Western District of North Carolina

ASHEVILLE, N.C. –  A federal criminal indictment unsealed today in Asheville charges 16 men and women with narcotics conspiracy operating in Swain, Cherokee and surrounding counties, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina.  Of the 16 defendants named in the indictment, 15 have been arrested by law enforcement.  The indictment is the result of a joint federal, state and local investigation, targeting the distribution of methamphetamine in Western North Carolina.

Acting U.S. Attorney Rose is joined in making today’s announcement with Daniel R. Salter, Special Agent in Charge of the Atlanta Field Division of the Drug Enforcement Administration (DEA), which oversees the Charlotte District Office; Charles Addington, Deputy Associate Director of the Bureau of Indian Affairs, Division of Drug Enforcement; C.J. Hyman, Special Agent in Charge of the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), Charlotte Field Division; Christopher Kuvlesky, Assistant Special Agent in Charge, Atlantic Field Office, National Park Service, Investigative Services Branch; Colonel William J. Grey, Commander of the North Carolina State Highway Patrol; Sheriff Curtis A. Cochran of the Swain County Sheriff’s Office; Chief Ben Reed of the Cherokee Indian Police Department; Sheriff Robert L. Holland of the Macon County Sheriff’s Office; and Sheriff Danny Millsaps of the Graham County Sheriff’s Office.

In announcing the charges, Acting U.S. Attorney Rose said, “Drug dealers think they can operate under the radar in smaller, rural areas, and evade detection.  They are wrong.  We will partner with law enforcement agencies throughout Western North Carolina to protect all communities, large and small, and crackdown on drug traffickers that threaten the safety and well-being of the people living there.”

“The success of this investigation speaks to the continued dedication between our local, state and federal law enforcement partners in targeting and dismantling meth distribution rings that profit by spreading their poison in our communities. Strong partnerships such as this one underscore the power of our combined forces and demonstrate our collective impact on the war against meth,” said Special Agent in Charge Salter, with DEA’s Atlanta Field Division.

All defendants are charged with one count of engaging in a conspiracy to distribute and to possess with the intent to distribute methamphetamine, with some facing additional drug and firearms violations.(Please see the attached chart for a list of all charges and penalties for each defendant). The 16 charged are:

• James Dee Ball, 36, of Bryson City, N.C. (arrested)
• Kelsie Marie Burch, 23, of Sylva, N.C. (not arrested yet)
• Theresa Lorene Burns, 55, of             Bryson City.  (arrested)
• Anna Marie Postell Cochran, 21, of Bryson City. (arrested)
• Thomas Bart Cochran, 35, of             Bryson City. (arrested)
• Jeremiah Jerome Gibby, 35, of Bryson City. (arrested)
• Hoke Benjamin Caleb Hayes, 24, of Hoschton, Georgia. (arrested in Georgia)
• Bryan Keith Jenkins, 35, of Robbinsville, N.C. (in state custody)
• Ray Chad Lequire, 34, of Bryson City. (arrested)
• Amanda Brooke McKinney, 34, of Bryson City. (arrested)
• Miranda Nations, 21, of Bryson City. (arrested)
• Tammie Lynn Payne, 44, of Waynesville, N.C. (arrested)
• Brandi Lynn Smith, 30, of Cleveland, Georgia. (arrested)
• Gregory Daniel Steedly, 48, of Lawrenceville, Georgia. (arrested in Georgia)
• Cain Hamilton Strickland, 34, of Atlanta, Georgia. (in state custody)
• Sebern Todd Wyatt, 50, of Bryson City. (arrested)

According to allegations contained in the indictment, from about April 2013 to about July 2015, in Cherokee, Haywood, Jackson, Macon, and Swain Counties, the defendants conspired with each other to distribute and to possess with intent to distribute methamphetamine.  According to court records and statements made in court, over the course of the investigation law enforcement recovered more than three pounds of methamphetamine, drug paraphernalia, approximately $43,000 in cash, 11 firearms, including semi-automatic pistols and rifles, and ammunition.

All defendants named in the indictment are in currently in custody, except Kelsie Marie Burch, who remains a fugitive.

The charges contained in the indictment are allegations.  The defendants are presumed innocent unless and until they have been proven guilty beyond a reasonable doubt in a court of law. 

Acting U.S. Attorney Rose thanked all the law enforcement agencies involved in this investigation for their continued cooperation and assistance.  The case is being prosecuted by Assistant U.S. Attorney Thomas Kent of the U.S. Attorney’s Office in Asheville.      

CHARLOTTE, N.C. – On Wednesday, September 16, 2015, U.S. District Judge Max O. Cogburn sentenced an Indian Trail, N.C. man to 20 years in prison on transportation of child pornography charges, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina. Jason Michael Brown, 41, was also sentenced to a lifetime of supervised release and was ordered to register as a sex offender.

Acting U.S. Attorney Rose is joined in making today’s announcement by John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation, Charlotte Division.

According to court documents and statements made in court, on or about December 2011, law enforcement became aware that an individual with the username “Gigatribal007,” later identified as Brown, was sharing child pornography using peer to peer software.  The investigation revealed that Brown possessed a collection of child pornography, consisting of more than 10,000 images and videos depicting children being sexually abused.  Brown was also found to have sexually abused a child under the age of five.  According to court records, Brown pleaded guilty in September 2014 to one count of transportation of child pornography and one count of possession of child pornography.

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In a separate case, on Tuesday, September 15, 2015, Chief U.S. District Judge Frank D. Whitney sentenced John Moore, Jr., 56, of Monroe, N.C. to 108 months in prison and 20 years of supervised release. According to filed documents and statements made in court, in September 2009, law enforcement became aware of Moore’s collection of child pornography after it was discovered by a computer repair technician who was repairing Moore’s computer.  Court documents indicate that a forensic examination of the seized computer revealed that Moore possessed an extensive collection of child pornography, consisting of more than 1,200 images of child pornography and videos.  Moore pleaded guilty in April 2013 to one count of possession of child pornography.  Judge Whitney also ordered Moore to register as a sex offender once he is released from prison.

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In a third case sentenced this week, on Monday, September 14, 2015, Judge Cogburn sentenced Clinton Williams, Jr., 35, of Charlotte, to 72 months in prison and a lifetime of supervised release.  According to court records, between February and August 2013, Williams accessed and downloaded on his computer child pornography using a peer to peer network.  Court records indicate that Williams, who at the time was a detention officer with the Mecklenburg County Sheriff’s Office, downloaded more than 100 images and videos of child pornography, some of which included children as young as four years old.  Williams pleaded guilty to one count of receiving child pornography and one count of possession of child pornography.  

All three defendants are currently in federal custody and will be transferred to the custody of the Federal Bureau of Prisons upon designation of a federal facility.  Federal sentences are served without the possibility of parole.

These investigations were handled by the FBI.  The Charlotte-Mecklenburg Police Department also assisted with the investigation into Williams.  

These cases were brought as part of Project Safe Childhood, a nationwide initiative launched in 2006 by the Department of Justice, aimed at combating the growing online sexual exploitation of children.  By combining resources, federal, state and local agencies are better able to locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue those victims.  For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.

CHARLOTTE, N.C. – A federal grand jury sitting in Charlotte has indicted Walter Eugene Litteral, 50, of Gastonia, N.C. for conspiring to violate federal firearms laws and related gun and drug charges, announced Acting U.S. Attorney Jill Westmoreland Rose of the Western District of North Carolina.  Litteral’s conspirators, Christopher Todd Campbell, 30, of Mt. Holly, N.C., and Christopher James Barker, 41, of Gastonia, were charged separately today and have agreed to plead guilty for their involvement in the conspiracy.

Special Agent in Charge John A. Strong of the FBI’s Charlotte Division joins Acting U.S. Attorney Rose in making today’s announcement.

According to allegations contained in filed court documents and statements made in court:

In June 2015, law enforcement became aware that Litteral was conspiring with other individuals, including Campbell and Barker, to acquire firearms and components necessary to manufacture improvised explosive devices.  Litteral, Campbell and others believed that the United States government intended to use the armed forces to impose martial law, which the conspirators planned to resist with violent force.  Litteral and Campbell purchased smokeless gun powder, dummy grenades, fuses and other material needed to manufacture the explosive devices, stating that they would use them against law enforcement personnel who attempted to disarm them.  In addition to manufacturing his own explosive devices, Litteral also helped Campbell reconstruct a dummy grenade into a live grenade and advised Campbell on how to maximize the success and impact of an explosion.

Litteral had also recruited Barker, who had access to plumbing supplies through his work, to provide him with pipe and pipe fittings needed to manufacture pipe bombs. Litteral also agreed to act as a “straw” firearm buyer for Barker, and attempted to purchase an assault rifle in his name for Barker’s use.  Litteral also advised Barker on the type of ammunition Barker should purchase for the assault rifle, knowing that Barker’s prior felony convictions prohibited him from possessing or receiving a firearm or firearm ammunition.     

To help finance his activities, Litteral sold prescription drugs which had been prescribed to him for his own use.  Litteral was receiving approximately 240 hydrocodone and 90 oxycodone pills per month, which are both controlled substances, and sold approximately 150 pills per month to Barker.  Litteral also sold prescription drugs to Campbell.

The six-count indictment charges Litteral with conspiracy to violate laws governing firearms and explosive devices which carries a maximum penalty of five years in prison;   making a false statement during the attempted purchase of a firearm, which carries a maximum penalty of 10 years in prison; aiding and abetting the possession of ammunition by a prohibited person; which carries a maximum penalty of 10 years in prison; aiding and abetting the making of a firearm in violation of the National Firearms Act (NFA, that being a grenade, which carries a maximum penalty of 10 years in prison; conspiracy to distribute and possess Schedule II controlled substances, which carries a maximum penalty of 20 years in prison; and illegal distribution and possession with intent to distribute Schedule II controlled substances, which carries a maximum penalty of 20 years in prison. 

Criminal bills of information were also filed in federal court against Litteral’s conspirators, Campbell and Barker.  The two men have agreed to plead guilty to federal charges for their involvement in the conspiracy, and will appear before a U.S. magistrate judge in the coming days to formally enter their guilty pleas.

Campbell has agreed to plead guilty to one count of possession of an unregistered firearm, and one count of making a firearm in violation of the NFA, that being a grenade.  Each charge carries a maximum of penalty of 10 years in prison.  Barker has agreed to plead guilty to conspiracy to violate laws governing firearms and explosive devices which carries a maximum penalty of five years in prison, and one count of possession of ammunition by a prohibited person, which carries a maximum penalty of 10 years in prison.

All three men have been in federal custody since they were arrested on August 1, 2015.

The charges contained in Litteral’s indictment are allegations.  The defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

The case is being investigated by the FBI and the Joint Terrorism Task Force (JTTF) of which the North Carolina Highway Patrol, the Federal Air Marshal Service, the Homeland Security Investigations, the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), the U.S. Customs and Border Protection, the Union County Sheriff’s Office and the Charlotte Mecklenburg Police Department are members.  In making today’s announcement, Acting U.S. Attorney Rose thanked the Belmont Police Department, the Mount Holly Police Department, Gaston County Police Department, the Gastonia Police Department, and the Mecklenburg County Sheriff’s office for their assistance with the investigation.

The case is being prosecuted by Assistant U.S. Attorney and Senior Litigation Counsel Michael E. Savage of the Western District of North Carolina.

CHARLOTTE, N.C. – Nathan Shane Wolf, 44, and John Wayne Perry, Jr., 34, both of Charlotte, were sentenced this week by Senior U.S. District Judge Graham C. Mullen on federal racketeering charges, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina.  An additional defendant, Purnell Wood, 44, was sentenced on Friday, July 31, 2015 for his role in the federal racketeering Enterprise.

Acting U.S. Attorney Rose is joined in making today’s announcement by John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division, Thomas J. Holloman III, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (IRS-CI).

These convictions are the latest in Operation Wax House, an investigation which began in 2007.  Of the 91 individuals charged, 89 defendants have either pleaded guilty or have been convicted following trial.  The two remaining defendants are international fugitives.  Of the 89 defendants convicted, two remain to be sentenced.

Wolf, a licensed real estate agent, was sentenced to 7 years in prison followed by three years of supervised release.  Wolf was convicted by a jury in October 2013. According to trial evidence, Wolf was a participant in the enterprise’s mortgage fraud operations, accounting for over $13 million in fraudulently-obtained loans, with losses of more than $7 million. Witnesses testified that Wolf arranged for builders of luxury real estate to pretend to sell such real estate at an inflated price – what Wolf called the “gross price” – in order to get an inflated mortgage loans from a bank.  In reality, the builders accepted the true, lower, price – what Wolf called the “strike price” – while Wolf arranged for the difference between the inflated price and the true price to be paid from the loan proceeds as kickbacks.  Such kickbacks were funneled through sham companies and disguised to look like payments for work actually done on the real estate.   Trial evidence established that the work was never done, but instead these kickbacks were payments to the buyers and promoters who helped bring the parties to the fraud together.  According to the evidence at trial, the kickbacks generally ranged from approximately $50,000 to almost $600,000.  According to today’s sentencing hearing, Defendant Wolf received more than $200,000 in commissions on the fraudulent transactions, which represented the vast majority of his income during the years he was committing fraud.

Perry was sentenced to 24 months in prison followed by two years of supervised release.  According to court records and today’s sentencing hearing, Perry served the Enterprise as a promoter in its mortgage fraud operations, arranging a fraudulent transaction that resulted in a loss of approximately $500,000.  More than $200,000 in kickbacks were then funneled through Perry’s bank account following the closing.  Defendant and his co-conspirators falsely represented the kickback money was for brick work done on the property. 

Wood was sentenced to 21 months in prison followed by one year supervised release.  According to court records and the sentencing hearing, Wood also served the Enterprise as a promoter in its mortgage fraud operations, arranging two mortgage fraud transactions with losses of more than $1.5 million, funneling nearly a half million dollars in kickbacks through his sham company following closing.  Defendant and his co-conspirators falsely represented that this kickback monies were for payment for home improvements.

In pronouncing these sentences Senior Judge Mullen noted that the calculated losses did not include the effects on the neighborhoods where houses purchased through fraud were located and that the victims of this fraud extended beyond the lending institutions to other people who lived in those neighborhoods and saw their property values negatively impacted by the fraud.

  Operation Wax House in the Western District of North Carolina is being handled by the Charlotte Division of the FBI and the Criminal Division of the IRS for the Financial Fraud Enforcement Task Force, along with the Securities Division of the North Carolina Secretary of State with respect to a separate prosecution.  The Operation Wax House prosecution is being handled for the government by Assistant United States Attorney Maria K. Vento.  The Mehr case was tried by Assistant United States Attorneys Maria K. Vento and Jenny G. Sugar.

“The charges were brought in connection with the President’s Financial Fraud Enforcement Task Force.  The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud.  Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations.  Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants. For more information on the task force, please visit www.StopFraud.gov.”

CHARLOTTE, N.C. – On Thursday, August 27, 2015, U.S. District Judge Robert J. Conrad, Jr. sentenced three members of a conspiracy involving the sale of over 69,000 counterfeit credit cards, announced Jill Westmoreland Rose, Acting United States Attorney for the Western District of North Carolina. Judge Conrad imposed prison terms on the three defendants ranging from 12 to 36 months and ordered restitution totaling $61,696. 

Acting U.S. Attorney Rose is joined in making today’s announcement by Thomas L. Noyes, Inspector in Charge of the Charlotte Division of the U.S. Postal Inspection Service and Matthew Quinn, Assistant Special Agent in Charge of the United States Secret Service, Charlotte Field Division.

Vinicio Joseph Gonzalez, 32, of Palm Bay, Florida, was sentenced to 36 months in prison followed by two years of supervised release and was ordered to pay $61,696 in restitution.  Judge Conrad also ordered Gonzalez to forfeit seized computers and electronic devices, including high-end color printers and embossing equipment, Bitcoins and $4,800 in seized cash.  Gonzalez pleaded guilty to wire fraud conspiracy.

Nashancy Johnny Colbert, 39, of Charlotte, was sentenced to 30 months in prison followed by three years of supervised release, and was ordered to pay $61,696 in restitution.  Colbert also pleaded guilty to wire fraud conspiracy.

Hugo Rebaza, Jr., 33, of Palm Bay, Florida, was sentenced to 12 months in prison, followed by two years of supervised release. Rebaza pleaded guilty to conspiracy to traffic in counterfeit goods.  A fourth related defendant, Sean Roberson, 40, of Palm Bay, is awaiting sentencing in the District of New Jersey.

According to information contained in filed documents and statements made in court:

In 2012 and 2013, Roberson owned and operated a membership-only, e-commerce business and website, known as Fakeplastic.net.  The website sold counterfeit credit cards and counterfeit debit cards to its members-only customers, as well as holographic overlays used to make fake identification cards.  The Fakeplastic website enabled criminals involved in credit and debit card fraud and identity theft fraud to browse, order and purchase from an extensive inventory of genuine-looking, but counterfeit, magnetic-stripe plastic credit and debit cards.  The Fakeplastic counterfeit payment cards were ready to be encoded with stolen payment card data, known in underground carding forums as “track data” or “card dumps,” onto the magnetic stripes of the counterfeit payment cards.  New Fakeplastic customers had to be sponsored by existing Fakeplastic members or others involved in illegal online carding forums dealing in stolen credit and debit card track data.

Fakeplastic customers, totaling approximately 400 in December 2013, were able to select the type and quantity of counterfeit payment cards and counterfeit holographic overlays they wanted to purchase.  For an additional fee, Fakeplastic customers could order custom embossing on the face of the counterfeit payment cards to include information typically associated with genuine payment cards, including cardholder names, payment card account numbers, and payment card expiration dates.  Fakeplastic customers were required to pay for their orders in Bitcoin, Liberty Reserve (a now-defunct online payment service) and, in some cases, cash.

Approximately 23,000 embossed counterfeit payment cards, costing $12 each, and approximately 46,000 unembossed counterfeit payment cards, costing $15 each, were sold and distributed through the Fakeplastic website.  Fakeplastic sales also included more than 35,000 holographic stickers used to make counterfeit cards appear more legitimate, and more than 30,000 state identification card holographic overlays.  Fakeplastic shipments exceeded 3,600 parcels shipped through the U.S. mail.

Gonzalez worked in Fakeplastic’s warehouse, processing purchase orders compiled by Roberson.  Gonzalez manufactured the counterfeit payment cards and packaged the completed orders in U.S. Express Mail envelopes for overnight delivery to Fakeplastic customers.  Rebaza’s role was limited to money pickups at a mail delivery service, sent by a group of New York-based Fakeplastic customers who paid cash, for approximately 16,000 unembossed counterfeit payment cards over a nine-month time period.  Colbert was a Charlotte-based Fakeplastic customer.  Colbert purchased approximately 230 counterfeit credit and debit cards from the Fakeplastic website, the bulk of which Colbert purchased soon after his release from a four-month state jail sentence for obtaining property by false pretenses.

Acting U.S. Attorney Rose credited inspectors of USPIS, special agents of the Charlotte Division of the U.S. Secret Service and Chief Kevin Lovelace and the Rutherfordton, N.C. Police Department for the investigation, and thanked the U.S. Attorney’s Office for the District of New Jersey, and Newark-based agents with USPIS and the FBI for their assistance.

The government is represented in the Western District of North Carolina by Assistant U.S. Attorneys Tom O’Malley and Ben Bain-Creed.

CHARLOTTE, N.C. – A Union County man was sentenced today in U.S. District Court to 25 years in federal prison for producing child pornography, announced Acting U.S. Attorney Jill Westmoreland Rose of the Western District of North Carolina.  Chad Landon Blume, 34, of Waxhaw, N.C., was also ordered to serve a lifetime of supervised release and to register as a sex offender.   The sentence was imposed by U.S. District Judge Robert J. Conrad, Jr. of the Western District of North Carolina.

John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division and Union County Sheriff Eddie Cathey join Acting U.S. Attorney Rose in making today’s announcement.

According both to admissions made in connection with Blume’s guilty plea and to information introduced at sentencing, law enforcement recovered an SD Card that contained visual depictions of a minor engaging in sexually explicit conduct.  Court records indicate that law enforcement determined the SD Card came from Blume’s cellular phone, which he had used to produce the child pornography on or about November 2012.  During a subsequent search of Blume’s residence, agents seized Blume’s computer and other devices.  A forensic analysis of those devices revealed that Blume had produced numerous sexually explicit pictures of a female minor under the age of 10.  After Blume’s arrest, a second minor female came forward and disclosed that she had been molested by Blume.  Blume pleaded guilty to one count of production of child pornography in December 2013.

Blume has been in federal custody since April 2013.  Upon designation of a federal facility, he will be transferred to the custody of the Federal Bureau of Prisons. Federal sentences are served without the possibility of parole.

The FBI’s Crimes Against Children Squad investigated the case, assisted by the Union County Sheriff’s Office.   Assistant U.S. Attorney Cortney Randall of the U.S. Attorney’s Office in Charlotte handled the prosecution.

CHARLOTTE, N.C. –U.S. District Judge Robert J. Conrad, Jr., sentenced a Charlotte area club owner and entertainment promoter on tax fraud and money laundering charges, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina.  Adolph R. Shiver, 52, of Charlotte, was sentenced to nine months in prison followed by three years of supervised release, during which he will serve an additional nine months of home confinement.  Shiver was also ordered to pay $28,635 as restitution to the Internal Revenue Service, and a $25,000 fine.  Additionally, Judge Conrad ordered Shiver to perform 50 hours of community service.  Finally, Shiver must close his nightclub, Club 935, and must not own or manage another nightclub for the duration of his sentence.

Daniel R. Salter, Special Agent in Charge of the Atlanta Field Division of the Drug Enforcement Administration (DEA), which oversees the Charlotte District Office, and Thomas J. Holloman III, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (IRS-CID), join Acting U.S. Attorney Rose in making today’s announcement.

According to filed court documents and today’s sentencing hearing, Shiver is the owner and operator of two Charlotte-based party promotion businesses, “L.A. Inc.” and “Adof Entertainment Group,” and the owner and operator of Club 935, also located in Charlotte.  Court records indicate that in or about December 2013, Shiver knowingly conducted a financial transaction involving $50,000, represented to be the proceeds of unlawful activity.  According to court records, Shiver planned to launder those illegal proceeds through his businesses.  In addition to engaging in money laundering, in or about October 2013, Shiver filed a false tax return for tax year 2012, which understated his taxable income.  According to court records, Shiver omitted from his personal and corporate tax returns gross receipts totaling $102,270, with a corresponding tax loss of $28,635.

Shiver pleaded guilty in December 2014 to one count of filing a false tax return for tax year 2012 and one count of money laundering.  At today’s sentencing hearing, Shiver was ordered to report to the Federal Bureau of Prisons upon designation of federal facility.  All federal sentences are served without the possibility of parole.

This prosecution is part of “Operation Jailhouse Productions,” an investigation by the Organized Crime Drug Enforcement Task Force (OCDETF).  OCDETF is a joint federal, state and local cooperative approach to combat drug trafficking and is the nation’s primary tool for disrupting and dismantling major drug trafficking organizations, targeting national and regional level drug trafficking organizations and coordinating the necessary law enforcement entities and resources to disrupt or dismantle the targeted criminal organization and seize their assets.

The case was investigated by DEA and IRS-CID.  Assistant U.S. Attorney Steven R. Kaufman coordinated on the investigation and handled the prosecution in this case.

CHARLOTTE, N.C. – The head of a Mexican drug trafficking organization (DTO) responsible for producing and distributing vast quantities of heroin into the United States was sentenced today by U.S. District Judge Robert J. Conrad, Jr., announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina.  Carlos Ramon Castro-Rocha, a/k/a “Cuate,” 41, of Sinaloa, Mexico, was handed down a 135-month sentence, followed by a five-year term of supervised release.

Daniel R. Salter, Special Agent in Charge of the Atlanta Field Division of the Drug Enforcement Administration (DEA), which oversees the Charlotte District Office and Chief Kerr Putney of the Charlotte-Mecklenburg Police Department (CMPD), join Acting U.S. Attorney Rose in making today’s announcement.  

According to court documents and court proceedings, between 2005 and 2008, Castro-Rocha, a Mexican drug kingpin, ran an extensive drug trafficking network and oversaw all aspects of his drug operation, from production in Mexico, to smuggling the narcotics across the border, to distribution in cities throughout the U.S.  In September 2007, law enforcement seized more than two and a half kilograms (approximately six pounds) of black tar heroin that had been trafficked to Charlotte through Castro-Rocha’s drug distribution network, as well as over $110,000 in cash and a handgun.  Court records indicate that in August 2008, law enforcement made two additional seizures of approximately one kilogram of black tar heroin each.  According to court records, between 2005 and 2008, Castro-Rocha’s network trafficked up to 10 kilograms of black tar heroin in the Charlotte area alone, with an approximate street value of $1.2 million.

The U.S. Department of Justice designated Castro-Rocha as a Consolidated Priority Organization Target, or “CPOT,” a designation reserved for the highest command and control level drug traffickers, who run organizations that smuggle large quantities of narcotics into the United States.  There are only 42 individuals in the world designated as a CPOT.

Castro-Rocha was charged by a criminal complaint and later formally indicted in the Western District of North Carolina in June 2009.  The indictment was unsealed after Mexican authorities arrested Castro-Rocha in Mexico, on May 30, 2010, pursuant to extradition proceedings initiated by the Justice Department.  Castro-Rocha filed several unsuccessful appeals in the Mexican judicial system, and was eventually extradited to the United States in October 2012.

In April 2014, Castro-Rocha pleaded guilty to one count of conspiracy to import heroin and one count of conspiracy to possess with intent to distribute heroin.  In addition to prosecution of the organization’s leader, this investigation has resulted in the prosecution of 11 defendants associated with Castro-Rocha’s DTO.  Following today’s sentencing in the Western District of North Carolina, Castro-Rocha will be transferred to Arizona to face federal drug trafficking and related charges pending against him in that district.

Castro-Rocha’s prosecution stems from “Operation Dirty Girl II,” which is the local portion of a national anti-drug initiative, “Project Deliverance,” aimed at stemming the flow of illegal narcotics into the U.S.  Led by the DEA and other members of the Western District’s Organized Crime Drug Enforcement Task Force (OCDETF), Dirty Girl II focused on disrupting and dismantling the infrastructure of Castro-Rocha’s drug trafficking network, which was responsible for producing and smuggling in the U.S. vast quantities of heroin, including a highly dangerous form, black tar heroin.  “Dirty Girl” is the street name for black tar heroin.

In making today’s announcement Acting U.S. Attorney Rose commended the DEA and CMPD for handling the investigation.  She also thanked the FBI, the Gastonia Police Department and the Union County Sheriff’s Office for their assistance.  Assistant United States Attorney Steven R. Kaufman of the U.S. Attorney’s Office in Charlotte coordinated in the investigation and prosecuted the case.

CHARLOTTE, N.C. – A coin and precious metals dealer and his company pleaded guilty to wire fraud charges for defrauding more than 400 customer-victims of over $15 million, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina.  The Tulving Company, Inc., and its owner, Hannes Tulving, Jr., 60, of Newport Beach, California, entered their guilty pleas today before U.S. Magistrate Judge David Keesler.  

Matthew Quinn, Assistant Special Agent in Charge of the United States Secret Service, Charlotte Field Division joins Acting U.S. Attorney Rose in making today’s announcement.

According to the filed plea documents and statements made in court, Tulving was the sole owner, shareholder and President of The Tulving Company, Inc. (Tulving Co.), a California-based business that sold coins, bullion, and other precious metals over the Internet.  Court records show that from about August 2013 to January 2014, Tulving and his company executed a scheme to defraud customers nationwide by inducing them to place orders for coins and other merchandise knowing those orders could not be fulfilled.  Court records show that the customers paid for the merchandise, expecting their orders to be delivered according to the timetable advertised on the company’s website.  According to information contained in plea documents, Tulving and his company accepted the customers’ payments but failed to deliver some of the merchandise.  Instead, they diverted the customers’ payments to fulfill other customers’ orders, to pay the company’s debt, and to return the money to previous customers who did not receive their merchandise.  Today, the defendants admitted to defrauding more than 400 victims of over $15 million.

As stated in Hannes Tulving’s plea agreement, the wire fraud charge carries a maximum penalty of 20 years in prison and a $250,000 fine.  As part of his plea with the government, the defendant has agreed to pay restitution to his victims.  Tulving was released on bond after entering his guilty plea.

According to the company’s plea agreement, the Tulving Co. faces at sentencing a fine in the amount $500,000, or twice the gross pecuniary gain derived from the crime or twice the gross pecuniary loss to the victims of the crime, whichever is greatest.  The company also faces a minimum of one year of organizational probation and will be required to pay full restitution to the victims.

The U.S. Secret Service handled the investigation.  Acting U.S. Attorney Rose also thanked the Commodities Futures Trading Commission for their assistance in this case.  Assistant U.S. Attorney Kevin Zolot is in charge of the prosecution.

CHARLOTTE, N.C. – Three Charlotte women were sentenced today for conspiring to steal millions from Medicaid, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina.  All three defendants appeared before Chief U.S. District Judge Frank D. Whitney and were sentenced as follows: Aliya Boss, 36, of Charlotte, was sentenced to 44 months in prison, followed by three years of supervised release and was ordered to pay $1,135,302.27 as restitution to Medicaid; Sakeenah David Davis, 38, of Charlotte, was sentenced to 42 months in prison, three years of supervised release and was ordered to pay restitution in the amount of $506,124; and Kino Legette Williams, 37, of Charlotte, was handed down a 35-month sentence, was ordered to serve three years under court supervision and to pay $506,124 as restitution to Medicaid.

Acting U.S. Attorney Jill Westmoreland Rose is joined by John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division.

According to filed court documents in each case and today’s sentencing hearings:

From 2012 to June 2013, Boss was involved in a scheme to defraud Medicaid of more than $4.3 million by submitting false reimbursement claims for mental and behavioral health services that she did not provide.  Boss, a licensed social worker and owner of “Boss Counseling and Consulting, LLC.,”  was approved by Medicaid to bill for and receive reimbursement for therapy services provided to Medicaid recipients.  Boss conspired with others and agreed to allow at least two mental health companies to submit fraudulent reimbursement claims to Medicaid using her provider number for sham mental and behavioral health services that Boss never provided.

Court documents indicate that, in some instances, the fraudulent reimbursement claims submitted to Medicaid claimed that Boss had provided as many as 140 hours of therapy during a single 24-hour day.  In exchange for lending her Medicaid provider number Boss received monthly payments from the companies, even though she knew she never provided those services.  In addition to “renting out” her provider number, Boss also submitted false claims to Medicaid for fraudulent counseling services through her own company, using the Medicaid numbers of beneficiaries collected by another member of the conspiracy working as a “patient recruiter.”

Boss and her conspirators filed fraudulent claims, in some instances claiming that therapy services were provided to more than 200 Medicaid recipients in a single day or billing for more than 64 hours of therapy over the course of a 24-hour period.  Of the fraudulent claims filed, $306,965.56 of the reimbursement funds was paid out directly to Boss.

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From October 2012 to July 2013, Sakeenah Davis and Kino Williams were involved in a scheme to defraud Medicaid of more than $1.6 million by submitting fraudulent reimbursement claims for mental and behavioral health services that were not provided.  Davis and Williams owned and operated “New Choices Youth and Family Services,” (New Choices), a Medicaid-approved company that purportedly provided outpatient mental and behavioral therapy services.  During the relevant time period, Davis, Williams and others hired a conspirator as the director of New Choices and agreed to pay her $4,000 per month for her services.  Court records show that the director-conspirator billed Medicaid for fraudulent services that never provided by New Choices.  Court records show that all the fraudulent claims listed “S.B.” as the attending clinician, even though S.B. did not provide the claimed services.  In some instances, New Choices’ billing claimed that the hours of therapy S.B. had provided over the course of a single day far exceeded a 24-hour period, in one instance claiming more than 77 hours of therapy in one day.  As a result of the fraudulent claims, over the course of the conspiracy Medicaid paid out $506,124 to Williams and Davis.  The two women used some of the stolen funds to pay for personal expenses, including jewelry and to pay for Davis’s wedding.

All three defendants previously pleaded guilty to one count of health care fraud conspiracy.  They will be ordered to report to the Federal Bureau of Prisons upon designation of a federal facility.  All federal sentences are served without the possibility of parole.

The FBI conducted the investigations with the assistance of MID.  The prosecution of the cases is handled by Assistant U.S. Attorney Kelli Ferry of the U.S. Attorney’s Charlotte Office.

The investigation and charges are the work of the Western District’s joint Health Care Fraud Task Force.  The Task Force is multi-agency team of experienced federal and state investigators, working in conjunction with criminal and civil Assistant United States Attorneys, dedicated to identifying and prosecuting those who defraud the health care system, and reducing the potential for health care fraud in the future. The Task Force focuses on the coordination of cases, information sharing, identification of trends in health care fraud throughout the region, staffing  of  all  whistle  blower  complaints,  and  the  creation  of  investigative  teams  so  that individual agencies may focus their unique areas of expertise on investigations.  The Task Force builds upon existing partnerships between the agencies and its work reflects a heightened effort to reduce fraud and recover taxpayer dollars.

If you suspect Medicare or Medicaid fraud please report it by phone at 1-800-447-8477 (1-800-HHS-TIPS), or E-Mail at HHSTips@oig.hhs.gov.

ASHEVILLE, N.C. – U.S. Magistrate Judge Dennis L. Howell sentenced Billy Joe Hurley, 47, of Bryson City, N.C. for illegally possessing ginseng, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina.  Hurley was convicted at trial on Wednesday, August 12, 2015, and was ordered today to serve six months in jail for the illegal possession or harvesting of American ginseng from the Great Smoky Mountains National Park.

Joe Pond, Acting Chief Ranger of the Great Smoky Mountains National Park and Cassius Cash, Superintendent of the Great Smoky Mountains National Park join Acting U.S. Attorney Rose in making today’s announcement.

“The illegal harvesting of American Ginseng poses a threat to this precious national resource and it is a crime our office takes very seriously,” said Acting U.S. Attorney Rose.  “We will continue to work closely with the Rangers of the Great Smoky Mountains National Park to protect wild ginseng from extinction and to prosecute those who profit from the illegal harvesting of ginseng roots.”

According to Acting Chief Ranger Pond, “Ginseng is a threatened natural resource, protected by law within Park boundaries.  Unfortunately, Rangers are finding that poached ginseng roots seized during criminal investigations are younger than in years past, as older roots become much harder to find.  This is not good for the viability of the plant.  Rangers work extremely hard to thwart the efforts of those who steal from public lands and we hope that this case serves as a deterrent for anyone considering this activity.”

According to filed court documents and court proceedings, on June 28, 2015, in Swain County, Hurley Illegally possessed more than 500 American Ginseng roots he had illegally dug from areas in the Great Smoky Mountains National Park.  Court records show that Hurley had filled a backpack with the roots and attempted to hide it behind a guardrail beside a hiking trail.

According to court records, in August 2014, Hurley was sentenced to five months and fifteen days in jail for the illegal possession or harvesting of American ginseng from the Great Smoky Mountains National Park.  Today’s conviction marks Hurley’s fifth such conviction.  Staff of the National Park Service replanted the recovered viable roots but estimate that at best, 50% of the replanted roots are likely to survive.

At Hurley’s 2014 sentencing hearing, a National Park Service botanist testified that the American ginseng species is under severe pressure from poachers in the Great Smoky Mountains National Park and may not be sustainable if it continues to be harvested illegally.  During that same hearing, a special agent with of the U.S. Fish and Wildlife Service also testified that financial gain is likely to continue to drive poachers and that fresh ginseng can bring up to $200 per pound on the black market.

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American ginseng is a native plant in the Smoky Mountains. These wild roots are also a highly prized tonic, particularly in Asian markets.  Dried ginseng roots are used in medicines, teas, and other health products.  American ginseng was recently placed in North Carolina’s Watch Category 5B, which includes generally widespread species that are in commercial demand and are often collected and sold in high volume.  This category was created to bring attention to the issue, since such high volume collection is unsustainable in the long run.

Ginseng harvest in the park has always been illegal.  It is legal to harvest ginseng outside the park on private lands or with a permit in certain Forest Service areas during the harvesting season.  Park scientists have realized these slow-growing native plants could disappear because harvesting means taking the entire ginseng root.  Each year law enforcement rangers seize between 500 and 1000 illegally poached ginseng roots.  Over the years, park biologists have marked and replanted over 15,000 roots seized by law enforcement.  Monitoring indicates that many of these roots have survived and are again thriving in these mountains.

The U.S. Attorney’s Office and the National Park Service remind the public that gathering ginseng on federal lands, such as the Great Smoky Mountains National Park, is a federal crime.  The Smokies are the largest fully protected reserve known for wild ginseng.  This plant was formerly abundant throughout the eastern mountains, but due to overharvesting, populations have been significantly reduced to isolated patches.  The roots poached in this park are usually young, between the ages of 5 and 10 years, and have not yet reached their full reproductive capacity.  In time, the park’s populations might recover if poaching ceases.

Hurley has been in custody since July 2015.

The investigation of the case was handled by Park Rangers of the Great Smoky Mountains National Park.  The U.S. Attorney’s Office in Asheville handled the prosecution.

To report illegal harvesting activities of American ginseng within the Smokies, please call the Law Enforcement Desk of the Great Smoky Mountains National Park at 1-865-436-1230.

STATESVILLE, N.C. – A Lincoln County man was sentenced today in U.S. District Court in Statesville to 180 months in federal prison for producing child pornography, announced Acting U.S. Attorney Jill Westmoreland Rose of the Western District of North Carolina.  U.S. District Judge Richard L. Voorhees also ordered Antony Alexander Gonzalez Solorzano, 28, of Lincolnton, N.C. to serve a lifetime of supervised release and to register as a sex offender.

John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division joins Acting U.S. Attorney Rose in making today’s announcement.

According to the criminal indictment, from January to March 2013, Solorzano did employ, use, persuade, induce, entice, and coerce a minor to engage in sexually explicit conduct for the purpose of producing a visual depiction of such conduct.  Court records show that Solorzano possessed both images and videos of the underage victim which he kept stored on his computer.  According to court records and today’s sentencing hearing, law enforcement became aware of Solorzano’s conduct while investigating him for sharing files containing child pornography over the Internet.          

Solorzano pleaded guilty to the one count of production of child pornography in June 2014.  He has been in federal custody since November 2013.  Upon designation of a federal facility, he will be transferred to the custody of the Federal Bureau of Prisons. Federal sentences are served without the possibility of parole.

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Judge Voorhees also sentenced a Mooresville man to 15 years in prison for producing and possessing child pornography, and ordered him to serve a lifetime of supervised release and to register as a sex offender.  According to court documents, evidence presented at trial and statements made in court, James Douglas Brown, 54, had sexually abused a minor female repeatedly between May 2009 and January 2011.  Court records show that Brown filmed and photographed some of the sexual abuse of the minor victim.  In May 2014, a federal jury convicted Brown of eight counts of production and one count of possession of child pornography.  He has been in federal custody since November 2013.  Brown’s case was investigated by the FBI and the Iredell County Sheriff’s Office.

Assistant U.S. Attorney Cortney Randall of the U.S. Attorney’s Office in Charlotte handled the prosecution of both cases.

These cases were 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. Attorneys’ offices and the Criminal Division’s Child Exploitation and Obscenity Section (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.projectsafechildhood.gov.

ASHEVILLE, N.C. – Keith Alan Franklin, 27, of Waynesville, N.C. was sentenced today to 27 months in prison on theft charges, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina.  U.S. District Judge Martin Reidinger also ordered Franklin to serve three years of supervised release and to pay $475,000 as restitution to Harrah’s Cherokee Casino (Harrah’s).

Acting U.S. Attorney Rose is joined by Matthew Quinn, Assistant Special Agent in Charge of the United States Secret Service, Charlotte Field Division and Chief Ben Reid of the Cherokee Indian Police Department in making today’s announcement.

According to court records and today’s sentencing hearing, from October 2013 to April 2014, Franklin embezzled money from Harrah’s, a gaming establishment operated by and for and licensed by the Eastern Band of Cherokee Indians.   Court records show that at the time of the offense Franklin was employed at Harrah’s and had direct access to the casino’s funds.  According to court records, Franklin routinely stole money while working at Harrah’s by exploiting a flaw in the casino’s security system.  Court records indicate that Franklin stole more than $400,000 from the casino in this manner and used the money to buy numerous cars and to support his personal lifestyle.  Franklin was fired in April 2014 after Harrah’s discover the theft and pleaded guilty in October 2014 to one count of theft by an employee of gaming establishments on Indian lands.

Franklin is currently in federal custody and will be transferred to the Federal Bureau of Prisons upon designation of a federal facility.  All federal sentences are served without the possibility of parole.

The U.S. Secret service handled the investigation assisted by the Cherokee Police Department.  Assistant U.S. Attorney Don Gast prosecuted the case.

CHARLOTTE, N.C. – Chief U.S. District Judge Frank D. Whitney sentenced today Justin Vang, 28, of Charlotte, to 151 months in prison on child pornography charges, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina.  Vang was also ordered to serve a lifetime of supervised release and to register as a sex offender.

John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division joins Acting U.S. Attorney Rose in making today’s announcement.

According to court records, between March and May 2013, Vang did knowingly receive visual depictions of minors engaging in sexually explicit conduct.  A forensic examination of Vang’s seized computer revealed that the defendant possessed 20 videos depicting the sexual abuse of children, including children under the age of 12.   

In handing down Vang’s sentence, Judge Whitney described the videos as “heinous.”  Judge Whitney also acknowledged the pain and suffering of the victims, stating “The victims of child pornography are not just victimized one time, they are victimized hundreds and thousands of times.”  Judge Whitney added that the circumstances of the offense are reprehensible.

Vang pleaded guilty in March 2015 to one count of receiving child pornography.  He is currently in federal custody and will be transferred to the custody of the Federal Bureau of Prisons upon designation of a federal facility.

All federal sentences are served without the possibility of parole.

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In a separate case, on Monday, August 10, 2015, U.S. District Judge Max O. Cogburn Jr. sentenced Byron Boswell Hess, IV, 48, of Charlotte, to 60 months in prison, a life time of supervised release and was ordered to register as a sex offender.  According to filed documents, in or about February 2014, Hess did knowingly possess and access with intent to view images depicting child pornography that involved prepubescent minors.  Hess pleaded guilty in March 2015 to one count of possession of child pornography and has been in federal custody since January 2015.

Both cases were investigated by the FBI.  Assistant U.S. Attorney Cortney E. Randall handled the prosecution of both cases.

The cases were 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. Attorneys’ offices and the Criminal Division’s Child Exploitation and Obscenity Section (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.projectsafechildhood.gov.

A California woman was sentenced to 130 months in prison for her role in a half-million dollar Costa Rica-based “sweepstakes fraud” scheme that victimized hundreds of U.S. residents.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and Acting U.S. Attorney Jill Westmoreland Rose of the Western District of North Carolina made the announcement.

Patricia Diane Clark, 57, of Sacramento, California, was sentenced today by Chief U.S. District Judge Frank D. Whitney of the Western District of North Carolina for conspiracy to commit wire fraud, wire fraud and conspiracy to commit money laundering.   Clark was also ordered to pay $642,032 in restitution and to forfeit the same amount jointly and severally with her co-defendants.

In connection with her guilty plea, Clark admitted that, from approximately 2007 through February 2013, her co-conspirators called U.S. residents from Costa Rican call centers, falsely informing them that they had won a substantial cash prize in a “sweepstakes.”  The victims, many of whom were elderly, were told that in order to receive the prize, they had to send money for a purported “refundable insurance fee.”  Clark admitted that she picked up money from the victims and sent it to her co-conspirators in Costa Rica.  Clark also admitted that she managed others who picked up money from the victims in the United States and that she kept a portion of the victims’ payments.

Clark also admitted that, once the victims sent money, her co-conspirators contacted the individuals again and falsely informed them that the prize amount had increased, either because of a clerical error or because another prize winner was disqualified.  The victims then had to send additional money to pay for new purported fees to receive the now larger sweepstakes prize.  The attempts to collect additional money from the victims continued until an individual either ran out of money or discovered the fraudulent nature of the scheme.

Clark admitted that, along with her co-conspirators, she was responsible for approximately $640,000 in losses to more than a hundred U.S. citizens. 

This case is being investigated by the U.S. Postal Inspection Service, Internal Revenue Service, FBI, Federal Trade Commission and Department of Homeland Security.  The case is being prosecuted by Senior Litigation Counsel Patrick M. Donley and Trial Attorney William H. Bowne of the Criminal Division’s Fraud Section. 

An Ohio man was convicted yesterday after a two-day jury trial in the Western District of North Carolina for his role in a Costa Rican telemarketing scheme.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and Acting U.S. Attorney Jill Westmoreland Rose of the Western District of North Carolina made the announcement.

Paul Ronald Toth Jr., 40, of Wintersville, Ohio, was convicted of one count of conspiracy to commit money laundering and six counts of international money-laundering concealment.  Sentencing before U.S. District Judge Robert J. Conrad Jr. of the Western District of North Carolina will be scheduled at a later date.

According to the evidence presented at trial, Toth was involved in a telemarketing scheme in which his co-conspirators contacted U.S. residents from call centers in Costa Rica, falsely informing them that they had won substantial cash prizes in “sweepstakes.”  To claim the cash prizes, the victims – many of whom were elderly – were instructed to send a purported “refundable insurance fee.”  

The trial evidence showed that, between approximately November 2009 and November 2010, Toth was a United States-based “smasher” who facilitated the laundering of funds received from the elderly victims.  Specifically, according to the evidence presented at trial, Toth and others he recruited and supervised received over $300,000 from victims and, using various individuals as senders and recipients to conceal the fraudulent nature of the transactions, wired over $200,000 of those funds to co-conspirators in Costa Rica.  The evidence further demonstrated that Toth kept the remainder as his profit.

This case is being investigated by the U.S. Postal Inspection Service, the FBI, the Internal Revenue Service, Federal Trade Commission and Department of Homeland Security.  The case is being prosecuted by Senior Litigation Counsel Patrick Donley and Trial Attorneys William Bowne and Anna Kaminska of the Criminal Division’s Fraud Section. 

CHARLOTTE, NC B A Charlotte man charged with defrauding financial institutions of more than $133,000 was sentenced today to 21 months in prison, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina.  Dezon Montrice Gill, a/k/a “Bentley,” was also ordered by Chief U.S. District Judge Frank D. Whitney to serve three years under court supervision and to pay $133,940.83 as restitution.

Acting U.S. Attorney Rose is joined in making today’s announcement by Michael Rolin, Acting Special Agent in Charge of the United States Secret Service, Charlotte Field Division.

According to filed documents and today’s sentencing hearing, from about July 1, 2013 to August 21, 2013, Gill orchestrated a check fraud scheme that targeted financial institutions in the Charlotte area.  Court records indicate that Gill executed the scheme by depositing worthless checks into back accounts of FDIC-insured institutions and then used debit cards linked to these bank accounts to purchase money orders and gift reload cards.  According to court records, Gill opened a new account at a bank and used the new “starter” checks to write worthless checks he then deposited into other individuals’ bank accounts.  According to court records, Gill paid the account holders between $1,000 to $2,000 in exchange for using their debit cards to purchase money orders, and Green Dot Moneypack Reload Cards.  Court records show that Gill defrauded financial institutions of more than $133,000 in this manner.  Gill pleaded guilty in January 2015 to one count of financial institution fraud conspiracy and one count of financial institution fraud.

Gill is currently in federal custody and will be transferred to the custody of the Federal Bureau of Prisons upon designation of a federal facility.  All federal sentences are served without the possibility of parole.

The U.S. Secret Service investigated the case.Assistant U.S. Attorney Kenneth Smith handled the prosecution.

CHARLOTTE, N.C. – Walter Eugene Litteral, 50, Christopher James Barker, 41, of Gastonia, and Christopher Todd Campbell, 30, of Mt. Holly, N.C., were arrested on Saturday, August 1, 2015, for conspiring to violate federal laws governing firearms and explosive devices and related charges, announced Acting U.S. Attorney Jill Westmoreland Rose of the Western District of North Carolina. Criminal complaints against the men were filed in late July 2015 and remained sealed until today.

Special Agent in Charge John A. Strong of the FBI’s Charlotte Division joins Acting U.S. Attorney Rose in making today’s announcement.

According to allegations contained in the affidavits filed with the criminal complaints:

Beginning on or about June 18, 2015, law enforcement received information that Litteral and Barker were attempting manufacture explosive or destructive devices.  On or about July 22, 2015, law enforcement received information that Campbell was reconstructing live grenades from “dummy grenades” sold legally as military artifacts.  Litteral, Campbell and others believed that the United States government intended to use the armed forces to impose martial law, which they planned to resist with violent force.  Litterral had been purchasing numerous military equipment in preparation for the alleged attack, including ammunition for a .338 caliber rifle, handheld radios with throat microphones for communication, military issue Kevlar helmets, body armor vests and balaclavas (a form of cloth headgear designed to expose only parts of the face).

The FBI became aware that Litteral and Campbell wanted to manufacture destructive devices such as pipe bombs and grenades and possessed some of the needed components.  According to the investigation, Barker provided Litteral with pipe fittings, which are needed to manufacture pipe bombs.  Litteral also discussed testing the destructive devices in Shelby, N.C., with Barker present for the testing.  Making reference to the explosion, court records indicate that Litteral said, “it is going to be great.”

In addition to purchasing the military supplies, Litteral also tried to purchase a firearm and ammunition for Barker.  According to court records, Litteral filled out the required form with his own information, even though the gun was intended for Barker.  Using his own debit card, Barker purchased ammunition and a large capacity magazine for the gun.  Barker’s prior criminal felony convictions prohibit him from purchasing or possessing a firearm or ammunition.

The three men had their initial appearances today in court and will in remain in federal custody pending their detention hearings, which have been set for Thursday, August 6, 2015.

The charge of conspiracy to violate laws governing firearms and explosive devices carries a maximum potential penalty of five years in prison and a $250,000 fine.  Campbell is also charged with receiving, possessing and making a firearm – which definition includes a destructive device – for which the maximum penalty is 10 years in prison and a $10,000 fine.

The charges contained in the complaint are allegations.  The defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

The case is being investigated by the FBI and the Joint Terrorism Task Force (JTTF) of which the North Carolina Highway Patrol, the Federal Air Marshal Service, the Homeland Security Investigations, the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) and the Charlotte Mecklenburg Police Department are members.  In making today’s announcement, Acting U.S. Attorney Rose thanked the Belmont Police Department, the Mount Holly Police Department, Gaston County Police Department, the Gastonia Police Department, and the Mecklenburg County Sheriff’s office for their assistance with the investigation.

The case is being prosecuted by Assistant U.S. Attorney and Senior Litigation Counsel Michael E. Savage of the Western District of North Carolina.

CHARLOTTE, N.C. – Chief U.S. District Judge Frank D. Whitney sentenced the owner of a North Carolina investment firm to 96 months in prison today, for orchestrating a Ponzi scheme that solicited victims to invest millions in the foreign currency market (“FOREX”), announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina.  James H. Mason, 67, of Graham, N.C., was also ordered to serve three years under court supervision and to pay $4,325,820.79 as restitution to the victims of his fraud.

North Carolina Secretary of State Elaine F. Marshall and John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division, and Thomas J. Holloman III, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (IRS-CI), join Acting U.S. Attorney Rose in making today’s announcement.

According to filed court documents and today’s sentencing hearing, beginning in 2010 and continuing through March 2013, Mason solicited at least 500 victims to invest over $4.7 million in his fraudulent Ponzi scheme.  Court records indicate that Mason executed the scheme by inducing victims to invest with his investment companies, “JHM Forex Only Pool” and “Forex Trading at Home Association,” and other related entities, for the supposed purpose of investing in Over-the-Counter (OTC) foreign currency exchange.  Mason lulled his victims into a false sense of security by falsely projecting substantial returns on their investments, as much as $100 million, depending on the amount of their initial investment.  Furthermore, Mason lied to his victims, falsely claiming that he had over 35 years of experience in commodity futures and options trading, when he had no such experience.  According to court records, Mason also failed to disclose to his investor victims a wire fraud conviction in 2000, for which he was sentenced to 18 months in prison.

According to court records, Mason put only a portion of investors’ money into the foreign currency exchange, and lost essentially all the money he did invest while conducting FOREX trading.  Court records indicate that Mason failed to disclose his actual trading results to his victims, and instead made false oral representations and provided bogus statements to clients, fraudulently reporting profits.  According to court records, in order to induce individuals to further invest in his fraudulent foreign currency commodity pool, Mason established a website so that investors could access their accounts online, which fraudulently depicted that investors were making money – in some cases significant profits – through successful FOREX trading.  The profits depicted on individual investor accounts were in fact false, and, in many cases, there was no actual money in the victims’ accounts.

According to court documents, rather than investing the funds as promised, Mason simply deposited victims’ money into various bank accounts he controlled and used a substantial portion of it to pay for personal and business expenses, real estate, cars and other expenses unrelated to any foreign exchange.  For example, court records indicate that Mason spent approximately $435,000 of the investors’ money on a residence in Greensboro, N.C., and more than $222,000 for two residences and office space in Hickory, N.C.  Court records show that Mason did not claim the additional income on his federal income tax returns filed with the IRS.  Mason also used the rest of investors’ money to make “Ponzi” payments to other victims, fraudulently claiming they were “profits” from successful FOREX trading.

Mason pleaded guilty in June 2014 to one count of securities fraud conspiracy and one count of filing a false federal income tax return for tax year 2011.  He has been in federal custody since April 2013 and will be transferred to the custody of the Federal Bureau of Prisons upon designation of federal facility.  All federal sentences are served without the possibility of parole.

The case was investigated by the North Carolina Secretary of State, Securities Division with assistance from the FBI, Charlotte Division, and IRS-CI.  Acting U.S. Attorney Rose also thanked the Commodities Futures Trading Commission for their assistance in this case.

The prosecution is being handled by Special Assistant United States Attorney Kevin M. Harrington and Assistant U.S. Attorney Kurt W. Meyers of the Western District of North Carolina.

Mr. Harrington is an Enforcement Attorney with the North Carolina Department of Secretary of State, Securities Division, and was appointed to serve as a Special Assistant United States Attorney (SAUSA) with the U.S. Attorney’s Office in Charlotte in September 2011.   The SAUSA position is reflection of the partnership between the North Carolina Securities Division and the United States Attorney that helps ensure the effective and vigorous prosecution of white collar criminals, particularly in the area of securities fraud.

The charges were brought in connection with the President’s Financial Fraud Enforcement Task Force.  The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud.  Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations.  Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants. For more information on the task force, please visit www.StopFraud.gov.

CHARLOTTE, N.C. B Today, Chief Judge Frank D. Whitney sentenced Davion Junior Gales, age 29, of West Jefferson, North Carolina, to 15 years in prison, followed by five years of supervised release, for conspiracy to distribute and to possess with intent to distribute cocaine and crack cocaine, money laundering conspiracy, and possession of a firearm in furtherance of drug trafficking, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina.

Acting U.S. Attorney Rose is joined in making today’s announcement by Nick Annan, Special Agent in Charge of ICE/Homeland Security Investigations (HSI) in Georgia and the Carolinas; Dewey “Craig” Chillcott, Acting Special Agent in Charge of the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), Charlotte Field Division; and Chief Kerr Putney of the Charlotte-Mecklenburg Police Department (CMPD).

According to filed documents and statements made in court, beginning some time in or about 2013 to December 2013, Gales was part of a drug conspiracy that trafficked cocaine and crack cocaine in Mecklenburg County and elsewhere.  Court records show that Gales was involved in numerous drug transactions involving multiple kilograms of cocaine.  For example, according to court records, on December 2, 2013, Gales paid $75,020 in cash as part of a purchase of approximately $500,000 worth of cocaine.  Two days later, on December 4, 2013, Gales provided another $85,000 in cash toward the cocaine purchase, and another $50,005 the following day.  Court records show that during one of the drug transactions, Gales possessed a firearm.  Court records also show that Gales used drug proceeds to buy expensive vehicles, among other things.

On December 9, 2013, Gales was arrested and law enforcement seized more than two kilograms of cocaine, a firearm, and approximately $118,000 in cash.  According to court records, Gales was trafficking some of his cocaine as crack cocaine.

This prosecution is part of an extensive investigation by the Organized Crime Drug Enforcement Task Force (OCDETF) that has resulted in the conviction of more than 35 defendants on cocaine and crack cocaine trafficking, money laundering, and firearms charges.  OCDETF is a joint federal, state and local cooperative approach to combat drug trafficking and is the nation’s primary tool for disrupting and dismantling major drug trafficking organizations, targeting national and regional drug trafficking organizations and coordinating the necessary law enforcement entities and resources to disrupt or dismantle the targeted criminal organization and seize their assets.

Gales was initially charged by complaint on December 4, 2013, indicted by a federal grand jury on December 19, 2013.  He has been in federal custody since his arrest on December 9, 2013.

Acting U.S. Attorney Rose commended HSI, ATF, and CMPD for the investigation leading to the successful prosecution of Gales. Assistant U.S. Attorney Steven R. Kaufman is handling the continuing prosecution of this OCDETF operation.

ASHEVILLE, N.C. – Anthony Lamont Hill, 31, of Fletcher, N.C., was sentenced today to 121 months in prison for his role in the 2013 armed robbery of a Dollar General store in Woodfin, N.C., announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina.  Senior U.S. District Judge Graham Mullen also sentenced Hill to three years of supervised release and ordered him to pay $4,750 as restitution.

Acting U.S. Attorney Rose is joined in making today’s announcement by Dewey “Craig” Chillcott, Acting Special Agent in Charge of the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), Charlotte Field Division, and Chief Brett Holloman of the Woodfin Police Department.

According to filed court documents and today’s sentencing hearing, in August 2013, Hill robbed at gunpoint a Dollar General store located in Woodfin.  Court records show that Hill and his accomplice entered the store right before closing time.  According to court records, Hill and his conspirator ordered two store employees to remove most of their clothing and proceeded to tie them up.  Hill and his accomplice attempted to destroy the store’s security system, before fleeing with approximately $2,500 in cash they had taken from the store’s register, court records show.   Hill pleaded guilty in December 2014 to one count of Hobbs Act robbery and one count of possessing and brandishing a firearm during and in relation to a crime of violence.

Hill remains in federal custody and will be transferred to the custody of the Federal Bureau of Prisons upon designation of a federal facility.  All federal sentences are served without the possibility of parole.

The investigation was handled by ATF and the Woodfin Police Department.  The prosecution for the government was handled by Assistant U.S. Attorney John D. Pritchard of the U.S. Attorney’s Office in Asheville.

CHARLOTTE, N.C. – Claude Darrell McDougal, 56, formerly of Charlotte, was sentenced today to 78 months in prison for orchestrating a Ponzi scheme that defrauded his investor victims of over $2.5 million, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina.  U.S. District Judge Max O. Cogburn, Jr. also ordered McDougal to serve two years under court supervision after he is released from prison and to pay $2,020,078.26 as restitution to the victims of his fraud.

North Carolina Secretary of State Elaine F. Marshall and John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division join Acting U.S. Attorney Rose in making today’s announcement.

According to court documents and today’s sentencing hearing, from 2006 to 2010 McDougal induced over 25 investors in Charlotte and elsewhere to invest more than $2.5 million, by promising his victims their money would be invested in securities, in the form of promissory notes offered by “US Financial Alliance Consultants, LLC” (Financial Alliance).  McDougal created Charlotte-based Financial Alliance in 2005, a company that was never registered as a dealer of securities in North Carolina or elsewhere, according to court records.  Also, according to court records, McDougal was not registered to sell securities in North Carolina or in any other state, following termination from his previous employer in August 2009.  Court documents show that McDougal induced his victims to invest with Financial Alliance by falsely “guaranteeing” fixed rates of return between 6% and 15% annually.

McDougal collected over $2.5 million dollars from victim-investors, many of whom were elderly and invested most, if not all, of their life-savings with him.  Instead of investing the victims’ money as promised, McDougal squandered it.  According to court records, over the course of the three-year scheme, McDougal invested only $580,000 of the victims’ money and used approximately $450,000 to pay some victims supposed “payouts” from profits made on investments.  However, these payments were not based on profits, but came from funds contributed by new investors, commonly referred to as “Ponzi” payments. Court records show that McDougal used approximately $1.19 million of the investors’ funds to support his own lifestyle, including to buy dinners, jewelry and electronics, and to pay for hotel stays, furniture and other business-related expenses.  McDougal pleaded guilty to securities fraud in July 2014.

Following the sentencing hearing McDougal was released on bond.  He will be ordered to report to the Federal Bureau of Prisons upon designation of a federal facility.  All federal sentences are served without the possibility of parole.

The case was investigated by the North Carolina Secretary of State, Securities Division, with assistance from the FBI’s Charlotte Division.

Special Assistant U.S. Attorney Kevin M. Harrington prosecuted the case.  Mr. Harrington is an Enforcement Attorney with the North Carolina Department of Secretary of State, Securities Division, and was appointed to serve as a Special Assistant United States Attorney (SAUSA) with the U.S. Attorney’s Office in Charlotte in September 2011.   The SAUSA position reflects the partnership between the North Carolina Securities Division and the United States Attorney that helps ensure the effective and vigorous prosecution of white collar criminals, particularly in the area of securities fraud.

The charges were brought in connection with the President’s Financial Fraud Enforcement Task Force.  The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud.  Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations.  Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants. For more information on the task force, please visit www.StopFraud.gov.”

CHARLOTTE, N.C. – U.S. District Judge Max O. Cogburn, Jr. sentenced Darren Mark Webb, 41, of Monroe, N.C. to six years in prison on child pornography charges, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina.  Webb was also ordered to serve a lifetime of supervised release, to register as a sex offender, and to pay $2,500 as restitution to his victims.

John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division joins Acting U.S. Attorney Rose in making today’s announcement.

According to court documents and the sentencing hearing, in or about July 2013, FBI agents conducting an undercover investigation discovered that Webb was downloading child pornography from the Internet.  Upon executing a search warrant at Webb’s residence, law enforcement discovered that Webb possessed over 550 images and videos of child pornography, including images and videos of prepubescent children.

Webb pleaded guilty to one count of receiving child pornography in January 2015.  He will be ordered to report to the Federal Bureau of Prisons upon designation of a federal facility.  All federal sentences are served without the possibility of parole.

FBI handled the investigation.  Assistant U.S. Attorney Cortney S. Randall, of the U.S. Attorney’s Office in Charlotte prosecuted the case.

The 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. Attorneys’ offices and the Criminal Division’s Child Exploitation and Obscenity Section (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.projectsafechildhood.gov.

CHARLOTTE, N.C. – U.S. District Judge Max O. Cogburn, Jr. sentenced today James William Lewis, Jr., 32, of Kings Mountain, N.C. to 108 months in prison for the armed robbery of a Charlotte-area fast food restaurant, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina.  Judge Cogburn also ordered Lewis to serve five years of supervised release and to pay $841 as restitution.

Acting U.S. Attorney Jill Westmoreland Rose is joined in making today’s announcement by John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division, and Chief Kerr Putney, of the Charlotte-Mecklenburg Police Department.

According to filed court documents and today’s sentencing hearing, on December 12, 2013, Lewis robbed a Jack-in-the-Box restaurant, located at 7725 Pineville Matthews Road, in Charlotte.Court documents show that Lewis entered the restaurant and demanded that the manager give him money and threatened to shoot.According to court records, Lewis, who is a former employee of the Jack in the Box restaurant, took the manager back into the office and made him open the safe.Court records indicate that while the manager was opening the safe, Lewis removed a hand gun from under his jacket and proceeded to display and point the hand gun.Lewis then took the cash from the manager and fled the scene, court records show.

In May 2014, Lewis pleaded guilty to one count of Hobbes Act Robbery and one count of use and carry of a firearm in furtherance of a crime of violence, and the possession and brandishing of the firearm

Lewis, who is currently in federal custody, will be transferred to the custody of the Federal Bureau of Prisons upon designation of a federal facility.All federal sentences are served without the possibility of parole.

The investigation was handled by the FBI and CMPD.  Assistant U.S. Attorney Robert Gleason, of the U.S. Attorney’s Office in Charlotte, prosecuted the case. 

CHARLOTTE, N.C. – Today, U.S. District Judge Max O. Cogburn, Jr. sentenced Tony Lee Drum, 32, of Charlotte, to 188 months in prison for two counts of sex trafficking of minors and two counts of transporting minors across states lines for purposes of prostitution, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina.  Judge Cogburn also sentenced Drum to a lifetime of supervised release upon completion of his prison term.

Ryan L. Spradlin, Special Agent in Charge of ICE/Homeland Security Investigations (HSI) in Georgia and the Carolinas and Chief Kerr Putney, of the Charlotte-Mecklenburg Police Department (CMPD) join Acting U.S. Attorney Rose in making today’s announcement.

According to filed court documents and statements made in court, between August 2013 and October 2013, Drum knowingly recruited, enticed, and harbored two minor females, identified in court documents as “D.W.” and “A.C.,” for the purpose of engaging in commercial sex acts.  Court records show that Drum met D.W. on a telephone chat service and A.C. on social media, and he knew both girls were minors.  On two occasions, court records indicate that Drum drove across state lines to pick up the minors and transport them to Charlotte to engage in prostitution.  According to court documents, an alert CMPD officer encountered D.W. while patrolling an area in Charlotte in September, 2013, and later identified her as a missing teen.  Law enforcement found A.C. sleeping in Drum’s car in October, 2013, while serving an arrest warrant on Drum for trafficking D.W.

“Drum preyed upon young, vulnerable victims, and with the promise of food, shelter and security, he lured them to Charlotte with the intention of exploiting them for his financial benefit.  Fortunately, a well-trained law enforcement officer observed one of the victims and the immediate circumstance and as a result, two young women were rescued from a life on the streets.  My office is committed to prosecuting sex trafficking cases and continuing to work with our law enforcement partners to identify those who engage in this illegal, dehumanizing business,” said Acting U.S. Attorney Rose.

“Unfortunately, child predators have become increasingly adept at using social media and other modern communication tools to identify and manipulate their victims,” said Special Agent in Charge Ryan L. Spradlin, ICE Homeland Security Investigations Atlanta. “Whenever HSI and our law enforcement partners encounter children for sale, we won’t rest until we’ve identified and arrested the predators seeking to pimp them out and have rescued their victims from a life of exploitation and abuse.”

Drum will remain in federal custody until he is transferred to the custody of the Federal Bureau of Prisons upon designation of a federal facility.  All federal sentences are served without the possibility of parole.

The investigation of the case was handled by the HSI and CMPD.  Assistant U.S. Attorney Kimlani Ford, of the U.S. Attorney’s office in Charlotte, prosecuted the case.

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. Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section (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.projectsafechildhood.gov.

CHARLOTTE, N.C. – U.S. District Judge Max O. Cogburn, Jr. sentenced today James McConnell, 48, of Gastonia, N.C. to 138 months in prison, followed by three years of supervised release on charges stemming from an April 2012 bank robbery, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina.

Acting U.S. Attorney Rose is joined in making today’s announcement by John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division, Chief Kerr Putney of the Charlotte Mecklenburg Police Department, and the Chief Robert C. Helton of the Gastonia Police Department.

According to court documents and today’s sentencing hearing, on April 11, 2012, McConnell robbed a BB&T branch located at 9200 S. Tryon Street, stealing $505 in cash.  Court records show that McConnell walked into the branch and told the bank teller he had a gun and demanded $2,500 in large bills.  Court records indicate that the teller told McConnell she did not have $2,500 and instead handed him $505 in small bills.  McConnell then fled with the money in his hand.  According to documents filed in the case, McConnell was arrested on June 16, 2012 on unrelated charges and was identified by a witness as the man captured on the bank’s cameras.

McConnell pleaded guilty in July 2014 to one count of bank robbery.  According to court documents and statements made in court, McConnell has two prior federal bank robbery convictions.

McConnell remains in federal custody and will be turned to the custody of the Federal Bureau of Prisons upon designation of a federal facility.  All federal sentences are served without the possibility of parole.

The investigation was handled by the FBI’s and the Charlotte Mecklenburg Police Department with assistance from the Gastonia Police Department.  The prosecution for the government was handled by Assistant U.S. Attorney Corey Ellis of the U.S. Attorney’s Office in Charlotte.

CHARLOTTE, N.C. – A Gaston County woman appeared before U.S. Magistrate Judge David S. Cayer today and pleaded guilty to stealing more than $500,000 from her employer, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina.  Jennifer Ann Champagne, 39, of Gastonia, N.C. pleaded guilty making and possessing forged and counterfeit securities, wire fraud and access device fraud.

Acting U.S. Attorney Rose is joined in making today’s announcement by Felica R. Rude, Acting Special Agent in Charge of the U.S. Secret Service in Charlotte.

According to charging documents and today’s court proceedings, from 2006 to 2013, Champagne was employed by a Charlotte-based company specializing in the construction and repair of tennis courts and running tracks.  Champagne was the company’s office manager and bookkeeper, and had access to the company’s safe, computer accounting programs, online bank accounts, security passwords and other confidential information.  According to court records, Champagne did not have access to and was not authorized to sign company checks, or use the company’s bank accounts or credit card accounts outside of the normal course of business.

Court records show that Champagne exploited her position as office manager and embezzled money from her employer by signing the company’s President’s name on forged checks and then altered the company’s books and records to hide the theft.  For example, according to court records, Champagne embezzled more than $260,000 by forging 100 company checks in her name and her husband’s landscaping business.  Champagne also used the company’s credit card to make more than 400 unauthorized charges totaling over $40,000.  Court records indicate that Champagne also made authorized bank transfers from the company’s bank accounts to her bank accounts, and issued a company credit in her name, which she used to make 170 unauthorized charges.  Overall, court records show that Champagne’s scheme caused the company a loss of over $540,000.

Champagne was released on bond after her plea hearing.  The making and possessing forged and counterfeit securities charge carries a maximum prison term of 10 years and a $250,000 fine.  The wire fraud charge carries a maximum prison term of 20 years and a $250,000 fine.  The access device fraud charge carries a maximum prison term of 15 years and a $250 fine.  As part of her plea agreement, Champagne has agreed to pay restitution, the amount of which will be determined by the Court at sentencing.   A sentencing date for the defendant has not been set yet.

The investigation was handled by the U.S. Secret Service.  The prosecution for the government is being handled by Assistant U.S. Attorney Kenneth Smith of the U.S. Attorney’s Office in Charlotte.

STATESVILLE, N.C. B On Wednesday, July 8, 2015, a federal jury in sitting in Statesville, convicted Roger Dale Franklin, 54, of Lenoir, N.C., of nine charges, including conspiracy to distribute and to possess with intent to distribute methamphetamine, possession of methamphetamine with intent to distribute, possession of firearms in furtherance of drug trafficking, and possession of firearms by a convicted felon, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina.

Acting U.S. Attorney Rose is joined in making today’s announcement by Ryan L. Spradlin, Acting Special Agent in Charge of ICE/Homeland Security Investigations (HSI) in Georgia and the Carolinas, Caldwell County Sheriff Alan C. Jones, and Lenoir Police Chief Scott Brown.

Evidence presented at the two-day trial that ended yesterday established that, from 2007 to 2014, Franklin and his co-conspirators sold more than five kilograms of methamphetamine, which has a street value of more than $150,000.  In 2013, law enforcement officials in Lenoir and Caldwell County, as well as Morganton, stopped Franklin in vehicles on four occasions and seized methamphetamine from him, his vehicles, and his co-conspirators.  On two of those occasions, he was in possession of handguns.

This prosecution in Operation “Dixie Crystal” is part of an extensive investigation by the Organized Crime Drug Enforcement Task Force (OCDETF) that has resulted in the conviction of more than 50 defendants on methamphetamine trafficking and firearms charges.  OCDETF is a joint federal, state and local cooperative approach to combat drug trafficking and is the nation’s primary tool for disrupting and dismantling major drug trafficking organizations, targeting national and regional drug trafficking organizations and coordinating the necessary law enforcement entities and resources to disrupt or dismantle the targeted criminal organization and seize their assets.

Franklin was indicted by a federal grand jury on December 16, 2014, which indictment was superseded on April 22, 2015.  He has been in federal since February 2, 2015, and was in state custody prior to that.  Franklin will remain in custody until his sentencing date, which has not yet been set.  He faces a statutory mandatory minimum sentence of 15 years to life, and a fine of up to $10,000,000.

The case was investigated by HSI in Charlotte, the Caldwell County Sheriff’s Office, Lenoir Police Department, and Morganton Department of Public Safety.The prosecution of this OCDETF investigation is being handled by Assistant U.S. Attorney Steven R. Kaufman.

CHARLOTTE, N.C. – Michael A. Marshall, 38, of Charlotte, was sentenced today to serve 96 months in prison and to pay $425,442 as restitution for committing bank fraud and related charges, in connection with an automobile loan scheme involving luxury vehicles, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina.  Chief U.S. District Judge Frank D. Whitney ordered Marshall to serve the 96-month sentence consecutive to the sentence Marshall previously received for a probation violation from his prior federal felony.

Acting U.S. Attorney Rose is joined in making today’s announcement by Ryan L. Spradlin, Special Agent in Charge of ICE/Homeland Security Investigations (HSI) in Georgia and the Carolinas.

According to filed court documents and court proceedings, from August 2012 to February 2013, Marshall and his co-defendant, Frederick D. Neal, engaged in a fraudulent loan scheme involving luxury vehicles the men purchased in Neal’s name.  Court records show that Marshall generally provided the down-payment money for the purchase of the vehicles, and arranged to finance the rest via automobile loans in Neal’s name.  Court records indicate that the conspirators obtained the loans by making false statements on the loan applications to the automobile lenders, including falsely claiming that Neal earned over $8,000 per month.

According to court records, the two men fraudulently obtained at least seven luxury vehicles, including a 2009 Maserati Grand Turismo, a 2006 Bentley, a 2011 Porsche Panamera and a 2009 Mercedes Benz SL550, among others.  Marshall and Neil “leased” some of the vehicles to others through “Luxotic Rentals, Inc.” (Luxotic), a company controlled by Marshall.  Eventually, the vehicles were fraudulently sold to third parties, after “wiping” their titles shortly after obtaining them, according to court records.  To get the clean titles, Marshall created fake letters from the automobile lenders purporting to be lien releases for the vehicles, falsely stating that the liens were paid off.  Marshall then filed the false lien releases with the North Carolina Division of Motor Vehicles to request and obtain new titles.  According to court records, using the new, clean titles, Marshall sold the vehicles to third parties, as if the luxury vehicles were owned free and clear of any liens.  According to court records, the scheme caused the lenders a loss of approximately $425,442.

In May 2014, a federal jury found Marshall guilty of conspiracy to commit offenses against the United States, including making false statements to financial institutions, bank fraud and money laundering conspiracy.  Neal was sentenced in February 2015 to 18 months in prison, three years of supervised release and was ordered to pay $425,442 as restitution, after pleading guilty to conspiracy to commit offenses against the United States.

The investigation was handled by HSI with the assistance of the North Carolina Division of Motor Vehicles.  Assistant U.S. Attorney Kevin Zolot prosecuted the case.

* * *

In a related case, on Wednesday, July 8, 2015, Judge Whitney sentenced Seth Kamose Ali, 42, of Charlotte, to 18 months in prison for assaulting an officer.  Court records indicate that while investigating Marshall’s case, law enforcement determined that Ali had notarized at least four of the fraudulent lien release documents used by Marshall to obtain the clean car titles.  According to court records, when a federal agent attempted to serve Ali with a trial subpoena in connection with Marshall’s case, Ali slammed his car door on the agent’s hand and attempted to flee by driving his vehicle at high speed toward the agent.  A federal jury convicted Ali of assaulting an officer, including acts involving physical contact and inflicting bodily injury.    

This investigation was handled by HSI.  Assistant U.S. Attorney Kelli Ferry of the U.S. Attorney’s Office in Charlotte handled the prosecution.

CHARLOTTE, N.C. – The owner of Charlotte-area metal and salvage business pleaded guilty to tax evasion today, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina.  Sammie Marks a/k/a Sammy Marks, 41, of Matthews, N.C., appeared before U.S. Magistrate Judge David Keesler and admitted to concealing from the Internal Revenue Service (IRS) personal earnings derived from his businesses, “Marks Metal & Salvage.”

According to the filed court documents and today’s plea hearing, between tax years 2009 and 2013, Marks deposited checks and cash receipts from his businesses and its customers totaling over $1.1 million into his personal bank account, which he did not include in income reported to IRS.  Court records show that, during the relevant time period, Marks failed to disclose or provide records of his bank account and other information about his income to his tax return preparer.  Furthermore, court records indicate Marks failed to report the additional income on his individual tax returns filed with the IRS.  As a result of the unreported gross receipts, Marks had additional taxable income of $158,614.

Marks pleaded guilty to one count of tax evasion.  The charge carries a maximum penalty of five years in prison and a $250,000 fine.  As part of today’s plea agreement, Marks has agreed to pay restitution, the amount of which will be determined by the Court at Marks’ sentencing hearing, which has not been scheduled yet.  Marks was released on bond following today’s court appearance.

* * *

In a separate case, on Tuesday, June 30, 2015, Jeremy Curtis Anderson, 34, of Charlotte, pleaded guilty to two counts of making a false statement on a loan application.  Anderson, who was formerly employed by Wells Fargo Bank as a loan documentation specialist and a consumer loan underwriter, appeared before Judge Keesler and admitted that between 2009 and 2012, he used false information, such as a false security number, false address and false employment information, on loan applications to obtained a car loan and a personal loan from a federally-insured credit union.

Anderson was released on bond following the plea hearing.  The maximum penalty for the false statement on a loan application is 30 years in prison and a $1,000,000 fine per count.  A sentencing hearing for Anderson has not been set yet.

Acting U.S. Attorney Rose thanked the Internal Revenue Service, Criminal Investigation Division (IRS-CI) under the direction of Special Agent in Charge Thomas J. Holloman, III, Special Agent in Charge, for the investigation of both cases.  Ms. Rose also thanked Martin Mulholland, Acting Special Agent in Charge of the U.S. Secret Service in Charlotte, for his agency’s assistance with Anderson’s investigation.

Assistant United States Attorney Jenny G. Sugar of the U.S. Attorney’s Office in Charlotte is in charge of the prosecution of both cases.      

ASHEVILLE, N.C. – U.S. District Judge Martin Reidinger sentenced Keith Vinson to 18 years in prison for his role in a scheme involving the failed land development deal of Seven Falls, a golf course and luxury residential community in Henderson County, N.C., announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina.  Vinson, age 57, of Arden, North Carolina, was also ordered to serve three years of supervised release and to pay restitution in the amount of $18,384,584.53.  A federal jury convicted Vinson in October 2013 of conspiracy, bank fraud, wire fraud, and money laundering conspiracy.

Acting U.S. Attorney Rose is joined in making today’s announcement by John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division, Thomas J. Holloman III, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (IRS-CI); and Jason T. Moran, Special Agent in Charge of the Federal Deposit Insurance Corporation (FDIC), Inspector General’s Office of Investigation, Atlanta office.

“Keith Vinson was the central figure among a group of rogue bankers, CPA’s, appraisers, investors and others who together not only violated federal laws, but violated the trust of legitimate investors and potential home owners.  The U.S. Attorney’s Office engaged our full resources to investigate and successfully prosecute this greedy group, but the greater message is to those who seek to engage in similar fraudulent activities:  we are not finished.   Western North Carolina is enticing to investors and developers because of the beauty of the landscape and continued growth; however, those who seek to conduct business in this area should prepare to do so fairly, legally and transparently because we are paying close attention to business transactions by investors, developers and would-be gate keepers” stated Acting United States Attorney Jill Westmoreland Rose.

According to filed court documents, evidence presented at Vinson’s trial and today’s sentencing hearing:

Beginning in 2008, Vinson and his co-defendants conspired and obtained money from several banks through a series of straw borrower transactions in order to funnel monies to Vinson and his failing development of Seven Falls, a proposed golf course and luxury residential community in Henderson County, N.C. A straw borrower is an individual whose name appears on a loan and on the books and records of a bank as the beneficiary of a loan, but whose name is substituted for that of the true borrower and does not in fact receive the benefits of the loan.  Lending institutions cannot properly assess the risk of making such loans as they do not know the true circumstances of the loans or the creditworthiness of the true borrowers.  Vinson and his conspirators devised this scheme in order to funnel monies to Vinson and his failing development of Seven Falls.

In order to advance this scheme Vinson and his co-conspirators, including Avery Ted “Buck” Cashion, III, Raymond M. “Ray” Chapman, and others, recruited local bank officials including George Gordon “Buddy” Greenwood and Ted Durham, who at the time were, respectively, President of the Bank of Asheville and the President of Pisgah Community Bank.  When bank officials realized that they had reached their legal lending limits with respect to some of the straw borrowers, additional straw borrowers were recruited to the scheme and more straw borrower loans were made to them.  Additional straw borrower loans were also necessary to keep loans current, a scheme known as “loan kiting.” The loan kiting scheme became necessary when conspirators were unable to make payments on loans made early in the scheme.  Seven Falls and another luxury residential golf development by Vinson named “Queens Gap” failed, resulting in millions in property losses.  In addition, both the Bank of Asheville and Pisgah Community Bank failed and were taken over by the FDIC.

Many of Vinson’s co-conspirators were sentenced on June 2, 2015.  Avery Ted “Buck” Cashion, III, 61, of Lake Luke, N.C., was sentenced to 36 months in prison; Raymond M. “Ray” Chapman, 68, of Brevard, N.C., was sentenced to 36 months in prison; Thomas E. “Ted” Durham, Jr., former President of the failed Pisgah Community Bank, 60, of Fletcher, N.C., was sentenced to 30 months in prison; and Aaron Ollis, 68, a former licensed Real Estate Appraiser, of Arden, N.C., was sentenced to two years of probation, including 12 months and 1 day home detention.  Cashion, Chapman, Durham and Ollis each pleaded guilty to conspiracy to defraud the United States.  The defendants were also ordered to pay restitution as follows

Avery Ted “Buck” Cashion, III,         $14,266,256.47

Raymond M. “Ray” Chapman,          $14,266,256.47

Thomas E. “Ted” Durham,                 $  6,237,453.37

Aaron Ollis,                                        $10,199,106.87

George M. Gabler, age 60, of Fletcher, N.C., was convicted of one count of willfully failing to report misconduct associated with two Seven Falls lot loans in March 2010.  In court documents, Gabler admitted that he withheld documents from a federal grand jury knowing that they were related to fraudulent loans taken out on behalf of conspirator Keith Vinson.  For this offense, Gabler, a former Certified Public Accountant, was sentenced to two years of probation, including 500 hours of community service and a $5,000 fine.

Previously, Buddy Greenwood was sentenced to 42 months in prison; Nicholas Dimitris was sentenced to 12 months plus one day in prison; the former Pisgah Community Bank Chief Credit Officer, Robert Craig Gourlay was sentenced to 15 months in prison; David G. Smith, who worked as a loan officer for Pisgah Community Bank was sentenced to nine months in prison, and Andrew Hager was sentenced to eight months in prison in connection with the Seven Falls scheme.

Vinson is currently in federal custody and will be transferred to the custody of the Federal Bureau of Prisons upon designation of a federal facility.  All federal sentences are served without the possibility of parole.

The investigation was being jointly handled by the FBI, IRS-CI, and FDIC-OIG.  Assistant U.S. Attorneys Don Gast and Michael Savage are in charge of the prosecution.

CHARLOTTE, N.C. – A criminal bill of information was filed today in federal court charging Mary S. Sherrill, 52, of Hickory, N.C. with theft of a program receiving federal funds, for using her employer’s funds to purchase approximately $179,000 worth of items and selling them over the Internet, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina.

Robert W. Rolin, Jr. Acting Special Agent in Charge of the United States Secret Service, Charlotte Field Office joins Acting U.S. Attorney Rose in making today’s announcement.

According to filed court documents, from about October 2010 to December 2014, Sherrill was employed by Catawba Valley Community College in Hickory as purchasing coordinator.  Court records show that as the college’s purchasing coordinator, Sherrill was authorized to place orders for equipment and other goods on behalf of the college and to pay using the college’s funds.  Filed court documents show that Sherrill fraudulently and without authority used the college’s funds to purchase computer hard drives, printer cartridges, and other small computer-related items.  According to court records, Sherrill then sold the items via the Internet using her personal eBay seller account and kept the profits.  Court records show that Sherrill purchased approximately $179,000 worth of items using the college’s monies.

A signed plea agreement was also filed in federal court today, and Sherrill is expected to enter her guilty plea before a U.S. Magistrate judge when the hearing is scheduled by the Court. The charge levied against Sherrill carries a maximum of 10 years in prison and a $250,000 fine.  As part of her plea agreement, Sherrill has agreed to pay restitution, the amount of which will be determined by the Court.

The case was investigated by the U.S. Secret Service.  Assistant U.S. Attorney Corey F. Ellis is in charge of the prosecution.

CHARLOTTE, N.C. – A Burke County, North Carolina, man has been charged with attempting to provide material support to the Islamic State of Iraq and the Levant (ISIL), a designated foreign terrorist organization, announced Assistant Attorney General for National Security John P. Carlin, Acting U.S. Attorney Jill Westmoreland Rose of the Western District of North Carolina and Special Agent in Charge John A. Strong of the FBI’s Charlotte, North Carolina, Division.

The criminal complaint was filed today in federal court, charging Justin Nojan Sullivan, 19, of Morganton, North Carolina, with one count of attempting to provide material support to ISIL, one count of transporting and receiving a silencer in interstate commerce with intent to commit a felony, and one count of receipt and possession of an unregistered silencer, unidentified by a serial number.  Sullivan was arrested in his home on Friday, June 19, 2015, without incident.

“As alleged in the complaint, the defendant was planning assassinations and violent attacks in the United States and is charged with attempting to provide material support to ISIL and federal firearms violations,” said Assistant Attorney General Carlin.  “The National Security Division’s highest priority is counterterrorism and we will continue to pursue justice against those who seek to provide material support to designated foreign terrorist organizations.”

“Sullivan is charged with attempting to provide material support to ISIL, a designated terrorist organization that poses a serious threat to our country’s security,” said Acting U.S. Attorney Rose.  “My highest priority is to detect and prosecute violent extremists and protect innocent Americans from terrorist attacks.”

“Justin Sullivan intended to commit violent acts against innocent people in the U.S. to support the terrorist organization, ISIL,” said Special Agent in Charge Strong.  “As demonstrated in this case federal, state, and local law enforcement will work tirelessly to protect our communities from those who plot to carry out terrorist activities of any kind.”

The criminal complaint alleges that the FBI became aware of Sullivan’s plans to obtain a semi-automatic AR-15 rifle at the Hickory Gun Show in Hickory, North Carolina, on June 20, 2015, which he planned to use to kill a large number of U.S. citizens on behalf of ISIL.  According to the criminal complaint, an FBI undercover employee (UC) made contact with Sullivan beginning on or about June 6, 2015, during which time Sullivan described himself as “a mujahid,” and as a Muslim convert living in the eastern United States.  Sullivan also told the UC that “the war is here,” and gave the UC the opportunity to join what he called the Islamic State of North America, whose “doctrine is Guerilla Warfare in and out,” the complaint alleges.  The criminal complaint further alleges that over the next few days and during various conversations, Sullivan discussed with the UC, among other things, his various terrorist attack concepts and instructed the UC on how to obtain weapons, specifically “an AR-15 .223 with split ammo” at a gun show.

According to the complaint, on or about June 9, 2015, Sullivan discussed with the UC the possibility of making homemade silencers and asked the UC whether he would be able to make one.  When the UC said that he thought he could, Sullivan told the UC “Ill need to have one built by next week.”  The complaint alleges that Sullivan also told the UC “Yeah ill let u mail me…I plan on using it this mont[h],” and that Sullivan planned on doing “minor assassinations before the big attack for training.”  He also told that UC that “we are going to send a video to IS.”  According to the complaint, during a follow-up conversation, Sullivan told the UC again that he would need the suppressor “before the end of next week,” apparently referring to June 19, 2015.

On June 19, 2015, the FBI, with the support of the Hickory, North Carolina, Police Department, the Burke County, North Carolina, Sheriff’s Office and the North Carolina State Highway Patrol, arrested Sullivan at his home and located the silencer at his residence, which Sullivan had received earlier that day.  No one was harmed during the arrest.

Sullivan is currently in federal custody.  Sullivan is expected to make his initial appearance in federal court today. 

The charge of conspiracy to provide material support to a designated foreign organization carries a maximum potential penalty of 20 years in prison and a $250,000 fine.  The charge of transporting and receiving a silencer in interstate commerce with intent to commit a felony carries a maximum potential penalty of 10 years in prison and a fine of $250,000.  The charge of receipt and possession of an unregistered silencer, unidentified by a serial number, carries a maximum potential penalty of 10 years in prison and a fine of $10,000.

The charges contained in the complaint are allegations.  The defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

The case was investigated by the FBI.  In making today’s announcement, Acting U.S. Attorney Rose also thanked the Charlotte Division of the U.S. Postal Inspection Service for their invaluable assistance.  Rose also thanked the North Carolina State Highway Patrol, the Burke County Sheriff’s Office, and the Hickory Police Department and for their help with the investigation.

The case is being prosecuted by Assistant U.S. Attorney and Senior Litigation Counsel Michael E. Savage of the Western District of North Carolina and Trial Attorney Gregory Gonzalez of the National Security Division’s Counterterrorism section.

CHARLOTTE, N.C. – A criminal bill of information was filed today in federal court, charging Kristine Louise Johnson, 60, of Aurora, Colorado, with wire fraud conspiracy for operating a $6.8 million Ponzi scheme that defrauded more than 10,000 investor victims, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina.

Robert W. Rolin, Jr. Acting Special Agent in Charge of the United States Secret Service, Charlotte Field Office joins Acting U.S. Attorney Rose in making today’s announcement.

According to filed court documents, from about April 2014 to February 2015, Johnson and her conspirators ran the investment scheme through a sham internet company, “The Achieve Community” (TAC).  To induce victims to invest their money, the conspirators falsely claimed the investors would receive a bogus 700% return on their investment.  According to court records, the victims’ money was never invested.  Rather, TAC operated as a “Ponzi” scheme, and the conspirators used monies from later victim-investors to pay fraudulent “returns” to earlier ones and to enrich themselves.  Johnson and her conspirators defrauded over 10,000 investors both in the Charlotte-area and worldwide, causing the victims to sustain losses totaling millions of dollars.

Court records show Johnson served as Chief Financial Officer (CFO) and managed TAC’s day-to-day operations, including managing company bank accounts and producing marketing materials.  According to filed documents, Johnson falsely told potential participants that TAC was not a “Pyramid Scheme,” when, in fact, TAC operated solely as a pyramid scheme and initial investors were paid with later investors’ money.  Johnson also falsely told potential investors that the “more products purchased, the more people move through the matrix and get paid.”  According to filed documents, there were no actual products and early victim-investors only received Ponzi-like payments, regardless of the purchase of any products.  Johnson and her conspirators also falsely promoted TAC as a “lifetime income plan” with “limitless” returns when, in reality, the Ponzi scheme could only operate with ever increasing infusions of new victim-investor cash.

As described in court documents, Johnson and her conspirators falsely represented that TAC was able to sustain and continue making payouts through the use of what they called a “Triple Algorithm” and a “3D Matrix,” which were so complex that they could not be explained in writing.  In reality, no such business model existed and the only revenue for the scheme came from victim-investors.  According to court records, in order to sustain the scheme, Johnson and her conspirators encouraged investors to “re-purchase” positions in the matrix, thereby reducing the amount of money needed to pay out to early investors and enabling the fraudsters to prolong the scheme.  Court records indicate that Johnson used over $200,000 of the victims’ money for her own enrichment.

According to court filings, as the scheme grew in size and scope, Johnson and her conspirators concealed the true nature of the scheme through multiple misrepresentations.  According to court records, when the conspirators became concerned that the use of the term “investment” would draw scrutiny from regulators, they instructed victim-investors that “We ARE NOT an INVESTMENT program, please don’t use that term when you speak or post about our re-purchase strategy.”

According to court records, Johnson and her conspirators also lied about the company’s “business model” to the third-party payment processors which processed TAC’s money transactions.   When one payment processor concluded that TAC was operating a Ponzi scheme and terminated TAC as a client, court records show that Johnson and her conspirators falsely told victim investors that it was because the payment processor was unable to handle the large amount of money TAC paid to its investors.

As indicated in court documents, the investment scheme began to crumble when payment processors stopped processing the Ponzi payments to victim-investors.  By the time the scheme collapsed in February 2015, the conspirators owed victim-investors at least $51 million in purported investment returns, yet Johnson, her conspirators and TAC had available only 4% or approximately $2.6 million.

A signed plea agreement was also filed today, and Johnson is expected to appear before a U.S. Magistrate judge in the coming days to formally accept the plea.  The wire fraud charge carries a maximum of 20 years in prison and a $250,000 fine.  As part of her plea agreement, Johnson has agreed to pay restitution, the amount of which will be determined by the Court.

The case was investigated by the U.S. Secret Service.  In making today’s announcement, Acting U.S. Attorney Rose also thanked the Denver Regional Office of the Securities and Exchange Commission for its assistance with the investigation.

Assistant U.S. Attorney Corey F. Ellis is in charge of the prosecution.

CHARLOTTE, N.C. – A Charlotte-area tax return preparer pleaded guilty today to aiding or assisting in the filing of a false claim for tax refund, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina.  Fitzroy E. Lawrence, 48, of Charlotte, appeared before U.S. Magistrate Judge David S. Cayer and admitted to aiding and assisting in the filing of hundreds of false tax returns that were filed with the IRS seeking fraudulent tax refunds totaling approximately $2.6 million.

According to the filed court documents and today’s plea hearing, for tax years 2008 through 2011, Lawrence aided and assisted in the preparation of hundreds of false tax returns, many of which included false wages and false dependent information.  In pleading guilty, Lawrence also admitted that the tax loss associated with the offense is $2,635,641.

Lawrence pleaded guilty to one count of aiding or assisting in filing a false claim against the United States.  The maximum penalty for this charge is five years in prison and a $250,000 fine.  As part of today’s plea agreement, Lawrence has agreed to pay restitution, the amount of which will be determined by the Court at his sentencing hearing, which has not been scheduled yet.  Lawrence was released on bond following his plea hearing.

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In a separate case, another Charlotte-area tax return preparer pleaded guilty for his role in filing false tax returns for clients.  Malik Shropshire, 43, of Charlotte, appeared before Judge Cayer today and admitted to conspiring to file false tax returns and lying on a loan application.  Shropshire’s conspirator, his sister Nkhenge Shropshire, was sentenced to 33 months in prison for her participation in the scheme in October 2014 in a related case.

According to the filed court documents and today’s plea hearing, beginning in 2010 and continuing through 2012, Shropshire worked as a tax preparer and a financial advisor.  Shropshire and his conspirators recruited individuals to have their tax returns prepared by promising large refunds.  For tax years 2008 through 2011, Shropshire aided and assisted in the preparation of hundreds of false tax returns that were filed with the IRS.  Most of these tax returns were false because, among other things, they included false Schedule C businesses, false dependents, and false refundable education credits.  As a result of the inclusion of the false information on the tax returns, the taxpayers’ tax liabilities decreased, the taxpayers received larger tax refunds, and the taxpayers qualified for the Earned Income Tax Credit.

Shropshire pleaded guilty to one count of conspiracy to impede the IRS and one count of making a false statement on a loan application.  The maximum penalty for the conspiracy charge is five years in prison and a $250,000 fine.  The maximum penalty for the false statement on a loan application is 30 years in prison and a $1,000,000 fine.  Shropshire was released on bond following his plea hearing.

Acting U.S. Attorney Rose thanked the Internal Revenue Service, Criminal Investigation Division (IRS-CI) under the direction of Special Agent in Charge Thomas J. Holloman, III, Special Agent in Charge, for the investigation of both cases.  Ms. Rose also thanked Thomas L. Noyes, Inspector in Charge of the Charlotte Division of the U.S. Postal Inspection Service, for his agency’s assistance with Shropshire’s investigation.

Assistant United States Attorney Jenny G. Sugar of the U.S. Attorney’s Office in Charlotte is in charge of the prosecution of both cases.     

CHARLOTTE, N.C. – In May 2015, federal officials from the United States Attorney’s Office for the Western District of North Carolina met with Gaston County District Attorney, Locke Bell regarding when to certify so-called “U visas,” announced Jill Westmoreland Rose, Acting U.S. Attorney Office for the Western District of North Carolina.  The U visa allows a victim of certain qualifying crimes to temporarily remain in the United States to help law enforcement investigate or prosecute the perpetrator. However, a victim is not eligible for a U visa unless the prosecutor or head of the law enforcement agency certifies, among other things, that he or she has been a victim of a qualifying crime and has been, is being, or is likely to be helpful in the investigation or prosecution.  Mr. Bell agreed to make U visa certifications without reference to nationality, as is consistent with applicable federal statutes. Mr. Bell authorized this release.

CHARLOTTE, N.C. – A criminal bill of information was filed today in federal court charging Chris Yung Le, 63, of Charlotte, with tax evasion, for using shell companies to hide his and others’ income, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina.

Thomas J. Holloman III, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (IRS-CI) joins Acting U.S. Attorney Rose in making today’s announcement.

According to filed court documents, Le was the owner and operator of two companies, Columbia General Services Corp. (Columbia General) and Comprehensive Administrative Services Corp. (CAS).   Court documents show that Le maintained separate bank accounts for each company, but had listed for both businesses the same address as his Charlotte residence.  According to documents filed with the court, from about 2007 to about 2013, the two companies primarily served as shell entities for income generated by other businesses, and Le used the companies’ bank accounts to conceal his and other individuals’ personal earnings from the IRS.  Court records reflect a series of bank transactions Le conducted in order to hide personal income.  Also, court records indicate that Le did not report income of at least $469,000 on his personal tax returns for tax year 2013.   The additional tax due on this unreported income is approximately $131,322.

A signed plea agreement was also filed today and Chris Le is expected to appear before a U.S. Magistrate Judge in the coming days to formally accept the plea.  The tax evasion charge carries a maximum penalty of five years in prison and a $100,000 fine.  As part of his plea agreement, Chris Le has agreed to pay restitution, the amount of which will be determined by the Court.

In a related prosecution, Mark Tuan Le, an internal medicine physician and former owner of Northcross Medical Center, previously pleaded guilty to health care fraud conspiracy in connection with a healthcare fraud scheme that billed health insurers for services that were not provided, and for evading over $800,000 in taxes in 2009 and 2010 by funneling money to companies and bank accounts controlled by Mark Le and others.  In parallel civil proceedings, Mark Le has also agreed to pay $6.2 million to the United States to settle related civil fraud allegations.  Mark Le currently awaits sentencing.

The investigation into Chris Le was handled IRS-CI.  The criminal prosecution is handled by Assistant U.S. Attorney Kelli Ferry.

CHARLOTTE, N.C. – The owner and operator of Charlotte-area appliance repair companies pleaded guilty today to wire fraud and filing a false tax return, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina.  John Wesley Clark, 42, of Charlotte, N.C., appeared before U.S. Magistrate Judge David S. Cayer and admitted to submitting false and fraudulent warranty work order claims to an electronics company and to filing a false income tax return.

Thomas J. Holloman, III, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (IRS-CI) and Thomas L. Noyes, Inspector in Charge of the Charlotte Division of the U.S. Postal Inspection Service join Acting U.S. Attorney Rose in making today’s announcement.

According to the filed court documents and today’s plea hearing, beginning in at least 2010 and continuing through 2012, Clark, also known as John Isaacs, Jonathan Fitzgerald, and JA Adams, engaged in a scheme to defraud a major electronics company based in New Jersey by submitting false and fraudulent warranty work order claims, resulting in payments of $576,000 for warranty work that was not performed.  Clark was the owner and operator of various Charlotte area appliance repair companies, including JA Appliance Co; Fitzgerald Appliance Co; BR Appliance; C&A Appliance Co.; D&L Appliance Co.; and J&S Appliance Co.  Court records indicate that Clark, sometimes using an alias, established his companies as authorized service centers for the major electronics company.  He then submitted fraudulent warranty work orders that listed, among other things, false customer information, false addresses, false part numbers, and false repair dates.

For tax years 2010 through 2012, Clark failed to report all of the income he obtained through the fraudulent warranty claims on his federal tax returns.  Additionally, Clark filed fraudulent forms W-2 with his federal tax returns that falsely stated that tax withholding had been paid over to the IRS.

Clark pleaded guilty to one count of wire fraud and one count of filing a false tax return.  The wire fraud charge carries a maximum penalty of 20 years in prison and a $250,000 fine.  The filing a false tax return charge carries a maximum penalty of three years in prison and a $250,000 fine.  As part of today’s plea agreement, Clark has agreed to pay restitution, the amount of which will be determined by the Court at Clark’s sentencing hearing, which has not been scheduled yet.  Clark was released on bond following his plea hearing.

The investigation of the case was handled by IRS-CI and the U.S. Postal Inspection Service.  The case is being prosecuted by Assistant United States Attorney Jenny G. Sugar of the U.S. Attorney’s Office in Charlotte.

CHARLOTTE, N.C. – Six members of a health care fraud ring that targeted Medicaid by submitting approximately $10 million in fraudulent reimbursement claims have been charged with health care fraud conspiracy, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina.

Filed criminal bills of information charge Wanda Marie Webb, 65, and Lachanda Clotier Parks, 40, both of Charlotte; Alexander Bass, 41, and Torrey Darnell Moton, 44, both of Fuquay-Varina, N.C.;  Jacqueline Priscilla Ford, 34, of Fayetteville, N.C; and D’Marcus Antonio White, 25, of Baton Rouge, Louisiana with one count of health care fraud conspiracy.  Webb and Ford pleaded guilty in Court earlier today.  Parks, Moton, Bass and White previously entered their guilty pleas.

Acting U.S. Attorney Rose is joined in making today’s announcement by John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division.

According to filed court documents, admissions reflected in the filed plea agreements and statements made in court, at various times between October 2012 and August 2013, unindicted conspirators #1 (CC#1) and #2 (CC#2) conspired with Webb, Parks, Bass, Moton, Ford and White to defraud Medicaid by filing false claims for payment for mental and behavioral health services to Medicaid recipients which were never actually provided.  According to court records, the network of conspirators executed the fraud through a number of mental and behavioral health services companies, including “United Rehabilitation Services” (URS) in Erwin, N.C., which was owned and operated by Bass and Moton.

Court records show that Bass and Moton agreed to pay CC#1 $4,000 per month in exchange for coordinating the filing of fraudulent claims to Medicaid on behalf of URS.  At the direction of CC#1, Bass and Moton also paid CC#2, who operated as the scheme’s patient-recruiter, to collect Medicaid beneficiary numbers which were then used to file the false claims.  Court records indicate that between January and July 2013, CC#1, Bass and Moton filed over $1.1 million in fraudulent claims, and Medicaid paid out approximately $400,000 directly to Bass and Moton.

According to plea documents and other court filings, the network of conspirators generated fake documents to support the fraudulent claims and in case Medicaid ever audited the providers for the claimed services.  White, Ford and Parks generated fictitious paperwork, which included fake intake sessions, fake clinical assessments and fabricated therapy notes.  At the direction of CC#1, White’s role, among other things, was to organize on spreadsheets the information of the non-existent mental health problems and treatment plans for the Medicaid recipients, to reflect which fake services were allegedly rendered to each recipient, court records show.

Court records also indicate that during the relevant time period, Webb, a licensed and Medicaid-approved psychologist, agreed to allow CC#1 to use her Medicaid provider number to submit the fraudulent reimbursement claims, listing Webb as the attending clinician.  Court records show that Webb kept approximately 68% of the Medicaid reimbursements, and paid 25% to CC#1 and 7% to other individuals responsible for processing the fake claims.  According to court records, just in the month of August 2013, using Webb’s Medicaid provider number, the conspirators submitted approximately $239,175 in false claims, of which $79,338.74 was paid out to Webb directly.

The health care fraud conspiracy charge carries a maximum sentence of 10 years in prison and a $250,000 fine.

The investigation, which is ongoing, is being handled by the FBI with assistance from the North Carolina Medicaid Investigations Division. Assistant U.S. Attorney Kelli Ferry is in charge of the prosecution.

Related Prosecutions

Four other defendants previously admitted to their involvement in the Medicaid fraud scheme.  In late 2014, Aliya Boss, Zaria Davis Humphreys, Kino Williams and Sakeenah Davis each pleaded guilty to one count of health care fraud conspiracy and currently await sentencing.  (Please visit: http://www.justice.gov/usao-wdnc/pr/charlotte-woman-pleads-guilty-conspiracy-defraud-medicaid-more-43-million to view WDNC’s press release related to those prosecutions).

The investigation and charges are the work of the Western District’s joint Health Care Fraud Task Force.  The Task Force is multi-agency team of experienced federal and state investigators, working in conjunction with criminal and civil Assistant United States Attorneys, dedicated to identifying and prosecuting those who defraud the health care system, and reducing the potential for health care fraud in the future. The Task Force focuses on the coordination of cases, information sharing, identification of trends in health care fraud throughout the region, staffing  of  all  whistle  blower  complaints,  and  the  creation  of  investigative  teams  so  that individual agencies may focus their unique areas of expertise on investigations.  The Task Force builds upon existing partnerships between the agencies and its work reflects a heightened effort to reduce fraud and recover taxpayer dollars.

If you suspect Medicare or Medicaid fraud please report it by phone at 1-800-447-8477 (1-800-HHS-TIPS), or E-Mail at HHSTips@oig.hhs.gov.  To report Medicaid fraud in North Carolina, call the North Carolina Medicaid Investigations Division at 919-881-2320.

ASHEVILLE, N.C. – On Thursday, June 4, 2015, U.S. District Judge Martin Reidinger sentenced a Georgia woman to 72 months in prison for conspiring with others to file over 1,000 false tax returns and collecting more than $3.5 million in fraudulent tax refunds, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina.  Yolanda Tiess Kitson, 35, of Hephzibah, Ga. was also sentenced to three years of supervised release and was ordered to pay more than $3.9 million as restitution.

Thomas J. Holloman III, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (IRS-CI); Russell F. Nelson, Special Agent in Charge of the United States Secret Service, Charlotte Field Division; and Thomas L. Noyes, Inspector in Charge of the Charlotte Division of the U.S. Postal Inspection Service join Acting U.S. Attorney Rose in making today’s announcements.

According to court records and court proceedings, Kitson conspired with Senita Dill and Ronald Jeremy Knowles to file fraudulent tax returns using the personal information of more than 1,000 veterans and their family members which Kitson had stolen through her job as a contractor at the Eisenhower Army Medical Center at Fort Gordon in Augusta, Ga.  Kitson obtained the personal information from patient records and passed it to her sister, Dill.  Using that information, Dill and Knowles filed over 1,000 false tax returns and received over $3.5 million of stolen U.S. Treasury funds.  Dill and Knowles were previously sentenced to 324 and 70 months in prison, respectively, for their roles in the conspiracy.  (Please visit: http://www.justice.gov/usao-wdnc/pr/polk-co-couple-sentenced-false-tax-refund-conspiracy to view WDNC’s press release related to those prosecutions).

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Judge Reidinger also sentenced yesterday James Wesley Hills, II, 36, of Houston Texas, to serve 45 months in prison and three years of supervised release for making false claims against the United States and aggravated identity theft.  He was also ordered to pay over $60,000 in restitution.  According to court documents and the sentencing hearing, Hills gained access to personal identifying information of customers of Primerica, a financial products company, and between 2010 and 2011 he used the stolen information to file fraudulent tax returns.  Hills filed at least 38 false tax returns in this manner and collected over $50,000 of stolen U.S. Treasury funds.

IRS-CI and USPIS investigated Kitson’s case.  Hills’ investigation was also handled U.S. Secret Service.

Assistant U.S. Attorney Don Gast of U.S. Attorney’s Office in Asheville prosecuted both cases.

WASHINGTON – Timothy Reid Dunbar, Automated Litigation Support Specialist, of the U.S. Attorney’s Office in the Western District of North Carolina, was one of the members of the Department of Justice recognized by Attorney General Loretta Lynch, Deputy Attorney General Sally Quillian Yates, and Executive Office for U.S. Attorneys (EOUSA) Director Monty Wilkinson at the 31st Director’s Awards Ceremony today in Washington, D.C.

The Western District of North Carolina was one of 31 districts represented at the ceremony which was held in the Great Hall at the Robert F. Kennedy Department of Justice Building.

“Our honorees include career executives and supervisors; Assistant U.S. Attorneys and Special Assistant U.S. Attorneys; appellate attorneys and law enforcement officials; administrators, paralegals, and public affairs officers.  These individuals, and so many others, have faced daunting and sometimes dangerous challenges.  They have dedicated their leadership and their expertise, their time and their energy, to the service of their mission.  And they have remained devoted, at all times, to the high ideals and deeply-held values that animate our country and our cause,” said Attorney General Lynch.

Tim Dunbar’s significant contibutions to the Western District’s Automated Legal Support (ALS) team  have been critical in the prosecution of some of the office’s most complex and high-profile matters, including the historic $16.7 billion Residential Mortgage-Backed Sucurities case against Bank of America, and the public corruption case against former Charlotte Mayor Patrick Cannon.  In addition to managing data, Tim uses his creativity and solution-oriented approach to assist attorneys and agents in efficiently searching and analyzing case-related data.  Moreover, Tim produces highly professional trial graphics, audio files and visual displays, many with hundreds of exhibits.  Tim is also a leading thinker for ALS nationwide, serving on the LAW Beta Test Team and the E-discovery Working Group.

Tim graduated from Washington State University with a Bachelor’s Degree in Business with an emphasis in Management Information Systems and is originally from Seattle, Washington.

“I am honored and delighted that Tim Dunbar was recognized today for his outstanding achievements and important contributions to furthering the mission of the Justice Department.  Tim is a critical member of our litigation team whose technical expertise and creativity contribute significantly to our trial preparation and presentations. This well-deserved award speaks to Tim’s dedication, hard work and professionalism, and I am proud to be working alongside such a talented and committed public servant,” said Acting U.S. Attorney Rose.

EOUSA provides oversight, general executive assistance, and direction to the 94 United States Attorneys’ offices around the country. For more information on EOUSA and its mission, visit http://www.justice.gov/usao.

STATESVILLE, N.C. – Earlier today, U.S. District Judge Richard Voorhees handed down lengthy prison terms to two men involved in a 2013 armed bank robbery, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina.  Judge Voorhees sentenced Darius Donnell Freeman, 33, of Charlotte to serve 447 months in prison.  Freeman’s conspirator, Wincy Joseph, 29, also of Charlotte, was sentenced to 135 months in prison.   Judge Voorhees also ordered the defendants to serve five years under court supervision following their release from prison and to pay $5,185.99 as restitution.

In May 2014, a federal jury convicted both men of armed bank robbery and possession of a firearm in furtherance of a crime of violence charges.  The jury also found Freeman guilty of carjacking and a second possession of a firearm in furtherance of a crime of violence.

Acting U.S. Attorney Rose is joined in making today’s announcement by John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division, Chief Matthew A. Selves of the Troutman Police Department and Chief Rodney D. Monroe of the Charlotte-Mecklenburg Police Department.

According to filed court documents and trial proceedings:

In or about May 20, 2013, at approximately 5:15 a.m. Freeman carjacked a victim at gunpoint at a Circle K gas station located on South Boulevard in Charlotte.  Later that morning, Freeman and Joseph used the carjacked vehicle to rob a Bank of America branch in Troutman, N.C.  Soon after the bank opened, Freeman entered the bank wearing a black cap, sunglasses, gloves and brandishing a silver handgun.  Freeman jumped on the tellers’ counter and demanded cash.  Joseph entered the bank behind Freeman, dressed in a black sweatshirt with the hood pulled over his head, sunglasses and gloves, and demanded cash from another bank employee.  The defendants then fled the scene with $5,185.99 in cash, driving off in the car Freeman had jacked earlier that day.  Law enforcement later found the car abandoned on Interstate-77 in Iredell County.  The defendants were identified five days later, following a tip from a concerned citizen.  Freeman was arrested on June 6, 2013 and Joseph on June 13, 2013.

The investigation was led by the FBI, the Troutman Police Department and CMPD.  Acting U.S. Attorney Rose also thanked the Mooresville Police Department, the Iredell County Sheriff’s Office and the Statesville Police Department for their assistance in the investigation. 

The prosecution was handled by Assistant U.S. Attorney Elizabeth Greene and Special Assistant U.S. Attorney Rebecca McNerney.

ASHEVILLE, N.C. – Five of the eleven defendants charged in connection to a scheme involving the development of Seven Falls, a golf course and luxury residential community in Henderson County, N.C. were sentenced today, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina.

Acting U.S. Attorney Rose is joined in making today’s announcement by John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division, Thomas J. Holloman III, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (IRS-CI); Jason Moran, Special Agent in Charge of the Federal Deposit Insurance Corporation (FDIC), Inspector General’s Office of Investigation, Atlanta office.

U.S. District Judge Martin Reidinger sentenced Avery Ted “Buck” Cashion, III, 61, of Lake Luke, N.C., to 36 months in prison, and three years of supervised release; Raymond M. “Ray” Chapman, 68, of Brevard, N.C., to 36 months in prison, and three years of supervised release; Thomas E. “Ted” Durham, Jr., former President of the failed Pisgah Community Bank, 60, of Fletcher, N.C., to 30 months in prison, and three years of supervised release; and Aaron Ollis, 68, a former licensed Real Estate Appraiser, of Arden, N.C., to two years of probation, including 12 months and 1 day home detention.  Cashion, Chapman, Durham and Ollis each pleaded guilty to conspiracy to defraud the United States.  The defendants were also ordered to pay restitution as follows:

Avery Ted “Buck” Cashion, III,         $14,266,256.47

Raymond M. “Ray” Chapman,          $14,266,256.47

Thomas E. “Ted” Durham,                 $  6,237,453.37

Aaron Ollis,                                        $10,199,106.87

George M. Gabler, age 60, of Fletcher, N.C., was convicted of one count of willfully failing to report misconduct associated with two Seven Falls lot loans in March 2010.  In court documents, Gabler admitted that he withheld documents from a federal grand jury knowing that they were related to fraudulent loans taken out on behalf of conspirator Keith Vinson.  For this offense, Gabler, a former Certified Public Accountant, was sentenced to two years of probation, including 500 hours of community service and a $5,000 fine.

Keith Vinson, was convicted at trial in October 2013 of conspiracy, bank fraud, wire fraud, and money laundering conspiracy.  He is scheduled to be sentenced on June 25, 2015 in Asheville, N.C. 

According to court documents filed in the case, trial evidence and statements made in court during the sentencing hearings:

Beginning in 2008, the defendants conspired and obtained money from several banks through a series of straw borrower transactions, in order to funnel monies to Vinson and his failing development of Seven Falls, a golf course and luxury residential community in Henderson County, N.C. A straw borrower is an individual whose name appears on a loan and on the books and records of a bank as the beneficiary of a loan, but whose name is substituted for that of the true borrower and does not in fact receive the benefits of the loan.  Lending institutions cannot properly assess the risk of making such loans as they do not know the true circumstances of the loans or the creditworthiness of the true borrowers.  The co-conspirators devised this scheme in order to funnel monies to Vinson and his failing development of Seven Falls.

In order to advance this scheme Vinson, Chapman, Cashion and others recruited local bank officials including George Gordon “Buddy” Greenwood and Ted Durham, who at the time were, respectively President of the Bank of Asheville and the President of Pisgah Community Bank.  When bank officials realized that they had reached their legal lending limits with respect to some of the straw borrowers, additional straw borrowers were recruited to the scheme and more straw borrower loans were made to them.  Additional straw borrower loans were also necessary to keep loans current, a scheme known as “loan kiting.” The loan kiting scheme became necessary when conspirators were unable to make payments on loans made early in the scheme.  Seven Falls and another luxury residential golf development by Vinson named “Queens Gap” failed resulting in millions in property losses.  In addition, both the Bank of Asheville and Pisgah Community Bank failed and were taken over by the FDIC.

Previously, Buddy Greenwood was sentenced to 42 months in prison; Nicholas Dimitris was sentenced to 12 months plus one day in prison; the former Pisgah Community Bank Chief Credit Officer, Robert Craig Gourlay was sentenced to 15 months in prison; David G. Smith, who worked as a loan officer for Pisgah Community Bank was sentenced to nine months in prison, and Andrew Hager was sentenced to eight months in prison in connection with the Seven Falls scheme.

The investigation was being jointly handled by the FBI, IRS-CI, and FDIC-OIG.  Assistant U.S. Attorneys Don Gast and Michael Savage are in charge of the prosecution.

ASHEVILLE, N.C. – On Thursday, May 28, 2015 U.S. District Judge Martin Reidinger sentenced Patrick Ronald Silva, 44, of Burnsville, N.C. to 262 months in prison on production of child pornography charges, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina.  Silva was ordered to serve a lifetime of supervised release, to register as a sex offender, and to pay $6,000 as restitution to his victim.

Ryan L. Spradlin, Special Agent in Charge of ICE/Homeland Security Investigations (HSI) in Georgia and the Carolinas, and Sheriff Gary Banks of the Yancey County Sheriff’s Office join U.S. Attorney Rose in making today’s announcement.

In June 2014, Silva pleaded guilty to one count of production of child pornography.  According to court documents and statements made in court, from May 26, 2012 to June 26, 2012, in Yancey County, Silva solicited his co-defendant, Tabatha Black, to produce child pornography of a female minor.  Court records indicate that Silva then distributed the child pornography via the Internet and e-mail.  Law enforcement executed a search warrant at Silva’s residence, and seized his computer and cellular phones.  A forensic examination of the seized items revealed that they contained images and videos of child pornography.  Silva has been in federal custody since April 2014.  Black was sentenced in February 2015 to 210 months in prison and a lifetime of supervised release, after pleading guilty to one count of production of child pornography.

* * *

Judge Reidinger also sentenced a second defendant today on child pornography charges.  Robert George Ross, 29, of Old Fort, N.C. was sentenced to 60 months in prison, a lifetime of supervised release, and was ordered to register as a sex offender.  According to court records, in July 2013 in McDowell County, Ross received and possessed images depicting child pornography. Court records show that Ross possessed approximately 800 images of child pornography as well as numerous videos. Ross pleaded guilty in October 2014 to one count of possession of child pornography and one count of receipt of child pornography.  He has been in federal custody since April 2014.  The case was investigated by HSI, the Yancey County Sheriff’s Office, and the McDowell County Sheriff’s Office.

In announcing today’s sentences, Acting U.S. Attorney Rose said, “The U.S. Attorney’s Office will continue to work closely with our law enforcement partners to protect the most vulnerable members of our communities from child predators.  Victimizing innocent children is repulsive and in all instances will receive swift and forceful attention from my office.” Rose also thanked all the law enforcement agencies that investigated these cases for their outstanding work.

The defendants will be transferred to the custody of the Federal Bureau of Prisons upon designation of a federal facility.  All federal sentences are served without the possibility of parole.

The 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. Attorneys’ offices and the Criminal Division’s Child Exploitation and Obscenity Section (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.projectsafechildhood.gov.

CHARLOTTE, N.C. – Earlier this month, Senior U.S. District Judge Graham Mullen sentenced a South Carolina man to 108 months in prison for his role as the “Chief Investment Officer” for an entity involved in the $75 million racketeering conspiracy known as “Operation Wax House,” announced the Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina.  In addition to the lengthy prison term, Toby Hunter, 39, of Fort Mill, S.C. was also sentenced to three years of supervised release and was ordered to pay $8,095,903.80 in restitution to victims.

North Carolina Secretary of State Elaine F. Marshall and John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division and Thomas J. Holloman III, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (IRS-CI) join Acting U.S. Attorney Rose in making today’s announcement.         

“Our agents and enforcement attorneys worked diligently with our federal partners on this case for several years, and we were gratified to see this end result in federal court.  Toby Hunter and other members of this vast racketeering enterprise showed utter contempt for the law and callous disregard for the victims. I want to thank our federal partners for their work in bringing this case to such a successful conclusion and giving victims some comfort in knowing that justice has been done,” said Elaine F. Marshall, North Carolina Secretary of State.

“Toby Hunter was a financial predator, now unable to harm investors for a long time. We are grateful for our partnership with the North Carolina Secretary of State, Securities Division, the FBI, and the IRS.  With such a team, fraudsters and scammers should beware:  we are coming for you,” said Jill Westmoreland Rose, Acting United States Attorney.

According to filed court documents and statements made during Hunter’s sentencing hearing, Hunter and his conspirators collectively stole over $27 million from more than 50 investor victims. Hunter and his conspirators used the victims’ money to pay for personal expenditures, including private jets, high profile offices, entertaining themselves and others, and supporting their luxurious lifestyles.  Hunter pleaded guilty in December 2013 to one count of racketeering conspiracy.

According to filed court documents and statements made during Hunter’s sentencing hearing, Hunter served the racketeering enterprise as the Chief Investment Officer for Prestige Capital Advisors, one of the entities used to defraud investor-victims.  Hunter was a registered commodity trading advisor with the National Futures Association (NFA), and had passed the Financial Industry Regulatory Authority (FINRA) Series 6 and Series 63 exams.  Hunter registered Prestige Capital Advisor with the NFA, and used his education, licenses, and supposed experience to help lure investor victims to the scheme, including a victim defrauded of $4 million.

Following the sentencing hearing, Hunter was released on bond and will be ordered to surrender to the custody of the Federal Bureau of Prisons upon designation of a federal facility.  All federal cases are served without the possibility of parole.

Hunter’s case was investigated by the North Carolina Secretary of State, Securities Division, the FBI, Charlotte Division, and IRS-CI.

The Hunter prosecution was handled by Assistant U.S. Attorney Maria Vento and Special Assistant United States Attorney Kevin M. Harrington.  Mr. Harrington is an Enforcement Attorney with the North Carolina Department of Secretary of State, Securities Division, and was appointed to serve as a Special Assistant United States Attorney (SAUSA) with the U.S. Attorney’s Office in Charlotte in September 2011.   The SAUSA position reflects the partnership between the North Carolina Securities Division and the United States Attorney that helps ensure the effective and vigorous prosecution of white collar criminals, particularly in the area of securities fraud.

CHARLOTTE, N.C. – Today, Senior U.S. District Judge Graham C. Mullen sentenced four defendants involved in mortgage and investment fraud schemes codenamed “Operation Wax House,” including three of the conspiracy’s leaders, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina.

Judge Mullen sentenced James Tyson, Jr., 34, of Charlotte, to 30 years in prison, Carrie Tyson, 61, of Winterville, N.C., to 18 years in prison, Victoria Hunt, 36, of Rockville, Maryland, to 8 years in prison, and Vonetta Tyson Barnes, 41, of Mililani, Hawaii, to 30 days in prison.  Each defendant was also sentenced to serve a term of three years supervised release.

Tyson, Jr., his mother, Carrie Tyson, and Victoria Hunt are three of the leaders of the Racketeering Influenced Corrupt Organization (RICO) (the “Enterprise”) which operated in Mecklenburg and Union Counties from approximately 2005 until the defendants were arrested in 2012.  A fourth leader, Ramin Amini, remains a fugitive.  The Enterprise was responsible for a mortgage fraud and an investment fraud scheme that collectively defrauded victims of more than $75 million.

John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division and Thomas J. Holloman, III, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (IRS-CI) join Acting U.S. Attorney Rose in making today’s announcement.

“As leaders of the racketeering conspiracy, James Tyson, Jr., Carrie Tyson and Victoria Hunt were single-handedly responsible for the financial hardships so many of their victims have suffered.  In many instances, the victims knew and trusted the defendants, only to find themselves conned out of their money and left to deal with the devastating consequences of the fraud.  Today’s lengthy sentences deliver a heavy dose of justice to the masterminds of a vast scheme that has been financially and psychologically devastating for so many individuals,” said Acting U.S. Attorney Rose.   

“More than sixty people, from all walks of life, were cheated out of their hard earned money by those involved in these complex fraud schemes. Today’s sentencings represent the leaders of this vast racketeering enterprise which utilized mortgage fraud and high yield investment schemes to enrich themselves at a time our country was facing a tenuous economic future.  The numerous convictions stemming from this long term investigation are proof of the FBI’s commitment toward holding accountable all those who put our nation’s economy at risk,” said John Strong, Special Agent in Charge of FBI Charlotte.

“The brazen, sustained criminal activity perpetrated by these defendants lasted for years, and demanded the attention of IRS Criminal Investigation and our law enforcement partners.  While the short-term gains of a financial crime wave such as this may appear enticing, the necessary consequences‎ reflected in today’s sentencings‎ are now ‎their long-term reality,” said Thomas J. Holloman III, Special Agent in Charge of IRS-CI.

According to filed court documents, evidence presented at trials, and statements made in court proceedings, including during today’s hearings:

The Enterprise, led by the three defendants sentenced today, stole approximately $27 million from victims as part of its investment operations and approximately $48 million in loans from financial and lending institutions as part of its mortgage fraud operations.

James Tyson, Jr.

In court today, prosecutors described defendant Tyson, Jr. as the leader of the leaders, the most culpable person in the RICO Enterprise, and the most culpable of the 91 defendants charged as part of Operation Wax House.  Tyson led the Enterprise in all aspects of its operations, including its investment fraud, its mortgage fraud, and its money laundering operations as well as a conspiracy to distribute marijuana.  At today’s court hearing, prosecutors described Tyson, Jr. as the linchpin of the multiple interwoven illegal schemes carried out by the Enterprise.

The Enterprise defrauded $27 million from victims as part of its investment operations, using a series of sham corporations to steal from individual investor-victims.  When the fraud associated with one sham corporation was discovered, the Enterprise would create another sham company with a different co-conspirator serving as the public front of the company, so that it could continue to steal money from unsuspecting investor victims.  As the leader, Tyson, Jr. was involved in creating and running each of the various sham companies used by the Enterprise to steal money from victims, and he was directly involved in stealing nearly $19 million from more than 60 individual victims.

When the Enterprise could not find victims who had money to invest, the conspirators induced individuals to become “credit” investors.  In exchange for handing over their personal information and good credit to the Enterprise, the victims were falsely told that the loan payments would be made for them and they would receive investment returns.  The Enterprise then took loans out in these victims’ names, kept the loan proceeds, and ultimately left the victims with thousands of dollars of debt.

In addition to the investment fraud scheme, Tyson, Jr. personally engaged in at least 18 different mortgage fraud transactions, resulting in loses to financial and lending institutions of more than $11 million.  Tyson, Jr. received more than $2.3 million of the fraudulent proceeds from those mortgage fraud transactions, including more than $1.5 million of fraudulent proceeds from financial institutions.

Tyson, Jr. pleaded guilty to racketeering (RICO) conspiracy, securities fraud, mortgage fraud, wire fraud, money laundering conspiracy and bank bribery conspiracy. As part of the RICO conspiracy, Tyson Jr. pleaded guilty to the predicate act of conspiracy to distribute marijuana.  Prosecutors noted that Tyson, Jr. arranged truckloads of marijuana from Texas and elsewhere to be transported to North Carolina, distributing hundreds of pounds of marijuana.  Tyson, Jr. also admitted to paying bribes of $7,500 to $30,000 to a bank employee in exchange for bogus letters of credit that he and his co-conspirators tried to leverage to fraudulently induce other victims.   

In announcing today’s sentence of Tyson, Jr., Judge Mullen described the defendant as the “apex of this pyramid of criminal activity.”  Tyson, Jr. has been in custody since he was arrested on October 21, 2012, returning from Senegal, where he was operating the Enterprise’s last fraud company, PEI, a purported import-export business.

Carrie Tyson

Carrie Tyson was also a leader of the Enterprise, and, in some instances, mentored the conspirators on how to operate the various schemes. For example, Carrie Tyson created and served as President of one of the first companies the Enterprise used to steal money from victims, “Brighton Developers,” falsely promising investor-victims that their investments were secured by lots of land.  When the terms of those investment contracts expired, Carrie Tyson wrote more than a million dollars in checks on an account which she knew had a negative balance.  In total, Carrie Tyson was directly involved in defrauding at least 14 victims out of at least $1.3 million.  Carrie Tyson was also a leader of the Enterprise’s mortgage fraud operations, participating in at least five different mortgage fraud transactions, resulting in losses of more than $4 million.  Carrie Tyson’s husband, James Tyson, Sr., was charged and previously sentenced to 37 months in prison for his role in the scheme.  Carrie Tyson pleaded guilty to RICO conspiracy in November 2013.

In announcing today’s sentence of Carrie Tyson, Judge Mullen noted that Carrie Tyson was “among the worst” of the defendants.  Carrie Tyson has been in custody since September 2013, when she was found to have been in violation of her conditions of release.

Victoria Hunt

Victoria Hunt was the third leader of the Enterprise, who handled the Enterprise’s investment fraud and money laundering operations.  Hunt served as Vice President and then CEO of “Sovereign Equity Group” and CEO of “Prestige Capital” and the “Elite Automotive” card dealership, which were used by the Enterprise to steal money from individual victims.  Hunt targeted her friends and professional acquaintances to invest in the Enterprise’s sham businesses.  In total, Hunt, working with Tyson, Jr., defrauded more than 60 victims of more than $19 million.  Hunt also participated in the Enterprise’s mortgage fraud operations, providing down payment money for at least two transactions which resulted in losses of more than $2 million.  Hunt pleaded guilty to RICO conspiracy, securities fraud, mortgage fraud, wire fraud and money laundering conspiracy in January 2013.  Following the sentencing hearing, Hunt was released on bond.  She will be ordered to report to the Federal Bureau of Prisons upon designation of a federal facility.

Vonetta Tyson Barnes

Vonetta Tyson Barnes, Carrie Tyson’s daughter, was a promoter in the Enterprise’s investment fraud operations.  She served as the President of “Sovereign Equity Group” after her brother, Tyson, Jr., stepped down.  Barnes also created another sham company, “Inspiron Holdings,” used by the Enterprise to steal money from victims.  In total, Barnes was involved in stealing nearly $900,000 from approximately 16 victims.  She pleaded guilty in September 2013 to one count of RICO conspiracy.  Following the sentencing hearing, Barnes was released on bond and will be ordered to report to the Federal Bureau of Prisons upon designation of a federal facility.

All federal sentences are served without the possibility of parole.

These convictions are the latest in Operation Wax House, an investigation which began in 2007.  Of the 91 individuals charged, 89 defendants have either pleaded guilty or have been convicted following trial.  The two remaining defendants are international fugitives.  Of the 89 defendants convicted, five remain to be sentenced in the coming months.

Operation Wax House in the Western District of North Carolina is being handled by the Charlotte Division of the FBI and the Criminal Division of the IRS for the Financial Fraud Enforcement Task Force, along with the Securities Division of the North Carolina Secretary of State with respect to a separate prosecution.  The Operation Wax House prosecution is being handled for the government by Assistant United States Attorney Maria K. Vento.

The charges were brought in connection with the President’s Financial Fraud Enforcement Task Force.  The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud.  Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations.  Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants. For more information on the task force, please visit www.StopFraud.gov.

CHARLOTTE, N.C. – Thirty-seven members of the street gang “La Mara Salvatrucha,” or “MS-13,” have been indicted by a federal grand jury on racketeering conspiracy charges, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina.  Twenty-two defendants have also been charged variously with additional offenses, including murder, attempted murder, assault, and firearms violations.

This morning, law enforcement arrested 16 of the alleged gang members during an early morning round-up.  Five remain at large and are subject to active arrest warrants. Another 16 are currently in state custody on various state charges.  

John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division; Ryan L. Spradlin, Special Agent in Charge of ICE/Homeland Security Investigations (HSI) in Atlanta; Mark Senter, Branch Head of the North Carolina Alcohol Law Enforcement; Chief Rodney D. Monroe of the Charlotte-Mecklenburg Police Department; and Mecklenburg County District Attorney Andrew Murray join Acting U.S. Attorney Rose in making today’s announcement.

            “As outlined in today’s indictment, the alleged MS-13 gang members have committed numerous violent crimes, including armed robberies, assaults, and murders, for the benefit of the criminal enterprise.  Today’s charges send a clear message to gangsters who think their gang affiliation puts them beyond the law’s reach.  Prosecutors and law enforcement officers will continue to work hand-in-hand to identify and prosecute gang offenders whose violent acts create mayhem in our streets and devastate communities,” said Acting U.S. Attorney Rose.

“The arrest of these MS-13 gang members is part of a coordinated law enforcement effort to eradicate gang violence in North Carolina.  Innocent families should not suffer because of the callous and violent actions of others.  The FBI will pursue those criminal offenders who impact the safety and stability of our neighborhoods, no matter their gang affiliation,” said John Strong, Special Agent in Charge of FBI Charlotte.

“Transnational criminal gangs like MS-13 inflict untold damage in our communities by engaging in violence and trafficking in drugs, weapons and even human beings,” said Ryan L. Spradlin, Special Agent in Charge of ICE Homeland Security Investigations (HSI) in Atlanta. “This lengthy investigation has uncovered alleged crimes ranging from petty drug deals to capital murder. There is no doubt that North Carolina communities will be safer as a result of these arrests.”

 “The partnerships between my office, the U.S. Attorney’s Office and both federal and local law enforcement reflect our dedication to ensuring that collaborative investigations and prosecutions target violent crime on our streets,” said Mecklenburg County District Attorney Andrew Murray. “We’ll continue to work together as we pursue justice for those affected by crime and protect the community from future harm.”

“The success of this roundup should be attributed to the strength of these law enforcement partnerships and send a clear message to gang members that all of us are working together in our pursuit to put the criminals out of business for the betterment of our communities,”  said Mark Senter, NC Alcohol Law Enforcement branch head.

The indictment charges each of the 37 alleged gang members with one count of Racketeering Influenced Corrupt Organization (RICO) conspiracy.  The named defendants are:

• Carlos Almote a/k/a “Rabioso,” 25, of Charlotte. (in state custody)
• Jose Danny Argueta a/k/a “Shadow,” 23, of Charlotte. (in state custody)
• Miriam Barilles-Escamilla a/k/a “Gata,” 26, of El Salvador. (not arrested)
• Juan Bergamasco-Suarez a/k/a “Temper” or “Kilo,” 21, of Charlotte. (in state custody)
• Milton Chavarria a/k/a “Syko,” 23, of Charlotte. (in state custody)
• Raul Contreras a/k/a “Smoke,” 24, of Charlotte. (in state custody)
• Luis Erazo a/k/a “Joker,” 24, of Honduras. (arrested)
• Marvin Fuentes-Canales a/k/a “Crazy,” 22, of El Salvador. (not arrested)
• Luis Funes-Rivera a/k/a “Demonio,” 20, of Charlotte. (in state custody)
• Jorge Garcia a/k/a “Shorty,” 25, of Charlotte. (arrested)
• Cesar Garcia-Perez a/k/a “Vikingo,” 35, of Charlotte. (in state custody)
• Saul Gavidia a/k/a “Scrappy,” 20, of Landis, N.C. (arrested)
• William Gavidia a/k/a “Duro,” 23, of Kannapolis, N.C. (arrested)
• Raul Guardado a/k/a “Guanaco,” 42, of Charlotte. (arrested)
• Neris Gutierrez a/k/a “Oso” or “Furioso,” 26, of Guatemala. (not arrested)
• Angel Hernandez a/k/a “Taz” or “Magic,” 24, of Rock Hill, S.C. (arrested)
• Jose Manuel Linares a/k/a “Chepito,” 21, of Charlotte. (arrested)
• Rene Lopez-Ventura a/k/a “Mafioso,” 32, of Charlotte. (arrested)
• Jose Moran-Celis a/k/a “Lil Silent,” 20, of Charlotte. (arrested)
• Daniel Navarro a/k/a “Lunatico,” 21, of Charlotte. (in state custody)
• Jonathan Noble a/k/a “Ghost,” 22, of Charlotte. (arrested)
• Luis Ordonez-Vega a/k/a “Big Boy,” 36, of Concord, N.C. (in state custody)
• Christian Pena a/k/a “Pitbull,” 19, of Charlotte. (in state custody)
• Jorge Perez a/k/a “JP Bukie,” 30, of Charlotte. (arrested)
• Victor Pineda a/k/a “Chele,” 23, of Charlotte. (arrested)
• Rosendo Rivas a/k/a “Jester,” or “Demonio” or “Nene” 24, of Rock Hill. (in state custody)
• Fec Rodriguez-Vareal a/k/a “Chelito,” 28, of Charlotte. (arrested)
• Salvador Ruiz a/k/a “Chava,” 26, of Kannapolis. (not arrested)
• Jorge Sosa a/k/a “Koki” or “Loco,” 23, of Charlotte. (in state custody)
• Oscar Trejo a/k/a “Trigger” or “Maliente,” 23, of Charlotte. (in state custody)
• Jaime Turcios a/k/a “Pitufo” or “Smurf,” 24, of Charlotte. (arrested)
• Jose Vasquez a/k/a “Muneco,” 26, of El Salvador. (arrested)
• Marlon Vasquez-Maldonado a/k/a “Gangster,” 23, of Charlotte. (in state custody)
• Albert Vela-Garcia a/k/a “Conejo,” 25, of Landis. (arrested)
• Luis Villalta a/k/a “Little Psycho,” 25, of El Salvador. (not arrested)
• Alexis Villalta-Morales a/k/a “Rikichi,” 23, of Charlotte.  (in state custody)
• Miguel Zelaya a/k/a “Most Wanted,” 19, of Charlotte. (in state custody)

In addition to the RICO conspiracy charge, three defendants face murder in aid of racketeering and related charges, Zelaya for the murder of Jose Orlando Ibarra, and Ordonez-Vega and Pena for the murder of Noel Navarro Hernandez.  Ten defendants – Argueta, Garcia, Linares, Funes-Rivera, Ruiz, Sosa, Trejo, Vasquez, Vela-Garcia, and Villalta-Morales – are also charged with attempted murder in aid of racketeering and related charges.

According to the allegations contained in the 41-count indictment:

From at least in or about 2009 to present in Mecklenburg County and elsewhere, the defendants were members of the MS-13 gang, a criminal organization with over 6,000 members in the United States and 30,000 members internationally.  MS-13 originated in Los Angeles, California, and has spread to states across the country, including in North Carolina.  The gang’s members are mostly immigrants or descendants of immigrants from El Salvador and other Central and Latin American countries.  MS-13 in North Carolina is divided into different groups, or “cliques,” identified by names such as “Charlotte Locotes Salvatrucha,” and “Centralles,” among others.  The different cliques work together to carry out criminal acts, to protect the interests of the criminal enterprise, and to assist each other in avoiding law enforcement detection.  The group leaders are often called “shot callers” or “voices,” and they are tasked with passing down information and orders from leaders higher in the gang hierarchy.  Group leaders also act to resolve disputes, address organizational issues, and to participate in gang decisions, including the assault or murder of those suspected of cooperating with law enforcement, known as “green light.”

MS-13 members adhere to a set of gang rules and pay dues which fund the gang’s criminal activities and support other gang members or their families in the U.S and abroad.  Gang members are also expected to protect the name, reputation, and status of the gang and its members, and to punish through acts of violence and intimidation those who disrespect the gang.  Some MS-13 members signify their affiliation with the gang by wearing blue, black and white color clothing and certain “Mara Salvatrucha,” or “MS-13” tattoos.

As alleged members of MS-13, the defendants charged in the indictment held multiple meetings at various times, to discuss gang-related matters and to plan the commission of future crimes for the benefit of the gang.  As outlined in the indictment, over the relevant time period, the defendants allegedly were responsible for numerous criminal acts including drug distribution, armed robberies, extortion, illegal possession of weapons, the assault of individuals suspected of cooperating with law enforcement and murder.

Specifically, the indictment alleges that on December 18, 2013, Zelaya allegedly murdered Jose Orlando Ibarra in Charlotte, whom he believed to be a member of a rival gang, and on or about June 6, 2014, also in Charlotte, Pena and Ordonez-Vega allegedly murdered Noel Navarro Hernandez.  According to the indictment, on April 23, 2011, Contreras murdered Rigoberto Castillo in Rock Hill, S.C., and on June 23, 2013, in Charlotte, Garcia-Perez shot and killed Alejandro Sebastian Alvarez, a rival gang member. Contreras and Garcia-Perez were prosecuted on state charges for those murders.      

The indictment contains a notice of special sentencing factors, which provides for a greater sentence for those defendants charged with offenses related to the murders.  A chart identifying each defendant’s charges and maximum penalties is attached below.  The defendants’ sentences will be determined by the Court, after considering the federal sentencing guidelines and statutory sentencing factors.

The defendants arrested today have begun making their initial appearances in Charlotte before a U.S. Magistrate Judge.  The defendants currently in state custody will be transferred to the custody of the U.S. Marshals to appear in court on the federal charges.

The charges contained in the indictment are allegations.  The defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

This prosecution is part of an extensive investigation by the Organized Crime Drug Enforcement Task Force (OCDETF).  OCDETF is a joint federal, state and local cooperative approach to combat drug trafficking and is the nation’s primary tool for disrupting and dismantling major drug trafficking organizations, targeting national and regional level drug trafficking organizations and coordinating the necessary law enforcement entities and resources to disrupt or dismantle the targeted criminal organization and seize their assets.

Acting U.S. Attorney Rose praised the outstanding investigative work of the FBI, HSI, CMPD and ALE and noted that the investigation is still ongoing.Ms. Rose also thanked the Mecklenburg County District Attorney’s Office for their continued support and cooperation with this case.

Assistant U.S. Attorneys Elizabeth Greene and William Miller are in charge of the prosecution.

WASHINGTON – Three subsidiaries of North Carolina-based Duke Energy Corporation, the largest utility in the United States, pleaded guilty today to nine criminal violations of the Clean Water Act at several of its North Carolina facilities and agreed to pay a $68 million criminal fine and spend $34 million on environmental projects and land conservation to benefit rivers and wetlands in North Carolina and Virginia.  Four of the charges are the direct result of the massive coal ash spill from the Dan River steam station into the Dan River near Eden, North Carolina, in February 2014. The remaining violations were discovered as the scope of the investigation broadened based on allegations of historical violations at the companies’ other facilities.

Under the plea agreement, both Duke Energy Carolinas and Duke Energy Progress, must certify that they have reserved sufficient assets to meet legal obligations with respect to its coal ash impoundments within North Carolina, obligations estimated to be approximately $3.4 billion.

Officials from the Justice Department’s Environment and Natural Resources Division and the three U.S. Attorney’s Offices in North Carolina, the Environmental Protection Agency’s (EPA) Office of Enforcement and Compliance Assurance, EPA’s Office of Inspector General, the Internal Revenue Service (IRS) Criminal Investigations and the North Carolina State Bureau of Investigation (SBI) made the announcement following a plea hearing at the federal courthouse in Greenville, North Carolina today.    

“The massive coal ash spill into North Carolina’s Dan River last year was a crime and it was the result of repeated failures by Duke Energy’s subsidiaries to exercise controls over coal ash facilities,” said Assistant Attorney General John C. Cruden of the Justice Department’s Environment and Natural Resources Division.  “The terms of these three plea agreements will help prevent this kind of environmental disaster from reoccurring in North Carolina and throughout the United States by requiring Duke subsidiaries to follow a rigorous and independently verifiable program to ensure they comply with the law.”

“Duke Energy's crimes reflect a breach of the public trust and a lack of stewardship for the natural resources belonging to all of the citizens of North Carolina,” said U.S. Attorney Thomas G. Walker for the Eastern District of North Carolina.  “The massive release at the Dan River coal ash basin revealed criminal misconduct throughout the state – conduct that will no longer be tolerated under the judgment imposed by the court today.”

“Duke’s subsidiaries discharged potentially toxic pollutants that put at risk North Carolina’s water quality and wildlife and today’s outcome ensures they will be held responsible for violating federal environmental requirements,” said Acting U.S. Attorney Jill W. Rose for the Western District of North Carolina.  “The defendants will now have to comply with the terms imposed by the court, including paying hefty financial penalties and making significant financial contributions toward improving the quality of impacted waterways, wetlands and our water supply system.”

“Duke’s actions adversely impacted the Dan River ecosystem and caused residents who live near and rely on the water supply much apprehension about the safety of the river,” said Criminal Chief Cliff Barrett for the U.S. Attorney’s Office in the Middle District of North Carolina.  “Today’s plea holds Duke accountable for this result and charts a course to remediate the impact of these spills.”

“Over two hundred sixteen million Americans rely on surface water as their source of drinking water,” said Assistant Administrator Cynthia Giles for EPA’s Office of Enforcement and Compliance Assurance.  “Duke Energy put that precious resource at risk in North Carolina as the result of their negligence.  Companies that cut corners and contaminate waters on which communities depend, as Duke did here, will be held accountable.”

On Feb. 20, 2015, the three U.S. Attorney’s Offices in North Carolina filed separate criminal bills of information in their respective federal courts, alleging violations of the Clean Water Act at the following Duke facilities: the Dan River steam station (Rockingham County), the Cape Fear steam electric plant (Chatham County), the Asheville steam electric generating plant (Buncombe County), the H.F. Lee steam electric plant (Wayne County) and the Riverbend steam station (Gaston County).  The alleged violations included unlawfully failing to maintain equipment at the Dan River and Cape Fear facilities and unlawfully discharging coal ash and/or coal ash wastewater from impoundments at the Dan River, Asheville, Lee and Riverbend facilities.

As part of their plea agreements, Duke Energy Business Services LLC, Duke Energy Carolinas LLC and Duke Energy Progress Inc. will pay a $68 million criminal fine and a total $24 million community service payment to the National Fish and Wildlife Foundation for the benefit of the riparian environment and ecosystems of North Carolina and Virginia.  The companies will also provide $10 million to an authorized wetlands mitigation bank for the purchase of wetlands or riparian lands to offset the long-term environmental impacts of its coal ash basins.  In addition, they will pay restitution to the federal, state and local governments that responded to the Dan River spill and be placed on a period of supervised probation for five years.

Duke’s subsidiaries operating 18 facilities in five states, including 14 in North Carolina, will also be required to develop and implement nationwide and statewide environmental compliance programs to be monitored by an independent court appointed monitor and be regularly and independently audited.  Results of these audits will be made available to the public to ensure compliance with environmental laws and programs.  The companies’ compliance will be overseen by a court-appointed monitor who will report findings to the court and the U.S. Probation Office as well as ensuring public access to the information.

Approximately 108 million tons of coal ash are currently held in coal ash basins owned and operated by the defendants in North Carolina.  Duke Energy Corporation subsidiaries also operate facilities with coal ash basins in South Carolina, approximately 5.99 million tons of coal ash, Kentucky, approximately 1.5 million tons of coal ash, Indiana, approximately 35.6 million tons of coal ash and Ohio, approximately 5.9 million tons of coal ash.

The companies must also meet the obligations imposed under federal and state law to excavate and close coal ash impoundments at the Asheville, Dan River, Riverbend and Sutton facilities. 

Additionally, at the insistence of the United States, the holding company Duke Energy Corporation has guaranteed the payment of the monetary penalties and the performance of the nationwide and statewide environmental compliance plans.

“Duke’s environmental crimes required a special financial review of their actions to which we were proud to join our partners in investigating,” said Special Agent in Charge Thomas J. Holloman, III of the IRS Criminal Investigation.  “The considerable fines, formal apologies and massive cleanup initiatives will impact the Duke image and brand, assuring the public that corporations will be held accountable for their gross actions involving the environment, wildlife and the communities of this great state.”

“The SBI worked closely with the Environmental Protection Agency Criminal Investigation Division and the Internal Revenue Service in this matter,” said Acting Director B.W. Collier of the North Carolina SBI.  “This type of collaboration is critical to ensuring a thorough and intensive review on cases such as this.  The SBI remains committed to the public interest and is prepared to continue assisting the U.S. Attorney’s office.”

The criminal investigation was conducted by the Criminal Investigation Division, Region Four and the Office of Inspector General of EPA, Criminal Investigations of the IRS and North Carolina State Bureau of Investigation with assistance from the Federal Bureau of Investigation and the Department of Defense Criminal Investigative Service.

CHARLOTTE, N.C. – Chief U.S. District Judge Frank D. Whitney sentenced Maria Steele Vera, 60, of Dallas, Texas to 33 months in prison and to one year of supervised release for selling stolen merchandise on the Internet, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina.   In April 2014, Vera pleaded guilty to wire fraud in connection with her scheme.  Judge Conrad also ordered Vera to pay more than $70,000 in restitution.

Acting U.S. Attorney Rose is joined in making today’s announcement by Russell F. Nelson, Special Agent in Charge of the United States Secret Service, Charlotte Field Division.

According to filed court documents and court proceedings, from 2009 to 2013, Vera shoplifted items from numerous hobby and craft retail stores in Mecklenburg County and elsewhere, which she then listed for sale on E-bay.  Court records indicate that Vera created various E-bay seller accounts and sold the stolen items below retail value.  Court records also show that this scheme netted Vera between $400,000 and $1,000,000. According to court records, when law enforcement executed a search warrant at Vera’s residence, they recovered 70 plastic crates full of stolen craft and scrapbooking products, as well as 50 flat rate mailing boxes.

Following the sentencing hearing Vera was released on bond. She will be ordered to report to the Federal Bureau of Prisons upon designation of a federal facility. All federal sentences are served without the possibility of parole.

Acting U.S. Attorney Rose credited the U.S. Secret Service for the investigation leading to today’s sentence.

Assistant U.S. Attorney Kevin Zolot of the U.S. Attorney’s Office in Charlotte prosecuted the case.

CHARLOTTE, N.C. – On Wednesday, May 6, 2015, U.S. District Judge Robert J. Conrad, Jr. sentenced to prison two men for their role in a scheme involving more than $1 million in fraudulent automobile and personal loans, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina.

Shawn Davis, 44, of Huntersville, N.C. and Darren Eugene Littles, 47, of Charlotte, were sentenced to 30 months and 27 months in prison, respectively, followed by a three years of supervised release.  Judge Conrad also ordered Littles to pay $394,784.50 and Davis $45,284.04 as restitution.  Davis and Littles each pleaded guilty to one count of bank fraud conspiracy and one count of financial institution fraud.   

Acting U.S. Attorney Rose is joined in making today’s announcement by Russell F. Nelson, Special Agent in Charge of the United States Secret Service, Charlotte Field Division.

Two additional defendants charged in connection with the scheme were sentenced on March 30, 2015.Kimberly Arnell Cureton, 45, of Rock Hill, S.C. was sentenced to 24 months in prison and one year of supervised release.She pleaded guilty to aggravated identity theft.Kevin Lamone Desmore, 43, of Durham, N.C., was sentenced to 15 months in prison and three years of supervised release.Desmore pleaded guilty to bank fraud conspiracy and making a false statement on a loan application.

According to filed court documents and yesterday’s court proceedings, the defendants conspired with each other and obtained automobile and personal loans from financial institutions by lying on the loan applications and submitting false or forged information and documentation to support the fraudulent loan packages.Court records indicate that, at times, the loan packages contained inflated prices for the automobiles to be purchased and, in many instances, the loan applicants failed to make the required loan payments but attempted to keep the funds obtained as a result of the fraudulent loan applications.

According to court records, Littles was the primary facilitator of the conspiracy.Littles recruited individuals to submit fraudulent loan applications, contacted financial institutions and submitted the fraudulent loan packages and, at times, used stolen identities of individuals or impersonated other people to facilitate the fraud.Littles received a commission based on the fraudulent auto loans deals.Court records indicate that Davis’ role in the conspiracy was to create fraudulent tax documents to support the loan applications, including fake W2s, tax returns and tax earning statements, among other things.Court records show that Davis has a previous federal conviction in connection with a 2000 investigation into bank fraud.

According to court records, Cureton served as a “credit scrubber,” who helped improve applicants’ negative credit scores, and Desmore worked as a recruiter of individuals whose information was used to fill out the fraudulent applications.On some occasions, Desmore even created fake residential leases to support the loan applications.According to court records, between 2008 and 2011 the conspirators obtained and attempted to obtain more than $1 million dollars in automobile and personal loans as a result of the conspiracy.

In handing down the two sentences, Judge Conrad noted that Davis had continued to engage in fraudulent conduct, and that Littles was “a leader in the conspiracy who facilitated the obtaining of fraudulent loans.”

The defendants were released on bond following the sentencing hearing.They will be ordered to report to the Federal Bureau of Prisons upon designation of a federal facility, to begin serving their sentences.All federal sentences are served without the possibility of parole.

The U.S. Secret Service investigated the case.Assistant U.S. Attorney Kenneth Smith was in charge of the prosecution.