The indictment, filed under seal on Thursday, December 5, charges Conley and Kenneth Lee Gambill and Ruth L. Gambill, the co-owners of PBTHNOJJ Construction, with several offenses arising from the kickback scheme. Conley and Kenneth Gambill are both charged with four counts of mail fraud and one count of theft from a program receiving federal funds. All three defendants are also charged with conspiring to launder money.

Specifically, the indictment alleges that, from early 2009 until August 2013, as part of a mail fraud scheme, Conley rigged competitive bidding processes to select PBTHNOJJ Construction for Morgan County construction contracts. After obtaining PBTHNOJJ Construction’s payments for these contracts, Kenneth Gambill then delivered to Conley cash kickbacks from the contract proceeds.

In addition, Conley and Kenneth Gambill are charged with defrauding a federally-funded program. The indictment alleges that Conley misappropriated money from Morgan County, which received federal funding for emergency services, debris cleanup, and rebuilding efforts following a tornado that swept through West Liberty, KY., on March 2, 2012. As part of the debris cleanup effort, Morgan County contracted with PBTHNOJJ Construction and other entities. Conley allegedly abused his position to ensure that PBTHNOJJ Construction received excessive payments for this work.

Finally, Conley, Kenneth Gambill, and Ruth Gambill are charged with conspiring to launder the proceeds of these crimes, in order to promote ongoing illegal activities and conceal the nature and source of the funds, among other things.

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, Perrye Turner, Special Agent in Charge, FBI, and Jack Conway, Kentucky Attorney General jointly announced the indictment today.

The investigation preceding the indictment was conducted by the FBI and the Kentucky Attorney General’s Office. The indictment was presented to the grand jury by Assistant U.S. Attorney Andrew T. Boone.

Conley is scheduled to appear in federal court on Tuesday, December 10 in Lexington at 3:00 pm. Kenneth Gambill will appear in court on December 30, 2013 at 1:00. in Lexington. A date for Ruth Gambill to appear in court has not yet been scheduled. The mail fraud and money laundering counts each carry a maximum penalty of 20 years in prison. The federal program fraud count carries a maximum penalty of 10 years in prison. The maximum fine for each count is $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.

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

COVINGTON, KY - Sam Droganes, 48, of Ft. Mitchell, KY., awaits sentencing for being a felon in possession of explosives, a violation of federal law.

Droganes, who will be sentenced in March 2014, pleaded guilty on November 27, 2013 and admitted selling 1.3G (display) fireworks to a confidential informant who was working with the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF). The sale occurred on May 28, 2013, at Droganes’s store, which is located in Covington, KY., Droganes is a convicted felon, having previously been convicted in federal court in 2010 of an offense involving the same type of explosives. Under federal law, convicted felons are prohibited from possessing firearms and explosives.

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, and Stuart L. Lowrey, Special Agent in Charge, ATF, jointly made the announcement.

The investigation was conducted by ATF. Assistant U.S. Attorney Elaine K. Leonhard represents the U.S. Attorney’s Office in this case.

Droganes is currently scheduled to appear for sentencing, before U.S. District Judge Amul R. Thapar, in Covington, on March 20, 2014 at 2:00 p.m. Droganes faces a maximum prison sentence of 10 years. However, any sentence will be imposed by the Court after consideration of the United States Sentencing Guidelines and the applicable federal statutes governing the imposition of sentences.

COVINGTON, KY - The former superintendent for the Dayton Independent School District has admitted in federal court to embezzling school funds during his tenure.

William Rye, 65, of Wilder, KY., pleaded guilty today to one count of embezzlement. Rye waived his right to be indicted by a federal grand jury and pleaded guilty to the embezzlement charge brought by U.S. Attorney Kerry B. Harvey.

In the course of his guilty plea, Rye admitted that, between 2004 and 2012, he embezzled approximately $193,149.22 from the Dayton Independent School District, while serving as school superintendent.

This case is eligible for federal prosecution because the Dayton School District annually receives in excess of $10,000 in federal funds.

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, and Perrye Turner, Special Agent in Charge, Federal Bureau of Investigation, jointly made the announcement today.

The investigation was conducted by the Federal Bureau of Investigation. Assistant U.S. Attorney Laura K. Voorhees represents the US. Attorney’s Office in this case.

Rye is currently scheduled to appear for sentencing in Covington on April 22 at 11:00 am. Rye faces a maximum prison sentence of 10 years. However, any sentence would be imposed by the Court after consideration of the U.S. Sentencing Guidelines and the federal statutes governing the imposition of sentences.

COVINGTON, KY - Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky and Perrye Turner, Special Agent in Charge, FBI, jointly announced today that a Covington man will be sentenced in March of next year for defrauding two internet companies out of thousands of dollars.

Melvin Dietz, Jr., 39, will be sentenced on March 14, 2014 for wire fraud and aggravated identity theft. Dietz faces a mandatory two year sentence on the aggravated identity theft count and maximum of 20 years on the wire fraud offense.

Dietz pleaded guilty on November 19 and admitted that on or about January 2011 through December 2011, he devised a scheme to defraud two online internet companies, WeBuyUsedCisco.com and Teksavers.com, both of which purchase used Cisco computers and equipment.

Dietz executed his scheme by using PayPal, which is a global e-commerce business allowing payments and money transfers to be made through the Internet. During this time, Dietz set up approximately fourteen PayPal accounts using alias identities. Shortly before or after he created an account, he contacted one of these companies and fraudulently offered to sell them certain Cisco items by misrepresenting that he possessed them.

Through email, he used an alias identity and negotiated a price with a representative of the company for the Cisco equipment. At Dietz’s direction, the company transferred payment to one of the PayPal accounts that Dietz had set up using the same or a different alias identity. Thereafter, Dietz cut off communication and never sent the equipment.

Dietz acknowledged he used or attempted to use the money in his PayPal accounts to purchase items on line from various online retail businesses or remove the money from his alias PayPal accounts in other ways. The money transferred by WeBuyUsedCisco.com to Dietz’s PayPal accounts as a result of his fraud totaled approximately $21,846.25. The amount of money transferred by Teksavers.com to Dietz’s PayPal accounts as a result of his fraud totaled approximately $50,240.

In committing this crime, Dietz knowingly used, without lawful authority, a means of identification of another person, during and in relation to the wire fraud count, in that he used that individual’s social security number to obtain a prepaid Visa card. Dietz used the card to authenticate the account with PayPal for the purpose of furthering his scheme to defraud Teksavers.com.

eBay Incorporated initiated the investigation with law enforcement and fully cooperated with the FBI and the Covington, KY., Police department who prepared the case for prosecution.

COVINGTON, KY - The owner of a chiropractic clinic in northern Kentucky was indicted today on charges that she conspired to defraud a federal health care benefit program.

A federal grand jury in Covington returned the indictment charging 47-year-old Dr. Andrea Almond, of Cincinnati, with one count of conspiracy to commit health care fraud.

The indictment alleges that from September 2008 until April 2010, Almond, a chiropractor and owner of Newport Chiropractic in Campbell County, allegedly submitted health care claims to Medicaid for chiropractic services which she did not perform or witness. Furthermore, the indictment alleges that Almond was aware that the chiropractors who did perform the services were not enrolled as providers with Kentucky Medicaid, and therefore were not eligible for reimbursement.

According to the indictment, over the course of the conspiracy Almond submitted or caused to be submitted approximately 1,943 claims for payment in the approximate amount of $483,797, and received approximately $95,098 in actual reimbursement from Kentucky Medicaid.

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, Perrye Turner, Special Agent in Charge, Federal Bureau of Investigation, Robin Dangleish, Postal Inspector in Charge, United States Postal Inspection Service, and Jack Conway, Kentucky Attorney General, jointly made the announcement today after a federal grand jury in Covington returned the indictment.

The investigation preceding the indictment was conducted by the Federal Bureau of Investigation, the United States Postal Inspection Service, and the investigators with the Medicaid Fraud and Abuse Control Unit with the Kentucky Office of the Attorney General. The indictment was presented to the grand jury by Assistant United States Attorney Laura K. Voorhees.

Almond’s appearance before the United States District Court has not yet been set by the Court in Covington. If convicted, Almond faces a maximum prison sentence of 10 years. However, any sentence following a conviction would be imposed by the Court after consideration of the United States Sentencing Guidelines and the federal statute governing the imposition of sentences.

Doctor has surrendered medical license

LEXINGTON, KY - A former Paintsville, KY., physician has agreed to pay the U.S. Government $200,000 to settle civil allegations that he improperly billed federal health care programs and failed to maintain documentation required to support reimbursement payments.

Under federal law, the Medicare and Medicaid programs reimburse physicians for procedures that are deemed medically necessary. The U.S. Attorney’s Office, on behalf of the Government, contends that, from January 2008 through December 2011, Dr. Don V. Bryson failed to keep documentation that supported the medical necessity of procedures for which he had billed Medicare and Medicaid for reimbursement.

The Government further contends that Bryson had submitted claims seeking reimbursement for services to patients that he failed to properly authorize or oversee.

Under the terms of the settlement agreement, Bryson will return $152,000 to repay the Kentucky Department for Medicaid Services and $48,000 to repay the Medicare program.

Previously, in June 2012, Bryson also agreed with the Kentucky Board of Medical Licensure to surrender his medical license.

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky announced the settlement agreement today.

The investigation was conducted by the U.S. Attorney’s Office and the Kentucky Department for Medicaid Services. Assistant U.S. Attorney Valorie D. Smith represented the Government in this case.

LEXINGTON, KY - Former public officials from Manchester, KY., admitted in federal court that they conspired to organize a long running criminal enterprise to achieve personal gain and control over the politics in Clay County.

Former longtime Clay County Circuit Judge, Russell Cletus Maricle; schools superintendent, Douglas C. Adams; county clerk, Freddy W. Thompson; democratic election commissioner, Charles W. Jones; and election officer William E. Stivers pleaded guilty to a racketeering conspiracy before U.S. District Judge Karen Caldwell on Wednesday.

The defendants admitted that starting in 2002 they conspired to gain control of the Clay County board of elections and corruptly used the board’s authority to control the outcome of elections in the county. In order to carry out this scheme, the defendants acknowledged that they pooled their money together to bribe voters and that they also appointed corrupt election officers who ensured that the bribed voters delivered for the slate of candidates that the members of the conspiracy wanted to win.

Three other co-defendants, Stanly Bowling, and Debra and Bart Morris previously pleaded guilty to the same charge.

Sentencing for the defendants is scheduled for February. Maricle faces a maximum of 87 months imprisonment; Adams, a maximum of 75 months imprisonment; Thompson, a maximum of 66 months imprisonment; Jones, a maximum of 69 months imprisonment; and Stivers, a maximum of 72 months imprisonment. However, any sentence following a conviction would come after the Court considers the U.S. Sentencing guidelines and the federal statutes.

Defendant will receive a minimum of 20 years in prison

LEXINGTON, KY - A federal jury convicted a Winchester, KY., man today of distributing heroin that resulted in an overdose death.

The jury convicted 53 year-old Harold Wayne Salyers on Wednesday evening for distribution of heroin resulting in death, conspiracy to distribute heroin, possession with intent to distribute heroin and distribution of heroin. The jury returned the verdict after approximately three hours of deliberation following two days of trial.

According to testimony, in August of 2012, Salyers distributed heroin to an individual in Clark County who used the heroin, overdosed and died. Evidence at trial established that three individuals witnessed the victim ingest the heroin and that the day after the victim died, Salyers admitted to one of the witnesses, in a recorded conversation, that he distributed the heroin to the victim.

Experts from the Medical Examiner’s Office and the toxicologist testified that the victim’s death was caused by the toxic effects of heroin in the victim’s body.

Evidence further established that Salyers conspired with others to distribute heroin in Clark County from approximately August 2012 until June 2013.

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky; Robert L. Corso, Special Agent in Charge, Drug Enforcement Administration; and Kevin Palmer, Chief, Winchester Police Department, jointly made the announcement today.

The investigation was conducted by the DEA and the Winchester Police Department. The U.S. attorney’s office is represented by Assistant U.S. Attorney Todd Bradbury.

Salyers’ sentence is scheduled for January. The distribution of heroin resulting in death offense carries a minimum of 20 years in prison and maximum of life. He faces a maximum of 20 years on the other heroin charges. However, any sentence following a conviction would be imposed after the Court considers the U.S. Sentencing Guidelines and the federal statutes.

LEXINGTON, KY -

A Lexington attorney admitted his involvement in a drug ring and several fraud schemes, where he illegally diverted in excess of a million dollars.

On Wednesday, Seth Johnston, 34, pleaded guilty to two counts of mail fraud and one count each of wire fraud, conspiracy to obstruct of justice, conspiracy to distribute a controlled substance analogue (synthetic marijuana) and tax fraud.

Johnston admitted he was responsible for collecting money for plaintiffs in a civil lawsuit, as part of a settlement regarding the diet drug Fen-Phen. However, Johnston diverted $14,963.15 of the collected money for his own personal use. Angela Ford, the Lexington attorney representing the plaintiffs in the lawsuit, had hired the law firm where Johnston worked to garnish assets of the defendants in that lawsuit, William Gallion, Shirley Cunningham and Melbourne Mills, Jr. This fraud scheme started in 2008 and continued through 2010.

Court records state that Ford had hired Johnston to establish multiple corporate bank accounts to hold $3.5 million of Ford’s money. Johnston acknowledged that he diverted a significant amount of Ford’s money for his own personal gain, some of which he used to purchase property for other clients. To cover up this scheme, Johnston provided Ford with fraudulent documentation regarding the status of her money.

Johnston also admitted that in 2010 he perpetrated a scheme to defraud the residual heirs of an estate for which he provided representation. According to court records, he hid assets and diverted money for his own personal use.

In addition, Johnston admitted that, as part of a drug conspiracy, he provided approximately $100,000 to others, to purchase synthetic marijuana to be distributed in Lexington.

Johnston acknowledged that in 2013, he instructed witnesses, who had been subpoenaed to testify at the grand jury regarding the fraud case, to destroy documents so that certain evidence would not be available. Johnston further admitted that, in 2011, he under reported his taxable income to the IRS. Specifically, Johnston reported an income of $26,372 when, in fact, his income was $208,950.

The U.S. attorney’s office for the Eastern District of Kentucky; Robert L. Corso, Special Agent in Charge, DEA; Perrye Turner, Special Agent in Charge, FBI; and Christopher Henry, Special Agent in Charge, IRS, jointly announced the plea today.

The investigation was conducted by the DEA, FBI and IRS. Assistant U.S. Attorneys Erin Roth, Robert Duncan Jr. and Elisabeth Sigler prosecuted the case on behalf of the U.S. attorney’s office.

Johnston is scheduled to be sentenced on March 3, 2014. The tax fraud charge carries a maximum of five years in prison. The remaining offenses each carry a maximum penalty of 20 years imprisonment. However, any sentence imposed by the Court would come after consideration of the U.S. Sentencing Guidelines and the federal statutes.

Indictment Charges the Former Mayor and Her Daughter

LONDON, KY - A former mayor of Martin, KY., her daughter, and two other city employees have been indicted for engaging in a scheme to defraud the Social Security Administration (SSA) and to misapply federal funds.

The federal indictment filed on Wednesday names former Martin Mayor Ruth Thomasine Robinson, 69; her daughter, Rita Christine Whicker, 42, who formerly directed the Martin Community Center; Ginger Michelle Halbert, 42, a volunteer city employee who worked closely with Robinson; and Ethel Lee Clouse, 68, the bookkeeper for the city.

All four defendants have been charged with conspiracy to defraud the SSA, an agency of the United States; theft of social security disability benefits; and aggravated identity theft. Halbert, Whicker, and Robinson were also charged with misappropriating money from a federal program. The final count of the indictment charges Halbert with knowingly failing to report her employment and earnings to the Social Security Administration.

According to the indictment, from 2006 until January 2013, Halbert, who purportedly worked on a volunteer basis, was secretly being paid with federal funds that were primarily intended for the Martin Community Center and the Martin Housing Authority. To conceal the scheme, the defendants allegedly arranged for the checks to be made payable to Halbert’s son.

The indictment further alleges that Halbert, who was receiving social security disability benefits, intentionally failed to notify SSA of her earned income from the city of Martin. Under federal law, anyone who receives disability benefits is limited in the amount of money he or she can receive from another source and all income must be reported to the SSA so it can properly determine eligibility for benefits.

Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky, Perrye Turner, Special Agent in Charge of the Federal Bureau of Investigation, Guy Fallen, Special Agent in Charge, Social Security Administration, Office of the Investigator General, Office of Investigations, and Jack Conway, Attorney General of Kentucky, jointly made the announcement today.

The investigation preceding the indictment was conducted by the Federal Bureau of Investigation, Social Security Administration, and the Attorney General’s Office. The indictment was presented to the grand jury by Assistant United States Attorney Kenneth R. Taylor.

The defendants’ appearance before the United States District Court has not yet been set by the Court in Pikeville. The charges of conspiracy and social security fraud carry a maximum of 5 years in prison; the charge of misappropriating money from a federal program carries a maximum penalty of 10 years in prison; and the aggravated identity theft charge has a mandatory minimum penalty of two years in prison upon a conviction.

The indictment of a person by a grand jury is an accusation only, and that person is presumed innocent unless proven guilty.

LEXINGTON, KY - Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky; Stuart L. Lowrey, Special Agent in Charge, Bureau of Alcohol, Tobacco, Firearms and Explosives; Barry Waldrop, Nicholasville Police Chief and Kevin Corman, Jessamine County Sheriff, jointly announced today that a man with several prior felony convictions was sentenced for a firearm offense.

On Wednesday, U.S. District Judge Danny C. Reeves sentenced 35 year-old Troy Lee Mellott to 15 years in prison for possessing a firearm after having been previously convicted of a felony offense. Under federal law, convicted felons are prohibited from possessing firearms.

Judge Reeves enhanced Mellott’s sentence because Mellott’s criminal history classified him as an “armed career criminal.” Defendants become armed career criminals when they are convicted of unlawfully possessing a firearm after having convictions for three or more violent felonies or serious drug offenses. Because Mellott is an armed career criminal, he was subject by law to the minimum statutory sentence of 15 years to up to life imprisonment.

Mellott admitted that on December 10, 2012, he unlawfully possessed a .380 caliber semiautomatic pistol that he pawned at a pawn shop in Nicholasville, KY.

Mellott pleaded guilty to the charges in June of 2013.

Under federal law, Mellott must serve at least 85 percent of his prison sentence and will be under the supervision of the U.S. Probation Office for three years following the completion of his prison term.

The investigation was conducted by the Bureau of Alcohol, Tobacco, Firearms and Explosives. The U.S. Attorney’s Office was represented by Assistant U.S. Attorney Hydee R. Hawkins and Special Assistant U.S. Attorney John Hayne.

LONDON, KY - A Williamsburg, KY., couple was sentenced today for robbing numerous banks in eastern Kentucky and Tennessee.

U.S. District Judge Gregory Van Tatenhove sentenced 32 year-old Jason Fox, aka “The Bad Hair Bandit,” to 20 years, for seven separate counts of bank robbery and armed bank robbery. His wife, Tasha Fox, 28, was sentenced to 10 years, for aiding and abetting in several of those robberies. Both defendants will also be on supervised release for five years, after their prison terms are completed. Judge Van Tatenhove also ordered Jason Fox to pay $80,028.30 in restitution; Tasha Fox is jointly and severally responsible for $57,956.88 of that restitution amount.

In a guilty plea earlier this year, Jason Fox admitted that, in 2011, he robbed a total of seven banks located in Barbourville, KY., Corbin, KY., Pine Knot, KY., Williamsburg, KY., Jellico, Tenn., and LaFollette, Tenn. In five of those robberies, he possessed a semi-automatic handgun; Fox sometimes brandished or pointed the gun at bank tellers as he demanded money.

The banks Fox robbed include: Commercial Bank, in Barbourville, on June 17, 2011; Bank of McCreary County, in Pine Knot, on July 5, 2011; Forcht Bank, in Barbourville, on August 19, 2011; Hometown Bank, in Corbin, on October 25, 2011; the Wal-Mart branch of the L&N Federal Credit Union, in Williamsburg, on December 1, 2011; First Volunteer Bank, in Jellico, Tenn., on June 9, 2011; and the Y-12 Federal Credit Union, in LaFollette, Tenn., on October 28, 2011.

In four of these bank robberies, Tasha Fox drove the “getaway” car for her husband. She also pleaded guilty earlier this year.

Under federal law, both defendants will have to serve at least 85 percent of their respective prison sentence.

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, William C. Killian, U.S. Attorney for the Eastern District of Tennessee, and Perrye Turner, Special Agent in Charge, FBI, jointly announced the sentence today.

The investigation was conducted by the FBI. The U.S. Attorney’s Office was represented in the case by Assistant U.S. Attorney Sam Dotson.

COVINGTON, KY - A Covington, KY., man has been arraigned on federal charges alleging that he sold a quantity of heroin to another individual who died as a result of using the drug.

On September 12, 2013, a federal grand jury in Covington returned a sealed indictment charging 28 year-old Timothy Tingle with distribution of heroin resulting in death. The indictment was unsealed Monday afternoon, following Tingle’s arrest. Tingle subsequently pleaded not guilty to the charges during his initial appearance in federal court. A trial date is set for November 25, 2013.

The indictment alleges that Tingle sold heroin, on or about April 20, 2013 in Kenton County, and that the person who purchased it died from an overdose as a result of using the heroin.

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, and Robert L. Corso, Special Agent in Charge, Drug Enforcement Administration, jointly announced the indictment and arraignment.

The investigation preceding the indictment was conducted by the Drug Enforcement Administration and the Taylor Mill Police Department. The indictment was presented to the grand jury by Assistant U.S. Attorney Anthony Bracke.

Tingle’s next court appearance is scheduled for September 19, 2013 at 1:30 p.m. If convicted, Tingle faces a minimum of 20 years and up to life in prison, a maximum fine of $1,000,000, and at least 3 years of supervised release. However, any sentence following a conviction would be imposed by the Court after consideration of the U.S. Sentencing Guidelines and the federal statutes.

An 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.

FRANKFORT, KY - Former Kentucky Department of Agriculture Commissioner, Richard Dwight Farmer, Jr., admitted in federal court today that he misappropriated public resources during his tenure in office.

Farmer pleaded guilty to two counts of theft from a program receiving federal funds. Farmer entered into an agreement with the U.S. Attorney’s office which, if approved by the Court, will require him to serve a prison sentence of 21 to 27 months. Additionally, Farmer agreed to pay $120,500 in restitution to the Commonwealth of Kentucky. Judge Gregory Van Tatenhove released Farmer on his own recognizance until his sentencing hearing on January 14, 2014.

Farmer admitted that he misappropriated a total of $120,500 by hiring friends who didn’t perform work to justify their salaries, and purchasing a number of items for his personal use with KDA funds.

Specifically, Farmer admitted that in 2008 he used approximately $19,500 in KDA money to buy excessive gifts for a KDA sponsored conference. Farmer purchased rifles, rifle cases, knives, and gift cards, purportedly for use at the conference that he actually appropriated to his own use. Farmer further acknowledged that in both 2008 and 2011 he misappropriated thousands of dollars in labor cost by putting friends on the public payroll, knowing they would perform little or no actual work for the KDA.

“Mr. Farmer admitted today that he engaged in a course of criminal conduct which constitutes an egregious abuse of the public trust,” said United States Attorney Kerry B. Harvey. “The people of Kentucky deserved better from Mr. Farmer. I hope that his acknowledgement of guilt will, in some small way, begin to repair the inevitable damage done when an elected official uses his public office to enrich himself through a criminal scheme. I appreciate the excellent work of the prosecutors and law enforcement officers who did the work necessary to bring this matter to a successful conclusion.”

Farmer was elected to two terms as Commissioner of Agriculture and was responsible for the supervision and administration of the KDA from January 2004 until January 2012.

A federal grand jury indicted Farmer in April of this year.

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, Perrye Turner, Special Agent in Charge, FBI, and Jack Conway, Kentucky Attorney General, jointly announced the plea today.

The investigation was conducted by the Kentucky Attorney General’s Office and the FBI. The case is being prosecuted by Assistant U.S. Attorneys Kenneth R. Taylor and Andrew T. Boone, and trial attorney Sean Mulryne with the Public Integrity Section of the United States Department of Justice.

LONDON, KY - Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky; Stewart Walker, London Police Chief; and Perrye Turner, Special Agent in Charge, FBI, jointly announced today that a London, KY., woman, who photographed two children engaged in sexually explicit conduct, was sentenced to 30 years in federal prison.

On Tuesday, U.S. District Judge Amul Thapar sentenced 37 year-old Corrine Sherman for producing child pornography, possessing child pornography, and conspiracy. Sherman’s husband and co-defendant, Rickey Sherman, died of a heart attack, while in custody, in July.

In February of this year, a jury convicted both at trial. Evidence presented established that, in 2008 and continuing throughout much of 2011, the Shermans conspired to produce child pornography. During this time period, the couple produced at least 40 images of two, prepubescent children engaged in sexually explicit conduct.

The investigation started when state authorities received a tip that Rickey Sherman had violated conditions of his probation from a previous offense. During that investigation, Corrine Sherman attempted to hide a camera from law enforcement. The camera was eventually recovered and contained the child pornography images.

Rickey Sherman had owned Truck Town Repair in Laurel County. He and his wife were indicted in September 2011.

Under federal law, Corrine Sherman will have to serve at least 85 percent of her prison sentence.

The investigation was conducted by Sargent Joe Smith, with the London Police Department, and the FBI. The U.S. Attorney’s Office was represented in the case by Assistant U.S. Attorney Jason Parman.

LONDON, KY -

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky; Stewart Walker, London Police Chief; and Perrye Turner, Special Agent in Charge, FBI, jointly announced today that a London, Ky., woman, who photographed two children engaged in sexually explicit conduct, was sentenced to 30 years in federal prison.

On Tuesday, U.S. District Judge Amul Thapar sentenced 37 year-old Corrine Sherman for producing child pornography, possessing child pornography, and conspiracy. Sherman’s husband and co-defendant, Rickey Sherman, died of a heart attack, while in custody, in July.

In February of this year, a jury convicted both at trial. Evidence presented established that, in 2008 and continuing throughout much of 2011, the Shermans conspired to produce child pornography. During this time period, the couple produced at least 40 images of two, prepubescent children engaged in sexually explicit conduct.

The investigation started when state authorities received a tip that Rickey Sherman had violated conditions of his probation from a previous offense. During that investigation, Corrine Sherman attempted to hide a camera from law enforcement. The camera was eventually recovered and contained the child pornography images.

Rickey Sherman had owned Truck Town Repair in Laurel County. He and his wife were indicted in September 2011.

Under federal law, Corrine Sherman will have to serve at least 85 percent of her prison sentence.

The investigation was conducted by Sargent Joe Smith, with the London Police Department, and the FBI. The U.S. Attorney’s Office was represented in the case by Assistant U.S. Attorney Jason Parman.

LEXINGTON, KY - A former employee at a child day care center in Nicholasville, KY., admitted defrauding the company out of thousands of dollars.

On Tuesday, Pamela Sandlin, 55, pleaded guilty to a fraud charge in front of U.S. District Judge Karen Caldwell.

Sandlin admitted that, over the course of several years, she fraudulently took thousands of dollars while working as the Assistant Director at the Kids Connection Learning Center (KCLC), a company that annually receives more than $10,000 in federal program funding.

According to her plea agreement, Sandlin was responsible for collecting money from parents, making bank deposits, and documenting financial transactions for KCLC. Court documents also established that Sandlin altered company records to conceal the fraud.

Judge Caldwell has scheduled an evidentiary hearing on December 11 to determine how much money Sandlin took from KCLC. Sandlin will be sentenced during this hearing as well.

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, and Perrye Turner, Special Agent in Charge, FBI, jointly announced the plea today.

The investigation was conducted by the FBI. Assistant U.S. Attorney Ken Taylor represents the U.S. Attorney’s office in this case.

Sandlin faces a maximum of 10 years in prison. However, the Court must consider the U.S. Sentencing Guidelines and the federal statues before imposing a sentence.

LEXINGTON, KY - A former U.S. Attorney, who successfully prosecuted cases involving coal mine officials, insurance executives, doctors, sheriffs, and mayors in eastern Kentucky, Texas and Idaho over a 46 year career, retired from the U.S. Attorney’s office in the Eastern District of Kentucky (USAO-EDKY).

Patrick Molloy, 74, began as an Assistant U.S. Attorney for the USAO-EDKY in 1967 and served as U.S. Attorney from 1977 to 1981. During that time, the office prosecuted several sheriffs for extortion and mail fraud. Molloy was the Commonwealth’s Attorney in Fayette County from 1972 to1977 and he briefly served as interim U.S. Attorney in Idaho in 1993. Molloy was an Assistant U.S. Attorney in Houston, Texas for approximately five years and also was engaged in the private practice of law for a few years.

Molloy educated authorities in several eastern European countries on ways to improve their judicial system. On these international trips, he and others encouraged authorities to develop money laundering laws and create methods for law enforcement to legally seize assets obtained by criminals through unlawful means.

“When I started out we basically had three types of cases in eastern Kentucky – moonshine, property theft, and social security fraud,” said Molloy. “The types of cases we prosecute today are much more complicated. The most rewarding part of the job was getting to learn about a variety of professions through the cases I had. I will miss the people I worked with.”

“Pat’s career stands as a shining example of everything public service should be,” said U.S. Attorney Kerry B. Harvey. “He has made enormous contributions to his community and his nation. Simply put, our communities are better places because of the skill, dedication and unwavering commitment to the cause of justice that he has brought to every case he has touched over a stellar career. Although he leaves us for a well-earned retirement, his example remains for those who continue the work.”

Some of Molloy’s prominent cases include:

• U.S. vs. Manalapan - Mine Safety Violations

In 2013, a Harlan County coal company and several officials pleaded guilty to violating mandatory mine safety standards. The Court imposed a $150,000 fine on Manalapan Mining Company, Inc., which represents the largest criminal fine for a coal company in the EDKY dating back at least two decades.

• U.S. vs. Parker – Civil Rights

In 1983, Molloy prosecuted a water boarding case that occurred on U.S. soil. The defendants, a rural Texas Sheriff and three others, were convicted of torturing suspects in a fashion similar to water boarding. Some of these suspects were arrested on false pretenses.

• U.S. vs. Madon – Vote Buying

Former Pineville, Ky., Mayor Bob Madon and his son, Brent Madon, pleaded guilty in 2009 to a conspiracy to buy votes in a mayoral election.

• U.S. vs. Kelco – Fraud

In March 2003, a viatical company in Lexington, its CEO, president and vice president were convicted of a conspiracy to sell fraudulent life insurance policies. The company executives paid terminally ill people to lie about their health on life insurance applications in order to obtain a policy. The defendants then sold the policies to unsuspecting third parties.

• U.S. vs. Singleton – Pill Mill

Earlier this year, Molloy served as a co-counsel in a case in which a pain clinic owner was convicted of operating pill mills in Georgetown and Dry Ridge. The doctors at these clinics unlawfully distributed pills to thousands of Kentucky patients.

• U.S. vs. Hollingsworth – Civil Rights

In 2010, a deputy jailer in Carter County, Ky., was convicted of sexually abusing female inmates in violation of their civil rights.

COVINGTON, KY -

A Florence, KY., man, previously convicted of copyright infringement, was sentenced today to 18 months in federal prison.

U.S. District Judge David L. Bunning sentenced 32 year-old Anthony Cappadona for willfully infringing a copyright, by distributing a copyrighted work being prepared for commercial distribution.

Cappandona previously admitted that, in May 2010, he made an Xbox 360 video game entitled “Red Dead Redemption,” available for download on a website, prior to the game’s official release date. Court records state that Cappadona illegally downloaded a copy of the game, then uploaded it to a website, and created links for others to download the game for free.

“Red Dead Redemption” is a copyrighted Xbox video game developed and manufactured by the company Take-Two Interactive; therefore, Cappadona violated copyright laws by improperly distributing the game.

According to court documents, Cappadona also advertised on the website that he modified Xbox consoles, so that they could play illegally copied games.

Under federal law, Cappadona must serve 85 percent of his prison sentence and will be under the supervision of the U.S. Probation Office for three years following his prison term.

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, and Perrye Turner, Special Agent in Charge, FBI, and (Louisville Field Division) jointly announced the sentence.

The investigation was conducted by FBI. The U.S. Attorney’s Office was represented by Assistant U.S. Attorney Laura Voorhees.

LONDON, KY - Following the first day of trial, a Pulaski County man pled guilty to conspiring to distribute heroin and to distributing heroin that resulted in the death of another.

Anthony Lacortiglia, age 29, admitted that he provided heroin to John Latham on May 4, 2012, and that Latham died as a result of using the heroin. Lacortiglia also admitted to conspiring with others to distribute heroin within Pulaski County. The terms of the agreement require Lacortiglia to be imprisoned for 240 months, provided no changes occur with respect to the law surrounding overdose deaths.

Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky; Perrye Turner, Special Agent in Charge, FBI; Rodney Brewer, Kentucky State Police Commissioner; Robbie Clark, Acting Director of the Lake Cumberland Area Drug Task Force; and Todd Wood, Pulaski County Sheriff, jointly announced the conviction.

U.S. Attorney Kerry B. Harvey said, “This case highlights the importance of cooperation between federal, state and local law enforcement in fighting the growing epidemic of heroin overdose deaths. A troubling increase in heroin abuse has been detected in the Eastern District of Kentucky. We are committed to using every available tool to combat this problem. Drug dealers should be on notice that we intend to hold them responsible for the consequences of their criminal conduct.”

The investigation was conducted by Detective Jason Browning of the Kentucky State Police, Detective Darrell Kegley of the Pulaski County Sheriff’s Office, Sergeant Jon Williams of the Pulaski County Sheriff’s Office, Agent Mike Walters of the Lake Cumberland Area Drug Task Force, and various agents of the Federal Bureau of Investigation. The case was prosecuted by Assistant United States Attorney Jason Parman.

WASHINGTON, DC - Kathryn Keneally, Assistant Attorney General of the Justice Department’s Tax Division, and Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, jointly announced today that James S. Faller II, of Russell Springs, Ky., was indicted by a federal grand jury in Bowling Green, Ky. Faller, a consultant and private investigator, is charged in an eleven count indictment with obstructing the internal revenue laws, evading his individual income taxes, making and subscribing to a false form that he filed with the Internal Revenue Service (IRS) and failing to file his individual income tax returns.

The indictment, returned on Wednesday, alleges that Faller obstructed the IRS’s ability to collect payment of a substantial penalty he owed to the government and the IRS’s ability to identify his income from 2006 through 2009. According to the indictment, Faller evaded the payment of a $216,000 penalty related to unpaid employment taxes of Call Center Communications Inc., of which Faller was the president. In addition, Faller was charged with evading his individual income taxes from 2006 through 2009. He allegedly failed to report more than $960,000 of income during this four-year period and committed various affirmative acts of evasion.

Faller faces a maximum punishment of three years in prison for the charge of obstructing the internal revenue laws; five years for each count of evading his individual income taxes; three years for making and subscribing to a false form that he filed with the IRS; and one year for each count of failing to file his individual income tax returns. He faces a maximum fine of $100,000 on each count of failing to file his income tax returns and $250,000 for each of the other counts. An indictment merely alleges that a crime has been committed, and a defendant is presumed innocent until proven guilty beyond a reasonable doubt.

The case resulted from an investigation by special agents of the IRS - Criminal Investigation. Tax Division Trial Attorney Thomas Voracek and Assistant U.S. Attorney Lee Gentry are prosecuting the case.

WASHINGTON, DC - Kathryn Keneally, Assistant Attorney General of the Justice Department’s Tax Division, and Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, jointly announced today that James S. Faller II, of Russell Springs, KY., was indicted by a federal grand jury in Bowling Green, KY. Faller, a consultant and private investigator, is charged in an eleven count indictment with obstructing the internal revenue laws, evading his individual income taxes, making and subscribing to a false form that he filed with the Internal Revenue Service (IRS) and failing to file his individual income tax returns.

The indictment, returned on Wednesday, alleges that Faller obstructed the IRS’s ability to collect payment of a substantial penalty he owed to the government and the IRS’s ability to identify his income from 2006 through 2009. According to the indictment, Faller evaded the payment of a $216,000 penalty related to unpaid employment taxes of Call Center Communications Inc., of which Faller was the president. In addition, Faller was charged with evading his individual income taxes from 2006 through 2009. He allegedly failed to report more than $960,000 of income during this four-year period and committed various affirmative acts of evasion.

Faller faces a maximum punishment of three years in prison for the charge of obstructing the internal revenue laws; five years for each count of evading his individual income taxes; three years for making and subscribing to a false form that he filed with the IRS; and one year for each count of failing to file his individual income tax returns. He faces a maximum fine of $100,000 on each count of failing to file his income tax returns and $250,000 for each of the other counts. An indictment merely alleges that a crime has been committed, and a defendant is presumed innocent until proven guilty beyond a reasonable doubt.

The case resulted from an investigation by special agents of the IRS - Criminal Investigation. Tax Division Trial Attorney Thomas Voracek and Assistant U.S. Attorney Lee Gentry are prosecuting the case.

LEXINGTON, KY - A home builder from Georgetown, KY., was convicted by a federal jury of fraudulently obtaining more than a million dollars in loans from a Frankfort bank.

The jury convicted 59 year-old Lee C. Tevis of one count of bank fraud, three counts of false loan application, three counts of aiding and abetting bank embezzlement and three counts of aggravated identity theft. Tevis was acquitted on a conspiracy count. The jury rendered the verdict Monday evening, after more than 15 hours of deliberation, following five days of trial.

Evidence at trial proved that, starting in 2006, Tevis began construction on a house and fraudulently obtained loans from American Founders Bank (AFB), by setting up bogus corporations in the names of other people to bypass loan limits.

The evidence furthered revealed that Tevis used some of the loan money, which the bank intended to be used to fund a home in Frankfort, to pay off his personal loans and debt on other construction projects.

According to trial testimony, when Tevis reached loan limits established by the Bank, he set up a bogus corporation in the name of his company’s foreman, an illegal alien, in order to obtain more loans. After fraudulently qualifying for the loans, Tevis used the social security number of the foreman’s five year-old son to pass the bank’s credit check.

Tevis fraudulently received $1.4 million in loans from the bank, according to the evidence at trial. The Bank eventually foreclosed on the home that Tevis received the loans for and suffered a significant financial loss in the process.

Jim Tate, the AFB president who approved the loans for Tevis, previously pleaded guilty to bank fraud and will be sentenced on September 10.

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, Perrye Turner, Special Agent in Charge, Federal Bureau of Investigation, and John E. Lucas, Special Agent in Charge, Federal Deposit Insurance Corporation, Office of Inspector General jointly announced the conviction.

The investigation was conducted by the FBI and the FDIC-OIG. Assistant U.S. Attorneys Andrew Sparks and Jim Arehart represent the U.S. Attorney’s Office in this case.

Tevis will appear for sentencing on December 3. He faces a maximum of 30 years in prison. However, the Court must consider the U.S. Sentencing Guidelines and the applicable federal statutes before imposing a sentence.

ASHLAND, KY - Melvin Charles Schoch, Jr., 30, was sentenced today to 75 months in federal prison for attempting to possess with intent to distribute Oxycodone and using a firearm during a drug offense.

Schoch previously admitted that, in May or June of 2009, while working as an Ashland Police Officer, he and two other individuals invaded a residence in Boyd County. They conducted the home invasion, under the guise of executing a search warrant, in order to obtain Oxycodone pills and/or money for their own personal benefit.

Prior to entering the residence, Schoch provided the others with police tactical equipment to help with the home invasion. Schoch entered the home armed with his duty weapon, a .40 caliber Glock pistol, and placed the two male occupants of the residence in handcuffs. However, Schoch didn’t locate any pills at the residence.

According to the plea agreement, before to the home invasion, Schoch and the others observed activity around the residence and believed there were large quantities of Oxycodone and cash at the residence.

Schoch’s co-defendant, Ellis Pittman, previously pleaded guilty to similar charges and is scheduled for sentencing in September.

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, Robert L. Corso, Special Agent in Charge, DEA; Rodney Brewer, Kentucky State Police Commissioner and Jack Conway. Kentucky Attorney General jointly made the announcement today.

The investigation was conducted by the DEA, Kentucky State Police, Kentucky Attorney General’s Office and the Morehead Police Department. Assistant U.S. Attorney Ron L. Walker represented the U.S. Attorney’s Office in this case.

Under federal law, Schoch must serve at least 85 percent of his prison sentence.

LONDON, KY - Lois Elaine Smith, 53, of Hazard, KY., pleaded guilty today to charges of currency structuring.

In her guilty plea, Smith admitted she intentionally structured cash deposits, in increments of just under $10,000, into an account at the Peoples Bank and Trust in Perry County. Smith acknowledged that she structured the deposits in this manner to prevent the bank from filing a currency transaction report with the federal government.

Under federal law, financial institutions, such as banks, are required to report to the federal government any currency deposit, withdrawal, or exchange that is over $10,000. It is a violation of federal law to intentionally structure cash transactions to avoid these reporting requirements.

Smith was indicted by a grand jury in February of 2013.

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, and Christopher A. Henry, Special Agent in Charge, Nashville Field Division, Internal Revenue Service, jointly made the announcement.

The investigation was conducted by the IRS, Northern Kentucky Financial Crimes Task Force. The U.S. Attorney’s Office was represented in the case by Assistant U.S. Attorneys Jordi De Llano and Robert K. McBride.

Smith is currently scheduled to appear before U.S. District Judge Gregory Van Tatenhove for sentencing, in London, on November 21, 2013, at 1:30 p.m. Smith faces a maximum prison sentence of five years. However, any sentence following conviction would be imposed by the Court after consideration of the U.S. Sentencing Guidelines and the federal statutes governing the imposition of sentences.

CITY, KY - A federal indictment, unsealed today, charges 28 individuals from Whitley County, KY., with a conspiracy to manufacture large quantities of methamphetamine.

Investigators with the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), Kentucky State Police (KSP), U.S. Marshal’s Office (USMS) and the Williamsburg Police Department arrested eight defendants this morning in Whitley County. All of the other defendants are already in custody.

On Thursday, July 25, a superseding indictment, which is a charging document that alters or changes information from a previous indictment, was returned sealed by a federal grand jury in London. The superseding indictment added 16 new defendants in a conspiracy to distribute at least 500 grams of a methamphetamine mixture over the course of approximately three and a half years. The original indictment, filed in May, charged 12 defendants in the conspiracy. The superseding indictment also charges some of the defendants with additional drug and firearm offenses.

Specifically, 35 year-old James Forest Manning is charged with manufacturing methamphetamine, carrying and using a firearm during and in relation to a drug trafficking offense and being an unlawful user of methamphetamine in possession of firearms. Jamie Mark Gibson 41, and Danny Lee Fyffe, 49, are charged with being unlawful users of methamphetamine in possession of a firearm.

The superseding indictment also alleges that Daniel John Moeser, 44, possessed firearms and explosives after having previously been convicted of a felony offense. Lisa Canada Ball, 49, is charged with being an unlawful user of methamphetamine in possession of firearms and explosives. Both defendants were charged with these offenses in the original indictment.

The other defendants indicted in the case are Bobby Darrell Canada, II, 26; David Allen Davis, 29; Robert Joe Gibson, 23; Michelle Manning, 33; Wayne Marcus, 32; Billy Ray Richardson, 35; Anthony Rose, 32; Jerry White, 36; Beverly Wilson, 28; James Bennett, 39; Wendell Ralph Canada, 31; Ryan David Carlson, 36; George Thomas Hubbard, 49; Mark A. Morrow, 46; Harrison B. Sulfridge, 33; Joanna Cansler, 55; Teanna Marie Cansler, 33; Robert Church, 27; William Helbig, Jr., 36; Suzann Judy Phillips, 49; Anna Davis, 24; Jason Wade Taylor, 31 and Aaron David Ellison, 35;

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, Stuart L. Lowery, Special Agent in Charge, Bureau of Tobacco, Firearms and Explosives (ATF), Wayne Bird, Police Chief, Williamsburg Police Department and Loren Carl, U.S. Marshal for the Eastern District of Kentucky, jointly announced the superseding indictment today.

The investigation preceding the indictment was a result of a joint collaboration between the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF); Post 11 of the Kentucky State Police, the Williamsburg Police Department; the U.S. Marshal’s Office; Kentucky Division of Probation and Parole; the Whitley County Sheriff’s Department and the Commonwealth Attorney’s Office for the 34th Judicial Circuit.

Arraignments for some defendants are set for August 2, 2013, while the defendants arrested today will make their initial appearances in court tomorrow. The conspiracy charge carries a maximum of 20 years in prison. Manning faces a minimum of five years in prison and a maximum of life for carrying and using a firearm during a drug trafficking crime. Additionally, he faces a maximum of 20 years for the manufacturing methamphetamine charge. The defendants charged with firearm/weapons offenses face a maximum of 10 years imprisonment.

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

LEXINGTON, KY - A Jackson, KY., woman, who previously admitted to stealing someone else’s identity to buy a car, was sentenced to 39 months in federal prison.

On Thursday, U.S. District Judge Karen Caldwell sentenced 45-year old Lisa Ann Salyers for wire fraud and aggravated identity theft. Judge Caldwell also ordered that Salyers pay $5,450.50 in restitution to Paul Miller Ford.

Salyers previously admitted she obtained the date of birth and social security number of another person through the internet. She then assumed the identity of this victim and used it to purchase a car from a Lexington car dealership. Salyers also tried to use the victim’s identity to buy furniture from a Lexington retailer.

Salyers pleaded guilty to these charges in March of 2013.

Under federal law, Salyers must serve at least 85 percent of her prison sentence, and will be under the supervision of the U.S. Probation Office for three years following the completion of her prison term.

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, and Paul R. Johnson, Special Agent in Charge, U.S. Secret Service, jointly announced the sentence.

The investigation was conducted by the U.S. Secret Service. The U.S. Attorney’s Office was represented in the case by Assistant U.S. Attorney Andrew T. Boone.

COVINGTON, KY - A financial technician, employed in a Boone County, Kentucky office of the Internal Revenue Service (IRS), has been charged with multiple crimes relating to her unauthorized access of an IRS computer, to obtain personal information about tax payers.

On July 18, 2013, a federal grand jury returned a sealed indictment against Joy Fox, 32, of Independence, KY. The indictment, which was unsealed today, charges Fox with eight counts of intentionally exceeding her authorized access to an IRS computer, for the purpose of improperly obtaining personal identifying information of tax payers. She is also charged with three counts of mail fraud and three counts of aggravated identity theft in relation to the mail fraud.

According to the indictment, another individual, Patrick Sharpe, 23, of Tallahassee, FL., was charged as a co-defendant in the case. Sharpe and Fox allegedly used the personal identifying information of tax payers to obtain online prepaid debit cards, in tax payers’ names, and then attempted to fund the cards using the tax payers’ social security benefits. Once the cards were approved, the defendants caused the cards to be mailed to addresses in Kentucky. Fox and Sharpe are also charged with conspiracy to file a false claim for a tax refund.

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, James D. Robnett, Special Agent in Charge, IRS Criminal Investigations Division, Tampa, FL., and Special Agent in Charge Dwaine Brinson, Treasury Inspector General Tax Administration, Chicago Field Division, jointly announced the indictment.

The investigation preceding the indictment was conducted by agents of the IRS, Criminal Investigation Division, Tallahassee, FL., the Leon County Sheriff’s Office, Tallahassee, FL., and agents of the U.S. Treasury Inspector General Tax Administration, Covington, KY. The indictment was presented to the grand jury by Assistant U.S. Attorney Laura Voorhees.

Fox appeared in court today, while Sharpe is scheduled to appear on August 14, 2013. The Court has scheduled trial for September 23, 2013. The mail fraud charges carry a maximum of 20 years imprisonment; the exceeding authorized access charges carry a maximum of 5 years imprisonment; the aggravated identity theft charges carry two years imprisonment, which must run consecutively to any other sentence imposed; and the filing a false claim for refund charge carries a maximum of 10 years imprisonment. The defendants could also be fined a maximum of $250,000. However, any sentence imposed would come after the court considers 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 the government must prove their guilt beyond a reasonable doubt.

LEXINGTON, KY - Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, and Christopher A. Henry, Special Agent in Charge, IRS Criminal Investigation Division, Nashville Field Office, jointly announced today that a Richmond, KY., man, who prepared false income tax returns, was sentenced to 36 months in federal prison.

U.S. District Judge Karen Caldwell sentenced 58 year-old James Raymond Kennedy for aiding and assisting in the preparation of false income tax returns. Kennedy had previously admitted he promoted tax deductions, to his clients, that were not authorized by law. Kennedy submitted false tax returns using these deductions, which resulted in the U.S> Government losing approximately $345,000. Kennedy’s clients were unaware that the deductions Kennedy used were not authorized under the tax code.

Kennedy pleaded guilty to the charges in August of last year. He operated J.R. Kennedy and Associates from 2006 through April 2009.

Judge Caldwell ordered Kennedy to report on September 30, 2013, to the Bureau of Prisons, to begin serving his sentence.

This investigation was conducted by IRS, Criminal Investigation Division. Assistant U.S. Attorney Robert K. McBride represented the U.S. Attorney’s Office in the case.

LEXINGTON, KY - A Lexington man, who made child pornography videos available for download over the internet, has been sentenced to 168 months in federal prison.

On Thursday, U.S. District Judge Karen Caldwell sentenced 29 year-old Brett Michael Compton for distribution of child pornography and ordered him to serve 25 years of supervised release following the completion of his prison sentence. Compton is also required to register as a sex offender for the remainder of his life.

According to court documents, in October 2011, an undercover law enforcement agent located two online videos depicting children engaged in sexually explicit conduct. Agents later discovered that Compton had posted these videos from his computer. The videos contained images of prepubescent children.

In December of 2011, during the execution of a search warrant, authorities found approximately 60,000 child pornography images on Compton’s home computer.

Under federal law, Compton must serve at least 85 percent of his prison sentence.

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, Perrye Turner, Special Agent in Charge, Federal Bureau of Investigation, and Jack Conway, Kentucky Attorney General, jointly announced the sentence.

The investigation was conducted by the Cyber Crimes Unit with the Kentucky Attorney General’s Office, and the FBI. The U.S. Attorney’s Office was represented in the case by its Fort Mitchell Branch Office.

LONDON, KY - A federal judge imposed a fine and ordered a period of probation for a Harlan County underground mining company, which violated mandatory safety and health standards established by the Mine Safety Health Administration (MSHA).

According to a sentencing document filed with the court on Monday, Manalapan Mining Company, Inc., received three years of probation and a $150,000 fine for allowing miners to work in hazardous conditions.

The sentence represents the largest criminal fine in the last 20 years imposed on a mining company in the Eastern District of Kentucky (district includes 67 counties). Mine officials previously pleaded guilty and were sentenced for their roles in the case.

As part of the probationary period, a probation officer is permitted to visit the mine to observe business practices. In addition, the conditions prohibit the company from attempting to hide assets. Specifically, the company can’t sell or transfer assets, without first notifying the probation officer, until the fine is paid off. Manalapan will pay $5,000 per month over a three year period to satisfy the fine. If the company fails to make payments, probation officers can conduct unannounced examinations of the company’s finances and records.

According to court records, from June 11, 2011 until June 29, 2011 the defendants allowed miners at the Harlan County P1-mine to work under roof conditions and operate electrical equipment that did not meet MSHA’s mandatory safety standards. Specifically, miners used mobile bridge carriers without a canopy, which is needed to protect miners from roof falls. Court records state that the canopies were available but never installed.

Under MSHA regulations, certain mine officials are required to perform daily inspections of the working sections of the mine and examine the equipment before allowing miners to work. After inspecting the mine, these officials are required to make written records of any hazardous conditions and address safety issues prior to the miners working in those sections of the mine.

Two of the defendants admitted they intentionally failed to document the hazardous working conditions in the mine and falsely signed and certified records stating that there were no hazardous conditions.

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, and Joseph A. Main, Assistant Secretary of Labor, Mine Safety and Health Administration, jointly announced the sentence today.

The investigation was conducted by MSHA. The case was prosecuted by Assistant U.S. Attorney Patrick H. Molloy and Jason Grover with the Department of Labor.

LONDON, KY - Former officials from an underground coal mine operation in Harlan County, KY., were sentenced today for violating mine safety standards.

U.S. District Judge Gregory Van Tatenhove sentenced mine foreman, Bryant Massingale, 53, of Cawood, KY., mine superintendent, Joseph Miniard, 54, of Smith, KY., and operations manager, Jefferson Davis, 47, of Harlan, KY., for violations of the Mine Safety and Health Administration’s (MSHA) mine safety standards.

Miniard received a $3,000 fine and three years of probation for a misdemeanor and felony offense of failing to report and record a hazardous condition. Judge Van Tatenhove ordered Miniard to serve his initial six months in home incarceration to be followed by a six month period of home detention. Massingale was fined $3,000 and sentenced to three years of probation, with six months to be served in home confinement, for failing to report and record a hazardous condition. Davis was fined $5,000 and sentenced to three years of probation for a misdemeanor offense of failing to provide protective canopies over persons operating mining equipment.

Judge Van Tatenhove scheduled a hearing to determine what fine, if any, to impose for Manalapan Mining Company.

According to court records, from June 11, 2011 until June 29, 2011 the defendants allowed miners at the Harlan County P1-mine to work under roof conditions and operate electrical equipment that did not meet MSHA’s mandatory safety standards. Specifically, miners used mobile bridge carriers without a canopy, which is needed to protect miners from roof collapses. Court records state that the canopies were available but never installed.

Under MSHA regulations, certain mine officials are required to perform daily inspections of the working sections of the mine and examine the equipment before allowing miners to work. After inspecting the mine, these officials are required to make written records of any hazardous conditions and address safety issues prior to the miners working in those sections of the mine.

Massingale and Miniard admitted they intentionally failed to document the hazardous working conditions in the mine and falsely signed and certified records stating that there were no hazardous conditions.

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, and Joseph A. Main, Assistant Secretary of Labor, Mine Safety and Health Administration, jointly announced the sentences today.

The investigation was conducted by MSHA. The case was prosecuted by Assistant U.S. Attorney Patrick H. Molloy and Jason Grover with the Department of Labor.

WASHINGTON, DC - U.S. Attorney Kerry B. Harvey of the Eastern District of Kentucky, and Assistant Attorney General Thomas E. Perez of the Civil Rights Division, announced today that Stephen Molen, a Sheriff’s Deputy with the Pulaski County Sheriff’s Office in Pulaski County, KY., was indicted by a federal grand jury on two counts of violating the civil rights of victims by using excessive force in October 2009 and October 2011.

Count one of the indictment alleges that on Oct. 2, 2009, Molen assaulted a victim identified in the indictment as “D.W.,” resulting in bodily injury. Count two of the indictment alleges that on Oct.7, 2011, Molen assaulted a victim identified in the indictment as “G.C.,” also resulting in bodily injury.

If Molen is convicted of these charges, he will face a statutory maximum punishment of 10 years in prison for each count.

The investigation was conducted by the Louisville Division of the FBI. The case will be prosecuted by Assistant U.S. Attorneys Pat Molloy and Ron Walker of the Eastern District of Kentucky and Civil Rights Division Trial Attorney Ali Ahmad.

The charges set forth in an indictment are merely accusations and the defendant is presumed innocent until proven guilty.

LEXINGTON, KY - The owner of pill mills in Georgetown, KY., and Dry Ridge, KY., which illegally dispensed prescription drugs to thousands of patients, was found guilty on all 21 counts of drug trafficking, money laundering, opening and maintaining a drug involved premise and conspiracy charges.

On Thursday, the jury returned guilty verdicts against 45 year-old Ernest William Singleton and his corporate fronts— Double D Holdings, LLC and S and R Medical Enterprises, LLC. These entities, controlled by Singleton, in turn owned Central Kentucky Bariatric and Pain Management; Central Kentucky Family Pharmacy of Georgetown and the Grant County Wellness Center in Dry Ridge, KY. The two clinics were convicted of the same charges as Singleton. Double D Holdings was convicted on drug trafficking and money laundering offenses. The pharmacy was convicted of money laundering charges. The jury returned the verdict after approximately three hours of deliberation, following three weeks of trial.

According to evidence presented at trial, starting in October of 2010 and continuing until February 2013, doctors at the clinics prescribed Diazepam and Ultram outside the scope of professional practice, not for a legitimate medical purpose, and under Singleton’s direction. Singleton then used his businesses to launder the proceeds gained from the drug trafficking.

Additionally, the jury found that Singleton used the drug proceeds to purchase a house in Willisburg, KY., a boat, farmland, and farm equipment, among other items. Singleton will have to forfeit bank accounts consisting of $427,834.34, more than 20 firearms, over 40 pieces of farm equipment, vehicles, and livestock that either facilitated the crimes or were purchased with proceeds obtained from his criminal offenses.

The evidence at trial established that Singleton oversaw the daily operations of the clinics, influenced doctors to overprescribe drugs to patients, and pressured them to see as many patients as possible. Witnesses testified that, at Singleton’s direction, one of the doctors saw more than 90 patients in a day and another doctor visited with some patients for as little as three minutes, before prescribing medication.

Testimony also revealed that when some doctors complained to Singleton, about the volume of patients, he instructed them not to reduce their patient load and told them “if we don’t give them (patients) what they want, they won’t come back.” Doctors testified that they could not provide adequate medical care under Singleton’s guidelines. Two of the doctors employed by Singleton, Lea Marlow and Gregory White, pleaded guilty earlier this month to conspiring to distribute controlled substances outside the scope of professional practice and without a legitimate medical purpose.

Other evidence established that the pain clinics operated on a cash-only basis and did not accept insurance. New patients paid approximately $250 on the first visit and $300 on subsequent visits. Investigators estimate that approximately 5,000 patients visited the clinics during the course of the conspiracy.

“Mr. Singleton is a drug dealer who used his business as a front for his criminal scheme,” said Kerry Harvey, U.S. Attorney for the Eastern District of Kentucky. “We will continue to pursue those who operate pill mills that bring so much pain to our communities. This successful prosecution exemplifies the sort of interagency collaboration that is necessary to effectively combat the scourge of illegal drug trafficking in our Commonwealth. We congratulate our law enforcement partners in this case and appreciate the great work of our trial team.”

“This verdict sends a clear message that drug and money laundering violations are serious crimes against the American public. IRS Criminal Investigation, along with our law enforcement partners, plays a very important role in the successful investigation and prosecution of these types of financial crimes,” said Christopher A. Henry, Special Agent in Charge, IRS Criminal Investigation, Nashville Field Office.

“The defendant’s greed came at a substantial cost to many families in the Commonwealth,” said Attorney General Jack Conway. “This case is a perfect example of why entrepreneurs should not be in control of pain management clinics, I appreciate the hard work of my Drug Investigative Branch and prosecutors who worked in coordination with our state and federal law enforcement partners to bring the defendant to justice and obtain this guilty verdict."

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, Robert L. Corso, Special Agent in Charge, Drug Enforcement Administration; Christopher A. Henry, Special Agent in Charge of IRS, Criminal Investigation Division; Jack Conway, Kentucky Attorney General; and Rodney Brewer, Commissioner of Kentucky State Police, jointly made the announcement.

The investigation was conducted by the DEA, IRS Criminal Investigation Division, the Kentucky Attorney General’s Office and Kentucky State Police. Assistant U.S. Attorneys Ron Walker and Patrick Molloy with the U.S. Attorney’s Office, and Special Assistant U.S. Attorney Shawna Kincer, who is the Executive Director of Special Prosecutions with the Kentucky Attorney General’s Office, prosecuted the case.

Singleton faces up to 20 years in prison for both the money laundering and drug trafficking conspiracies. The businesses face a maximum of fine of $250,000. However, any sentences following conviction would be imposed after the Court reviews the U.S. Sentencing Guidelines and the federal statutes.

LONDON, KY - Four Harlan County, KY., relatives were sentenced today by U.S. District Judge Gregory Van Tatenhove for their roles in kidnapping and assaulting Kevin Pennington, a gay man. David Jason Jenkins (“Jason”), 39, received 30 years in prison, Anthony Ray Jenkins, 22, 17 years in prison, Mable Ashley Jenkins (“Ashley”), 20, 100 months in prison and Alexis LeeAnn Jenkins, 20, 8 years in prison.

In October 2012, a federal jury in London, KY., convicted Jason Jenkins and Anthony Jenkins of kidnapping and conspiracy charges related to the April 4, 2011 assault of Pennington. The jury acquitted the men of violating the sexual orientation provision of the Matthew Shepard James Byrd, Jr. Hate Crimes Prevention Act. Testimony at trial established that the two men, who are cousins, carried out the crime with help from their relatives - Ashley Jenkins and Alexis Jenkins, who both pleaded guilty prior to trial to aiding and abetting kidnapping and aiding and abetting the hate crime assault against Pennington. Both women testified against the defendants. The women’s guilty pleas to federal hate crime charges constituted the first federal convictions in the nation under the sexual orientation provision of the Matthew Shepard James Byrd, Jr. Hate Crimes Prevention Act.

The evidence at trial established that the four relatives planned in advance of the assault to kidnap Pennington, take him to a remote location and beat him to death. After luring Pennington by false pretenses into a truck driven by Anthony Jenkins, the group drove Pennington up a deserted mountain road into Kingdom Come State Park, where they dragged Pennington into the road and beat him.

The evidence also established that Pennington escaped while the two men were searching in the back of the truck for a tire iron to use to kill Pennington. Pennington ran off the road and threw himself over a ledge, where he hid behind a rock until the group finally gave up searching for him and drove away. Pennington staggered part-way down the mountain, where he found a ranger shack, broke a window and called 911.

Ashley and Alexis Jenkins both testified that they and the men had agreed in advance to lure Pennington into the truck, drive him to a deserted area and beat him because of his sexual orientation. The women also testified that during the beating, they all used anti-gay slurs and yelled “Kill the faggot!” and that the group intended to kill Pennington.

“Justice imposes a heavy price on those who engage in the sort of gratuitous violence that led to this prosecution,” said Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky. “The defendants’ crimes were brutal and cruel. They fully deserve the sentences delivered by the Court. The message is clear-our society will not tolerate such horrific conduct. The team of dedicated professionals who investigated and successfully prosecuted this case are to be congratulated for their fine work. We also thank our state and local partners who played an important role in achieving a just result in this matter.”

“We are pleased that this matter has been successfully resolved and that justice has been done,” said Perrye K. Turner, Special Agent in Charge of the FBI in Kentucky. “We feel the length of the sentences sufficiently reflects the seriousness of these violent acts”

This case was investigated by Special Agents Anthony Sankey and Mike Brown with the FBI and was prosecuted by Assistant U.S. Attorney Hydee Hawkins from the U.S. Attorney’s Office for the Eastern District of Kentucky, and Trial Attorney Angie Cha from the Civil Rights Division.

LEXINGTON, KY - Ramiro Ozuna Guerrero, 45, of Lexington, KY., was convicted Friday afternoon by a federal jury of conspiring to distribute 5 kilograms or more of cocaine.

The jury returned the verdict after a 2-day trial. The evidence established that Ozuna-Guerrero acted as a courier for a central Kentucky cocaine trafficking organization. The evidence also established that on July 24, 2012, Ozuna-Guerrero departed Lexington for Mexico, where he obtained over 5 kilograms of cocaine. Ozuna-Guerrero returned to Lexington on July 29, 2012, and provided the cocaine to Valentin Garcia-Ruiz.

On July 29, 2012, law enforcement arrested several participants in the conspiracy, including Ozuna-Guerrero, Garcia-Ruiz and Mario Sanchez Sr. Law enforcement also executed several search warrants which resulted in the recovery of over 1.5 kilograms of cocaine, 3 firearms, and $210,000, the monetary equivalent of 7-8 kilograms of cocaine.

Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky, Robert L. Corso, Special Agent in Charge, Drug Enforcement Administration (DEA), and Rodney Brewer, Commissioner, Kentucky State Police (KSP), jointly made the announcement today.

The investigation was conducted by the DEA, KSP, and the Lexington Division of Police. The United States was represented in the trial by Assistant United States Attorney Robert M. Duncan, Jr.

Ozuna-Guerrero is currently scheduled to appear for sentencing before Senior District Judge Joseph M. Hood, in Lexington, on September 16, 2013, at 10:30 a.m. Ozuna-Guerrero faces a minimum prison sentence of 10 years and maximum prison sentence of Life. However, his sentence will be imposed by the court after consideration of the United States Sentencing Guidelines and the federal statute governing the imposition of sentences.

LEXINGTON, KY - A Winchester, KY., man, accused of distributing heroin to an individual who died of an overdose, made his first appearance in federal court today.

Harold Wayne Salyers, 53, was indicted on June 6 for distribution of heroin resulting in death, conspiracy to distribute heroin, possession with intent to distribute heroin and distribution of heroin.

Magistrate Judge Robert Wier advised Salyers of the charges and scheduled an arraignment for Tuesday, June 18. Salyers remains in custody.

According to the indictment, on August 7, 2012, Salyers distributed heroin to an individual in Clark County who used the heroin, overdosed and died. The indictment also alleges that Salyers conspired with others to distribute heroin in Clark County from approximately August 2012 until June 2013.

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, Robert L. Corso, Special Agent in Charge, Drug Enforcement Administration, and Kevin Palmer, Chief, Winchester Police Department, jointly made the announcement today.

The investigation preceding the indictment was conducted by the DEA and the Winchester Police Department. The U.S. Attorney’s Office is represented by Assistant U.S. Attorney Todd Bradbury.

If convicted of the distribution resulting in death charge, Salyers faces a minimum prison sentence of 20 years and a maximum of life. He faces a maximum of 20 years on the other heroin charges. However, any sentence following a conviction would be imposed after the Court considers the U.S. Sentencing Guidelines and the federal statutes.

The indictment of a person by a grand jury is an accusation only and that person is presumed innocent unless proven guilty.

COVINGTON, KY - A Chicago man, who has several prior criminal convictions, was sentenced to 125 months in federal prison for committing two bank robberies in Boone County.

U.S. District Judge David Bunning sentenced 49 year-old Bernard Beaver Russell on Thursday and placed him on supervised release for 3 years after he completes his prison term. Judge Bunning ordered the sentence to run consecutively to a previous state court sentence of 7 ½ years for driving a stolen car and engaging in a high-speed chase after committing the bank robberies.

Russell admitted to robbing a Huntington Bank branch and a Central Bank branch in Boone County on February 9, 2012.

Russell entered his guilty plea on February 28, 2013. Under federal law, he must serve at least 85 percent of his prison sentence.

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

The investigation was conducted by the Federal Bureau of Investigation and the Boone County Sheriff’s Department. The U.S. Attorney’s Office was represented in the case by Assistant U.S. Attorney Tony Bracke.

LONDON, KY - A London, KY., physician was sentenced today to 18 months in prison to be followed by six months of home incarceration for evading federal income taxes.

U.S. District Court Judge Gregory F. Van Tatenhove sentenced Werner Grentz, 64, for tax evasion and ordered him to pay the IRS approximately $900,000 for taxes that Grentz owes for the years 1999 to 2010.

According to the plea agreement, in one of those years, Grentz made $356,073 in taxable income in 2009 while working as an independent physician contractor for a hospital in Jellico, Tenn., and a medical office in London, KY. Grentz previously admitted that he hid his income by having his earnings deposited into bank accounts of companies that he controlled.

Grentz pleaded guilty to the charge in January 2013.

Under federal law, Grentz must serve 85 percent of his prison sentence. Following his release, he will be under the supervision of the U.S. Probation Office for three years.

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, Kathryn M. Keneally, Assistant Attorney General for the Tax Division, and Christopher A. Henry, Special Agent in Charge, Internal Revenue Service, Criminal Investigation Division, jointly made the announcement.

The investigation preceding the indictment was conducted by the Internal Revenue Service, Criminal Investigation Division. The United States was represented in the case by Assistant U.S. Attorney John Patrick Grant and Kenneth C. Vert, Trial Attorney, U.S. Department of Justice Tax Division.

LEXINGTON, KY - A former Paintsville, KY., doctor, who previously admitted that he unlawfully dispensed approximately 50,000 prescription pills to individuals in Eastern Kentucky, was sentenced today to 75 months in prison, to be followed by three years supervised release.

U.S. District Judge Amul Thapar sentenced 66-year-old Richard Albert for conspiring to distribute and dispense controlled substances. Albert also agreed to forfeit more $630,000, which represents proceeds from his conspiracy. Albert was also ordered to pay $100,000 in community restitution.

Albert admitted that, from January 2009 until February 2011, he wrote numerous fraudulent prescriptions to individuals without a legitimate medical purpose. He typically wrote prescriptions for 100 (10 milligram) Percocet pills in exchange for $200 cash. Court records indicate that Albert frequently wrote approximately 40 to 50 fraudulent prescriptions in a given day.

According to the plea agreement, Albert wrote prescriptions to people who visited his clinic, his private residence, and a closed chiropractor’s office in Johnson County. During these visits, Albert performed little to no examination before writing the prescriptions. Patients who returned to the clinic after their initial visits received prescriptions without visiting with Albert at all.

In many cases, Albert signed his name to blank prescriptions and had an office assistant fill out the actual prescription. He also back dated information into his medical files to cover up the scheme.

During the course of the conspiracy, Albert worked at Care More Pain Management; and after resigning from Care More, he opened his own pain clinic. Albert was employed by Care More Pain Management owners Tammy Cantrell, of Oil Springs, KY., and Shelby Lackey, of Williamsport, KY. They pleaded guilty in April to conspiracy to distribute and unlawfully dispense Oxycodone and maintaining a drug involved premise.

The investigation started in 2009 when investigators with the Kentucky Attorney General’s Office observed large congregations of people routinely lined up outside Care More’s pain clinic.

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, Jack Conway, Kentucky Attorney General and Robert L. Corso, Special Agent in Charge, DEA, jointly announced the plea.

The investigation was conducted by the DEA, the Kentucky Attorney General’s Office and the Paintsville Police Department. Assistant U.S. Attorney Roger West represented the U.S. Attorney’s Office in this case.

FRANKFORT, KY - A London, KY., cardiologist pleaded guilty to charges that he falsely recorded the severity of patients’ illnesses in order to receive payment for numerous heart procedures.

Sandesh Rajaram Patil, 51, a former cardiologist at St. Joseph’s Hospital in London, admitted Tuesday in Frankfort to making false statements regarding the placement of heart stents. Stents are metal tubes surgically inserted into a patient’s arteries in order to improve blood flow.

Patil reached an agreement with the U.S. Attorney’s Office to serve a prison term between 30 and 37 months, pending a judge’s approval. Patil is scheduled for sentencing on August 27, 2013. St Joseph’s hospital has repaid the government $256,800 for cardiac stent procedures that Patil falsely submitted for reimbursement in 2009 and 2010.

Patil is the third cardiologist in the nation, and the first in Kentucky, to be federally prosecuted for health care fraud related to the placement of heart stents.

“Dr. Patil violated the public’s trust in physicians,” said Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky. “Both patients and the entities that pay for medical services trust that our physicians will accurately and honestly assess a patient’s medical condition. We will aggressively pursue any physician or provider that breaches this trust and places their own financial well-being ahead of the well-being of the patients.”

Under federal law, Medicare and Medicaid reimburse physicians for procedures that are deemed medically necessary. For a cardiac stent procedure to qualify as a medical necessity, it is generally accepted that a patient must have at least 70 percent blockage of an artery and symptoms of blockage. Patil admitted that he placed stents in arteries that had substantially less than 70 percent blockage. Patil nonetheless recorded blockage of 70 percent or more in patient documents to guarantee payment from Medicare and Medicaid.

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, Perrye Turner, Special Agent in Charge, Federal Bureau of Investigation, and Jack Conway, Kentucky Attorney General, jointly announced the plea.

The investigation was conducted by the Federal Bureau of Investigation, the Kentucky Attorney General’s Medicaid Fraud Abuse and Control Unit, and the Department of Health and Human Services.

Defendant is the Third Cardiologist Nationwide to be Criminally Prosecuted for Health Care Fraud Related to the Placement of Heart Stents

COVINGTON, KY - A Cincinnati man, who has several prior criminal convictions, was sentenced to 262 months in federal prison for possessing a firearm in furtherance of his drug trafficking activity in northern Kentucky.

On Wednesday, U.S. District Judge Amul Thapar sentenced 35 year-old Mitchell Blankumsee and also ordered that he be placed on supervised release for five years after he completes his prison term. Blankumsee received an enhanced sentence because he qualifies as a career offender, which means he had two or more drug trafficking or violent crime convictions at the time of his most recent offense.

In this case, Blankumsee admitted to distributing and selling heroin in Newport, KY., on July 24, 2012. He also possessed crack cocaine and a loaded firearm at the time of his arrest on August 29, 2012. Blankumsee acknowledged that he intended to sell the crack cocaine and that he possessed the firearm to assist him in trafficking drugs.

Blankumsee was previously convicted of selling crack cocaine, in Kenton County, in 1998; of possession of cocaine, in Hamilton County, Ohio, in 1999; and of trafficking in crack cocaine, in Campbell County, in 2005. He was released from prison for his 2005 offense shortly before committing this most recent offense.

Blankumsee entered his guilty plea on February 1, 2013. Under federal law, Blankumsee must serve at least 85 percent of his prison sentence.

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, and Stuart L. Lowrey, Special Agent in Charge, Bureau of Alcohol, Tobacco, Firearms & Explosives (Louisville Field Division), jointly announced the sentence.

The investigation was conducted by the Bureau of Alcohol, Tobacco, Firearms, & Explosives, the Newport Police Department, and the Highland Heights Police Department. The U.S. Attorney’s Office was represented in the case by Assistant U.S. Attorney Tony Bracke.

COVINGTON, KY - A Cincinnati man who previously admitted to participating in a conspiracy to distribute heroin was sentenced to 162 months in federal prison.

U.S. District Judge David Bunning sentenced 43 year-old Lee Moore on Tuesday and also ordered him to serve 8 years of supervised release after he completes his prison term.

Moore admitted that over the course of approximately 15 months he distributed over 100 grams of heroin throughout northern Kentucky and southern Ohio. He also acknowledged transporting large amounts of a substance used to cut heroin for distribution. Moore was previously convicted of felony drug trafficking offenses in Ohio and Georgia.

Moore pleaded guilty on January 25, 2012. A co-defendant, Raymond Hill, Jr., was sentenced to 276 months in prison on May 16, 2013.

Under federal law, the defendants must serve at least 85 percent of their prison sentence.

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, and Robert L. Corso, Special Agent in Charge, Drug Enforcement Administration, Detroit Field Division, jointly announced the sentence.

The investigation was conducted by the DEA and the Cincinnati Police Department. The U.S. Attorney’s Office was represented in the case by Assistant U.S. Attorney Tony Bracke.

COVINGTON, KY - A Texas man was sentenced to 72 months in federal prison for his role in a conspiracy to distribute methamphetamine in northern Kentucky.

U.S. District Judge David Bunning sentenced 52-year-old Michael Brian Brown on Thursday and placed him on supervised release for five years after he completes his prison term.

Brown admitted to distributing over 50 grams of pure methamphetamine from November of 2011 through April of 2012. He shipped between 1/8 ounce and an ounce of methamphetamine to Kenton County on approximately 12 occasions. Brown’s co-defendant, Michael Harney, received these shipments and distributed the methamphetamine in different areas in Northern Kentucky. In April of this year, Harney was sentenced to 53 months in prison.

Under federal law, Brown must serve 85 percent of his prison sentence.

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, and Robert L. Corso, Special Agent in Charge, Drug Enforcement Administration (DEA), jointly announced the sentence.

The investigation was conducted by the DEA. The U.S. Attorney’s Office was represented in the case by Assistant U.S. Attorney Tony Bracke.

CITY, KY - The U.S. Attorney’s Office filed a lawsuit today against a Somerset optometrist and his practice group, alleging that Dr. Philip Robinson and Associates in Eye Care P.S.C., defrauded the Medicare and Medicaid programs.

The lawsuit alleges that the defendants sought and received payment from Medicare and Medicaid for unnecessary eye examinations and for services Robinson didn’t provide.

According to the complaint, Robinson frequently visited area nursing homes and often claimed to treat more than 100 nursing home patients in a single day. The complaint alleges that on certain dates, these services would have required more than 20 hours’ worth of direct patient care per day, and that Robinson was not working inside these nursing homes more than 8 hours per day.

The complaint also claims that the defendants sought payment for routine monthly eye examinations that were unreasonable and unnecessary given the patients’ conditions. Many nursing home patients received an eye examination from Robinson every four to five weeks for five years or more. At times, Robinson billed Medicare for certain eye examinations more than any other optometrist in the United States.

The complaint accuses the defendants of violating the False Claims Act. If found liable, the defendants would face financial penalties between $5,500 and $11,000 per false claim, and would have to repay Medicare and Medicaid three times the amount of the U.S. Government’s loss for the fraud.

“Under the guise of caring for nursing home residents, these defendants exploited the Medicare and Medicaid programs,” said Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky. “Individuals paying for eye care with money from their own pocket would not be expected to pay a doctor to simply monitor their vision with a monthly exam, especially if the exams were as brief and superficial as what Robinson provided. Health care programs funded with taxpayer dollars are no different.”

The investigation preceding the complaint was conducted by agents with the Department of Health and Human Services, Office of Inspector General and the Kentucky Attorney General’s Medicaid Fraud and Abuse Control Unit. Assistant U. S. Attorney Paul McCaffrey will represent the U.S. Attorney’s Office in this case.

COVINGTON, KY - Pamela Brown, 43, of Independence, Ky., was sentenced today to 51 months in federal prison by U.S. District Judge David L. Bunning for mail fraud and aggravated identity theft. Judge Bunning also ordered Brown to pay $261,182.45 in restitution.

Brown previously admitted that over a seven year period she embezzled more than $261,000 from her employer, Northern Kentucky Title, Inc. Brown, who worked as the company’s office manager and bookkeeper, also acknowledged that she wrote checks issued from the business’ accounts to pay her personal expenses. She executed this by unlawfully accessing a signature stamp in the business owner’s name.

Brown pleaded guilty to the charges in January of 2013.

Under federal law, Brown must serve 85 percent of her prison sentence, and, upon release, will be under the supervision of the U.S. Probation Office for three years.

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, and Perrye Turner, Special Agent in Charge of the Federal Bureau of Investigation, Louisville Division, jointly made the announcement today.

The investigation was conducted by the FBI and local law enforcement. The U.S. Attorney’s Office was represented by Assistant U.S. Attorney Christopher L. Nasson.

COVINGTON, KY - An employee at the IRS Service Center in Kenton County, KY., is accused of destroying hundreds of tax forms.

A federal grand jury returned an indictment Thursday charging Brady James, 30, of Burlington, KY., with one count of destruction of records with intent to impede proper administration of a matter within an agency of the United States.

According to the indictment, in April of this year, James destroyed at least 800 1041 federal income tax return forms that had been submitted to the IRS. These forms are used for individuals earning income from estates and trusts. James worked as a tax examining technician.

Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky, and Special Agent in Charge Dwaine Brinson, Treasury Inspector General Tax Administration, Chicago Field Division, jointly announced the indictment.

The investigation preceding the indictment was conducted by agents with the Treasury Inspector General for Tax Administration. The indictment was presented to the grand jury by Assistant U.S. Attorney Laura Voorhees.

A date for James to appear in federal court has not yet been set. If convicted he faces a minimum of probation and a maximum of 20 years in prison. However, any sentence following a conviction would come after the court considers the U.S. Sentencing Guidelines and the federal statutes.

The indictment of a person by a grand jury is an accusation only, and that person is presumed innocent unless proven guilty.