District of Minnesota

United States Attorney Erica H. MacDonald today announced the sentencing of SCOTT PHILLIP FLYNN, 57, to 87 months of federal prison. He was also ordered to pay over $5 million in restitution. FLYNN was sentenced by Senior U.S. District Judge Ann D. Montgomery on January 24, 2019, in Minneapolis, Minnesota. On June 4, 2018, FLYNN pleaded guilty to one count of conspiracy to defraud the IRS and one count of tax evasion.  

According to the defendant’s guilty plea and documents filed in court, between 2005 and 2015, FLYNN evaded the assessment of millions of dollars in income taxes by fraudulently hiding millions of shares of stock that he obtained for himself.  In 2006 and 2008, FLYNN assisted two privately-held Wisconsin-based companies, Tower Tech Systems, Inc. and Advanced Fiberglass Technologies, in becoming publicly traded through stock-for-stock “reverse merger” transactions. As compensation for FLYNN’S work, millions of shares of publicly-traded stock in the resulting public companies were transferred to “Integritas, Inc.” and “Diversified Equities Partners,” both of which were  controlled by FLYNN. FLYNN, who exercised control over the stock, which had considerable value, was required to, but did not, report the receipt of the shares of stock as income on his individual income tax returns.

According to the defendant’s guilty plea and documents filed in court, in order to conceal his control and ownership of the stock, and to evade paying income taxes, FLYNN caused a portion of the stock to be put in the names of Australian nominees recruited by FLYNN’S co-conspirator. The Australian nominees, who never actually owned or controlled the stock, were directed to open brokerage accounts in the United States to receive the shares, but FLYNN possessed their login and password data so he could maintain control of the accounts and the shares of stock.

According to the defendant’s guilty plea and documents filed in court, during the course of the conspiracy, when FLYNN needed money, he caused the Australian nominees to sell shares of stock and transfer the proceeds to entities in the United States controlled by FLYNN, which in turn made payments to FLYNN or on his behalf. These sales generated millions of dollars in income, which FLYNN purposely failed to report to the IRS. For example, in 2007, FLYNN received approximately $2.7 million of the proceeds from the Australian nominees to buy a house in Orono, Minnesota, which was considered income to FLYNN. That year, in a tax return FLYNN acknowledged was materially false at his guilty plea hearing, FLYNN reported only $26,136 of total income.

United States Attorney MacDonald thanked the Criminal Investigation Division of the IRS who investigated the case and Assistant United States Attorneys David J. Maclaughlin and Benjamin F. Langner who prosecuted the case.

Defendant Information:

Scott Phillip Flynn, 57

Orono, Minnesota  

Convicted:

• Conspiracy to defraud the IRS, 1 count
• Tax Evasion- 2007, 1 count

 

Sentenced:

• 87 months (60 months on Count 1 and 27 months on Count 3 to run consecutively)
• 2 years of supervised release
• $5,392,442.87

 

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United States Attorney Erica H. MacDonald today announced the conviction of TONY LENDELL REED, 32, of Memphis, Tennessee, for robbery. Following a five-day trial before U.S. District Judge Joan N. Ericksen, in Minneapolis, Minnesota, a federal jury found REED guilty on February 1, 2019, of six counts of interference with commerce by robbery, known as the Hobbs Act. The Hobbs Act prohibits actual or attempted robbery affecting interstate or foreign commerce “in any way or degree.”

Co-defendant ORLANDO LORENZO HARRIS, 36, of Minneapolis, Minnesota, pleaded guilty on March 22, 2018, to two counts of Hobbs Act robbery.

Co-defendant DERF REGLAN RAHINE REED, 46, of Chicago, Illinois, pleaded guilty on November 13, 2018, to one count of Hobbs Act robbery.

Co-defendant TYRELL DANDRE CAMPBELL, 24, of Minneapolis, Minnesota, pleaded guilty on November 27, 2018, to one count of Hobbs Act robbery.

As proven at trial and in documents filed in court, on six separate occasions, REED and his co-defendants robbed auto parts stores throughout the Twin Cities metro region. During each of the robberies, the defendants displayed what appeared to the victims to be a gun, threatened the victims, and demanded money. REED and his co-defendants also restrained the employees of the stores they robbed, using zip ties to bind the victims’ wrists and ankles.  

United States Attorney Erica H. MacDonald thanked the Minneapolis Division, Chicago Division, and Memphis Division of the FBI, the Minneapolis Police Department, the Crystal Police Department, the Columbia Heights Police Department, the White Bear Lake Police Department, the Anoka County Sheriff’s Office, and the Holly Springs, Mississippi Police Department for their work in investigating the robberies.

United States Attorney MacDonald further thanked Assistant United States Attorneys LeeAnn K. Bell and Ruth Shnider who prosecuted the case.

Defendant Information:

TONY LENDELL REED, 32

Memphis, Tennessee

Convicted:

• Interference with Commerce by Robbery (Hobbs Act), 6 counts

ORLANDO LORENZO HARRIS, 36

Minneapolis, Minnesota

Convicted:

• Interference with Commerce by Robbery (Hobbs Act), 2 counts

DERF REGLAN RAHINE REED, 46

Chicago, Illinois

Convicted:

• Interference with Commerce by Robbery (Hobbs Act), 1 count

TYRELL DANDRE CAMPBELL, 24

Minneapolis, Minnesota

Convicted:

• Interference with Commerce by Robbery (Hobbs Act), 1 count

 

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Michael McWhorter, 29, and Joe Morris, 23, both of Clarence, Illinois, pleaded guilty today to multiple charges including federal civil rights charges in United States District Court in St. Paul, Minnesota.

United States Attorney for the District of Minnesota Erica H. MacDonald; United States Attorney for the Central District of Illinois John C. Milhiser; Assistant Attorney General for Civil Rights Eric S. Dreiband; and Jill Sanborn, Special Agent in Charge of the FBI's Minneapolis Division, announced today’s guilty pleas.

“The defendants engaged in a violent multi-state crime spree that terrorized communities, including members of the Dar al-Farooq Islamic Center in Minnesota. The defendants’ criminal acts are reprehensible and antithetical to our values as a nation. Every individual has the fundamental right to live life free from the threat of violence and discrimination, no matter who they are, what they believe, or where they worship,” said United States Attorney Erica H. MacDonald. “The dedication and collaboration of our law enforcement partners across several jurisdictions to bring these defendants to justice is a powerful example of our unwavering devotion to seek justice for all victims, and to prosecute to the fullest extent of the law any individual or group that seeks to threaten another’s civil rights through the commission of such vile hate crimes.”

"We will continue to work with our federal and state partners to identify and prosecute dangerous and radical groups that choose to terrorize our communities,” said United States Attorney John C. Milhiser.

"All people are entitled to live free from violence and fear, regardless of their religion or place of worship," said Assistant Attorney General Eric Dreiband of the Civil Rights Division. "The Justice Department is committed to holding hate crimes perpetrators accountable under the law for their dangerous and criminal actions against innocent community members."

“This crime was not only an attack on the intended target, it was meant to threaten and intimidate an entire community. Because of that wide-ranging impact, investigating this crime and others like it are high priority for the FBI,” said Jill Sanborn, Special Agent in Charge of the FBI Minneapolis Division. “The FBI is charged with protecting civil rights and our agents in both the Minneapolis and Springfield field offices in conjunction with the Joint Terrorism Task Force swiftly investigated this case side by side with the ATF, the Bloomington Police Department and other law enforcement partners with one singular goal – to bring the bombers to justice and most importantly to help the  Dar al-Farooq community begin to feel safe and secure once again.”

Defendants McWhorter and Morris pleaded guilty in the District of Minnesota to federal charges that originated in both the District of Minnesota and the Central District of Illinois. The pleas to the charges originating in the Central District of Illinois were entered in Minnesota pursuant to Federal Rule of Criminal Procedure 20, which allows for the transfer of charges for the entry of guilty pleas and the imposition of sentence. McWhorter, Morris, and co-defendant Michael Hari, 47, were federally indicted on possession of a machine gun; conspiracy to interfere with commerce by threats and violence (the Hobbs Act); and attempted arson, via a superseding indictment on May 2, 2018, in the Central District of Illinois. McWhorter, Morris, and Hari were indicted in the District of Minnesota on June 21, 2018, with federal civil rights charges, and possession and use of a destructive device in furtherance of a federal crime of violence.

McWhorter and Morris entered their guilty pleas earlier today before U.S. District Court Senior Judge Donovan Frank. Defendant Hari remains in custody in the Central District of Illinois.[1]

According to McWhorter’s and Morris’ guilty pleas, during the summer of 2017, Michael Hari started a militia group in central Illinois, which was eventually called  the “White Rabbits,” and which defendants McWhorter and Morris, together with others, joined.

According to McWhorter’s and Morris’ guilty pleas and documents filed in court, on August 4 and 5, 2017, McWhorter, Morris, and Hari drove in a rented truck from central Illinois to the Dar al-Farooq (“DAF”) Islamic Center in Bloomington, Minnesota, leaving their mobile phones in Illinois and avoiding toll roads in an attempt to remain undetected. The defendants stopped along the way to purchase diesel fuel and gasoline, which Hari mixed in a plastic container. About an hour outside of Minnesota, Hari disclosed to McWhorter and Morris that there was a pipe bomb in the truck (which had been created using previously purchased materials) and that they were going to bomb a mosque.

As admitted by McWhorter and Morris during their guilty plea hearings, the two, along with Hari, arrived at the DAF Islamic Center, at approximately five in the morning on August 5, 2017. Morris used a sledgehammer to break a window at the DAF Islamic Center and threw the plastic container containing the diesel fuel and gasoline mixture into the building. McWhorter then lit the fuse on the pipe bomb that Hari had built and threw the pipe bomb through the broken window at the DAF Islamic Center. According to the court documents, the window that was broken was part of the DAF Islamic Center Imam’s office. When the pipe bomb exploded, it ignited the mixture in the plastic container, causing extensive fire and smoke damage to the Imam’s office together with water damage caused when the building’s sprinkler system activated. McWhorter and Morris ran back to the truck, where Hari was waiting in the driver’s seat, and drove back to Illinois. At the time of the explosion, congregants were in the mosque for morning prayers, however, the Imam’s office was unoccupied and the bombing caused no fatalities or injuries.

According to their guilty pleas, Hari selected the DAF Islamic Center because it is an Islamic house of worship. McWhorter and Morris admitted that the bombing was an attempt to scare Muslims into believing they are not welcome in the United States, and should leave the country. The defendants also stated that the DAF Islamic Center was targeted, because they believed it was far enough away from central Illinois that the three thought it unlikely they would be suspected in the bombing.

As part of their guilty pleas, McWhorter and Morris admitted to participating in an armed home invasion in the town of Ambia, Indiana on December 16, 2017, where they, masquerading as police officers, carried firearms, including two that had been illegally converted into machine guns. McWhorter and Morris also conducted armed robberies of two Wal-Mart stores, along with co-defendant Hari, one in Watseka, Illinois, and one in Mt. Vernon, Illinois, on December 2, 2017 and December 17, 2017, respectively.

McWhorter and Morris also admitted that along with co-defendant Hari, they attempted to set on fire the Women’s Health Practice in Champaign, Illinois, on November 7, 2017. Morris admitted to breaking a window and placing an incendiary device in the Women’s Health Practice and to lighting a strip of magnesium that was being used as a fuse. However, the device did not ignite and was found on the floor by an employee of the Women’s Health Practice when the employee arrived to work that morning.

The Federal Bureau of Investigation is leading the investigation.

This case is being prosecuted by Assistant United States Attorneys John Docherty and Julie E. Allyn of the District of Minnesota, with assistance from Trial Attorney Timothy Visser of the Justice Department’s Civil Rights Division. The team also worked closely with Assistant United States Attorney Eugene Miller of the U.S. Attorney’s Office for the Central District of Illinois.

Defendant Information:

MICHAEL MCWHORTER, 29

Clarence, Ill.

Convicted:

• Intentionally Obstructing, and Attempting to Obstruct, by Force and the Threat of Force, the Free Exercise of Religious Beliefs, 1 count
• Carrying and Using a Destructive Device During and in Relation to Crimes of Violence, 1 count
• Possession of a Machine Gun, 1 count
• Conspiracy to Interfere with Commerce by Threats and Violence, 1 count
• Attempted Arson, 1 count
   
  JOE MORRIS, 23
  Clarence, Ill.
   
  Convicted:
• Intentionally Obstructing, and Attempting to Obstruct, by Force and the Threat of Force, the Free Exercise of Religious Beliefs, 1 count
• Carrying and Using a Destructive Device During and in Relation to Crimes of Violence, 1 count
• Possession of a Machine Gun, 1 count
• Conspiracy to Interfere with Commerce by Threats and Violence, 1 count
• Attempted Arson, 1 count
   
  MICHAEL HARI, 47
  Clarence, Ill.
   
  Charges in the District of Minnesota:
• Intentionally Defacing, Damaging, and Destroying any Religious Real Property Because of the Religious Character of that Property, 1 count
• Intentionally Obstructing, and Attempting to Obstruct, by Force and the Threat of Force, the Free Exercise of Religious Beliefs, 1 count
• Conspiracy to Commit Federal Felonies by Means of Fire and Explosives, 1 count
• Carrying and Using a Destructive Device During and in Relation to Crimes of Violence, 1 count
• Possession of an unregistered destructive device, 1 count

 

Charges in the Central District of Illinois[2]:

• Possession of a Machine Gun, 1 count
• Conspiracy to Interfere with Commerce by Threats and Violence, 1 count
• Attempted Arson, 1 count
• Possession of a firearm by a felon, 1 count

 

 

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[1] The charges against defendant Michael Hari are accusations, and he is presumed innocent unless and until proven guilty.

[2] Superseding Indictment Adds New Charges Against Four East Central Illinois Men

United States Attorney Erica H. MacDonald today announced the sentencing of DOUGLAS VAUGHN HOSKINS, 50, to 24 months of federal prison. HOSKINS was sentenced earlier today by Judge Patrick J. Schiltz in U.S. District Court in Minneapolis, Minnesota. A federal jury convicted HOSKINS and RYAN RANDALL GILBERTSON, 42, of multiple counts of wire fraud, securities fraud, and conspiracy to commit securities fraud, on June 26, 2018, following an 11-day jury trial before Judge Schiltz.

GILBERTSON who was the founder of Dakota Plains Holdings, Inc., (“Dakota Plains”) was sentenced on December 11, 2018, to 144 months of federal prison.

Dakota Plains was a privately held company based in Wayzata, Minnesota that owned and operated a transloading facility in New Town, North Dakota. As proven in court, as part of the fraud scheme, GILBERTSON caused Dakota Plains to go public via a reverse merger with a company called Malibu Club Tan, which was a publicly traded shell company. GILBERTSON made it a secret condition of the reverse merger that HOSKINS, his friend and polo coach, be able to purchase the majority of the “float” of freely trading shares, which were the only shares that could trade publicly following the reverse merger. GILBERTSON then gave $30,000 to HOSKINS, who was deeply in debt and owed money to the IRS and other creditors, in order to purchase 50,000 shares of Dakota Plains stock at a price of $0.50 per share on March 23, 2012, the morning of the reverse merger.

On the first day of public trading, HOSKINS began selling his newly acquired shares for an inflated price of $12 per share at GILBERTSON’S direction, and continued to do so throughout the first 20 days of public trading following the reverse merger. Throughout that 20-day period, GILBERTSON, with the help of HOSKINS and others, manipulated the price of Dakota Plains stock to increase the average trading price to $11.30 per share. This inflated share price triggered a $32.8 million bonus payment to GILBERTSON and the other noteholders.

In the wake of the fraud scheme, HOSKINS was interviewed by the Securities and Exchange Commission (SEC) about his involvement in these stock sales. HOSKINS repeatedly lied under oath during the deposition, covering up both his and GILBERTSON’S involvement in the stock manipulation scheme. Among other things, HOSKINS claimed that he did not discuss the stock trades with any other individuals.

Ultimately, GILBERTSON made millions as a result of his stock manipulation scheme. HOSKINS made less money, but still pocketed more than $125,000 from his stock sales, much of which he used to purchase an Argentine polo pony.

“The expertise of our partners – the FBI, the U.S. Postal Inspection Service, and the Securities and Exchange Commission - brought to light a complex and detailed stock manipulation scheme, resulting in the convictions of Gilbertson and Hoskins,” said United States Attorney Erica H. MacDonald. “It is thanks to their tireless digging and collaboration that this case had a just outcome.”

This case is the result of an investigation conducted by the FBI and the United States Postal Inspection Service. United States Attorney MacDonald would also like to thank the Securities and Exchange Commission for their assistance on this matter.

This case was prosecuted by Assistant United States Attorneys Joseph H. Thompson, Kimberly A. Svendsen, and Melinda A. Williams.

The Criminal Docket Number for this case is: 17-cr-00066

Defendant Information:                 

DOUGLAS VAUGHN HOSKINS, 50
Wayzata, Minn.
 
Convicted:

• Wire fraud, 2 counts
• Conspiracy to commit securities fraud, 1 count
• Securities fraud, 3 counts

Sentenced:

• 24 months imprisonment
• 1 year supervised release
• $15,135,360 in restitution (owed jointly with defendant Gilbertson)

 

RYAN RANDALL GILBERTSON, 42

Delano, Minn.

Convicted:

• Wire fraud, 14 counts
• Conspiracy to commit securities fraud, 1 count
• Securities fraud, 6 counts

Sentenced:

• 144 months imprisonment
• 2 years supervised release
• $2 million fine
• $15,135,360 in restitution (owed jointly with defendant Hoskins)

 

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United States Attorney’s Office, District of Minnesota: (612) 664-5600

Erica H. MacDonald today announced the unsealing of a federal indictment charging LENNIE DWAYNE BROOKS, 33, RANDY LORENZO BROOKS, 23, and AUTUMN MARIE NICHOLS, 20, each with one count of robbery. [1]  

As alleged in the indictment, LENNIE BROOKS, RANDY BROOKS, and NICHOLS stole approximately $50,000 in cash belonging to the Shaung Hur Asian Markets and as a result, caused the death of a robbery victim.

ATF and local law enforcement executed federal search warrants the morning of December 20, 2018. All three defendants are in custody and are scheduled to make their initial appearances today at 2:00 p.m. before Magistrate Judge Becky R. Thorson in U.S. District Court in St. Paul, Minnesota.

The defendants are charged with violating the Hobbs Act. The Hobbs Act prohibits actual or attempted robbery affecting interstate or foreign commerce “in any way or degree.”

This case is the result of a multi-jurisdictional investigation conducted by ATF, Eden Prairie Police Department, Steele County Sheriff’s Office, Woodbury Police Department, Cottage Grove Police Department, St. Paul Police Department, Minneapolis Police Department, Winona Police Department, Wabasha Police Department, Prior Lake Police Department, Southeast Minnesota Violent Crime Enforcement Team, St. Croix County Sheriff’s Office, Wabasha County Sheriff’s Office, Washington County Sheriff’s Office, Olmstead County Sheriff’s Office, and the Winona County Sheriff’s Office. This case is part of Project Safe Neighborhoods, an initiative that brings together all levels of law enforcement and the communities they serve to reduce violent crime and make neighborhoods safer for everyone.

Assistant United States Attorney Jeffrey S. Paulsen is prosecuting the case.

Defendant Information:

LENNIE DWAYNE BROOKS, 33

Zumbro Falls, Minn.

Charges:

• Interference with Commerce by Robbery, 1 count

 

RANDY LORENZO BROOKS, 23

Wabasha, Minn.

Charges:

• Interference with Commerce by Robbery, 1 count

 

AUTUMN MARIE NICHOLS, 20

St. Paul, Minn.

Charges:

• Interference with Commerce by Robbery, 1 count

 

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[1] The charges contained in the indictment are merely allegations, and the defendants are presumed innocent unless and until proven guilty.

United States Attorney Erica H. MacDonald today announced the sentencings of W. Jeffery Taylor, 57, Scott A. Nelson, 60, and Jeffery Longtain, 59, for their roles in the fraud scheme perpetrated against Starkey Laboratories, Inc. (Starkey) and its principal owner William F. Austin. Taylor was sentenced to 18 months of prison, Nelson was sentenced to 24 months of prison, and Longtain was sentenced to one year of probation. The defendants were sentenced today in United States District Court by Chief Judge John R. Tunheim. Jerome Ruzicka, 62, was sentenced on December 19, 2018 to 84 months of federal prison, by Chief Judge Tunheim.   

“The sentencings today are a testament to the remarkable skill, dedication, and professionalism of our law enforcement partners,” said United States Attorney Erica H. MacDonald. “I am thankful for their unrelenting pursuit of justice during this investigation and trial.”

Taylor was convicted on March 3, 2018, following a nearly 8-week trial presided over by Chief Judge John R. Tunheim. Longtain pleaded guilty on April 20, 2017, to a criminal information charging him with one count of making and subscribing a false return. Nelson pleaded guilty on December 19, 2017, to a criminal information charging him with one count of conspiracy.

This case was the result of an investigation conducted by the FBI, Criminal Investigation Division of the IRS, and the United States Postal Inspection Service.

Assistant United States Attorneys Benjamin Langner and Surya Saxena, and former Assistant United States Attorney Lola Velazquez-Aguilu prosecuted the case.

Defendant Information:

 

Jerome C. Ruzicka, 61

Plymouth, Minn.

 

Convicted:

• Mail fraud, 4 counts
• Wire fraud, 3 counts
• Tax fraud, 1 count

 
Sentenced:

• 84 months imprisonment
• 1 year supervised release
• Court will issue a restitution order

 

W. Jeffery Taylor, 57

Cologne, Minn.

Convicted:

• Mail fraud, 1 count
• Wire fraud, 2 counts

 
Sentenced:

• 18 months imprisonment
• 2 years supervised release

 

Scott A. Nelson, 60

Prior Lake, Minn.

Convicted:

• Conspiracy to commit mail fraud and wire fraud, 1 count

 
Sentenced:

• 24 months imprisonment
• 1 year supervised release

 

Jeffrey Lee Longtain, 58

West Linn, Ore.

Convicted:

• Marking and Subscribing a False Return, 1 count
   

Sentenced:

• One year of probation

 

 

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JULIE ANN LEE, 53, former controller of the Town & Country Club, was sentenced today to 42 months of federal prison for operating a million dollar embezzlement scheme. LEE, who pleaded guilty on April 4, 2018, was sentenced by Senior Judge Donovan W. Frank in U.S. District Court in St. Paul, Minnesota.

“For more than eight years, Ms. Lee used her position to embezzle more than a million dollars from Town and Country. She took elaborate steps to hide her deception from her employer, her colleagues and the club’s members who entrusted her with the club’s finances, said United States Attorney Erica H. MacDonald. “Today’s sentence highlights the seriousness of financial crimes.”

According to the defendant’s guilty plea and documents filed in court, from 2008 through December 2016, LEE was the controller of the Town & Country Club (“TCC”) in St. Paul, Minnesota. In her role, LEE was responsible for managing TCC’s finances and had authority to sign and issue checks on behalf of TCC as well as signing authority on TCC’s bank accounts, including a line of credit TCC had with Alliance Bank. LEE used her position as controller to devise a scheme to embezzle more than $1 million from TCC over the course of eight years.

As part of her embezzlement scheme, LEE fraudulently issued herself more than 50 checks totaling approximately $163,357 directly from TCC’s bank accounts. LEE also stole approximately $250,000 in cash from TCC, which she deposited into her personal bank account. LEE also made payments on her personal credit cards directly from TCC bank accounts totaling approximately $764,932. LEE spent the funds she embezzled on things unrelated to TCC, including personal travel, home improvements and her mortgage, a 2013 Dodge Charger, a 2015 GMC Sierra K3500 pickup truck, a motorcycle, and a recreational vehicle.

LEE admitted to attempting to conceal her embezzlement scheme and cover the shortage of money in TCC’s bank accounts by taking advances on TCC’s line of credit at Alliance Bank. As a result of LEE’s embezzlement, TCC was left without sufficient funds to make its quarterly payroll tax payments to the IRS. In order to conceal the shortage of funds, LEE filed false quarterly payroll tax returns with the IRS understating TCC’s payroll tax liability. At times, LEE also filed TCC’s quarterly payroll tax returns late and made TCC’s quarterly tax payments late, which resulted in TCC paying more than $300,000 in interest and penalties to the IRS.

United States Attorney Erica H. MacDonald thanked the Criminal Investigation Division of the Internal Revenue Service, the United States Secret Service, and the Saint Paul Police Department for their work on the investigation, and Assistant United States Attorney Joseph H. Thompson for prosecuting the case.

Defendant Information:

JULIE ANN LEE, 53

Farmington, MN

Convicted:

• Wire fraud, 1 count
• Filing a false tax return, 1 count

 

Sentenced:

• 42 months imprisonment
• 3 years supervised release
• $1,178,189 in restitution
• $200 special assessment

 

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United States Attorney Erica H. MacDonald today announced a federal indictment charging WAYNE ROBERT DAHL, JR., 50, with four counts of mail fraud and four counts of wire fraud. DAHL will make his initial appearance in U.S. District Court at a later date.

According to the indictment, DAHL owned “Your Magazine Service, Inc.” a fraudulent telemarketing company that operated a call center in Chaska, Minnesota. DAHL devised a scheme to trick mostly elderly customers into signing up for costly magazine subscriptions using false representations and fraudulent sales tactics. From 2009 through 2016, DAHL fraudulently obtained more than $10 million from 13,000 victims across the United States.

According to the indictment, DAHL purchased lists of consumers who had active magazine subscriptions through other companies. DAHL directed his employees to call these consumers and falsely claim they were calling to offer the consumers a $150 reduction on their existing account balance. In reality, as DAHL knew, the consumers did not have an existing magazine subscription with his company. During the calls, DAHL directed his employees to obtain consumers’ credit card information by falsely claiming that the company was conducting a survey on credit card and banking usage. DAHL then directed his employees to use this information to trick consumers into signing up for expensive magazine subscription packages that they did not want nor realize they were purchasing. These new subscription packages resulted in DAHL’s company billing his victim-consumers 20 monthly payments of $49.90, for a total cost of $998.  

This case is the result of an investigation conducted by the United States Postal Inspection Service and the Federal Bureau of Investigation.

Assistant U.S. Attorney Joseph H. Thompson is prosecuting the case.

Defendant Information:

Wayne Robert Dahl, Jr., 50

Fridley, Minn.

Charges:

• Mail Fraud, 4 counts
• Wire Fraud, 4 counts

 

 

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The charges contained in the indictment are merely allegations, and the defendant is presumed innocent unless and until proven guilty.

United States Attorney Erica H. MacDonald today announced a federal indictment charging ANTHONY DALE RANDKLEV, 39, with illegally possessing a firearm. RANDKLEV has been previously convicted of multiple violent offenses, including assault, drug, and kidnapping convictions, which prohibit him, under federal law, from owning or possessing a firearm.

According to the indictment, on or about July 22, 2018, the defendant possessed a Remington model 870 12-gauge shotgun. If convicted of the federal charge, RANDKLEV faces a mandatory minimum sentence of 15 years in federal prison.

RANDKLEV is also indicted in Otter Tail County District Court on three counts of first-degree criminal sexual conduct, as well as one count each of kidnapping, first-degree burglary, false imprisonment, felon in possession of a firearm, and fleeing a police officer. He is currently in custody in the Otter Tail County Jail.

This case is the result of an investigation conducted by the ATF, the Otter Tail County Sheriff’s Office, the Minnesota Bureau of Criminal Apprehension, and the Otter Tail County Attorney’s Office. This case was brought as part of Project Safe Neighborhoods (PSN), an initiative that brings together federal, state, and local law enforcement to combat violent crime.

Assistant U.S. Attorney Joseph H. Thompson is prosecuting the case.

Defendant Information:

Anthony Dale Randklev, 39

Pelican Rapids, Minn.

Charges:

• Felon in Possession of a Firearm, 1 count

 

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The charges contained in the indictment are merely allegations, and the defendant is presumed innocent unless and until proven guilty.

Jerome Ruzicka, 62, was sentenced today in United States District Court in Minneapolis by Chief Judge John R. Tunheim to 84 months of federal prison. Ruzicka and co-defendant W. Jeffery Taylor, 57, were convicted on March 3, 2018, of charges related to stealing more than $15 million from the Eden Prairie-based Starkey Laboratories, Inc. (Starkey) and its principal owner William F. Austin, as well as one of Starkey’s suppliers, Sonion. Chief Judge John R. Tunheim presided over the trial, which lasted nearly eight weeks, in Minneapolis, Minnesota.

Taylor and defendants, Jeffery Longtain, 59, and Scott A. Nelson, 60, will be sentenced on December 20, 2018, by Chief Judge John Tunheim for their roles in the fraud scheme. Longtain pleaded guilty on April 20, 2017, to a criminal information charging him with one count of making and subscribing a false return. Nelson pleaded guilty on December 19, 2017, to a criminal information charging him with one count of conspiracy.

United States Attorney Erica H. MacDonald, announcing the sentencing, said, “The defendant served as the President of Starkey Laboratories and had the confidence and trust of the company’s owner and its employees. Mr. Ruzicka abused that trust when he stole millions of dollars through a brash and complex fraud scheme. The sentence imposed today marks the end to a long and meticulous investigation and trial.”  

"It is unfortunate that Ruzicka misused his position of trust over a period of years to steal millions from a company that does so much to give the gift of hearing to so many people in need," said Special Agent in Charge Jill Sanborn of the FBI Minneapolis Division. "Corporate fraud has far-reaching negative effects on so many institutions and individuals and that's why the FBI continues to work tirelessly with our criminal justice partners to detect corporate fraud and hold those responsible to account for their crimes."

“IRS Criminal Investigation, along with the U.S. Attorney’s Office and other law enforcement agencies, will continue to investigate individuals who misuse their position of trust and authority within their corporations. As all financial transactions leave a trail, IRS Criminal Investigation special agents used their accounting skills and expertise to analyze the complex financial transactions made by the defendant. The sentencing of this individual should serve as a deterrent to those who might contemplate similar fraudulent actions,” stated Special Agent in Charge Gabriel Grchan of the IRS Criminal Investigation Chicago Field Office. 

"Today's sentence illustrates that regardless of your economic status, financial fraud on any level is still a crime, and criminals will be held accountable for their actions. Postal Inspectors will continue to protect the integrity of the U.S. Postal Service and aggressively investigate those cases where the U.S. Mails are used to defraud individuals and businesses of money and property," said Lesley Allison, (Acting) Postal Inspector in Charge for the Twin Cities Field Office, Denver Division.  

As proven at trial, between 2006 and September 2015, Ruzicka and Taylor worked together to embezzle and misappropriate money and business opportunities belonging to Starkey and Sonion, a major supplier of hearing aid components to Starkey. The defendants, using their leadership positions, deployed various tactics to steal from Starkey, including controlling a complicated web of sham companies and dummy entities, surreptitiously awarding themselves restricted stock in Starkey’s retail affiliate, and embezzling money from the company by causing payments to be made by Starkey for the benefit of the defendants and others.

For example, as proven at trial, Ruzicka and Taylor controlled a sham entity, Archer Acoustics. Taylor falsely represented to Sonion this entity was a Starkey affiliate, thereby securing Starkey’s discounted pricing on hearing-aid components for Archer Acoustics. The defendants obtained at least $600,000 in profits, commissions, and rebates by fraudulently leveraging Starkey’s purchasing power for their own benefit.

Another facet of this scheme related to Starkey’s retail affiliate, Northland Hearing Centers. The purpose of Northland was to acquire and operate retail hearing aid establishments. In 2013, after awarding themselves restricted stock in Northland, Ruzicka and Nelson paid themselves and Longtain approximately $15 million in exchange for terminating the restricted stock grants.

As proven at trial, in 2014, Ruzicka additionally embezzled $200,000 from Starkey under the guise of “officer’s insurance.” He used those funds to pay his state and federal personal income taxes. Ruzicka also stole a 2011 Jaguar automobile that Starkey purchased for Ruzicka’s use at a cost of $119,188.77. Starkey paid the fees, insurance premiums, and other costs associated with the automobile. Nevertheless, in July 2015, Ruzicka transferred ownership of the car from Starkey to himself by signing the title as both representative of the seller and also as the buyer. He did not pay Starkey for the vehicle, nor was it reported as a taxable benefit.

When some details of the scheme were discovered in September 2015, Ruzicka was terminated by Starkey.

This case was the result of an investigation conducted by the FBI, Criminal Investigation Division of the IRS, and the United States Postal Inspection Service.

Assistant United States Attorneys Benjamin Langner and Surya Saxena, and former Assistant United States Attorney Lola Velazquez-Aguilu prosecuted the case.

Defendant Information:                                                                                                                     

JEROME C. RUZICKA, 61

Plymouth, Minn.

Convicted:

• Mail fraud, 4 counts
• Wire fraud, 3 counts
• Tax fraud, 1 count

 

Sentenced:

• 84 months imprisonment
• 1 year supervised release
• Court will issue a restitution order
   
   
   
   
   

United States Attorney Erica H. MacDonald today announced the sentencing of BRIAN ALAN KAELBLE, 33, to 212 months in federal prison for receipt of child pornography. KAEBLE, who has two prior convictions in the States of Missouri and Kansas for crimes related to child pornography, pleaded guilty on August 14, 2018, to a criminal information. He was sentenced December 12, 2018, by Chief Judge John R. Tunheim in U.S. District Court in Minneapolis, Minnesota.

According to KAELBLE’s guilty plea, on November 3, 2017, law enforcement officers executed a federal search warrant at KAELBLE’s residence in Brooklyn Center. KAELBLE admitted to the officers that he was downloading child pornography, both at home and while at work. KAELBLE worked delivering pizzas. Officers seized electronics from the residence.

More than 85,000 files containing child pornography were found during a forensic review of the electronics seized from KAELBLE’s bedroom, many of the files contained pornography depicting  very young children.

This case was prosecuted by Assistant U.S. Attorney Carol M. Kayser. Ms. Kayser observed that Mr. Kaelble was a “purposeful” and “prolific” collector of child pornography. “The Court’s sentence of 212 months ensures that Mr. Kealble will not be able to hurt children for a very long time,” said Assistant United States Attorney Carol M. Kayser.

United States Attorney Erica MacDonald thanks the FBI and the Minneapolis Police Department for their work in the investigation.

Defendant Information:

BRIAN ALAN KAELBLE, 33

Brooklyn Center, MN

Convicted:

• Receipt of Child Pornography, 1 count

 

Sentenced:

• 212 months imprisonment
• 20 years supervised release

###

 

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United States Attorney Erica H. MacDonald today announced the guilty plea of MICHAEL WAYNE WHITEFEATHER, 18, to murder in the second degree. WHITEFEATHER entered his guilty plea today before Judge Susan Richard Nelson in United States District Court in St. Paul, Minnesota.

According to the defendant’s guilty plea, during the early morning hours of April 28, 2018, the defendant was traveling in a car on the Red Lake Indian Reservation and saw Anthony Allen Wells and another male walking in a parking lot near the Red Lake Skate Park. WHITEFEATHER admitted to getting out of the car with a shotgun and chasing after the victim and the other male. WHITEFEATHER eventually caught up to the victim and shot him in the face, which resulted in the victim’s death.  

This case is the result of an investigation conducted by the Red Lake Department of Public Safety, the FBI Headwaters Safe Trails Task Force, the Paul Bunyan Drug Task Force, the Bemidji Police Department, the Beltrami County Sheriff's Office, and United States Customs and Border Protection. This case is part of Project Safe Neighborhoods, an initiative that brings together all levels of law enforcement and the communities they serve to reduce violent crime and make neighborhoods safer for everyone.

This case is being prosecuted by Assistant U.S. Attorney Deidre Y. Aanstad.

Defendant Information:                                                                                                                     

MICHAEL WAYNE WHITEFEATHER, 18

Red Lake, Minn.

Convicted:

• Murder in the second degree, 1 count

 

###

 

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United States Attorney Erica H. MacDonald today announced the sentencing of ERIC JAMES REINBOLD, 41, to five years in federal prison for illegally possessing unregistered pipe bombs. REINBOLD was convicted on July 20, 2018, following a three-day trial before Chief Judge John R. Tunheim in U.S. District Court in Fergus Falls, Minnesota.

“The defendant possessed multiple pipe bombs and other items that presented a potentially dangerous situation for the Red Lake County community,” said Assistant U.S. Attorney Julie Allyn. “It is because of a courageous decision made by relatives of the defendant to report the pipe bombs, that the community is safe.”  

"Those engaged in building illegal improvised explosive devices are a threat to the community, therefore, this sentence is well deserved," said ATF Special Agent in Charge Kurt Thielhorn of the St. Paul Field Division. "We are grateful that a member of the community came forward and provided information regarding a public safety risk. We are thankful for, and appreciative of, the partnerships we have with local authorities who were an important part of this case."

As proven at trial, on October 22, 2017, law enforcement responded to a report of possible pipe bombs and bomb making materials on hunting land in Oklee, Minnesota. Specifically, they found a plastic tote containing pipe bombs, jugs of gunpowder, fuses, and other bomb making material as well as a receipt for the fuses containing REINBOLD’S name and address.

As proven at trial, on November 2, 2017, law enforcement executed a search warrant at REINBOLD’S residence in Oklee. Officers recovered materials similar to those found on the hunting land as well as handwritten notes related to manufacturing pipe bombs, making homemade explosives, how to use pipe bombs, and diagrams of bombs that match the bombs found in the tote.

Chief Judge John R. Tunheim sentenced REINBOLD today in U.S. District Court in Fergus Falls.

This case is the result of an investigation conducted by the Bureau of Alcohol, Tobacco, Firearms and Explosives, the Red Lake County Sheriff’s Office, the Crow Wing County Sheriff’s Office, and the Pennington County Sheriff’s Office. This case was brought as part of Project Safe Neighborhoods (PSN), an initiative that brings together federal, state, and local law enforcement to combat violent crime.

Assistant United States Attorneys Julie E. Allyn and Angela Munoz-Kaphing prosecuted this case.

Defendant Information:

ERIC JAMES REINBOLD, 41

Oklee, Minn.

Convicted:

• Possession of unregistered destructive devices, 1 count

Sentenced:

• 60 months imprisonment
• 3 years supervised release

###

 

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Five defendants were convicted yesterday by a federal jury for their roles in operating a massive international sex trafficking organization that was responsible for coercing hundreds of Thai women to engage in commercial sex acts across the United States.

Michael Morris, 65, of Seal Beach, California; Pawinee Unpradit, 46, of Dallas, Texas; Saowapha Thinram, 44, of Hutto, Texas; Thoucharin Ruttanamongkongul, 35, of Chicago Illinois; and Waralee Wanless, 39, of The Colony, Texas, were convicted following a six-week trial before Senior Judge Donovan Frank in U.S. District Court in St. Paul, Minnesota.  Thirty-one defendants previously pleaded guilty for their roles in the sex trafficking organization.

The convictions were announced yesterday by U.S. Attorney Erica H. MacDonald for the District of Minnesota, Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, Assistant Attorney General Eric Dreiband for the Department of Justice’s Civil Rights Division, Special Agent in Charge Tracy J. Cormier of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) St. Paul, Supervisory Special Agent Todd Strom of IRS Criminal Investigation (IRS-CI) and Directing Attorney Panida Rzonca for the Thai Community Development Center.

“More than two years ago, my office filed the first federal indictment against a criminal organization that relied on the sexual exploitation of women for their own financial gain,” said U.S. Attorney MacDonald.  “Since then, our team of prosecutors and investigators systematically dismantled the organization, while seeking justice for every victim of this organization.  The process has been long, but today’s guilty verdict represents both a successful and just outcome.  While our work combatting human trafficking continues, this case stands as a powerful example of the Department of Justice's commitment to achieving justice for victims.  I applaud our law enforcement partners for the remarkable dedication and collaboration they have demonstrated throughout this process.”

“The defendants convicted yesterday participated in a massive yet brutally efficient criminal enterprise that trafficked hundreds of vulnerable Thai women for sexual exploitation and used sophisticated money laundering techniques to conceal and sustain itself,” said Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division.  “The Criminal Division, through our Money Laundering and Asset Recovery Section, is committed to working with our law enforcement partners to dismantle the financial infrastructure supporting criminal organizations such as these.”

“Sex trafficking is a horrific crime that seeks to erode the human dignity of victims," said Assistant Attorney General Eric Dreiband for the Department of Justice’s Civil Rights Division.  “I want to thank U.S. Attorney Erica H. MacDonald, the District of Minnesota’s Anti-Trafficking Coordination Team, HSI St. Paul, IRS Criminal Investigations, the State Department’s Diplomatic Security Service, and other law enforcement and local partners for their hard work on this case which dismantled an extensive transnational trafficking enterprise.  The Department of Justice will bring the full force of the law against perpetrators of sex trafficking crimes.”

“The convictions of these defendants close this chapter for law enforcement, however mark only the beginning of the recovery process for the victims,” said Special Agent in Charge Comier.  “I am extremely proud of the work done by HSI’s special agents, and of the teamwork demonstrated by our law enforcement partners in dismantling this criminal organization.  Our communities are safer as a result of this investigation.”

“The cruel and illegal actions of the defendants tear at the fabric of our community, causing trauma, fear and anguish both seen and unseen,” said St. Paul Police Chief Axtell.  “Thankfully, due to the exceptional work of many law enforcement agencies and their representatives, the guilty will be held accountable for their actions and survivors will get help, support and justice.” 

“The guilty verdict of these five individuals received yesterday is the culmination of a large sophisticated international sex trafficking criminal enterprise," said IRS-CI Special Agent in Charge Strom.  "This criminal organization exploited women and laundered hundreds of thousands of illicit profits. Pooling the skills of each agency in this complex investigation made a tremendous team including IRS Criminal Investigation who provided the financial expertise to follow the money trail of these criminals.  Today’s guilty verdict demonstrates the collective efforts of law enforcement and U.S. Attorney’s Office who brought down an international sex trafficking organization.”

As proven at trial, this criminal organization compelled hundreds of women from Bangkok, Thailand, to engage in commercial sex acts in various cities across the United States, including Minneapolis, Los Angeles, Chicago, Atlanta, Phoenix, Washington, D.C., Las Vegas, Houston, Dallas, Seattle and Austin.  The trafficking victims were often from impoverished backgrounds and spoke little or no English. They were coerced to participate in the criminal scheme through misleading promises of a better life in the United States and the ability to provide money to their families in Thailand. 

Once in the United States, the victims were sent to houses of prostitution where they were forced to have sex with strangers – every day – for up to 12 hours a day, at times having sex with 10 men a day.  The victims were isolated from the outside world.  They were not allowed to leave the houses of prostitution unless accompanied by a member of the criminal organization.  The victims moved around the United States between houses of prostitution in multiple cities.  They and their families in Thailand were threatened. 

The organization also engaged in widespread visa fraud to facilitate the international transportation of the victims.  Traffickers assisted the victims in obtaining fraudulent visas and travel documents by funding false bank accounts, creating fictitious backgrounds and occupations, and instructing the victims to enter into fraudulent marriages to increase the likelihood that their visa applications would be approved.  Traffickers also coached the victims as to what to say during their visa interviews.  While working to obtain visa documents, traffickers gathered personal information from the victims, including the location of the victims’ families in Thailand.  This information was later used to threaten victims who sought to flee the organization in the United States.

The organization dealt primarily in cash and engaged in rampant and sophisticated money laundering in order to promote and conceal illegal profits. The organization used “funnel accounts” to launder and route cash from cities across the United States to the money launderers in Los Angeles.  To date, investigators have been able to recover $1.5 million in cash and $15 million in money judgments secured through plea agreements.  During the extensive investigation, law enforcement traced tens of millions of dollars to the organization.  Indeed, at trial, there was testimony that more than $40 million was sent to Thailand by one money launderer alone.

The District of Minnesota is one of six districts designated through a nationwide selection process as a Phase II Anti-Trafficking Coordination Team (ACTeam), an ACTeam Initiative of the Departments of Justice, Homeland Security and Labor. ACTeams focus on developing high-impact human trafficking investigations and prosecutions involving forced labor, international sex trafficking and sex trafficking by force, fraud or coercion through interagency collaboration among federal prosecutors and federal investigative agencies.  Today’s convictions validate the continued ACTeam mission—to take on and take down the most entrenched and sophisticated human trafficking organizations that seek to profit from human exploitation.

U.S. Attorney MacDonald, Assistant Attorney General Benczkowski and Assistant Attorney General Dreiband commended the multiple agencies that assisted in this investigation over the past three years including: HSI; IRS-CI; the Department of Justice’s Criminal Division’s Money Laundering and Asset Recovery Section; the Department of Justice’s Civil Rights Division’s Human Trafficking Prosecution Unit;  the St. Paul Police Department; the Bureau of Criminal Apprehension’s Minnesota Human Trafficking Investigators Task Force; the Anoka County Sheriff’s Office; the Cook County (Illinois) Sheriff’s Office; the State Department Diplomatic Security Service; and the International Organized Crime Intelligence and Operations Center (IOC-2).  U.S. Attorney MacDonald also thanks the Thai Community Development Center for the support and advocacy they have done on behalf of the victims of this sex trafficking organization.

U.S. Attorney MacDonald, Assistant Attorney General Benczkowski and Assistant Attorney General Dreiband further thanked the trial team led by Assistant U.S. Attorneys Melinda A. Williams and Laura Provinzino, with assistance from HSI Special Agent Tonya Price, IRS-CI Special Agent John Tschida, Senior Investigator Steven Baker of the Justice Department’s Criminal Division’s Money Laundering and Asset Recovery Section, and the Justice Department’s Civil Rights Division’s Human Trafficking Prosecution Unit for their dedication to the pursuit of justice

This case is filed as United States v. Michael Morris, et al., 17-cr-107 (DWF/TNL) and United States v. Sumalee Intarathong, et al., 16-cr-257 (DWF/TNL).

Defendants:

MICHAEL J. MORRIS, 65

Seal Beach, Calif.

Convicted:

• Conspiracy to commit sex trafficking, 1 count
• Sex trafficking by use of force, fraud, and coercion, 1 count
• Conspiracy to commit transportation to engage in prostitution, 1 count
• Conspiracy to engage in money laundering, 1 count
• Conspiracy to use a communication facility to promote prostitution, 1 count

PAWINEE UNPRADIT, 46 

Dallas, Texas

Convicted:

• Conspiracy to commit sex trafficking, 1 count
• Conspiracy to commit transportation to engage in prostitution, 1 count
• Conspiracy to engage in money laundering, 1 count
• Conspiracy to use a communication facility to promote prostitution, 1 count

SAOWAPHA THINRAM, 44 

Hutto, Texas

Convicted:

• Conspiracy to commit sex trafficking, 1 count
• Conspiracy to commit transportation to engage in prostitution, 1 count
• Conspiracy to engage in money laundering, 1 count
• Conspiracy to use a communication facility to promote prostitution, 1 count

THOUCHARIN RUTTANAMONGKONGUL, 35 

Chicago, Ill.

Convicted:

• Conspiracy to commit sex trafficking, 1 count
• Conspiracy to commit transportation to engage in prostitution, 1 count
• Conspiracy to engage in money laundering, 1 count
• Conspiracy to use a communication facility to promote prostitution, 1 count

WARALEE WANLESS, 39

The Colony, Texas

Convicted:

• Conspiracy to commit sex trafficking, 1 count
• Conspiracy to commit transportation to engage in prostitution, 1 count
• Conspiracy to engage in money laundering, 1 count
• Conspiracy to use a communication facility to promote prostitution, 1 count

CHATARAK TAUFFLIEB, 52

San Jose, Calif.

Convicted:

• Conspiracy to commit sex trafficking, 1 count
• Conspiracy to engage in money laundering, 1 count

PEERACHET THIPBOONNGAM, 58

Los Angeles, Calif.

Convicted:

• Conspiracy to commit sex trafficking, 1 count
• Conspiracy to engage in money laundering, 1 count

GREGORY ALLEN KIMMY, 38

Hutto, Texas

Convicted:

• Conspiracy to commit transportation to engage in prostitution, 1 count
• Conspiracy to engage in money laundering, 1 count

WILAIWAN PHIMKHALEE, 40

Chicago, Ill.

Convicted:

• Conspiracy to commit sex trafficking, 1 count
• Conspiracy to engage in money laundering, 1 count

KANYARAT CHAIWIRAT, 52

Chicago, Ill.

Convicted:

• Conspiracy to commit sex trafficking, 1 count
• Conspiracy to engage in money laundering, 1 count

PORNTHEP SUKPRASERT, 42

Huntington Beach, Calif.

Convicted:

• Conspiracy to engage in money laundering, 1 count

MULCHULEE CHALERMSAKULRAT, 41

Huntington Beach, Calif.

Convicted:

• Conspiracy to engage in money laundering, 1 count

BHUNNA WIN, 51

San Diego, Calif.

Convicted:

• Unlicensed money transmitting business, 1 count

NATCHANOK YUVASUTA, 50

Los Angeles, Calif.

Convicted:

• Conspiracy to engage in money laundering, 1 count

NATTAYA LEELARUNGRAYAB, 47

Los Angeles, Calif.

Convicted:

• Conspiracy to engage in money laundering, 1 count

PEERASAK GUNTETONG, 61

North Hollywood, CA

Convicted:

• Conspiracy to engage in money laundering, 1 count

VEERAPON GHETTALAE, 57

Lake Elsinore, Calif.

Convicted:

• Conspiracy to engage in money laundering, 1 count

MATTHEW MINTZ, 27

Chicago, Ill.

Convicted:

• Conspiracy to commit alien harboring, 1 count
• Conspiracy to engage in money laundering, 1 count

MOHIT TANDON, 38

Burr Ridge, Ill.

Convicted:

• Conspiracy to commit transportation to engage in prostitution, 1 count
• Conspiracy to engage in money laundering, 1 count

RICHARD ALEXANDER, 53

DeKalb, Ill.

Convicted:

• Conspiracy to commit marriage fraud, 1 count
• Conspiracy to engage in money laundering, 1 count

TANAKRON PATRATH, 60

Houston, Texas

Convicted:

• Conspiracy to engage in money laundering, 1 count

PANWAD KHOTPRATOOM, 47

Houston, Texas

Convicted:

• Conspiracy to commit sex trafficking, 1 count
• Conspiracy to engage in money laundering, 1 count

CHABAPRAI BOONLUEA, 44

Winder, Ga.

Convicted:

• Conspiracy to commit sex trafficking, 1 count
• Conspiracy to engage in money laundering, 1 count

NOPPAWAN LERSLURCHACHAI, 37

Lomita, Calif.

Convicted:

• Sex trafficking by use of force, fraud, and coercion, 1 count
• Conspiracy to engage in money laundering, 1 count

WATCHARIN LUAMSEEJUN, 48

Unknown

Convicted:

• Conspiracy to commit sex trafficking, 1 count
• Conspiracy to engage in money laundering, 1 count

PANTILA RODPHOKHA, 33

Mount Prospect, Ill.

Convicted:

• Conspiracy to commit sex trafficking, 1 count
• Conspiracy to engage in money laundering, 1 count

SOYSUDA SIANGDANG, 34

Chicago, Ill.

Convicted:

• Conspiracy to commit sex trafficking, 1 count
• Conspiracy to engage in money laundering, 1 count

ANDREW FLANIGAN, 53

Winder, Ga.

Convicted:

• Conspiracy to commit transportation to engage in prostitution, 1 count
• Conspiracy to engage in money laundering, 1 count

TODD VASSEY, 56

Lahanina, Hawaii

Convicted:

• Conspiracy to commit transportation to engage in prostitution, 1 count
• Conspiracy to engage in money laundering, 1 count

THI VU, 50

Atlanta, Ga.

Convicted:

• Conspiracy to commit sex trafficking, 1 count
• Conspiracy to engage in money laundering, 1 count

JOHN ZBRACKI, 61

Lakeville, Minn.

Convicted:

• Conspiracy to commit transportation to engage in prostitution, 1 count
• Conspiracy to engage in money laundering, 1 count

JOHN NG, 41

Cottage Grove, Minn.

Convicted:

• Conspiracy to commit transportation to engage in prostitution, 1 count
• Conspiracy to engage in money laundering, 1 count

PATCHARAPORN SAENGKHAM, 43

Los Angeles, Calif.

Convicted:

• Conspiracy to enter the United States by means of misrepresentation and concealment of facts, 1 count

CHANANCHIDA SENASU, 42

Dallas, Tex.

Convicted:

• Conspiracy to enter the United States by means of misrepresentation and concealment of facts, 1 count

YADAPORN PANNGOEN, 32

Chicago, Ill.

Convicted:

• Conspiracy to enter the United States by means of misrepresentation and concealment of facts, 1 count

CHONTHICHA SOICHAISONG, 38

Austin, Tex.

Convicted:

• Conspiracy to enter the United States by means of misrepresentation and concealment of facts, 1 count

WASHINGTON – Five defendants were convicted yesterday by a federal jury for their roles in operating a massive international sex trafficking organization that was responsible for coercing hundreds of Thai women to engage in commercial sex acts across the United States.

Michael Morris, 65, of Seal Beach, California; Pawinee Unpradit, 46, of Dallas, Texas; Saowapha Thinram, 44, of Hutto, Texas; Thoucharin Ruttanamongkongul, 35, of Chicago Illinois; and Waralee Wanless, 39, of The Colony, Texas, were convicted following a six-week trial before Senior Judge Donovan Frank in U.S. District Court in St. Paul, Minnesota.  Thirty-one defendants previously pleaded guilty for their roles in the sex trafficking organization.

The convictions were announced yesterday by U.S. Attorney Erica H. MacDonald for the District of Minnesota, Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, Assistant Attorney General Eric Dreiband for the Department of Justice’s Civil Rights Division, Special Agent in Charge Tracy J. Cormier of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) St. Paul, Supervisory Special Agent Todd Strom of IRS Criminal Investigation (IRS-CI) and Directing Attorney Panida Rzonca for the Thai Community Development Center.

“More than two years ago, my office filed the first federal indictment against a criminal organization that relied on the sexual exploitation of women for their own financial gain,” said U.S. Attorney MacDonald.  “Since then, our team of prosecutors and investigators systematically dismantled the organization, while seeking justice for every victim of this organization.  The process has been long, but today’s guilty verdict represents both a successful and just outcome.  While our work combatting human trafficking continues, this case stands as a powerful example of the Department of Justice's commitment to achieving justice for victims.  I applaud our law enforcement partners for the remarkable dedication and collaboration they have demonstrated throughout this process.”

“The defendants convicted yesterday participated in a massive yet brutally efficient criminal enterprise that trafficked hundreds of vulnerable Thai women for sexual exploitation and used sophisticated money laundering techniques to conceal and sustain itself,” said Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division.  “The Criminal Division, through our Money Laundering and Asset Recovery Section, is committed to working with our law enforcement partners to dismantle the financial infrastructure supporting criminal organizations such as these.”

“Sex trafficking is a horrific crime that seeks to erode the human dignity of victims," said Assistant Attorney General Eric Dreiband for the Department of Justice’s Civil Rights Division.  “I want to thank U.S. Attorney Erica H. MacDonald, the District of Minnesota’s Anti-Trafficking Coordination Team, HSI St. Paul, IRS Criminal Investigations, the State Department’s Diplomatic Security Service, and other law enforcement and local partners for their hard work on this case which dismantled an extensive transnational trafficking enterprise.  The Department of Justice will bring the full force of the law against perpetrators of sex trafficking crimes.”

“The convictions of these defendants close this chapter for law enforcement, however mark only the beginning of the recovery process for the victims,” said Special Agent in Charge Comier.  “I am extremely proud of the work done by HSI’s special agents, and of the teamwork demonstrated by our law enforcement partners in dismantling this criminal organization.  Our communities are safer as a result of this investigation.”

“The cruel and illegal actions of the defendants tear at the fabric of our community, causing trauma, fear and anguish both seen and unseen,” said St. Paul Police Chief Axtell.  “Thankfully, due to the exceptional work of many law enforcement agencies and their representatives, the guilty will be held accountable for their actions and survivors will get help, support and justice.” 

“The guilty verdict of these five individuals received yesterday is the culmination of a large sophisticated international sex trafficking criminal enterprise," said IRS-CI Special Agent in Charge Strom.  "This criminal organization exploited women and laundered hundreds of thousands of illicit profits. Pooling the skills of each agency in this complex investigation made a tremendous team including IRS Criminal Investigation who provided the financial expertise to follow the money trail of these criminals.  Today’s guilty verdict demonstrates the collective efforts of law enforcement and U.S. Attorney’s Office who brought down an international sex trafficking organization.”

As proven at trial, this criminal organization compelled hundreds of women from Bangkok, Thailand, to engage in commercial sex acts in various cities across the United States, including Minneapolis, Los Angeles, Chicago, Atlanta, Phoenix, Washington, D.C., Las Vegas, Houston, Dallas, Seattle and Austin.  The trafficking victims were often from impoverished backgrounds and spoke little or no English. They were coerced to participate in the criminal scheme through misleading promises of a better life in the United States and the ability to provide money to their families in Thailand. 

Once in the United States, the victims were sent to houses of prostitution where they were forced to have sex with strangers – every day – for up to 12 hours a day, at times having sex with 10 men a day.  The victims were isolated from the outside world.  They were not allowed to leave the houses of prostitution unless accompanied by a member of the criminal organization.  The victims moved around the United States between houses of prostitution in multiple cities.  They and their families in Thailand were threatened. 

The organization also engaged in widespread visa fraud to facilitate the international transportation of the victims.  Traffickers assisted the victims in obtaining fraudulent visas and travel documents by funding false bank accounts, creating fictitious backgrounds and occupations, and instructing the victims to enter into fraudulent marriages to increase the likelihood that their visa applications would be approved.  Traffickers also coached the victims as to what to say during their visa interviews.  While working to obtain visa documents, traffickers gathered personal information from the victims, including the location of the victims’ families in Thailand.  This information was later used to threaten victims who sought to flee the organization in the United States.

The organization dealt primarily in cash and engaged in rampant and sophisticated money laundering in order to promote and conceal illegal profits. The organization used “funnel accounts” to launder and route cash from cities across the United States to the money launderers in Los Angeles.  To date, investigators have been able to recover $1.5 million in cash and $15 million in money judgments secured through plea agreements.  During the extensive investigation, law enforcement traced tens of millions of dollars to the organization.  Indeed, at trial, there was testimony that more than $40 million was sent to Thailand by one money launderer alone.

The District of Minnesota is one of six districts designated through a nationwide selection process as a Phase II Anti-Trafficking Coordination Team (ACTeam), an ACTeam Initiative of the Departments of Justice, Homeland Security and Labor. ACTeams focus on developing high-impact human trafficking investigations and prosecutions involving forced labor, international sex trafficking and sex trafficking by force, fraud or coercion through interagency collaboration among federal prosecutors and federal investigative agencies.  Today’s convictions validate the continued ACTeam mission—to take on and take down the most entrenched and sophisticated human trafficking organizations that seek to profit from human exploitation.

U.S. Attorney MacDonald, Assistant Attorney General Benczkowski and Assistant Attorney General Dreiband commended the multiple agencies that assisted in this investigation over the past three years including: HSI; IRS-CI; the Department of Justice’s Criminal Division’s Money Laundering and Asset Recovery Section; the Department of Justice’s Civil Rights Division’s Human Trafficking Prosecution Unit;  the St. Paul Police Department; the Bureau of Criminal Apprehension’s Minnesota Human Trafficking Investigators Task Force; the Anoka County Sheriff’s Office; the Cook County (Illinois) Sheriff’s Office; the State Department Diplomatic Security Service; and the International Organized Crime Intelligence and Operations Center (IOC-2).  U.S. Attorney MacDonald also thanks the Thai Community Development Center for the support and advocacy they have done on behalf of the victims of this sex trafficking organization.

U.S. Attorney MacDonald, Assistant Attorney General Benczkowski and Assistant Attorney General Dreiband further thanked the trial team led by Assistant U.S. Attorneys Melinda A. Williams and Laura Provinzino, with assistance from HSI Special Agent Tonya Price, IRS-CI Special Agent John Tschida, Senior Investigator Steven Baker of the Justice Department’s Criminal Division’s Money Laundering and Asset Recovery Section, and the Justice Department’s Civil Rights Division’s Human Trafficking Prosecution Unit for their dedication to the pursuit of justice

This case is filed as United States v. Michael Morris, et al., 17-cr-107 (DWF/TNL) and United States v. Sumalee Intarathong, et al., 16-cr-257 (DWF/TNL).

Defendants:

MICHAEL J. MORRIS, 65

Seal Beach, Calif.

Convicted:

• Conspiracy to commit sex trafficking, 1 count
• Sex trafficking by use of force, fraud, and coercion, 1 count
• Conspiracy to commit transportation to engage in prostitution, 1 count
• Conspiracy to engage in money laundering, 1 count
• Conspiracy to use a communication facility to promote prostitution, 1 count

PAWINEE UNPRADIT, 46 

Dallas, Texas

Convicted:

• Conspiracy to commit sex trafficking, 1 count
• Conspiracy to commit transportation to engage in prostitution, 1 count
• Conspiracy to engage in money laundering, 1 count
• Conspiracy to use a communication facility to promote prostitution, 1 count

SAOWAPHA THINRAM, 44 

Hutto, Texas

Convicted:

• Conspiracy to commit sex trafficking, 1 count
• Conspiracy to commit transportation to engage in prostitution, 1 count
• Conspiracy to engage in money laundering, 1 count
• Conspiracy to use a communication facility to promote prostitution, 1 count

THOUCHARIN RUTTANAMONGKONGUL, 35 

Chicago, Ill.

Convicted:

• Conspiracy to commit sex trafficking, 1 count
• Conspiracy to commit transportation to engage in prostitution, 1 count
• Conspiracy to engage in money laundering, 1 count
• Conspiracy to use a communication facility to promote prostitution, 1 count

WARALEE WANLESS, 39

The Colony, Texas

Convicted:

• Conspiracy to commit sex trafficking, 1 count
• Conspiracy to commit transportation to engage in prostitution, 1 count
• Conspiracy to engage in money laundering, 1 count
• Conspiracy to use a communication facility to promote prostitution, 1 count

CHATARAK TAUFFLIEB, 52

San Jose, Calif.

Convicted:

• Conspiracy to commit sex trafficking, 1 count
• Conspiracy to engage in money laundering, 1 count

PEERACHET THIPBOONNGAM, 58

Los Angeles, Calif.

Convicted:

• Conspiracy to commit sex trafficking, 1 count
• Conspiracy to engage in money laundering, 1 count

GREGORY ALLEN KIMMY, 38

Hutto, Texas

Convicted:

• Conspiracy to commit transportation to engage in prostitution, 1 count
• Conspiracy to engage in money laundering, 1 count

WILAIWAN PHIMKHALEE, 40

Chicago, Ill.

Convicted:

• Conspiracy to commit sex trafficking, 1 count
• Conspiracy to engage in money laundering, 1 count

KANYARAT CHAIWIRAT, 52

Chicago, Ill.

Convicted:

• Conspiracy to commit sex trafficking, 1 count
• Conspiracy to engage in money laundering, 1 count

PORNTHEP SUKPRASERT, 42

Huntington Beach, Calif.

Convicted:

• Conspiracy to engage in money laundering, 1 count

MULCHULEE CHALERMSAKULRAT, 41

Huntington Beach, Calif.

Convicted:

• Conspiracy to engage in money laundering, 1 count

BHUNNA WIN, 51

San Diego, Calif.

Convicted:

• Unlicensed money transmitting business, 1 count

NATCHANOK YUVASUTA, 50

Los Angeles, Calif.

Convicted:

• Conspiracy to engage in money laundering, 1 count

NATTAYA LEELARUNGRAYAB, 47

Los Angeles, Calif.

Convicted:

• Conspiracy to engage in money laundering, 1 count

PEERASAK GUNTETONG, 61

North Hollywood, CA

Convicted:

• Conspiracy to engage in money laundering, 1 count

VEERAPON GHETTALAE, 57

Lake Elsinore, Calif.

Convicted:

• Conspiracy to engage in money laundering, 1 count

MATTHEW MINTZ, 27

Chicago, Ill.

Convicted:

• Conspiracy to commit alien harboring, 1 count
• Conspiracy to engage in money laundering, 1 count

MOHIT TANDON, 38

Burr Ridge, Ill.

Convicted:

• Conspiracy to commit transportation to engage in prostitution, 1 count
• Conspiracy to engage in money laundering, 1 count

RICHARD ALEXANDER, 53

DeKalb, Ill.

Convicted:

• Conspiracy to commit marriage fraud, 1 count
• Conspiracy to engage in money laundering, 1 count

TANAKRON PATRATH, 60

Houston, Texas

Convicted:

• Conspiracy to engage in money laundering, 1 count

PANWAD KHOTPRATOOM, 47

Houston, Texas

Convicted:

• Conspiracy to commit sex trafficking, 1 count
• Conspiracy to engage in money laundering, 1 count

CHABAPRAI BOONLUEA, 44

Winder, Ga.

Convicted:

• Conspiracy to commit sex trafficking, 1 count
• Conspiracy to engage in money laundering, 1 count

NOPPAWAN LERSLURCHACHAI, 37

Lomita, Calif.

Convicted:

• Sex trafficking by use of force, fraud, and coercion, 1 count
• Conspiracy to engage in money laundering, 1 count

WATCHARIN LUAMSEEJUN, 48

Unknown

Convicted:

• Conspiracy to commit sex trafficking, 1 count
• Conspiracy to engage in money laundering, 1 count

PANTILA RODPHOKHA, 33

Mount Prospect, Ill.

Convicted:

• Conspiracy to commit sex trafficking, 1 count
• Conspiracy to engage in money laundering, 1 count

SOYSUDA SIANGDANG, 34

Chicago, Ill.

Convicted:

• Conspiracy to commit sex trafficking, 1 count
• Conspiracy to engage in money laundering, 1 count

ANDREW FLANIGAN, 53

Winder, Ga.

Convicted:

• Conspiracy to commit transportation to engage in prostitution, 1 count
• Conspiracy to engage in money laundering, 1 count

TODD VASSEY, 56

Lahanina, Hawaii

Convicted:

• Conspiracy to commit transportation to engage in prostitution, 1 count
• Conspiracy to engage in money laundering, 1 count

THI VU, 50

Atlanta, Ga.

Convicted:

• Conspiracy to commit sex trafficking, 1 count
• Conspiracy to engage in money laundering, 1 count

JOHN ZBRACKI, 61

Lakeville, Minn.

Convicted:

• Conspiracy to commit transportation to engage in prostitution, 1 count
• Conspiracy to engage in money laundering, 1 count

JOHN NG, 41

Cottage Grove, Minn.

Convicted:

• Conspiracy to commit transportation to engage in prostitution, 1 count
• Conspiracy to engage in money laundering, 1 count

PATCHARAPORN SAENGKHAM, 43

Los Angeles, Calif.

Convicted:

• Conspiracy to enter the United States by means of misrepresentation and concealment of facts, 1 count

CHANANCHIDA SENASU, 42

Dallas, Tex.

Convicted:

• Conspiracy to enter the United States by means of misrepresentation and concealment of facts, 1 count

YADAPORN PANNGOEN, 32

Chicago, Ill.

Convicted:

• Conspiracy to enter the United States by means of misrepresentation and concealment of facts, 1 count

CHONTHICHA SOICHAISONG, 38

Austin, Tex.

Convicted:

• Conspiracy to enter the United States by means of misrepresentation and concealment of facts, 1 count

 

 

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United States Attorney Erica H. MacDonald and Massachusetts Attorney General Maura Healey today announced that Target Corporation has agreed to pay a total of $3,000,000 to resolve allegations that it violated the federal False Claims Act and Massachusetts False Claims Act by submitting claims for payment to Massachusetts’ Medicaid program in violation of rules prohibiting Medicaid prescriptions from being automatically refilled.

Massachusetts’ Medicaid program, called MassHealth, is jointly funded by the federal government and the Commonwealth of Massachusetts to provide health care to low-income individuals. Along with at least 20 other states, Massachusetts does not allow pharmacies to automatically refill prescriptions paid for by Medicaid without an explicit request from the beneficiary for each refill. This policy provides an important control against wasted or unnecessary prescriptions that are reimbursed by taxpayer funds.

According to the allegations in the complaint, Target pharmacies knowingly and routinely enrolled MassHealth beneficiaries in the company’s auto-refill program, and billed MassHealth for prescriptions in violation of the state’s regulation prohibiting the practice. This practice continued until Target sold its pharmacy business to CVS Health in or around December 2015. 

“This resolution demonstrates our ongoing commitment to ensuring compliance with rules that are specifically designed to protect taxpayer funds and prevent wasted medications,” said United States Attorney Erica H. MacDonald. 

"Unauthorized automatic refills can result in inappropriate prescription drug use and wastes taxpayer dollars," said Massachusetts Attorney General Maura Healey. "This settlement will bring money back to our state and will help ensure that our health care resources reach those who need them the most."

This settlement resolves allegations filed in a civil lawsuit originally brought by a whistleblower under the qui tam provisions of the federal False Claims Act and Massachusetts False Claims Act, which allow private parties to bring suit on behalf of the government for false claims and to share in any recovery. The government often relies on whistleblowers to bring fraud schemes to light that might otherwise go undetected. 

In this civil settlement, Target has denied the allegations of wrongdoing and False Claims Act liability. Target cooperated with the government’s investigation of this matter.

The case was handled by the Civil Division of the U.S. Attorney’s Office for the District of Minnesota and the Medicaid Fraud Control Unit of the Massachusetts’ Attorney General’s Office.

The case is United States of America, State of Minnesota, Commonwealth of Massachusetts, State of New York, and Commonwealth of Virginia, ex rel. Ryan Mesaros v. Target Corp., Civil No. 15-CV-2684 (PAM/TNL). The claims resolved by the settlement are allegations only; there has been no determination of liability.

 

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United States Attorney Erica H. MacDonald today announced the sentencing of RYAN RANDALL GILBERTSON, 42, founder of Dakota Plains Holdings, Inc., to 144 months in federal prison, a $2 million fine, and over $15 million in restitution. GILBERTSON was sentenced today by Judge Patrick J. Schiltz in U.S. District Court in Minneapolis, Minnesota. A federal jury convicted GILBERTSON and co-defendant DOUGLAS VAUGHN HOSKINS, 50, of multiple counts of wire fraud, securities fraud, and conspiracy to commit securities fraud, on June 26, 2018, following an 11-day jury trial before Judge Schiltz.

HOSKINS is scheduled to be sentenced on December 21, 2018, by Judge Patrick J. Schiltz in U.S. District Court in Minneapolis, Minnesota.

As proven in court, in November 2008, GILBERTSON and his business partner founded Dakota Plains, Inc. (“Dakota Plains”), a privately held company based in Wayzata, Minnesota that owned and operated a transloading facility in New Town, North Dakota. From the outset, GILBERTSON and his partner concealed their involvement in the company by installing their fathers as the company’s executives and two-person board of directors. Rather than capitalize the company at the outset, GILBERTSON caused the company to issue $9 million in promissory notes to himself and other corporate insiders. The notes paid 12% annual interest and included a provision that paid GILBERTSON and the other noteholders a bonus payment based on the average trading price of Dakota Plains stock during the first 20 days of public trading. The bonus payment provision operated as an “embedded derivative” in which the value of the bonus payment would be based on the average price of Dakota Plains stock during the first 20 days of public trading.

GILBERTSON then caused the company to go public via a reverse merger with a company called Malibu Club Tan, which was a publicly traded shell company that operated a single defunct tanning salon in suburban Salt Lake City, Utah. GILBERTSON made it a secret condition of the reverse merger that DOUG HOSKINS, his friend and polo coach, be able to purchase the majority of the “float” of freely trading shares, which were the only shares that could trade publicly following the reverse merger. GILBERTSON then gave $30,000 to HOSKINS, who was deeply in debt and owed money to the IRS and other creditors, in order to purchase 50,000 shares of Dakota Plains stock at a price of $0.50 per share on March 23, 2012, the morning of the reverse merger. That same day, again at the direction of GILBERTSON, HOSKINS began selling his shares at the fraudulently inflated price of $12 per share.

On the first day of public trading, HOSKINS began selling his newly acquired shares for an inflated price of $12 per share at GILBERTSON’S direction, and continued to do so throughout the first 20 days of public trading following the reverse merger. At the same time, GILBERTSON directed a local stockbroker at a Minneapolis-based securities brokerage firm to purchase shares of Dakota Plains stock on behalf of both himself and his clients at inflated prices. GILBERTSON also instructed a Salt Lake City-based business consultant to manipulate the price of the stock by ensuring that none of the shell company shareholders sold their stock for less than the $12 per share price offered by his friend and polo coach, HOSKINS. Indeed, on April 4, 2012, GILBERTSON sent a text message to the consultant in Utah bragging that the shell company shareholders “would be participating on sales at 7 bucks [a share] not 12 were it not for my involvement.”

Throughout the 20-day period following the reverse merger, GILBERTSON, with the help of HOSKINS and others, manipulated the price of Dakota Plains stock to increase the average trading price to $11.30 per share. This inflated share price triggered a $32.8 million bonus payment to GILBERTSON and the other noteholders. When the cash-strapped company was unable to pay the bonus, GILBERTSON instructed its CEO to raise money for use in paying GILBERTSON’s fraudulently inflated bonus payment.

Ultimately, GILBERTSON made millions as a result of his stock manipulation scheme. HOSKINS made less money, but still pocketed more than $125,000 from his stock sales, much of which he used to purchase an Argentine polo pony.

In the wake of the fraud scheme, HOSKINS was interviewed by the Securities and Exchange Commission (SEC) about his involvement in these stock sales. HOSKINS repeatedly lied under oath during the deposition, covering up both his and GILBERTSON’S involvement in the stock manipulation scheme. Among other things, HOSKINS claimed that he did not discuss the stock trades with any other individuals. At trial, GILBERTSON falsely denied his role in the stock manipulation scheme, but conceded that he had arranged for HOSKINS to purchase Dakota Plains stock prior to the reverse merger and had provided HOSKINS with the money with which he purchased the stock.

“Mr. Gilbertson orchestrated an extraordinarily complex stock manipulation scheme in order to obtain millions of dollars from a publicly traded company. He executed his scheme over many years at the detriment of the company, which is now bankrupt, its shareholders and the trading public,” said United States Attorney Erica H. MacDonald. “He did not care about how his actions may impact others; he only cared about lining his own pockets. Despite the complexity of his scheme, and how much of a game he tried to play, he lost, thanks to the diligent and thorough work of investigators, prosecutors, a federal jury, and the Court.”

“Mr. Gilbertson created a complex and complicated scheme that was unraveled thanks to the diligence of highly trained agents who don't give up,” said Jill Sanborn, Special Agent in Charge of the Minneapolis Division of the FBI. “The heavy  sentence imposed today on Mr. Gilbertson  underscores that market rigging and self-dealing for one's own financial gain are nefarious activities that will be discovered and that those who engage in them will be dealt with accordingly."

“Today’s sentence sends a clear message regarding the critical role the U.S. Postal Inspection Service and its law enforcement partners play in protecting the investing public from these types of fraudulent schemes, “ said Acting Postal Inspector in Charge Lesley Allison. “We will continue to protect and ensure the nation’s mail stream is not used by criminals to prey upon our citizens.” 

This case is the result of an investigation conducted by the FBI and the United States Postal Inspection Service.

This case was prosecuted by Assistant United States Attorneys Joseph H. Thompson, Kimberly A. Svendsen, and Melinda A. Williams.

The Criminal Docket Number for this case is: 17-cr-00066

Defendant Information:                                                                                                                     

RYAN RANDALL GILBERTSON, 42

Delano, Minn.

Convicted:

• Wire fraud, 14 counts
• Conspiracy to commit securities fraud, 1 count
• Securities fraud, 6 counts

 

Sentenced:

• 144 months imprisonment
• 2 years supervised release
• $2 million fine
• $15,135,360 in restitution 

 

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United States Attorney Erica H. MacDonald today announced the sentencing of CHAD LEE MONSON, 46, for illegally possessing machine guns, pipe bombs, and silencers. MONSON, who pleaded guilty on August 16, 2018, was sentenced today in U.S. District Court in Minneapolis, Minnesota, by Judge Joan N. Ericksen to 36 months in prison.

According to the defendant’s guilty plea and documents filed in court, on January 30, 2018, law enforcement officers executed a search warrant at MONSON’S residence in Willmar, Minnesota. Inside the residence, officers found personal use amounts of illegal narcotic drugs, as well as sixteen firearms, and a large quantity of ammunition. On February 21, 2018, law enforcement officers executed two additional search warrants at a commercial utility building near MONSON’S residence. There, officers found ten machine guns, two of them with obliterated serial numbers, three pipe bombs, and three unregistered silencers. As part of his guilty plea, MONSON was required to forfeit to the United States 12 firearms, three pipe bombs, and three silencers.

United States Attorney Erica MacDonald thanked the Bureau of Alcohol, Tobacco, Firearms and Explosives, the CEE-VI Gang and Drug Task Force, and the Kandiyohi County Attorney’s Office who investigated this case, and Assistant United States Attorney John Docherty who prosecuted the case.

Defendant Information:

CHAD LEE MONSON, 46

Willmar, Minn.

Convicted:

• Possession of a machine gun, 1 count
• Possession of an unregistered destructive device (pipe bomb), 1 count
• Possession of an unregistered silencer, 1 count

 

Sentenced:

• 36 months
• 3 years supervised release

 

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United States Attorney Erica H. MacDonald today announced sentencing of MARIO LUIS JONES, 27, for the violent armed robbery of a Red & White taxicab in Minneapolis, Minnesota.  JONES pleaded guilty on May 8, 2018, and was sentenced to 168 months imprisonment, on December 3, 2018, by Judge Joan N. Ericksen in U.S. District Court in Minneapolis, Minnesota.

“The defendant put many lives in danger. He has a lengthy criminal record, and chose to commit this offense while on probation for a previous sexual conduct offense,” said United States Attorney Erica H. MacDonald. “I am grateful that the Court recognized his violent conduct and sentenced him accordingly.”

“There is no room for this kind of behavior in our communities, and this sentence is fitting for Jones’ inexcusable acts,” said Acting Special Agent in Charge Kirk Howard of the ATF St. Paul Field Division. “The prevalence of firearm-related crime is an ongoing issue, and ATF, with the help of our state and local partners, will continue to focus on bringing justice to the victims of violent offenders.”

As admitted by the defendant in his guilty plea and in other documents filed in court, on November 27, 2017, JONES got into a Red & White taxicab near the 2800 block of Pillsbury Avenue South in Minneapolis. JONES told the taxicab driver to take him to 5773 Bossen Terrace in Minneapolis, however, when they arrived, JONES told the driver that it was the wrong address. JONES then pulled out a .40 caliber semi-automatic pistol with a laser scope, placed the barrel near the driver’s head, and demanded that the driver stop the car and open the trunk. JONES got out of the taxi and walked to the trunk area. Fearing that JONES was going to kill him, the driver ran off. JONES fired the firearm and then drove off in the taxicab.

As admitted by the defendant in his guilty plea and in other documents filed in court, JONES was located driving southbound on Interstate 35 in the Lakeville area. When law enforcement officers approached JONES, he sped off at speeds exceeding 100 miles per hour. JONES eventually crashed into a swampy ditch and was later apprehended and arrested.

U.S. Attorney MacDonald thanked the United States Bureau of Alcohol, Tobacco, Firearms and Explosives, the Minneapolis Police Department, and the Lakeville Police Department who investigated this case and Assistant U.S. Attorney Thomas M. Hollenhorst who prosecuted the case.

Defendant Information:

MARIO LUIS JONES, 27

Richfield, Minn.

Convicted:

• Interference with commerce by robbery, 1 count
• Using, carrying, and discharging a firearm during and in relation to a crime of violence, 1 count

Sentenced:

• 168 months imprisonment (terms served consecutively)
• 5 years supervised release

 

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United States Attorney Erica H. MacDonald today announced the sentencing of DEREK JON PADDY, 22, KEVIN ROBERTSON, 32, CHERAI MICHELLE CLARK, 26, and SHANISE FRANCES OSTLUND, 29, for their roles in a burglary on the Red Lake Reservation in the early morning hours of November 24, 2017.

PADDY was sentenced to 29 months imprisonment, ROBERTSON was sentenced to 51 months imprisonment, CLARK was sentenced to 21 months imprisonment, and OSTLUND was sentenced to 3 years probation. Judge Susan Richard Nelson sentenced the defendants on December 3, 2018, in U.S. District Court, in Duluth, Minnesota.

OSTLUND and ROBERTSON were found guilty of burglary in the second degree and of robbery, following a jury trial, before on Judge Susan Richard Nelson in U.S. District Court in Duluth, Minnesota, on September 12, 2018. PADDY and CLARK each pleaded guilty to one count of burglary in the second degree, on August 31, 2018 and September 10, 2018, respectively, before Judge Susan Richard Nelson.

United States Attorney MacDonald said, “Defendants Paddy and Robertson are repeat violent offenders, who chose to continue to commit crime. My office and our law enforcement partners are committed to ensuring all communities have the opportunity to be safe.”

As proven at trial, in the early morning hours of November 24, 2017, following a brawl at a local Walmart store, OSTLUND, ROBERTSON, PADDY and CLARK drove together to the victim’s residence with intentions to confront the victim and steal their property. When the defendants arrived, PADDY and CLARK kicked in the front door and entered the residence along with OSTLUND and ROBERTSON. The defendants expected to find the victim inside the residence; however, the victim escaped by jumping out of a window. The defendants stole various items from the residence before leaving the property. 

This case is the result of an investigation conducted by the FBI Headwaters Safe Trails Task Force, the Red Lake Police Department and the Bemidji Police Department.

Assistant U.S. Attorney Deidre A. Aanstad and former Assistant U.S. Attorney Clifford B. Wardlaw tried the case.

Defendant Information:

Derek Jon Paddy, 22

Bemidji, Minn.

Convicted:

• Burglary in the second degree, 1 count

Sentenced:

• 29 months imprisonment
• 3 years supervised release

 

Kevin Robertson, 32

Bemidji, Minn.

Convicted:

• Burglary in the second degree, 1 count
• Robbery, 1 count

Sentenced:

• 51 months imprisonment
• 3 years supervised release
   

Cherai Michelle Clark, 26

Bemidji, Minn.

Convicted:

• Burglary in the second degree, 1 count

Sentenced:

• 21 months imprisonment
• 3 years supervised release

 

Shanise Frances Ostlund, 29

Bemidji, Minn.

Convicted:

• Burglary in the second degree, 1 count
• Robbery, 1 count

Sentenced:

• 3 years probation  

 

 

 

 

 

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United States Attorney Erica H. MacDonald today announced a criminal complaint charging JEROME ROBERT HENNESSEY, 56, with one count of mail fraud. HENNESSEY surrendered himself and made his initial appearance today before Magistrate Judge Katherine Menendez, in U.S. District Court in Minneapolis, Minnesota.

According to the criminal complaint and a law enforcement affidavit, from 2003 through at least September of 2018, HENNESSEY defrauded the Ashby Farmers’ Co-Operative Elevator Company (co-op) in Ashby, Minnesota, for his own expenses.

According to the affidavit, on September 12, 2018, the co-op contacted local law enforcement regarding concerns over payments that HENNESSEY made to himself or for his own personal expenses. HENNESSEY was serving as the co-ops’ general manager. The co-op discovered multiple checks written by HENNESSEY to himself for over $40,000 and including a check for $135,000.

According to the affidavit, among the payments in question included over $1 million in payments to HENNESSEY’s personal Cabela’s Visa Card and hundreds of thousands of dollars for various hunting trips, including international big game hunting safaris, and taxidermy services. For example, investigators found at least twelve checks totaling more than $400,000 for items such as “South Africa Mounts” and “Zimbabwe Double Kudu Pedestals” and for a “Zebra Pedestal.” 

The criminal complaint and law enforcement affidavit allege that on January 27, 2017, HENNESSEY mailed a check via U.S. mail in the amount of $34,166.67 from the co-ops’ account for a partial payment toward the purchase of hunting property in Kanabec County. 

According to the affidavit, after the co-op identified the suspicious payments, they requested HENNESSEY meet with them on the morning of September 10, 2018. HENNESSEY did not show up for the meeting and instead met a friend who ultimately drove HENNESSEY to Des Moines, Iowa. Two of HENNESSEY’s acquaintances who were interviewed by law enforcement indicated that HENNESSEY told them that he taken money from his employer and was in a lot of trouble. 

This case is the result of an investigation conducted by the Internal Revenue Service-Criminal Investigation Division, the Grant County Sheriff’s Office, and the Minnesota Bureau of Criminal Apprehension.

Assistant U.S. Attorney John Kokkinen is prosecuting the case.

Defendant Information:

JEROME ROBERT HENNESSEY, 56

Dalton, Minnesota

Charged:

• Mail Fraud, 1 count

 

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The charges contained in the criminal complaint are merely allegations, and the defendant is presumed innocent unless and until proven guilty.

United States Attorney Erica H. MacDonald today announced the sentencing of CEDRIC LAMONT BERRY, JR, a/k/a “Ced,” 24, to 71 months in federal prison. BERRY was sentenced on November 28, 2018, by Senior Judge Ann D. Montgomery, in U.S. District Court in Minneapolis, Minnesota. BERRY pleaded guilty on July 19, 2018, to one count of felon in possession of ammunition.

Earlier this month, BERRY’s co-defendant CORTEZ MAURICE CRUMBLE, a/k/a “Bruiser,” 30, was found guilty following a jury trial before Senior Judge Montgomery in U.S. District Court, in Minneapolis, Minnesota. A sentencing hearing for CRUMBLE has been set for March 21, 2019.

“The defendant has a violent criminal history and has consistently been shown to be a danger to the community,” said United States Attorney Erica H. MacDonald. “He and his co-defendant brazenly shot at a man fleeing in a car in a public parking lot, posing a substantial danger to human life. My commitment to Minnesotans is to use every tool and law enforcement partnership we have to keep our communities safe.”

“These individuals repeatedly disregarded both the law and the safety of others,” said ATF Special Agent in Charge Kurt Thielhorn of the Saint Paul Field Division. “We’re glad to get them out of the community they victimized and this case is part of our effort to reduce violent crime in Minneapolis. Our relationship with the Minneapolis Police Department and the Minnesota Bureau of Criminal Apprehension led to the success in investigating these violent offenders and we are thankful for their involvement in this case.”

According to documents submitted to the court, including BERRY’s guilty plea, and evidence admitted at CRUMBLE’s trial, in the early morning hours of November 23, 2017, CRUMBLE and BERRY were at the Broadway Pub in Minneapolis when BERRY and other individuals got into a fight inside the bar. Security personnel broke up the fight, however; video footage captured BERRY as he ran out of the bar and appeared to retrieve something from a vehicle in the parking lot. BERRY was then seen running back into the bar with a firearm in his hand. Shortly afterward, CRUMBLE was captured on video outside the bar shooting at a vehicle as it sped out of the parking lot. BERRY was also captured on video appearing to draw a firearm from his waistband and firing at the vehicle. Law enforcement officers found 20 .40 caliber discharged cartridge casings in the area where the shooting took place.

Both CRUMBLE and BERRY have prior felony convictions prohibiting them from legally possessing firearms or ammunition at any time.

This case is the result of an investigation conducted by the Bureau of Alcohol, Tobacco, Firearms and Explosives, the Minneapolis Police Department, and the Minnesota Bureau of Criminal Apprehension.

Assistant U.S. Attorney Thomas Calhoun-Lopez tried the case.

Defendant Information:

CEDRIC LAMONT BERRY, JR, a/k/a “Ced,” 24 Minneapolis, Minn.

Convicted:

• Felon in possession of ammunition, 1 count

Sentenced:

• 71 months in prison
• 3 years supervised release

 

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United States Attorney Erica MacDonald today announced the sentencing of MAI NHIA VUE, 47, to 38 months in federal prison for failing to pay payroll taxes. VUE pleaded guilty on May 16, 2018, to one count of willful failure to pay payroll taxes and was sentenced on November 27, 2018, by Judge Wilhelmina Wright, in U.S. District Court in Minneapolis, Minnesota.

According to the defendant’s guilty plea and documents filed in court, VUE owned and operated Five Star Workforce Solutions (Five Star), which provided temporary contract employees to businesses in Minnesota. As part of Five Star’s contracts with its client businesses, Five Star was responsible for collecting and paying the payroll taxes from the employees, which included the federal withholding taxes, social security, and Medicare withholdings.

According to the defendant’s guilty plea and documents filed in court, during the tax years of 2014, 2015, and 2016, VUE created two sets of accounting books and paid payroll taxes for some employees but did not pay any payroll taxes for other employees, despite charging Five Star clients consistent rates between the two sets of employees. Additionally, VUE did not pay the employer’s portion of social security and Medicare taxes.

According to documents filed in court, VUE failed to pay nearly $2 million under this scheme, which should have gone to the IRS. VUE spent hundreds of thousands of dollars on luxury travel, gambling, gold, and the construction and furnishing of a new home.

United States Attorney Erica H. MacDonald thanked the special agents of the IRS-Criminal Investigation Division who investigated the case and Assistant U.S. Attorney Robert Lewis, who prosecuted the case.

Defendant Information:

MAI NHIA VUE, 47

Lake Elmo, Minn.

Convicted:

• Willful Failure To Pay Payroll Taxes, 1 count

Sentenced:

• 38 months incarceration
• 3 years supervised release
• $1,820,331 in restitution to the IRS

 

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United States Attorney Erica H. MacDonald today announced the arrest and extradition of IGOR VOROTINOV, 54. The defendant made his initial appearance on November 19, 2018, before United States Magistrate Judge Kate Menendez, in U.S. District Court, in Minneapolis, Minnesota. IGOR VOROTINOV was federally indicted on February 19, 2015, on one count of mail fraud. [1] He was arrested on November 14, 2018 in the Republic of Moldova, and extradited to the United States, arriving on United States soil on November 17, 2018.

According to the indictment and documents filed in court, in March 2010, IGOR VOROTINOV obtained a $2 million life insurance policy on his own life from Mutual of Omaha Insurance Company (Mutual of Omaha), and designated his wife, IRINA VOROTINOV, as the primary beneficiary.

According to the indictment and documents filed in court, on October 1, 2011, police in Moldova received a phone call reporting a dead body at the entrance of the Cojusna village in central Moldova. Documents recovered from the body, including a passport, hotel cards, and contact phone numbers, identified the man as IGOR VOROTINOV. IRINA VOROTINOV traveled to Moldova to identify the body. After positively identifying the corpse as IGOR, IRINA obtained a death certificate from Moldovan authorities and had the corpse cremated. Returning to the United States with the death certificate and an urn with ashes claiming to be that of IGOR’s remains, IRINA submitted the death claim to Mutual of Omaha for the $2 million policy. A funeral was held where the urn was placed in a niche at Lakewood Cemetery in Minneapolis.

According to the indictment and documents filed in court, on March 23, 2012, Mutual of Omaha sent a proceeds check in the amount of $2,048,414.09, via United States mail, to IRINA’S home in Maple Grove, Minnesota.

According to documents filed in court, IRINA recruited a third party to open an account at a local branch of U.S. Bank and to deposit the insurance check into the account. She then caused the third party to transfer $1.5 million to another account at U.S. Bank in the name of her son, ALKON VOROTINOV. Between March 29, 2012 and January 2015, more than $1.5 million of the life insurance proceeds were transferred to accounts located in Switzerland and Moldova.

According to documents filed in court, on November 27, 2013, ALKON was stopped by Customs and Border Protection (CBP) in Detroit, Michigan upon returning from a trip to Moldova. A computer seized by CBP agents contained digital photographs of IGOR VOROTINOV taken on April 19, 2013 and on May 12, 2013, in which IGOR is alive.

On May 16, 2016, IRINA VOROTINOV pleaded guilty to one count of mail fraud and one count of engaging in a monetary transaction in criminally derived property. On November 15, 2016, IRINA VOROTINOV was sentenced to 37 months in federal prison, by Judge Patrick J. Schlitz, in U.S. District Court in Minneapolis. She is currently serving her sentence.

ALKON VOROTINOV pleaded guilty on March 24, 2015, to one count of misprision of a felony. On September 27, 2016, ALKON was sentenced to three years of probation and $2,056,554.09 in restitution (to be paid jointly) by Judge Patrick J. Schlitz, in U.S. District Court in Minneapolis.

This case is the result of an investigation conducted by the Federal Bureau of Investigation and the Internal Revenue Service – Criminal Investigation Division. The Justice Department’s Office of International Affairs handled the extradition in this matter.

Assistant U.S. Attorney David J. MacLaughlin is prosecuting the case.

Defendant Information:

Igor Vorotinov, 54

No Known Address

Charged:

• Mail Fraud, 1 count

 

Irina Vorotinov, 51

Plymouth, Minn.

Convicted:

• Mail Fraud, 1 count
• Engaging in a Monetary Transaction in Criminally Derived Property, 1 count

Sentenced:

• Mail Fraud, 37 months (served concurrently)
• Engaging in a Monetary Transaction in Criminally Derived Property, 37 months (served concurrently)
• 2 years each, supervised release (served concurrently)
• $2,056,554 in restitution to be paid jointly
   

Alkon Vorotinov, 28

Plymouth, Minn.

Convicted:

• Misprision of a Felony, 1 count

Sentenced:

• 2 years of probation
• $2,056,554 in restitution to be paid jointly

 

 

 

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[1] The charges contained in the indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

United States Attorney Erica H. MacDonald announced the sentencing of DAVID THOMAS ROUGIER, 46, to 88 months in prison for one count of wire fraud. ROUGIER, who pleaded guilty on July 18, 2018, was sentenced on November 19, 2018, before Chief Judge John R. Tunheim, in U.S. District Court in Minneapolis, Minnesota.

"The defendant callously preyed on several victims who were at or nearing retirement age – a population that not only lives on a tight budget, but is also trusting of those who claim to help them live out their golden years with security. David Rougier abused that trust and we are satisfied that today's sentence ensures that he will not only pay for his crimes, but will not be able to harm again," said FBI Special Agent in Charge Jill Sanborn. "The men and women of the FBI will continue doggedly go after those who lie, cheat and swindle their way into stealing the hard earned savings of our senior citizens." 

According to the defendant’s guilty plea and documents filed in court, between November 2010 and June 2017, more than a dozen individuals paid ROUGIER approximately $835,000 based upon his promises that he was using their money to buy gold and silver and, in some cases, that their investments were protected through guaranteed buyback contracts. ROUGIER promised his victim-investors that precious metals would be a safe investment and that the value would increase every year. Instead of purchasing the gold and silver, ROUGIER spent hundreds of thousands of dollars of victims’ money on shopping trips, entertainment, travel, strip clubs and other personal expenses.

According to the defendant’s guilty plea and documents filed in court, ROUGIER also collected yearly fees for “storage” and “management” from his victim-investors, purportedly to store and manage the gold and silver he claimed to have purchased on their behalf. Additionally, between 2013 and 2014, ROUGIER began telling his victim-investors that he had found a company, which he identified as “TAUG Limited” (“TAUG”) that would guarantee to purchase their gold and silver for a set price on a designated future date, making their investment virtually risk free. ROUGIER presented some of his victim-investors with a purported contract between them and TAUG, under which they were charged between $1,000 and $2,000 in order to avail themselves of this guaranteed future purchase price. These funds were paid directly to ROUGIER, who spent them on personal expenditures.

This case is the result of an investigation conducted by the FBI and the Minnesota Commerce Fraud Bureau.

Assistant United States Attorney Amber M. Brennan prosecuted the case.

Defendant information:

DAVID THOMAS ROUGIER, 46

Lakeville, Minn.

Convicted:

• Wire Fraud, 1 count

Sentenced:

• 88 months in prison
• 3 years supervised release

 

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United States Attorney Erica H. MacDonald today announced the sentencing of LANDON CONAN KINGBIRD, 34, to 46 months in prison for one count of domestic assault by a habitual offender. KINGBIRD, who pleaded guilty on March 26, 2018, was sentenced on November 14, 2018, before Judge Joan N. Ericksen, in U.S. District Court in Minneapolis, Minnesota.

According to the defendant’s guilty plea and documents filed in court, on June 14, 2017, a female victim, Victim A, was taken to the Red Lake Indian Health Services Hospital, suffering from a stab wound to the leg and laceration on her forehead. Upon meeting with responding officers, Victim A informed officers that while sitting in her car, KINGBIRD stabbed her in her leg and struck her in the face splitting her forehand and causing her to receive stiches and medical attention. KINGBIRD denied stabbing Victim A, a former domestic partner, but admitted striking her in the face.

Before this assault on Victim A, KINGBIRD had been convicted on at least two prior occasions of serious violent felonies against an intimate partner. Once, in 2007 in Roseau County District Court, for 3rd Degree Assault against his then-girlfriend, and in April, 2013, in Beltrami County District Court for Domestic Assault – By Strangulation against Victim A.

The case was investigated by the Red Lake Department of Public Safety and the FBI Headwaters Safe Trails Task Force.

Assistant U.S. Attorney Sarah Hudleston prosecuted the case.

Defendant Information:                                                                                                                     

Landon Conan Kingbird, 34

Red Lake, Minn.

Convicted:

• Domestic Assault By An Habitual Offender, 1 count

Sentenced:

• 46 months
• 3 years supervised release

 

 

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United States Attorney Erica H. MacDonald today announced a federal indictment charging ADRIAN JOSEPH VALDEZ, 33, with two counts of assault with a dangerous weapon and two counts of assault resulting in serious bodily injury.[1] VALDEZ was previously charged via federal compliant on October 18, 2018. He made his initial appearance before Magistrate Judge Jon T. Huseby in U.S. District Court on October 24, 2018.

According to documents filed with the court, including a law enforcement affidavit, on August 10, 2018, law enforcement responded to a call from a female who reported an ongoing incident at a residence on the Red Lake Indian Reservation. Responding officers found a man, who later identified himself as ADRIAN JOSEPH VALDEZ, walking down the driveway. VALDEZ, who had blood on his arm, stated, “I stabbed them, handcuff me and take me to jail! I’m a bad guy, take me to jail.” VALDEZ was taken into custody at the Red Lake Detention Center.

According to documents filed with the court, including a law enforcement affidavit, responding officers found two stabbing victims at the residence who were taken to the hospital. Witnesses reported that after drinking alcohol together, a disagreement turned into a physical fight, and VALDEZ began stabbing one of the victims. A second man who attempted to break up the fight also was stabbed by VALDEZ.

During a post-Miranda interview, VALDEZ admitted to getting into a fight and subsequently stabbing the two identified victims. VALDEZ is a member of the Tohono O’Odham Nation tribe located in Southwestern Arizona.   

This case is the result of an investigation conducted by the Red Lake Department of Public Safety and the FBI Headwaters Safe Trails Task Force.

This case is being prosecuted by Assistant U.S. Attorney Deidre Y. Aanstad.

Defendant Information:                                                                                                                     

ADRIAN JOSEPH VALDEZ, 33

Tohono O’Odham Nation, Ariz.

Charges:

• Assault with a dangerous weapon, 2 counts
• Assault resulting in serious bodily injury, 2 counts

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[1] The charges contained in the indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

 

United States Attorney Erica H. MacDonald today announced a federal indictment charging DARWIN LEE LUSSIER, SR., 52, with assault with a dangerous weapon and assault resulting in serious bodily injury. LUSSIER was previously charged on October 30, 2018, via federal complaint.[1] LUSSIER made his initial appearance before Magistrate Judge Jon T. Huseby in U.S. District Court on October 31, 2018.  

According to documents filed with the court, including a law enforcement affidavit, on October 8, 2018, law enforcement responded to calls from a female who reported being the victim of multiple ongoing violent attacks, including being clubbed in the head. The female reported that she was at the LUSSIER’s home and that he had fled.

According to documents filed with the court, including a law enforcement affidavit, responding officers brought the female to the hospital. Upon execution of a search warrant at LUSSIER’s residence, officers found LUSSIER hiding in the basement. Officers also found the spiked club, previously described by the victim.

This case is the result of an investigation conducted by the Red Lake Department of Public Safety and the FBI Headwaters Safe Trails Task Force.

This case is being prosecuted by Assistant U.S. Attorney Deidre Y. Aanstad.

Defendant Information:                                                                                                                     

DARWIN LEE LUSSIER, SR., 52,

Red Lake, Minn.  

Charges:

• Assault with a dangerous weapon, 1 count
• Assault resulting in serious bodily injury, 1 count

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[1] The charges contained in the indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

 

United States Attorney Erica H. MacDonald today announced a federal indictment charging ROBERT ANTHONY COLEMAN, 45, and YOLANDA YVETTE COLEMAN aka YOLANDA YVETTE PITTMAN, 50, with multiple counts related to the theft of more than $248,000 of government funds. ROBERT COLEMAN is also charged with two counts of false statements and an additional count of Social Security fraud. They will make their initial appearances in U.S. District Court at a later date. 1]

According to documents filed with the court, from least October 2010 through August of 2018, ROBERT COLEMAN and YOLANDA PITTMAN conspired to fraudulently obtain government funds and public assistance including, Section 8 rental housing assistance subsidies, Supplemental Nutrition Assistance Program (SNAP) benefits, and Medical Assistance benefits, by purposefully submitting false applications to the government entities responsible for implementing these programs.

Further, according to documents filed with the court, YOLANDA PITTMAN used her role as an employee of Hennepin County Human Services and Public Health Department to affect COLEMAN’S receipt of benefits and failed to note that she lived with ROBERT COLEMAN.  PITTMAN also acted as COLEMAN’S Personal Care Attendant (PCA) for several years, with COLEMAN’S Medical Assistance benefits paying for these PCA services.

This case is the result of an investigation conducted by the Department of Housing and Urban Development – Office of the Inspector General, Hennepin County Fraud Unit, and the Social Security Administration – Office of the Inspector General.

This case is being prosecuted by Assistant U.S. Attorney Sarah Hudleston and Special Assistant U.S. Attorney Lindsey Middlecamp.

Defendant Information:                                                                                                                     

ROBERT ANTHONY COLEMAN, 45

Minneapolis, Minn.

Charges:

• Conspiracy, 1 count
• Theft of government funds- housing, SNAP, and Social Security Fraud, 1 count
• False statement, 2 counts
• Social Security Benefits Fraud, 1 count
   

YOLANDA YVETTE COLEMAN, aka YOLANDA YVETTE PITTMAN, 50

Minneapolis, Minn.  

Charges:

• Conspiracy, 1 count
• Theft of government funds- housing, SNAP, and Social Security Fraud, 1 count
• Theft from a Program Receiving Federal Funds, 1 count

 

 

 

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[1] The charges contained in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

 

United States Attorney Erica H. MacDonald today announced the guilty plea of RODNEY KEITH THOMPSON, 53, for corruptly soliciting a bribe. THOMPSON entered his guilty plea earlier today, before Judge Susan Nelson in U.S. District Court in St. Paul, Minnesota. He was charged via felony information on November 13, 2018.

According to the defendant’s guilty plea and documents filed in court, THOMPSON used his position and authority as then Superintendent of the Shakopee School District, to obtain personal benefits from a company interested in being awarded contracts with the Shakopee School District. THOMPSON solicited home improvement projects, personal travel, and attendance at sporting events in exchange for contracts with the School District.

“Mr. Thompson was a trusted member of the Shakopee community. Parents, teachers, staff, and students trusted him to act with integrity to make the right decisions in the best interest of the Shakopee schools,” said United States Attorney Erica H. MacDonald. “He chose to violate that trust and act on what served his own interest. With his guilty plea today, I hope the Shakopee community has a sense of closure.” 

"The defendant held a position of public trust with an obligation to act in the best interest of Shakopee schools, staff, and students he was responsible for," said FBI Special Agent in Charge Jill Sanborn. "Sadly, the defendant chose to violate this sacred trust by making the conscious decision to steal and deprive teachers of the very resources necessary to provide a quality education. The FBI remains committed to working with our law enforcement partners to investigate public corruption such as this and bring those responsible to justice."

THOMPSON’s sentencing has been scheduled for March 29, 2019, before Judge Susan Nelson, in U.S. District Court in St. Paul.

This case is the result of an investigation conducted by the FBI.

Assistant U.S. Attorney David J. MacLaughlin is prosecuting the case.

Defendant Information:

RODNEY KEITH THOMPSON, 53

Shakopee, Minn.

Convicted:

• Corrupt Solicitation of a Bribe, 1 count

 

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United States Attorney Erica H. MacDonald today announced the filing of a felony information charging RODNEY KEITH THOMPSON, 53, with corruptly soliciting a bribe. [1] THOMPSON will make his initial appearance in U.S. District Court at a later date.

As alleged in the felony information, THOMPSON used his position and authority as then Superintendent of the Shakopee School District, to obtain personal benefits from a company interested in being awarded contracts with the Shakopee School District. Namely, THOMPSON solicited home improvement projects, personal travel, and attendance at sporting events in exchange for contracts with the School District.

This case is the result of an investigation conducted by the FBI.

Assistant U.S. Attorney David J. MacLaughlin is prosecuting the case.

Defendant Information:

RODNEY KEITH THOMPSON, 53

Shakopee, Minn.

Charges:

• Corrupt Solicitation of a Bribe, 1 count

 

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[1] The charges contained in the information are merely allegations, and the defendant is presumed innocent unless and until proven guilty.

United States Attorney Erica H. MacDonald today announced the conviction of CORTEZ MAURICE CRUMBLE, a/k/a “Bruiser,” 30, on one count of felon in possession of ammunition in connection with a shooting at a Minneapolis bar. CRUMBLE was indicted on January 23, 2018, and was found guilty yesterday afternoon following a jury trial before Senior Judge Ann D. Montgomery in United States District Court in Minneapolis, Minnesota. One additional defendant, CEDRIC LAMONT BERRY, JR, a/k/a “Ced,” 24, pleaded guilty on July 19, 2018, to one count of felon in possession of ammunition. A sentencing hearing for CRUMBLE has been set for March 21, 2018.

Evidence admitted at trial showed that in the early morning hours of November 23, 2017, CRUMBLE and BERRY were at the Broadway Pub in Minneapolis when BERRY and other individuals got into a fight inside the bar. Security personnel broke up the fight, however; video footage captured BERRY as he ran out of the bar and appeared to retrieve something from a vehicle in the parking lot. BERRY was then seen running back into the bar with a firearm in his hand. Shortly afterward, CRUMBLE was captured on video outside the bar shooting at a vehicle as it sped out of the parking lot. BERRY was also captured on video appearing to draw a firearm from his waistband and firing at the vehicle. Law enforcement officers found 20 .40 caliber discharged cartridge casings in the area where the shooting took place.

Additional evidence admitted at trial showed that on December 19, 2017, law enforcement officers conducted a traffic stop of a vehicle that matched the car CRUMBLE and BERRY were seen driving following the shooting. CRUMBLE, who was a passenger in the vehicle at the time of the stop, was taken into custody. Following the execution of a search warrant on CRUMBLE’S cell phone and residence, officers found multiple images of firearms and ammunition.

Both CRUMBLE and BERRY have prior felony convictions prohibiting them from legally possessing firearms or ammunition at any time.

This case is the result of an investigation conducted by the Bureau of Alcohol, Tobacco, Firearms and Explosives, the Minneapolis Police Department, and the Minnesota Bureau of Criminal Apprehension.

Assistant U.S. Attorney Thomas Calhoun-Lopez tried the case.

 

Defendant Information:

CORTEZ MAURICE CRUMBLE, a/k/a “Bruiser,” 30

Minneapolis, Minn.

Convicted:

• Felon in possession of ammunition, 1 count

 

 

 

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United States Attorney Erica H. MacDonald today announced a federal indictment charging FERNANDO RAMOS-MEZA, 33, PETER MARTIN, 34, JAVIER LOPEZ-LOPEZ, 46, AND JUAN DANIEL VALDEZ-MENDOZA, 23, with multiple drug-trafficking violations. MARTIN is also charged with possession of an unregistered firearm. All four defendants were previously charged via federal complaint on October 5, 2018.  The defendants remain in custody.

According to charging documents filed with the court, as a result of law enforcement operations initiated by the Cannon River Drug Task Force, officers executed a search warrant at a North Minneapolis home. During the search of the residence, officers located several items of contraband, a 12-gauge sawed-off pump shotgun, and approximately 191 pounds of methamphetamine (with packaging).

This case is the result of an investigation conducted by the Cannon River Drug Task Force, Homeland Security Investigations, and the Minneapolis Police Department.

Assistant United States Attorney David P. Steinkamp is prosecuting the case.  

 

Defendant Information:

FERNANDO RAMOS-MEZA, 33

Minneapolis, Minn.

Charges:

• Conspiracy to distribute and possess with intent to distribute methamphetamine, 1 count
• Possession with intent to distribute methamphetamine, 1 count
   

PETER MARTIN, 34

Minneapolis, Minn.

Charges:

• Conspiracy to distribute and possess with intent to distribute methamphetamine, 1 count
• Possession with intent to distribute methamphetamine, 1 count
• Possession of an unregistered firearm, 1 count

 

JAVIER LOPEZ-LOPEZ, 46

Minneapolis, Minn.

Charges:

• Conspiracy to distribute and possess with intent to distribute methamphetamine, 1 count
• Possession with intent to distribute methamphetamine, 1 count

 

JUAN DANIEL VALDEZ-MENDOZA, 23

Kansas City, Kan.

Charges:

• Conspiracy to distribute and possess with intent to distribute methamphetamine, 1 count
• Possession with intent to distribute methamphetamine, 1 count

 

 

 

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The charges contained in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

United States Attorney Erica H. MacDonald announced the sentencing of SCOTT FRANCIS FORTIER, 39, to 25 years in prison for producing and possessing video files containing child pornography. FORTIER, who was convicted by a federal jury on January 25, 2018, on one count of production of child pornography and one count of possession of child pornography, was sentenced on November 7, 2018, before Judge Patrick J. Schiltz in U.S. District Court in Minneapolis, Minnesota. In addressing the defendant’s conduct, Judge Schiltz referred to FORTIER and the campers at Circle R Ranch as, “a wolf let loose in a field of sheep,” and further described FORTIER’S dishonest testimony at trial as so preposterous as to be embarrassing.

“Scott Fortier is a serial predator and rapist who victimized underage girls whom he met at a summer camp where he frequented,” said U.S. Attorney MacDonald. “I am grateful that the Court recognized the severity of this type of predatory conduct and I commend the diligent work of the investigators and prosecutors in bringing this defendant to justice.”

"The defendant used his position in the camp to prey on his victims and then further victimized them by producing child pornography and we are satisfied that he will now have to pay for his crimes,” said Special Agent in Charge Jill Sanborn. “We have no greater duty than to protect the most vulnerable among us, and the men and women of the FBI will continue to relentlessly pursue those who seek to harm our children.”

As proven at trial, FORTIER was associated for many years with Circle R Ranch (“the Camp”), a co-ed horseback riding summer camp located in Todd County, Minn. Through his involvement with the Camp, FORTIER met a 17-year-old minor (Minor Victim #1). On September 9, 2016, FORTIER invited Minor Victim #1 and her 15-year-old friend (Minor Victim #2) to his house in Blaine, Minnesota, where he gave them both alcohol and subsequently used each minor to engage in sexually explicit conduct. FORTIER used his cell phone to produce multiple videos of himself engaging in the sexually explicit conduct with Minor Victim #1 and Minor Victim #2. Following an execution of a search warrant, law enforcement discovered that FORTIER also possessed videos of children under the age of 12 engaging is sexually explicit conduct, along with thousands of other images of child pornography.

At the sentencing hearing, the Government introduced statements by Minor Victim #1 and Minor Victim #2, as well as statements by a number of other victims detailing years of sexual misconduct and rapes committed by FORTIER against underage girls at the Circle R Ranch.

This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorney’s Offices and CEOS, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.justice.gov/psc.

This case was the result of an investigation conducted by the FBI, the Anoka County Sheriff’s Office, the Todd County Sheriff’s Office, and the Minneapolis Police Department.

Assistant U.S. Attorney Carol M. Kayser and Special Assistant U.S. Attorney Lindsey E. Middlecamp prosecuted the case.

 

Defendant Information:

SCOTT FRANCIS FORTIER, 39

Blaine, Minn.

Convicted:

• Production of child pornography, 1 count
• Possession of child pornography, 1 count

Sentenced:

• 300 months in prison
• 10 years of supervised release

 

 

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United States Attorney Erica H. MacDonald announced a federal indictment charging KERRY DALE KISSLINGER, 58, former owner and CEO of a wind energy company, with five counts of wire fraud in a $1 million fraud scheme.

According to the indictment, KISSLINGER was the owner and CEO of ES Windpower, Inc., a Minnesota corporation that sold wind turbines to farmers, ranchers, and others in Minnesota and throughout the Midwest. KISSLINGER marketed the wind turbines as a way for customers to save money by reducing or even eliminating their energy expenses. Beginning in 2012 until 2015, KISSLINGER devised and executed a scheme to defraud ES Windpower customers by falsely representing that in exchange for payment, KISSLINGER and his company would deliver and install a wind turbine on the customers’ farms or land.

As alleged in the indictment, ES Windpower had a distribution agreement with a North Dakota-based wind turbine manufacturer (“Company A”). The terms of the distribution agreement required ES Windpower to provide Company A with a purchase order, contract, and 30 percent down payment for each new order. The balance of the purchase price was due when Company A delivered the product to ES Windpower. Oftentimes, KISSLINGER failed to send the down payment to Company A and other manufacturers to purchase the wind turbines or otherwise complete any work on the project. On other occasions, KISSLINGER remitted some of the down payment to the manufacturer, but did not complete the ordering process.

As alleged in the indictment, KISSLINGER regularly used some or all of the customers’ payments for personal use and benefit, including to make a $45,000 down payment on the purchase of a lakefront home in Emmons, Minnesota, and to purchase Minnesota Timberwolves season tickets.  KISSLINGER at times solicited a second payment from his customers by falsely representing that all or part of their wind turbine was ready to be shipped and installed, despite knowing that he had not placed the orders or made the down payments to the manufacturer.  KISSLINGER also falsely represented to some of his customers that each turbine ordered would be protected by a $100,000 bond, which would be used to refund their money if ES Windpower was unable to complete the delivery and installation. KISSLINGER falsely told customers that his failure to deliver and install their wind turbines was due to manufacturing delays. In reality, KISSLINGER knew the delays were caused by his own failure to complete the ordering process and remit his customers’ down payments to the manufacturers. In total, KISSLINGER fraudulently solicited and received more than $1 million in payments from customers.

This case is the result of an investigation conducted by the FBI.

Assistant U.S. Attorney Joseph H. Thompson is prosecuting the case.

 

Defendant Information:                                                                                                                     

KERRY DALE KISSLINGER, 58

Humble, Texas

Charges:

• Wire fraud, 5 counts

 

 

 

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The charges contained in the indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

United States Attorney Erica H. MacDonald today announced the sentencing of RONNIE EUGENE TAGGART, 51, to 24 months in prison for soliciting and receiving bribes and kickbacks in exchange for awarding City of Plymouth contracts. TAGGART pleaded guilty on May 1, 2018, to one count of wire fraud and was sentenced earlier today before Senior Judge Michael J. Davis in United States District Court in Minneapolis, Minnesota.

United States Attorney MacDonald thanked the Special Agents with the FBI for their hard work and expertise in investigating public corruption cases such as this.

“The public trusts that their government officials are honest and will always work in the best interest of the citizens they represent. The defendant took advantage of that trust and used it for his own gain and we believe today’s sentence will serve as an appropriate punishment for his crimes,” said FBI Special Agent in Charge Jill Sanborn. “I want to commend the work of the investigative team on this matter, as their work on this case shows that the FBI will continue to ensure that the public’s faith in their leaders is protected.”

According to the defendant’s guilty plea and documents filed in court, from approximately October 2012 through November 2016, TAGGART was the Facilities Supervisor for the City of Plymouth, Minnesota. In his position, TAGGART was responsible for the maintenance of all buildings owned and operated by the City of Plymouth, including the authority to award contracts for City projects such as building maintenance and cleaning, landscaping, and snow removal.                                                                                                                              

According to the defendant’s guilty plea and documents filed in court, from approximately 2014 through November 2016, TAGGART devised a scheme to defraud the City of Plymouth by soliciting and receiving bribes and kickbacks in exchange for awarding City contracts to various contractors outside of the competitive bidding process mandated by Minnesota state law and City of Plymouth procurement policy. TAGGART solicited and received cash kickbacks based on the total value of certain contracts. On other contracts, TAGGART received a flat cash kickback amount from the contractor. TAGGART also solicited and received non-cash bribes from certain City contractors, including items and services for TAGGART’S home, such as thousands of dollars in kitchen appliances, installation of new carpet, a concrete driveway, a garage door, a yard irrigation and sprinkler system, and extensive landscaping and electrical work. All of these items and services were provided to TAGGART at no cost.

According to the defendant’s guilty plea and documents filed in court, in order to conceal his failure to comply with the competitive bidding requirements, TAGGART instructed the bribe- and kickback-paying contractors to submit a second, fake quotation to give the false appearance that TAGGART had complied with the state statute and City policy. TAGGART also encouraged the bribe- and kickback-paying contractors to inflate the amount of their bids to cover the cost of the kickbacks and bribes. In total, TAGGART solicited and received bribes and kickbacks worth approximately $58,532.

This case was the result of an investigation conducted by the FBI.

Assistant United States Attorney Joseph H. Thompson prosecuted the case.

 

Defendant Information:

RONNIE EUGENE TAGGART, 51

Golden Valley, Minn.

Convicted:

• Wire fraud, 1 count

Sentenced:

• 24 months in prison
• Two years of supervised release
• $58,352 in restitution

 

 

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United States Attorney Erica H. MacDonald today announced the sentencing of ELLIS ALANCE BANKS, 53, to 68 months for conspiracy to defraud the United States, and 24 months for aggravated identity theft, to be served consecutively. He was sentenced on November 7, 2018, by Senior Judge David S. Doty in U.S. District Court in Minneapolis, Minnesota. Judge Doty also ordered more than one million dollars in restitution.

ELLIS ALANCE BANKS, pleaded guilty on May 24, 2018. According to documents filed in court including BANKS’ guilty plea, from at least January 31, 2013 to at least May 28, 2016, BANKS defrauded the United States by filing over 250 false tax returns seeking $1.5 million in fraudulent tax refunds. Additionally, he obtained social security numbers, dates of birth, and other personal identifying information of individuals to use to file fraudulent income tax returns.

“Millions of hardworking Americans pay their taxes expecting that money to be used to fund the essential needs of Government,” stated IRS Criminal Investigation Special Agent in Charge Gabe Grchan. “Ellis Banks stole more than one million dollars from the pockets of our citizens and this sentence illustrates that there are consequences for exploiting others through fraud and deceit to steal from the United States Treasury.”

This case was the result of an investigation conducted by the Internal Revenue Service.

Assistant U.S. Attorney Michelle Jones prosecuted the case.

Defendant Information:

ELLIS ALANCE BANKS, 53

Brooklyn Center, Minn.

Convicted:

• Conspiracy to defraud the United States, 1 count
• Aggravated identity theft, 1 count

 

Sentenced:

• 92 months in prison 
• Three years supervised release
• $1,001,999.49 in restitution

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United States Attorney Erica H. MacDonald and Special Agent in Charge of the FBI Minneapolis Division Jill Sanborn will convene a community meeting in response to the tragic shooting that took place this past week at the Tree of Life synagogue in Pittsburgh, Pennsylvania. Leaders of the interfaith community, representatives of houses of worship, and other community stakeholders are encouraged to attend to discuss federal hate crimes laws, identifying and reporting hate crimes, and best practices for creating safe and secure houses of worship. The meeting will take place on Monday, November 5, 2018, from 6:00-7:30 p.m. at the Dakota County Western Service Center in Apple Valley, Minnesota. For more information, please email usamn.outreach@usdoj.gov

“Here in Minnesota and across the nation, we stand united against the violent and hateful events that have recently taken place in Pittsburgh, Pennsylvania and Jeffersontown, Kentucky. These attacks are reprehensible and antithetical to our values as a nation,” said U.S. Attorney MacDonald. “The safety and security of all Minnesotans is my highest priority and these events serve as a solemn reminder that law enforcement and community leaders must remain vigilant in our shared work of building public safety awareness around the issue of hate crimes. As U.S. Attorney, I will not tolerate hateful acts from any individual or group that seeks to threaten another’s civil rights.”

“The attacks in Pittsburgh show that evil does exist, but we can find hope in the response and solidarity of an entire nation, which mourns the senseless and tragic loss of life,” said SAC Sanborn. “Every American has the right to live, love and worship how they choose and the FBI stands shoulder to shoulder with our law enforcement partners to protect those rights. We are looking forward to this meeting and being a part of the solution in our community.”

Steve Hunegs, Executive Director of the Jewish Community Relations Council of Minnesota and the Dakotas (JCRC) said, “The JCRC is proud to work with our federal, state, and local law enforcement partners in Minnesota to assist with educating about civil rights and community security. We look forward to our continued work with the U.S. Attorney’s Office and FBI to organize community forums that provide critical security guidance and address community concerns. In the wake of hate incidents impacting the Muslim and Jewish communities in 2017, the JCRC joined with the U.S. Attorney’s Office and FBI to provide security assistance to a diverse group of community organizations and houses of worship. In the aftermath of the Etz Chaim (Tree of Life) murders, we are grateful for the swift response of law enforcement and the outpouring of support to the Jewish community.”

On October 29, 2018, the Department of Justice announced the launch of a new comprehensive hate crimes website designed to provide a centralized portal for the Department’s hate crimes resources for law enforcement, media, researchers, victims, advocacy groups, and other related organizations and individuals. The resources include training materials, technical assistance, videos, research reports, statistics, and other helpful information from all of the Department components working on hate crimes. For more information, please visit https://www.justice.gov/hatecrimes

NOTE: This event is open press. All media must RSVP to usamn.outreach@usdoj.gov and present valid media credentials at the event.

 

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United States Attorney Erica H. MacDonald announced the sentencing of JESSE WELLS HAUG, 33, to 49 months in prison for defrauding real estate investors out of $880,000. HAUG, who pleaded guilty on June 4, 2018, to one count of wire fraud, was sentenced yesterday before Chief Judge John R. Tunheim in U.S. District Court in Minneapolis, Minnesota.

According to the defendant’s guilty plea and documents filed in court, HAUG is the owner of a Twin Cities-based construction company called 7-10 Services, LLC. Beginning in 2015 and continuing through the end of 2016, HAUG executed a scheme to defraud investors by falsely representing to them that he would use their money to purchase and renovate residential real estate, and, in exchange, he would share the profits when the properties were re-sold, or “flipped.”

According to the defendant’s guilty plea and documents filed in court, during the course of the scheme, HAUG obtained $880,000 from two victim-investors to purchase and renovate residential properties located throughout the Twin Cities. During the course of HAUG’S interactions with the victims, HAUG provided them with false documentation showing how the investment money was purportedly being used, false information about upcoming real estate closings and re-sales of properties HAUG claimed to have flipped, as well as fictional documents showing “returns” from the so-called investment properties. In reality, HAUG spent the investment money on personal expenses, including credit card bills, and never purchased or sold any of the properties.

This case was the result of an investigation conducted by the FBI and the Minnesota Commerce Fraud Bureau.

Assistant United States Attorneys Kimberly A. Svendsen and Charles J. Kovats prosecuted this case.

 

Defendant Information:                                                                                                                     

JESSE WELLS HAUG, 33

Rosemount, Minn.

Convicted:

• Wire fraud, 1 count

Sentenced:

• 49 months in prison
• Three years of supervised release
• $880,000 in restitution

 

 

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United States Attorney Erica H. MacDonald today announced the guilty plea of YU ZHANG, 27, to one count of conspiracy to commit wire fraud. ZHANG, who was initially charged via criminal complaint on June 8, 2018, pleaded guilty yesterday before Senior Judge Ann D. Montgomery in U.S. District Court in Minneapolis, Minnesota.

According to the ZHANG’s guilty plea, from March 12, 2018, to June 8, 2018, he participated in a scheme to obtain money from victims through which co-conspirators posed as IRS agents and threatened to arrest victims unless immediate payments were made for allegedly “delinquent” taxes.

As part of the scheme, ZHANG’S co-conspirators made phone calls to victims in numerous states across the country and, posing as government agents, employed a number of strategies to threaten or entice the victim into making an immediate payment to a purported governmental entity. Oftentimes, the co-conspirator would pose as an Internal Revenue Service (IRS) agent and threaten to have the victim arrested unless the victim immediately made payment to satisfy an alleged tax debt. The victims were instructed to bring funds to a local Target store and purchase a gift card that could be used to satisfy the “debt,” and provide the card number and activation code to the co-conspirator over the phone. The co-conspirators would then send a message to ZHANG containing the gift card numbers and activation codes, so that ZHANG could use that information to redeem the gift cards at Target stores by purchasing pre-paid, third-party gift cards such as Google Play and Steam cards. To avoid detection, ZHANG would travel to multiple Target stores, including stores in other states, and use the self-checkout registers for his transactions. After purchasing the third-party cards, ZHANG would immediately convey the card numbers and activation codes to others who were involved in the scheme.

In his guilty plea, ZHANG admitted to redeeming more than $250,000 worth of Target gift cards by conducting hundreds of transactions at Target stores in Minnesota and Colorado.

If you believe you may have fallen victim to an IRS impersonation scam, you may file a report with the Target store or other retailer where the gift cards were purchased, the local police department, or TIGTA at https://www.treasury.gov/tigta/contact_report_scam.shtml

This case is the result of an investigation conducted by the Treasury Inspector General for Tax Administration (TIGTA).

Assistant U.S. Attorney Amber M. Brennan is prosecuting the case.

 

Defendant Information:

YU ZHANG, 27

Baldwin Park, Calif.

Convicted:

• Conspiracy to commit wire fraud, 1 count

 

 

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United States Attorney Erica H. MacDonald announced the sentencing of EDGAR MARTINEZ-SANCHEZ, 41, to 210 months in prison for his role in a methamphetamine and cocaine distribution conspiracy. MARTINEZ-SANCHEZ, who pleaded guilty on November 14, 2017, to one count of conspiracy to distribute methamphetamine and cocaine, was sentenced yesterday before Judge Joan N. Ericksen in U.S. District Court in Minneapolis, Minnesota.

According to the defendant’s guilty plea and documents filed in court, from 2014 through February 2017, MARTINEZ-SANCHEZ along with other individuals including his co-defendants ROBERTO GALICIA-MACEDA and ELIEL GARCIA, conspired to distribute and transport methamphetamine and cocaine across the Twin Cities metropolitan area as part of the Martinez-Sanchez Drug Trafficking Organization. After a contested evidentiary proceeding on Tuesday, October 23, 2018, the Court found that MARTINEZ-SANCHEZ was the organization’s manager in Minnesota, who directed his co-defendants in their drug trafficking activities along with co-conspirators in Arizona and Mexico. For example, MARTINEZ-SANCHEZ negotiated three separate 1-pound methamphetamine transactions with a government informant and then directed GALICIA-MACEDA to deliver that methamphetamine, ultimately to an undercover law enforcement officer. After each transaction, law enforcement agents followed GALICIA-MACEDA as he traveled back to SANCHEZ to deliver the money he had received from the transaction. SANCHEZ also directed GARCIA in the organization’s day-to-day operations as a drug deliverer and money courier.

The investigation, which began in 2016, included the February 7, 2017, seizure of approximately $391,000 from GALICIA-MACEDA’s vehicle as he traveled southbound on Interstate 35 from the Twin Cities. During a February 14, 2017, arrest and warrant takedown operation, agents seized approximately $150,000, 11 pounds of methamphetamine, four kilograms of cocaine, as well as other evidence, during searches of the residences held by MARTINEZ-SANCHEZ, GALICIA-MACEDA, and GARCIA.

This case was the result of an investigation conducted by Homeland Security Investigations, the Drug Enforcement Administration, the Saint Paul Police Department, and the Minneapolis Police Department.

Assistant United States Attorney Allen A. Slaughter prosecuted this case.

 

Defendant Information:                                                                                                                     

EDGAR MARTINEZ-SANCHEZ, 41

Brooklyn Center, Minn.

Convicted:

• Conspiracy to distribute methamphetamine and cocaine, 1 count

Sentenced:

• 210 months in prison

 

 

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United States Attorney Erica H. MacDonald today announced the guilty plea of ALEJANDRO MARIO CORTES, 46, to one count of visa fraud and one count of illegally reentering the United States. CORTES, who was initially charged via criminal complaint on August 28, 2018, pleaded guilty earlier today before Senior Judge Michael J. Davis in U.S. District Court in Minneapolis, Minnesota.

According to the defendant’s guilty plea, between April 11, 2018 and August 29, 2018, CORTES conspired with another individual to fraudulently apply for and obtain a U Visa based on the false claim that CORTES was kidnapped from his home in Chicago, Illinois and taken against his will to St. Paul, Minnesota. As part of the scheme, CORTES and his co-conspirator traveled together from Illinois to Minnesota and stayed in a storage facility for several days. On April 17, 2018, the co-conspirator drove CORTES to St. Paul and, at CORTES’ request, bound the defendant’s mouth and hands with duct tape and left him near Randolph Avenue in St. Paul. Law enforcement officers responded to a report made by a snowplow driver and located the individual, who later identified himself as CORTES.

In his guilty plea, CORTES admitted to telling local and federal law enforcement officers that he had been kidnapped from Chicago and transported to Minnesota against his will, and that he received multiple threatening text messages in the days leading up to the fabricated kidnapping. CORTES also admitted that he sought medical treatment at Regions Hospital for injuries he claimed to have sustained during the kidnapping, and he obtained gift cards for personal items from an organization providing services to crime victims.

CORTES is a citizen of Mexico with no lawful status in the United States. CORTES was removed from the United States in 2001, and again in 2010.

This case is the result of an investigation conducted by the FBI and the Saint Paul Police Department.

Assistant U.S. Attorney Angela Munoz-Kaphing is prosecuting the case.

 

Defendant Information:

ALEJANDRO MARIO CORTES, 46

Chicago, Ill.

Convicted:

• Conspiracy to commit visa fraud, 1 count
• Reentry of removed alien, 1 count

 

 

 

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United States Attorney Erica H. MacDonald announced the sentencing of THERESA ERNESTINE LINSMEIER, 59, to 27 months in prison for embezzling $540,000 from her former employer. LINSMEIER, who pleaded guilty on June 7, 2018, to one count of wire fraud and one count of filing a false tax return, was sentenced earlier today before Senior Judge Donovan W. Frank in U.S. District Court in St. Paul, Minnesota.

According to the defendant’s guilty plea and documents filed in court, from 1998 to 2016, LINSMEIER was employed as a bookkeeper at Farm Mercantile, Inc., a hardware store located in Fairfax, Minn. In her position, LINSMEIER had access to and was an authorized signatory on Farm Mercantile’s bank accounts and had authority to sign and issue checks on behalf of the company. From about 2011 through 2016, LINSMEIER devised a scheme to embezzle more than $500,000 from Farm Mercantile. As part of the scheme, LINSMEIER transferred money to her personal credit cards directly from the bank accounts to which she had access. LINSMEIER attempted to conceal her embezzlement by creating false entries in Farm Mercantile’s general ledger to make it look like the money she stole had actually been used to pay legitimate business expenses. In total, LINSMEIER stole approximately $540,063, which she used for online gambling.

LINSMEIER did not report the money she embezzled from Farm Mercantile on her federal income tax returns. LINSMEIER instead filed tax returns that falsely reported and understated her income. These false returns allowed her to avoid more than $100,000 in federal income taxes from 2012 through 2016. 

This case was the result of an investigation conducted by the Internal Revenue Service-Criminal Investigation.

Assistant United States Attorney Joseph H. Thompson prosecuted this case.

 

Defendant Information:                                                                                                                     

THERESA ERNESTINE LINSMEIER, 59

Fairfax, Minn.

Convicted:

• Wire fraud, 1 count
• Filing a false tax return, 1 count

Sentenced:

• 27 months in prison
• Three years of supervised release
• $540,063 in restitution

 

 

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United States Attorney Erica H. MacDonald announced the sentencing of RAYMOND ANTHONY POOLE, 44, to 60 months in prison for distributing heroin on the Leech Lake Indian Reservation and surrounding areas. POOLE pleaded guilty to one count of conspiracy on August 24, 2018, and was sentenced today before Judge Joan N. Ericksen in U.S. District Court in Minneapolis, Minnesota.

According to his guilty plea and documents filed in court, between April 2016 and March 2017, POOLE conspired with other individuals to distribute approximately 227 grams of heroin between Minneapolis, Bemidji, Cass Lake, Minnesota, and on the Leech Lake Indian Reservation, areas that have been significantly affected by heroin.

This case is the result of an investigation conducted by the Leech Lake Tribal Police Department, the Paul Bunyan Drug Task Force, the Minnesota Bureau of Criminal Apprehension, the Bureau of Indian Affairs, the United States Postal Inspection Service, the Headwaters Safe Trails Task Force, and the Hennepin County Violent Offender Task Force.

Assistant United States Attorney Bradley M. Endicott prosecuted the case.

 

Defendant Information:                                                                                                                     

RAYMOND ANTHONY POOLE, 44

Detroit, Mich.

Convicted:

• Conspiracy to distribute heroin, 1 count

Sentenced:

• 60 months in prison
• Four years of supervised release

 

 

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United States Attorney Erica H. MacDonald announced the sentencing of CHELSEA MARIE DESERLY, 30, to 42 months in prison for involuntary manslaughter resulting from a drunk driving crash. DESERLY, who pleaded guilty on May 3, 2018, to one count of involuntary manslaughter, was sentenced today before Judge Wilhelmina M. Wright in U.S. District Court in Bemidji, Minnesota.

According to the defendant’s guilty plea and documents filed in court, on May 16, 2015, DESERLY was driving a pickup truck while under the influence of alcohol. DESERLY was unable to keep the pickup on the roadway and rolled the vehicle into a ditch, ejecting the victim from the vehicle. DESERLY had a blood alcohol concentration of .198.

This case was the result of an investigation conducted by the Red Lake Police Department and the FBI Headwaters Safe Trails Task Force.

Assistant United States Attorney Clifford B. Wardlaw prosecuted the case.

 

Defendant Information:                                                                                                                     

CHELSEA MARIE DESERLY, 30

Red Lake, Minn.

Convicted:

• Involuntary manslaughter, 1 count

Sentenced:

• 42 months in prison
• Three years of supervised release

 

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United States Attorney Erica H. MacDonald today announced that LUMINAIRE ENVIRONMENTAL AND TECHNOLOGIES, INC., pleaded guilty to one count of mail fraud for the improper disposal of toxic waste. Co-defendants JOHN D. MILLER JR., 61, and JOSEPH V. MILLER, 58, previously entered guilty pleas for their roles in the fraud scheme.

“Luminaire defrauded its customers and, in doing so, exposed the community to the toxic chemicals they had been paid to safely destroy. The United States will vigorously pursue those who steal and pollute for their own profit,” said U.S. Attorney Erica MacDonald.

“The laws surrounding the safe management of PCBs exist to protect human health and the environment,” said Special Agent in Charge Jennifer Lynn of EPA’s criminal enforcement program in Minnesota. “Instead of complying with those laws, the defendants defrauded their customers and put workers and the public at risk by removing PCB labels and selling PCB-containing fluorescent light ballasts to scrap metal recyclers. EPA and its law enforcement partners are committed to working aggressively to prevent these types of flagrant and dangerous violations.”

According to the defendant’s guilty plea and documents filed in court, LUMINAIRE ENVIRONMENTAL AND TECHNOLOGIES, INC. (“LUMINAIRE”) provided recycling and waste disposal services to customers. Among other services, LUMINAIRE offered to pick up customers’ fluorescent light ballasts containing polychlorinated biphenyls (“PCBs”), transport the PCB-containing ballasts to the LUMINAIRE facility located in Plymouth, Minnesota, and remove and dispose of all the PCBs in accordance with the Toxic Substances Control Act (TSCA). In exchange, LUMINAIRE charged customers a fee of approximately $0.35 per pound of PCB lighting ballasts plus transportation costs. Because the PCBs contained in the ballasts are considered a toxic chemical, regulations promulgated by the United States Environmental Protection Agency (“EPA”) mandate special procedures and documentation for the transportation and disposal of PCB waste.

According to the defendant’s guilty plea and documents filed in court, between 2010 until 2015, JOHN MILLER, owner of LUMINAIRE, and other LUMINAIRE employees falsely represented to customers that LUMINAIRE would properly transport and dispose of customers’ toxic chemicals. Instead, after picking up loads of PCB-ballasts from customers, JOHN MILLER instructed LUMINAIRE employees to remove warning labels from the containers holding the PCB-ballasts, and then sell the PCB-ballasts as scrap metal to scrap yards and metal recycling facilities. In order to conceal the fact that the PCB-ballasts had not been received and processed at LUMINAIRE’S facility, JOHN MILLER directed LUMINAIRE employees, including JOSEPH MILLER, to falsely certify on shipping manifests that the PCB-ballasts had arrived at LUMINAIRE’S facility. At JOHN MILLER’S direction, LUMINAIRE employees also sent copies of the falsified shipping documentation by mail to customers and to certain state environmental agencies. In addition, JOHN MILLER instructed LUMINAIRE employees to prepare and deliver falsified invoices to customers who, in turn, made payments to LUMINAIRE. As a result of the scheme, LUMINAIRE fraudulently collected more than $1,000,000 in fees and additional profits.

This case is the result of an investigation conducted by the U.S. Environmental Protection Agency and the Hennepin County Department of Environmental Protection.

Assistant U.S. Attorneys Benjamin F. Langner and Amber M. Brennan are prosecuting this case.

 

Defendant Information:                                                                                                                     

LUMINAIRE ENVIRONMENTAL AND TECHNOLOGIES, INC.

Plymouth, Minn.

Convicted:

• Mail fraud, 1 count

 

JOHN D. MILLER JR., 61

Plymouth, Minn.

Convicted:

• Conspiracy to commit mail and wire fraud, 1 count

 

JOSEPH V. MILLER, 58

Chanhassen, Minn.

Convicted:

• Falsification of documents with intent to obstruct a federal matter, 1 count

 

United States Attorney Erica H. MacDonald announced the sentencing of MARK MCSHANE, 37, a former correctional officer, to 14 months in prison for engaging in a sexual relationship with a female inmate. On June 7, 2018, MCSHANE pleaded guilty to a felony information charging him with one count of sexual abuse of a ward. MCSHANE was sentenced earlier today before Senior Judge Donovan W. Frank in U.S. District Court in St. Paul, Minnesota.

Assistant U.S. Attorney Julie Allyn said, “The sentence handed down today was appropriate for Mr. McShane’s misconduct. When a correctional officer, a person in a position of authority, takes advantage of an inmate, it erodes trust throughout the institution and has a negative impact on every other inmate and employee.”

According to his guilty plea and documents filed in court, MCSHANE was employed as a correctional officer at the Federal Correctional Institution (FCI) in Waseca, Minnesota. From November 2016 through January 2017, MCSHANE engaged in a sexually inappropriate relationship with the inmate while she was incarcerated. Subsequently, in February 2017, MCSHANE became extremely intoxicated during a social outing and admitted to co-workers his sexual misconduct with the inmate.

This case is the result of an investigation conducted by the Department of Justice Office of the Inspector General.

This case was prosecuted by Assistant U.S. Attorney Julie E. Allyn.

 

Defendant Information:

MARK MCSHANE, 37

Owatonna, Minn.

Convicted:

• Sexual abuse of a ward, 1 count

Sentenced:

• 14 months in prison
• Five years of supervised release

 

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United States Attorney Erica H. MacDonald announced the sentencing of PAUL LEWIS AXELSON, 42, a registered sex offender, to 216 months in prison on one count of receipt of child pornography. AXELSON, who pleaded guilty on February 13, 2018, was sentenced today before U.S. District Judge Patrick J. Schiltz in U.S. District Court in Minneapolis, Minnesota.

According to his guilty plea and documents filed in court, AXELSON was convicted in 2008 in Dakota County, Minnesota of third degree criminal sexual conduct and possession of child pornography. In April 2016, while on probation for the 2008 conviction, AXELSON used file sharing software to download, collect, and distribute child pornography. A forensic review of AXELSON’S computer revealed that he possessed more than 160,000 image and video files containing child pornography.

This case was brought as part of Project Safe Childhood, a nationwide initiative, launched in May 2006, to combat the growing epidemic of child sexual exploitation and abuse.  Led by U.S. Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.  In addition, if you know of any child who may have been a victim of exploitation, please contact the National Center for Missing or Exploited Children (NCMEC) at 1-800-THE-LOST (1-800-843-5678) or visit NCMEC’s web site at www.missingkids.com.

This case is the result of an investigation conducted by the Federal Bureau of Investigation and the Minneapolis Police Department.

This case was prosecuted by Assistant U.S. Attorney Carol M. Kayser.

 

Defendant Information:

PAUL LEWIS AXELSON, 42

Hastings, Minn.

Convicted:

• Receipt of child pornography, 1 count

Sentenced:

• 216 months in prison
• 10 years of supervised release

 

 

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United States Attorney’s Office, District of Minnesota: (612) 664-5600

 

United States Attorney Erica H. MacDonald today announced a federal indictment charging MICHAEL CORTEZ REED, 25, with the attempted robbery of a Walgreens pharmacy, as well as drug-trafficking and firearms violations.[1] REED was arraigned yesterday afternoon before Magistrate Judge Becky R. Thorson in U.S. District Court in St. Paul, Minnesota.

According to the indictment, on August 27, 2017, REED used force, violence, and fear of injury in an attempt to steal controlled substances from a Walgreens pharmacy located in St. Paul, Minnesota. Between September 13, 2017 and September 5, 2018, REED was found to be in possession of five or more grams of methamphetamine and three firearms, including a Ruger model P95DC nine-millimeter semi-automatic firearm, a Phoenix Arms model Raven 25 .25-caliber semi-automatic pistol, and a Kahr Arms model P380 .380-caliber semi-automatic pistol.

Because he is a felon, REED is prohibited under federal law from possessing any type of firearm at any time.

The Hobbs Act, passed by Congress in 1946, allows federal prosecutors to prosecute individuals who commit robberies of businesses engaged in interstate commerce. If convicted, REED faces potential maximum penalties of 10 years to life in prison.

This case was the result of an investigation conducted by the Bureau of Alcohol, Tobacco, Firearms and Explosives and the Saint Paul Police Department. This case is part of Project Safe Neighborhoods, an initiative that brings together all levels of law enforcement and the communities they serve to reduce violent crime and make our neighborhoods safer for everyone.

Assistant United States Attorneys Thomas Calhoun-Lopez and Benjamin Bejar are prosecuting the case.

 

Defendant Information:

MICHAEL CORTEZ REED, a/k/a “Hyphy,” 25

St. Paul, Minn.

Charges:

• Attempted interference with commerce by robbery, 1 count
• Felon in possession of a firearm, 3 counts
• Possession with intent to distribute methamphetamine, 1 count
• Carrying a firearm during and in relation to a drug trafficking crime, 1 count

 

 

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United States Attorney’s Office, District of Minnesota: (612) 664-5600

 

 

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The charges contained in the indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

One year ago, the Department of Justice announced the revitalization and enhancement of Project Safe Neighborhoods (PSN), the centerpiece of the Department’s violent crime reduction strategy. Today, $28 million in grant funding was awarded nationally to combat violent crime through PSN programs, as well as an additional $3 million for training and technical assistance to develop and implement violent crime reduction strategies and enhance services and resources for victims of violent crime. Locally, the District of Minnesota has received a funding allocation of $441,632.

“Collaboration with federal, state, local, and tribal law enforcement and community stakeholders to develop tailored solutions to address violent crime issues throughout the state is key,” said U.S. Attorney MacDonald. “I am surging federal resources to our violence reduction efforts, which includes hiring additional prosecutors and the provision of nearly $500,000 in funding. These resources will support an aggressive, three-pronged approach to our PSN strategy—including enforcement, prevention, and treatment—because ensuring safe neighborhoods and communities for all Minnesotans is my top priority.”

The District of Minnesota is collaborating with the Minnesota Department of Public Safety to administer the funding. A portion of the funding will be dedicated to the City of Minneapolis to continue efforts to reduce gang and gun violence through its Group Violence Intervention (GVI) strategy. Funding will also be set aside for other jurisdictions that are seeing an uptick in violence and are interested in developing locally-based solutions, in partnership with the federal government. Additional information for jurisdictions interested in applying will be available in the coming months, through the Minnesota Department of Public Safety’s Office of Justice Programs. 

FY 2018 PSN Funding Allocation amounts can be found here. 

 

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Additional news available on our website.

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United States Attorney’s Office, District of Minnesota: (612) 664-5600