Western District of North Carolina

CHARLOTTE, N.C. – Today, U.S. District Judge Robert J. Conrad, Jr. sentenced to prison a former online mortgage broker employee and his California-based mortgage broker conspirator, for their roles involving computer theft from a nation-wide online mortgage broker (the “victim company”), announced the U.S. Attorney’s Office for the Western District of North Carolina and John A. Strong, Special Agent in Charge for the Federal Bureau of Investigation, Charlotte Division.

Jarrod Beddingfield, 38, of Waxhaw, N.C., was sentenced to 15 months in prison, followed by two years of supervised release. Steve Rosene, 43, of Newport Beach, Calif. was sentenced to 27 months in prison and three years of supervised release. Judge Conrad also entered forfeiture money judgments of $1.9 million for Rosene and $60,000 for Beddingfield. Both defendants were ordered to pay restitution to the company, the amount of which will be determined by the court at a later date.

According to filed court documents, court proceedings and today’s sentencing hearing: Beddingfield, a former employee of the victim company, sold company-employee log-in credentials to California-based Rosene. Rosene then used the stolen log-in credentials to access the victim company’s database and downloaded approximately 41,435 mortgage leads for use by two mortgage companies associated with Rosene. Rosene also sold the stolen log-in credentials to two other California mortgage brokers, Brian Rich and Marcus Avritt, co-owners of Chapman Capital, Inc., a mortgage broker firm that also did business as “Home Loan Consultants.” Rich and Avritt used their unauthorized access to the victim company’s database to steal approximately 14,137 mortgage leads. The mortgage leads were stolen in 2007 prior to the victim company’s change of all employee log-in credentials in early January 2008.

The stolen mortgage leads consisted of data on consumers who had used the victim company’s online mortgage lending exchange network to apply for new and refinanced mortgage loans. Mortgage loan consumers used the internet to access the company’s network and to complete online mortgage application forms containing contact, non-public financial data and other information necessary to complete the application process. Court records indicate that the information submitted through this online process comprised the company’s mortgage referral information, known individually as “mortgage leads.” The mortgage referral information, which contained thousands of such individual mortgage leads, was valuable information because it consisted of mortgage loan consumers who were ready, willing and financially-able to close on mortgage loans, refinancing loans and home equity loans. By obtaining this information without paying the requisite fees and dues, Rosene avoided paying the victim company an estimated $1.9 million for the stolen mortgage leads. Rich and Avritt avoided paying the victim company an estimated $745,152 for the stolen mortgage leads.

Beddingfield and Rosene pleaded guilty in July 2013 to one count of conspiracy to illegally access and use the victim company’s customer database. Rosene also pleaded guilty to an additional count of illegally accessing and using the victim company’s database. The other two co-defendants, Avritt and Rich, were sentenced to 15 months and 24 months in prison respectively for conspiracy to illegally access and use the victim company’s customer database.

Beddingfield and Rosene have been 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.

The investigation was handled by the FBI. This prosecution is handled by Assistant United States Attorneys Tom O’Malley, Ben Bain-Creed and Tiffany Mallory of the U.S. Attorney’s Office in Charlotte.

Today’s Plea is One of Four for Similar Schemes

CHARLOTTE, N.C. – A Charlotte woman appeared in federal court today and admitted to conspiring to defraud Medicaid of at least $4.3 million, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Aliya Boss, 35, of Charlotte, pleaded guilty before U.S. Magistrate Judge David C. Keesler to one count of health care fraud conspiracy.

In a separate case, Zaria Davis Humphries pleaded guilty on Tuesday, November 24, 2014, to one count of health care fraud conspiracy for attempting to steal over $850,000 from Medicaid. In a still further separate case, charging documents and plea agreements have been filed against two women also facing health care fraud conspiracy charges. Sakeenah David Davis and Kino Legette Williams are expected to enter formal guilty pleas on Thursday, December 4, 2014, for conspiring to defraud Medicaid of at least $1.6 million.

U.S. Attorney Tompkins is joined in making today’s announcement by Attorney General Roy Cooper, who oversees the North Carolina Medicaid Investigations Division (MID), and John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division.

Aliya Boss,,

According to filed documents and today’s plea hearing, from 2012 to June 2013, Boss participated in a scheme to defraud Medicaid of at least $4.3 million by submitting false reimbursement claims for mental and behavioral health services that she did not provide. Filed court documents indicate that Boss, a licensed social worker, is approved by Medicaid to bill for and receive reimbursement for therapy services provided to Medicaid recipients. According to court documents, 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, court documents indicate that, at the assistance of one conspirator, Boss submitted false claims to Medicaid for fraudulent counseling services through her own company, “Boss Counseling and Consulting, LLC.” According to court records, Boss billed Medicaid for fraudulent therapy services using the Medicaid numbers of beneficiaries collected by another member of the conspiracy working as a “patient recruiter.” Court records indicate that the patient recruiter collected the Medicaid numbers from the recipients in exchange for cash or indirectly by paying for food and taxi rides, among other things. According to court records, the conspirators then used the beneficiaries’ numbers to file the fraudulent reimbursements, claiming, in some instances, that Boss provided therapy services to more than 200 Medicaid recipients in a single day and billing for more than 64 hours of therapy over the course of a 24-hour period. In all, court records show that Boss and her conspirators caused Medicaid pay out over $1,135,302.27 as a result of the false claims, of which $306,965.56 was paid out directly to Boss.

Boss was released on bond following her guilty plea. The maximum prison term for the health care fraud conspiracy charge is 10 years and a $250,000 fine. Boss has also agreed to pay restitution, the amount of which will be determined by the Court at sentencing, which has not been set yet.

Zaria Davis Humphries

In a separate case, on Tuesday, November 24, 2014, Zaria Davis Humphries pleaded guilty to one count of health care fraud conspiracy. Humphries, 41, of Charlotte, admitted before Judge Keesler that she participated in a similar health care fraud scheme that attempted to defraud Medicaid of over $850,000 by submitting false claims for mental and behavioral health services that were never provided. Of the claims submitted, court records indicate that Medicaid paid out a total of $222,037 directly to Humphries. Court records in this case indicate that Humphries is a licensed social worker and the owner and operator of “Life Impact Solutions, LLC” (Life Impact), a company specializing in behavioral and counseling services. Court records show that from January to June 2013, Humphries and her conspirators submitted fraudulent claims to Medicaid for non-existent services, using Humphries’ Medicaid provider number. According to court records, at the assistance of one conspirator, Humphries filed the fraudulent claims using the Medicaid number of beneficiaries collected by a patient recruiter. As part of her plea agreement, Humphries admitted that, in some instances, she claimed she personally provided more than 39 hours of therapy in a 24-hour period and that she provided therapy to more than 100 Medicaid recipients in one day. Humphries was also released on bond and is awaiting sentencing. She faces a maximum prison term of 10 years and a $250,000 fine.

Sakeenah Davis & Kino Williams

Two more women face health care fraud conspiracy charges in connection with a scheme that attempted to defraud Medicaid of at least $1.6 million. Filed court documents indicate that that Sakeenah David Davis, 37, and Kino Legette Williams, 36, both of Charlotte, each have agreed to plead guilty to one count of heath care fraud conspiracy for filing fraudulent reimbursement claims with Medicaid for outpatient behavioral services that were never provided. Court documents show that the two women owned and operated “New Choices Youth and Family Services,” (New Choices), a Medicaid-approved company that purportedly provided outpatient mental and behavioral therapy services. According to court records, from October 2012 to July 2013, Davis and Williams 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 never provided by New Choices.

Court records show that all the claims submitted to Medicaid from New Choices listed “S.B.” as the attending clinician, even though S.B. did not provide the claimed services. In some instances, according to court records, 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. Court records also show that the conspirators used the Medicaid numbers of beneficiaries collected by a patient recruiter and fabricated patient notes to cover up the fraud. According to court records, the defendants were aware of the scheme but did not inquire about or attempt to stop the fraud. Instead, according to court records, they used some of the stolen funds to pay for personal expenses, including jewelry and to pay for Davis’s wedding. Davis and Williams admitted that fraudulent reimbursement claims totaling $1,696,225 were submitted to Medicaid over the course of the scheme, of which $506,124 was paid out to Williams and Davis.

The defendants are expected to appear in court on Thursday, December 4, 2014, before U.S. Magistrate Judge David S. Cayer to formally accept their guilty pleas. The health care fraud conspiracy charge carries a maximum prison term of 10 years and a $250,000 fine.

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.

CHARLOTTE, N.C. – U.S. District Judge Max O. Cogburn, Jr. sentenced today Ali Fayez Nasrallah, 46, of East Elmhurst, NY, to 46 months in prison for conspiracy to traffic in counterfeit goods and for making false statements on an income tax return, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Judge Cogburn also ordered Nasrallah to pay $623,826 as restitution.

Joining U.S. Attorney Tompkins in making today’s announcement are Brock D. Nicholson, Special Agent in Charge of ICE/Homeland Security Investigations (HSI) in Georgia and the Carolinas and Thomas J. Holloman III, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (IRS-CI).

According to filed court documents and today’s sentencing hearing, from 2007 to 2010, Nasrallah conspired with others in the Western District of North Carolina and throughout the country to traffic in counterfeit clothing and shoes bearing counterfeit trademarks of numerous manufacturers, including Nike, Gucci, Coach, Timberland, Ralph Lauren Polo, among others. According to court documents and court proceedings, Nasrallah had deposited approximately $8.2 million in various bank account connected with his trafficking in counterfeit goods. On December 2, 2010, agents seized 645 boxes of counterfeit goods worth over $1.5 million from two warehouses operated by Nasrallah in Astoria, NY. Court documents indicate that Nasrallah also falsely stated his business income and taxes owed on his 2008 income tax return.

Nasrallah has been released on bond. Upon designation of a federal facility he will be ordered to report to the custody of the Federal Bureau of Prisons. All federal sentences are served without the possibility of parole.

The investigation is being handled by HSI and IRS. The prosecution for the government was handled by Assistant U.S. Attorneys Tom O’Malley and Ben Bain-Creed of the U.S. Attorney’s Office in Charlotte.

CHARLOTTE, N.C. – On Thursday, November 13, 2014, U.S. District Judge Max O. Cogburn, Jr. sentenced Joseph Lee Schaffer, 44, of Gastonia, N.C. to 84 months in prison on child pornography charges, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. In addition to the prison term, Moore was ordered to register as a sex offender and to serve the rest of his life under court supervision after he is released from prison.

U.S. Attorney Tompkins is joined in making today’s announcement by John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation, Charlotte Division and Chief Robert C. Helton of the Gastonia Police Department.

Schaffer pleaded guilty in April 2013 to one count of transportation of child pornography and aiding and abetting the transportation of child pornography and one count of possession of child pornography. According to filed documents and statements made in court, in December 2011, law enforcement became aware of Schaffer’s extensive collection of child pornography which he was downloading from and sharing over the Internet. Court records indicate that law enforcement executed a search warrant at Schaffer’s home and seized his computers. A forensic examination of Schaffer’s computers revealed that he possessed over 6,000 images and hundreds of videos of children being sexually abused, including 1,540 images of child pornography victims under the age of five. Court records show that the child pornography in Schaffer’s possession included at least 87 different children already identified by law enforcement as victims of child pornography.

Schaffer has been ordered to self-report to 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 the Gastonia Police Department. Assistant U.S. Attorneys Cortney S. Randall and David A. Thorneloe 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

The Defendants Falsely Claimed on Company Websites the Drugs Were Sold for “Research Purposes” Only

CHARLOTTE, N.C. – Joseph Marsala, 35, and Brent Bumgarner, 33, both of Charlotte, appeared before U.S. Magistrate Judge David S. Cayer today and pleaded guilty to selling misbranded drugs, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. A criminal bill of information charging the two men with one count of introducing and distributing misbranded drugs into interstate commerce and aiding and abetting was filed on October 28, 2014.

David W. Bourne, Special Agent in Charge of the Food and Drug Administration, Office of Criminal Investigations (FDA-OCI), Miami Field Office and Thomas L. Noyes, Inspector in Charge of the Charlotte Division of the U.S. Postal Inspection Service, join U.S. Attorney Tompkins in making today’s announcement.

According to filed court documents and today’s plea hearing, from 2010 to January 2014, the defendants owned and operated two companies, first “Osta-Gain” and later “Spectrum Peptides,” through which they illegally distributed drugs, including “peptides,” and compounds containing the active ingredients of FDA-approved prescription drugs to customers, primarily bodybuilders, for human consumption. Court records indicate that there is an illegal market for peptides, prescription drugs, and compounds containing the active ingredients of FDA-approved prescription drugs among bodybuilders and weight lifters, since it is believed that these substances enhance muscle development. The FDA regulates these products as drugs when they are marketed for human use. According to court records, to avoid detection by the FDA, the defendants made numerous false representations on their companies’ websites, www.osta-gain.com and www.spectrumpeptide.com, claiming that, “ALL products and services offered are for RESEARCH purposes ONLY.” In reality, court records indicate, the products the defendants sold were intended for human consumption, by individuals seeking to build body mass and to counter the side effects of such muscle building drugs. In addition to the illegal drugs, Marsala and Bumgarner also sold the necessary “laboratory supplies” (e.g., pipettes) for bodybuilders to administer the products and distributed dosing information to consumers, court records show.

In connection with today’s guilty plea, the court was also advised that even though the defendants claimed the products sold on their websites were for research purposes only, Marsala and Bumgarner held promotional events such as Black Friday sales, Christmas sales, and free T-shirt promotions. The defendants also specifically targeted the bodybuilding community by advertising on websites catering to bodybuilders. According to filed court documents, in April 2013 Osta-Gain was named in a national newspaper article about the illegal marketing of research chemicals to bodybuilders. As a result of that article, the defendants shut down the Osta-Gain website, created Spectrum Peptides and began selling identical products through the new company’s website. During the relevant time period, Marsala and Bumgarner advertised and sold through the two websites approximately $800,000 of misbranded drugs to customers across the United States.

During the course of the investigation, law enforcement agents seized approximately $34,012.43 in funds. Marsala and Bumgarner have agreed to forfeit these assets as part of their plea agreement and to pay full restitution, the amount of which will be determined by the Court at sentencing.

The defendants have been released on bond. The penalty for introducing misbranded drugs into interstate commerce and aiding and abetting carries a maximum prison term of three years and a $10,000. A sentencing date has not been set yet.

The investigation was conducted by FDA-OCI and USPIS. The prosecution is handled by Assistant U.S. Attorney Kelli Ferry of the U.S. Attorney’s Office in Charlotte.

The FDA has made available a consumer-friendly form for reporting to the agency adverse events and other serious safety problems with FDA-regulated products, including products catering to bodybuilders for the increase of muscle mass. That form is available at http://www.fda.gov/ForConsumers/ConsumerUpdates/ucm354560.htm.

Defendant Stole more than $2 Million from over 30 Victim Investors

CHARLOTTE, N.C. – Chuckie Beaver, 51, of Ellenboro, N.C. appeared before U.S. Magistrate Judge David S. Cayer today and pleaded guilty to one count of securities fraud for defrauding more than 30 investors of over $2 million dollars, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina.

Russell F. Nelson, Special Agent in Charge of the United States Secret Service, Charlotte Field Division joins U.S. Attorney Tompkins in making today’s announcement.

According to filed court documents and today’s plea hearing, from June 2012 to April 2014, Beaver induced over 30 victims to invest in his fraudulent scheme, falsely claiming that their money would be invested in “Best Services, Inc.,” a company owned by Beaver and specializing in the repair of industrial electronic equipment. Court records indicate that Beaver solicited friends, neighbors, and fellow church members to invest with his company, by claiming that his company needed additional capital to purchase materials to complete a large number of outstanding repair orders from major corporations. To further the scheme, court records show that Beaver created and showed his investors bogus documents, including false repair orders indicating significant work activity, fake customer checks, and fake customer emails, giving a false impression he had strong relationships with major corporations.

According court records, Beaver provided his investor victims with promissory note investment contracts, stating that the investors would receive the principal invested plus interest - as high as 100% - within a specified period of time, typically 30 days. Court records indicate that, at the time of investment, Beaver would provide his investor victims a post-dated check for the full amount of the promised investment plus interest. As filed documents show, in most instances, when the investors deposited Beaver’s checks they would be returned for insufficient funds. According to court records, when investor victims questioned Beaver about the returned checks, Beaver made up a number of excuses, and in some instances he was able to lull investors into investing even more money with the promise of even greater returns. Court records indicate that contrary to his claims, Beaver used the investors’ money to pay for personal expenses and to make payments to previous investors, commonly referred to as Ponzi-payments. In total, over the course of the scheme, Beaver defrauded more than 30 individuals from Mecklenburg, Gaston and Cleveland counties of more than $2 million.

Beaver was released on bond following his plea hearing. He faces a maximum prison term of 20 years and a $250,000 fine, or both, and 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 Secret Service. Assistant United States Attorney Kevin Zolot, of the U.S. Attorney’s Office in Charlotte is handling the prosecution.

Defendant Falsely Told Investor Victim He Was a Former FBI Agent

CHARLOTTE, N.C. – Mark Burgin, 44, of Tampa, Fla. appeared before U.S. Magistrate Judge David S. Cayer today and pleaded guilty to securities fraud conspiracy for soliciting investor victims to invest in a fraudulent bond scheme, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Burgin’s conspirator, Charles Abrams, 52, of Huntersville, N.C., also faces wire fraud and securities fraud conspiracy, securities fraud and wire fraud charges in connection with the scheme.

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

According to filed court documents and today’s plea hearing, Burgin and Abrams engaged in a securities fraud scheme, by promoting a fraudulent investment known as the Mexican “Pink Lady” Bonds (bonds), which the two men claimed were gold-backed bearer bonds issued in 1899 by the “United States of Mexico” and had a value of 5% interest compounded daily. According to court records, the two men induced victims to invest in their scheme by falsely claiming that they had purchased the rare bond during a trip to Los Angeles in 2010. Court records show that, in February 2011, Burgin and Abrams met with one victim investor, identified as “Individual 1” and falsely represented that they were putting the bond on a trading platform named “Euroclear.” At that meeting, the conspirators promised Individual 1 a return of over $1.1 million based on the victim’s $225,000 past investment.

Court records indicate that in April 2011, Burgin and Abrams solicited another victim investor, “Individual 2,” to invest in the bond. During their meeting with Individual 2, court records indicate Burgin falsely held himself out to be a former police officer with Gastonia and Charlotte-Mecklenburg Police Departments and a former Special Agent with the FBI. According to court records, Burgin and Abrams falsely represented to Individual 2 that the bond was under contract with a company named “Americana” for $2 billion, and that they were to receive $1.9 billion from its sale. Court records indicate over the next few days, the conspirators induced Individual 2 to invest in the bond by falsely claiming that a purchase of the bond by the U.S. Treasury Department was imminent, causing Individual 2 to wire transfer $10,000 to a bank account maintained by Abrams. In addition to defrauding the investor victims, Burgin also provided false statements to law enforcement about his knowledge and participation in the scheme, court records show.

Burgin was released on bond following his plea hearing. He faces a maximum prison term of 20 years and a $250,000 fine, or both, and 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.

Abrams has also been released on bond and is scheduled appear to before U.S. Magistrate Judge David Keesler for his arraignment hearing on November 24, 2014 at 9:55 a.m.

The investigation was handled by the FBI. Assistant United States Attorney Kenneth M. Smith, of the U.S. Attorney’s Office in Charlotte is handling the prosecution.

CHARLOTTE, N.C. – Today, U.S. District Judge Robert J. Conrad, Jr. handed down prison sentences ranging from 168 to 84 months to six defendants involved in a drug trafficking conspiracy, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. The six men each pleaded guilty to one count of conspiracy to distribute and to possess with intent to distribute cocaine and crack cocaine.

U.S. Attorney Tompkins 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 Robert C. Helton of the Gastonia Police Department.

Judge Conrad sentenced Torbent Lamont Jackson, 34, of Charlotte to 168 months in prison; James Russell Coulter, 35, of Grover, N.C., to 132 months in prison; Mario Demond Floyd, 34, of Charlotte, to 120 months in prison; Larry Donnell Erby, Jr., 35, of Gastonia, N.C to 120 months in prison; Thomas Monteres Burris, 34, of Gastonia, to 87 months in prison; and Carroll Macarthur Williams, Jr., 35, of Winston-Salem, N.C. to 84 months in prison. Each defendant was also ordered to serve five years under court supervision upon release from prison.

According to filed court documents and court proceedings, from 2002 to September 2013, in Gaston and Mecklenburg Counties and elsewhere, the defendants conspired with each other and others to distribute and to possess with intent to distribute controlled substances, including dozens of kilograms of cocaine and dozens of ounces of crack cocaine with a street value in excess of $2 million. Coulter’s and Floyd’s sentences were enhanced because of their prior criminal histories and because they possessed a firearm in furtherance of the conspiracy.

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.

The 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. All federal sentences are served without the possibility of parole.

The case was investigated by the FBI and Gastonia PD. Assistant U.S. Attorney Steven R. Kaufman 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 man today on charges stemming from two 2012 carjackings committed in Charlotte, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Antonio Cordiara McClary, 25, of Charlotte, was sentenced to 148 months in prison, followed by three years of supervised release.

Wayne L. Dixie, Special Agent in Charge of the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), Charlotte Field Division, and Chief Rodney D. Monroe of the Charlotte-Mecklenburg Police Department (CMPD) join U.S. Attorney Tompkins in making today’s announcement.

According to court documents and today’s sentencing hearing:

McClary carjacked a woman on January 5, 2012, and forced her to drive to her bank and withdraw $500 from an ATM. During the carjacking, McClary pointed what appeared to be a firearm at the victim’s head. Following the forced withdrawal of money from the ATM, McClary forced the victim into the trunk of her 2010 Honda Accord while he drove around for thirty minutes. McClary later abandoned the car with the victim locked in the trunk and told her not to get out. An hour later, the victim was able to escape the trunk and call police.

On January 20, 2012, McClary confronted a second woman who was getting out of her car in her apartment parking lot and forced her back into her car with what appeared to be a firearm and a knife. McClary took the victim’s car keys and drove the woman to the bank ATM, forcing her to withdraw $500. Later, while driving from the ATM, McClary threatened to “splatter the victim’s brains all over the windshield.” Following the carjacking, McClary abandoned the victim in her car and told her not to report the carjacking to the police because he knew where she lived and said he would come back and kill her. In both incidents, what appeared to be a firearm was later determined to have been an air rifle that fired pellets. In April 2013, McClary pleaded guilty to two counts of carjacking.

In announcing the sentence, Judge Conrad stated that the offenses were a “heinous couple of carjackings that caused unfathomable terror to the victims.” Judge Conrad noted that he imposed the 148 month sentence to protect the public from further crimes of the defendant.

The defendant has been 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.

The investigation was handled by ATF and CMPD. The prosecution for the government was handled by Assistant U.S. Attorney Robert Gleason of the U.S. Attorney’s Office in Charlotte.

Defendant Spent The Stolen Funds On Personal Expenses

CHARLOTTE, N.C. – Sean F. Mescall, 35, of Charlotte, was sentenced today by U.S. District Judge Robert J. Conrad, Jr. to serve 195 months in prison for orchestrating a Ponzi scheme that solicited victims to invest more than $1.5 million dollars in the foreign currency market (FOREX), announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Judge Conrad also ordered Mescall to serve three years under court supervision following his prison term and to pay $1,248,812.09 as restitution to his victims. In December 2012, a federal jury convicted Mescall of securities fraud, wire fraud and money laundering.

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 U.S. Attorney Tompkins in making today’s announcement.

According to court documents and today’s sentencing hearing, from 2006 to 2010 Mescall executed a Ponzi scheme by inducing over 119 investors in Charlotte and elsewhere to invest more than $1.5 million in his investment company, “Capitalstreet Financial, LLC” (CSF), falsely representing that their money would be invested in the foreign currency market. Court documents show that Mescall lied to his victims about his professional background and credentials falsely claiming that he was a college graduate with over 20 years of experience trading in FOREX and that he was a former director at Merrill Lynch. Court records indicate that Mescall did not have a college degree, had no relevant trading experience and never worked for Merrill Lynch. Mescall also misled his investors about CSF, claiming that it was a national company with over 35 offices, and that CSF handled over $100 million in trade volume each month. In fact, court records indicate, CSF only operated a boiler room in Charlotte and later in Cornelius, and that it never handled $100 million in trade at any time during the scheme.

Court documents indicate that Mescall lulled his victims into a false sense of security by falsely promising 60% to 80% annual returns on their investments. Court records show that often Mescall’s victims were elderly and the funds they invested were most, if not all, of their life savings. Over the course of the scheme, Mescall only traded $285,908 of the victim’s money, and sustained $271,705 in losses. Mescall used approximately $295,000 to pay some victims supposed “payouts” from profits made on investments. However, court records show that these payments were not based on profits, but came from funds contributed by new investors, commonly referred to as “Ponzi” payments. Mescal simply deposited the rest of the investors’ money into various bank accounts he controlled in the United States and offshore, and used a substantial amount of investor money to pay for personal expenses unrelated to any foreign exchange. For example, court documents indicate that Mescall used investor money to buy, among other things, a BMW, a Ferrari and other cars, a Rolex watch, diamonds and other jewelry, and to make mortgage payments on his Lake Norman residence.

“The defendant seemed to have no sense of the traumas suffered by the victims,” Judge Conrad said in announcing Mescall’s sentence. “These losses were significant, life impacting events because of the defendant’s greed.”

Mescall has been detained since June 2012 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 case was investigated by the Securities Division of the North Carolina Secretary of State and the FBI.

The prosecution was handled by Assistant U.S. Attorney Kenneth Smith of the Western District of North Carolina.

U.S. Attorney’s Office for the Western District of North Carolina Leading Local Efforts

CHARLOTTE, N.C. – U. S. Attorney Anne M. Tompkins announced today that Michael E. “Mike” Savage and Richard Edwards, Assistant United States Attorneys (AUSAs) in the Charlotte and Asheville offices of the U.S. Attorney for the Western District of North Carolina will lead the efforts of this Office in connection with the Justice Department’s nationwide Election Day Program for the upcoming November 4, 2014, general elections. AUSAs Savage and Edwards have been appointed to serve as the District Election Officers (DEOs) for the Western District of North Carolina and in that capacity are responsible for overseeing the District’s handling of complaints of election fraud and voting rights abuses in consultation with Justice Department Headquarters in Washington.

United States Attorney Tompkins said, “Every citizen must be able to vote without interference or discrimination. The Department of Justice will act promptly and aggressively to protect the integrity of the election process.”

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

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

The franchise is the cornerstone of American democracy. We all must ensure that those who are entitled to the franchise exercise it if they choose, and that those who seek to corrupt it are brought to justice. In order to respond to complaints of election fraud or voting rights abuses on November 4, 2014, and to ensure that such complaints are directed to the appropriate authorities, United States Attorney Tompkins stated that AUSA/DEO Savage will be on duty in the Charlotte Office and AUSA/DEO Edwards in the Asheville Office while the polls are open. They can be reached by the public at the following telephone numbers:

In Charlotte: 704-344-6222 and in Asheville: 828-271-4661.

In addition, the FBI will have special agents available in each field office and resident agency throughout the country to receive allegations of election fraud and other election abuses on election day. The local FBI field office can be reached by the public at 704-672-6100.

Complaints about possible violations of the federal voting rights laws can be made directly to the Civil Rights Division’s Voting Section in Washington by phone at 1-800-253-3931 or (202) 307-2767, by fax at (202) 307-3961, by email to voting.section@usdoj.gov or by complaint form at http://www.justice.gov/crt/complaint/votintake/index.php. United States Attorney Tompkins said, “Ensuring free and fair elections depends in large part on the cooperation of the American electorate. It is imperative that those who have specific information about discrimination or election fraud make that information available immediately to my Office, the FBI, or the Civil Rights Division.”

CHARLOTTE, N.C. – Nkhenge Shropshire, a/k/a Konjay Shropshire, 41, of Charlotte, was sentenced to 33 months in prison today for filing false tax returns and lying on a loan application, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Chief U.S. District Judge Frank D. Whitney ordered Shropshire to serve five years under court supervision following her prison term and to pay $582,933 as restitution to IRS and $14,309.17 and $25,000 respectively to two credit unions she defrauded.

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

According to filed court documents and today’s sentencing hearing, Shropshire was the owner of “Tax Connections” a Charlotte tax return preparation business. Court records indicate that from 2009 to 2011, Shropshire aided and assisted in the preparation of more than 600 tax returns for clients which were e-filed with the IRS. According to court records, many of the tax returns prepared by Shropshire falsely included Schedule C losses and refundable education credits, which decreased the clients’ tax liabilities, resulting in larger tax refunds and false Earned Income Tax Credits. The tax loss associated with the false education credits is more than $580,000. Court records show that Shropshire directed that many of the fraudulent tax refunds be deposited into a business bank account she controlled, and kept a portion of the refund as payment for her services. On some occasions, according to court records, Shropshire did not provide her clients with copies of their completed tax returns or gave them incomplete copies, so clients would not know their returns contained false information.

According to filed court documents, in October 2011 Shropshire applied for membership with a federal credit union using a different social security number and home address. On the same day, court records show, Shropshire also filled out an application for a car loan with the same credit union for the purchase of a 2008 Mercedes CLS 550 vehicle. On that car loan application, Shropshire listed a false employer, false annual salary and false job title. Court records also show that Shropshire was approved for a $40,075 car loan but only made two payments totaling $2,508.50. Shropshire pleaded guilty to conspiracy to defraud the IRS and to making false statements on a loan application in October 2013.

In handing down Shropshire’s sentence today, Judge Whitney noted that we have a “system based on truth” and “self-reporting,” and that we rely on individuals filing taxes to be honest and even more on return preparers. Judge Whitney also stated that the victims in this case are honest tax payers and that this crime victimizes every single honest taxpayer.

Shropshire will be ordered to self-report to 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 IRS-CI. Assistant United States Attorney Jenny G. Sugar of the U.S. Attorney’s Office in Charlotte prosecuted the case.

CHARLOTTE, N.C. – On Tuesday, October 28, 2014, Chief U.S. District Judge Frank D. Whitney sentenced Molina-Sanchez, 35, of Mexico, to serve 420 months in prison on drug trafficking and firearms charges, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. A federal jury convicted Molina-Sanchez in May 2013 of conspiracy to distribute and to possess with intent to distribute at least five kilograms of cocaine and at least one kilogram of heroin, conspiracy to launder proceeds of drug trafficking, possession with intent to distribute cocaine and possession of a firearm in furtherance of drug trafficking.

U.S. Attorney Tompkins is joined in making today’s announcement by Brock D. Nicholson, Special Agent in Charge of ICE/Homeland Security Investigations (HSI) in Georgia and the Carolinas and Sheriff Kevin L. Auten of Rowan County Sheriff’s Office (RCSO).

According to filed court documents, trial evidence and today’s sentencing hearing, from 2004 to 2011, Molina-Sanchez and his conspirators obtained more than 350 kilograms of cocaine with a street value of more than $30 million from a supplier in California. Molina-Sanchez and his conspirators transported and distributed the cocaine to traffickers in North Carolina who then sold it throughout the state. Court records show that to transport the drugs without being detected, Molina-Sanchez and his conspirators hid the drugs and drug proceeds in secret car compartments. During the investigation, law enforcement found hundreds of thousands of dollars, three kilograms of cocaine, and a kilogram of heroin, all hidden in various locations within vehicles. When officers arrested Molina-Sanchez in October 2012, he was in possession of almost three ounces of cocaine, two handguns, and more than 100 rounds of ammunition, according to court records. Finally, based on evidence elicited at Molina-Sanchez’s May 2013 trial, law enforcement, post-trial, conducted a search of one of his vehicles and found a hidden compartment containing almost $50,000 in cash and three handguns.

This prosecution is part of an extensive investigation by the Organized Crime Drug Enforcement Task Force (OCDETF) that has resulted in the conviction of 14 defendants on 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 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.

Molina-Sanchez has been in federal custody since October 2012. He 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 investigated by HSI in Charlotte and RCSO, assisted by the Charlotte-Mecklenburg Police Department and its crime laboratory, the Iredell County Sheriff’s Office and its crime laboratory, and the North Carolina State Bureau of Investigation. The prosecution was handled by Assistant U.S. Attorney Steven R. Kaufman.

CHARLOTTE, N.C. – Eric Eugene Brice, a/k/a “Bug,” 42, was sentenced today to 77 months in prison and to three years of supervised release for possession of an illegal firearm, a Maverick 99 pistol-grip shotgun, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Brice pleaded guilty to the charge in March 2014.

Brice is also the final defendant to be sentenced in connection with the 28 “United Blood Nation” (UBN) gang members indicted in 2012 on racketeering and related charges.

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

According to filed documents and statements made in court, the defendants conspired to participate in a racketeering enterprise, that is, the United Blood Nation (“UBN” or “Bloods”) and several factions of the UBN. Court records indicate that from 2007 to May 2012, in the Western District of North Carolina and elsewhere, the defendants conspired to operate as a gang, a criminal enterprise, and in doing so, they engaged in criminal activities, including racketeering conspiracy, murder conspiracy, narcotics trafficking, armed robbery and firearms related crimes.

The remaining defendants have been sentenced as follows:

• James Anderson, a/k/a “Stank, 31, was sentenced to 84 months in prison and 5 years of supervised release. • Alan Boyd Donta Barnett, a/k/a “Big Al”, 39, was sentenced to 360 months in prison and 5 years of supervised release. • Travis Lamar Brice, a/k/a “Trap”, 30, was sentenced to 63 months in prison and 4 years of supervised release. • Quinton Lavar Brown, a/k/a “QP” or “QB”, 22, was sentenced to 70 months in prison and 4 years of supervised release. • Rafas Gene Camp, a/k/a “Tick”, 35, was sentenced to 130 months in prison and 4 years of supervised release. • Joston Jamal Clemmer, a/k/a “Ace”, 23, was sentenced to 97 months in prison and 2 years of supervised release. • Kemmey Nicole Cooke, a/k/a “ Gangsta Wu”, 32, was sentenced to 27 months in prison and 2 years of supervised release. • Jaimel Kenzie Davison, a/k/a “I-Shine”, 31, was sentenced to 150 months in prison and 2 years of supervised release. • Wesley Tyler Floyd, a/k/a “West Coast”, 28, was sentenced to 110 months in prison and 4 years of supervised release. • Davon Yakeen Futrell, a/k/a “Smooth”, 26, was sentenced to 63 months in prison and 2 years of supervised release. • Tristan Daquane Goode, a/k/a “Buck”, 22, was sentenced to 70 months in prison and 4 years of supervised release. • Nathaniel Graham, a/k/a “Nasty”, 25, was sentenced to 240 months in prison and 3 years of supervised release. • Joseph Dranell Gray, a/k/a “Killa”, 40, was sentenced to 180 months in prison and 2 years of supervised release. • Dominque O’Neill Jackson, a/k/a “DJ”, 26, was sentenced to 84 months in prison and 4 years of supervised release. • Jimmy Lionell, Jones, a/k/a “Buddhist” or “Buddha”, 39, was sentenced to 180 months in prison and 3 years of supervised release. • William Amir Knox, a/k/a “Poo Nuk”, 30, was sentenced to 108 months in prison and 5 years of supervised release. • Kentrell Tyrone McIntyre, a/k/a “Mustafa”, 35, was sentenced to 192 months in prison and 3 years of supervised release. • William Lewis Dontars Meeks, a/k/a “Willie” or “Rock”, 36, was sentenced to 130 months in prison and 8 years of supervised release. • Kevin Jerome Morris, a/k/a “Kato”, 37, was sentenced to 84 months in prison and 3 years of supervised release. • Franklin Robbs, a/k/a “Frankie Boo”, 43, was sentenced to 132 months in prison and 3 years of supervised release. • Maurice Terrell Robinson, a/k/a “Hell Rell”, 25, was sentenced to 70 months in prison and 2 years of supervised release. • Andrew Eugene Stowe, a/k/a “Coco”, 38, was sentenced to 60 months in prison and 4 years of supervised release. • Marquise Deshawn Watson, a/k/a “ Rambo”, 22, was sentenced to 97 months in prison and 2 years of supervised release. • Melinda Charmane Watson, 38, was sentenced to 46 months in prison and 4 years of supervised release. • Daryl Wilkinson, a/k/a “OG Powerful”, 50, was sentenced to 51 months in prison and 3 years of supervised release. • Samatha Williams, a/k/a “Samantha Wilkinson” or “Lady Sam”, 45, was sentenced to 72 months in prison and 2 years of supervised release. • Perry Gorontent Williams, a/k/a “P-Flame” or “Flame”, 29, was sentenced to 360 months in prison and 3 years of supervised release.

Court documents indicate that, as part of the conspiracy, the defendants engaged in drug trafficking, and used the proceeds of their drug crimes to help finance the gang’s criminal activities. According to court records, the defendants also committed armed robberies and armed home invasions in order to generate proceeds to support the enterprise. Court document show that, as part of the conspiracy, the defendants committed acts of violence against rival gang members. According to court records, the defendants concealed their criminal activities and obstructed justice, including threatening potential witnesses. The defendants also maintained and circulated a collection of firearms for the use in criminal activity by UBN members, court records show.

According to court records, the defendants and other UBN gang members in North Carolina and elsewhere identified gang members belonging to other UBN or Bloods factions by their gang names and phone numbers, including telephone area codes. For example, according to court records, area code “704” represented gang factions within Mecklenburg and Gaston Counties. Court records indicate that gang members identified other gang members who were incarcerated by their street gang names and by their inmate identification numbers, in lieu of their telephone numbers, while incarcerated gang members were referred to as “behind the G wall.”

According to court documents and court proceedings, as gang members of the UBN enterprise, the defendants met regularly with other UBN members. During those meetings, gang members talked about past acts of violence and other crimes against rival gang members, about UBN gang members who had been arrested or incarcerated, about police interactions with gang members and discussed internal disciplinary action of other UBN members, court records show. According to court records, also during these meetings, gang members shared identities of individuals whom they suspected to be cooperating with law enforcement and discussed the types of action that ought to be taken against those individuals. Court documents indicate that during these meetings, UBN members also planned and agreed on carry out future crimes, including murder, robbery, and drug trafficking.

The case was investigated by the FBI in cooperation with the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives, the North Carolina State Bureau of Investigation, the Charlotte-Mecklenburg Police Department, the Gastonia Police Department, the Gaston County Police Department, the Gaston County Sheriff’s Office, the Shelby Police Department, and North Carolina Department of Probation and Parole. All federal sentences are served without the possibility of parole.

The prosecution is handled by Assistant U.S. Attorney Jill Westmoreland Rose, Daniel Ryan, and Kevin Zolot of the U.S. Attorney’s Office.

CHARLOTTE, N.C. – Late on Tuesday, October 28, 2014, U.S. District Judge Robert J. Conrad, Jr. sentenced Juan Brandon Gray-Sommerville, 25, of Charlotte, to 225 months in prison followed by three years of supervised release for sex trafficking of a minor, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. A federal jury convicted the defendant of one count of sex trafficking of a minor in August 2013.

John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division and Chief Rodney D. Monroe, of the Charlotte-Mecklenburg Police Department (CMPD) join U.S. Attorney Tompkins in making today’s announcement.

According to filed court documents and testimony presented during the two-day trial, the minor female met Gray-Sommerville through social media in early March 2012. Shortly thereafter, the defendant began exchanging text messages with the minor, encouraging her to meet him. According to court records, on March 13, 2012, Gray-Sommerville and his girlfriend travelled to a town outside of Charlotte to pick up the minor in front of her school. There, he enticed to come to Charlotte with him by showing her a large sum of money and marijuana. According to trial testimony, the three of them drove back to Charlotte and checked into a motel. Trial testimony established that the defendant created an online advertisement on Backpage.com to recruit clients to engage in sex acts with the minor. Court records indicate that the defendant drove the minor to have sex for money with two clients. According to court documents and witness testimony, law enforcement located the minor when they responded her 9-1-1 call, after Gray-Sommerville abandoned her fearing police detection. Court records indicate that during the investigation, an FBI computer forensic examiner found on Gray-Sommerville’s computer the picture of the minor the defendant posted on Backpage.com. Investigators also recovered text messages the defendant had exchanged with the minor using his cell phone.

At sentencing, Judge Conrad considered an incident that occurred several months before the defendant picked up the minor victim at her school. Testimony regarding this incident was presented at trial. During that incident, law enforcement officers and agents encountered the defendant at a local hotel when he dropped off another minor so that she could prostitute there.

In announcing his sentence, Judge Conrad said that Gray-Sommerville was a pimp whose actions were callous. The judge also found that the Gray-Sommerville knowingly testified falsely at trial and that credible evidence presented at trial showed that the defendant knew early on in his involvement with the victim that she was a minor.

Gray-Sommerville has been in local federal custody since April 2013. He 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 of the case was handled by the FBI and was assisted by CMPD and Homeland Security Investigations (“HSI”). 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. – Antonio Donte Smith, 30, of Charlotte, was sentenced to 147 months in prison today in connection with the 2012 robbery of a pharmacy and related firearms violations, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Chief U.S. District Judge Frank D. Whitney also ordered Smith to serve five years under court supervision.

Wayne L. Dixie, Special Agent in Charge of the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), Charlotte Field Division and Chief Rob Merchant of the Pineville Police Department (PPD) join U.S. Attorney Tompkins in making today’s announcement.

In July 2013, a federal jury convicted Smith of Hobbs Act robbery, possession of a firearm in furtherance of a crime of violence, and possession of a firearm by a convicted felon in connection with the September 2012 armed robbery of a pharmacy located in Pineville, N.C. According to filed documents, evidence presented at trial, and today’s sentencing hearing, Smith entered the pharmacy wearing a white hooded sweatshirt and a cut-off black tee-shirt sleeve across his face, and was carrying a Ruger .45 caliber pistol. Court records show that Smith pointed the firearm at the store clerk and demanded money from the cash register, to which the cashier complied. Court records indicate that while Smith was taking the money from the register Smith noticed a customer, pointed his firearm at the customer, ordered the customer to get on his knees and robbed the customer of his wallet. According to court records, Smith then forced the store manager to give him all the money kept in the store’s safe. At trial, witnesses testified that Smith pointed his gun at the store manager and began to count down from ten while the store manager tried to open the safe.

Court records indicate that Smith fled the store, entered a vehicle and proceeded to lead law enforcement officers on a high speed chase. Eventually Smith abandoned the car and fled on foot into a wooded area where he dropped the firearm and some of his clothing. According to court records, police officers, assisted by a K-9 unit, found and arrested Smith who was hiding in a nearby apartment complex. In the area where Smith was apprehended, officers located money and a receipt that belonged to the pharmacy customer Smith had robbed earlier. At trial, Smith claimed that it was his brother who had robbed the pharmacy.

In handing down today’s sentence, Judge Whitney stated that “Smith is a very serious recidivist with regard to violent armed crimes.” He also noted that Smith committed five armed robberies and planned out violent crimes and that he terrified the employees of the pharmacy he robbed.

In 2002, Smith was convicted in state court of four counts of robbery with a dangerous weapon. According to police reports and court documents from those cases, Smith robbed three Charlotte-area pharmacies and a fast-food restaurant and even shot a cashier working at one of the drug stores during one of the robberies.

Smith has been in local federal custody since he was arrested in February 2013. He 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 investigated by ATF and PPD. The prosecution is being handled by Assistant U.S. Attorney Jennifer Dillon.

STATESVILLE, N.C. – On Monday, October 27, 2014, U.S. District Judge Richard L. Voorhees sentenced Nakia Monica Brown, 36, formerly of Charlotte, to 87 months in prison and to two years of supervised release for her role in a scheme involving stolen personal identities and fraudulently-obtained consumer credit reports, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Judge Voorhees also ordered a money judgment forfeiture against Brown in the amount of $396,194.18, and victim restitution in the amount of $447,101.

U.S. Attorney Tompkins 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 (USPIS).

According to filed court documents and court proceedings, from 2009 to 2010, Brown and her conspirators obtained a list of more than 1,400 identity theft victims, which contained stolen personally identifiable information (PII), such as the victims’ names, social security numbers, and dates of birth. Court records show that the conspirators used the victim’s PII to obtain free consumer credit reports from credit reporting agencies and then used the credit report information to manufacture fake identification documents and to purchase over $400,000 in merchandise from 11 national retail chains.

According to filed documents and court proceedings, Brown gained access to the victims’ consumer credit reports, including the victims’ credit scores, their existing credit card accounts, their available lines of credit and other biographical information, such as their residential addresses. In this manner, Brown fraudulently acquired a combined total of 370 credit reports from three major credit reporting agencies, according to court documents. Court documents indicate that Brown then used the identity theft victims’ information to manufacture counterfeit New York driver’s licenses that contained the names, dates of birth and addresses of the identity theft victims, along with photographs and physical descriptions of Brown and her conspirators. Using the counterfeit driver’s licenses, Brown and her conspirators fraudulently purchased merchandise at national retail stores based on the identity theft victims’ available credit or based on same-day, instant credit offered by the retail stores to new customers. Court records indicate that the fraudulently-purchased merchandise was then sold to pawnbrokers, “fences” and other end users. According to court records, Brown and her conspirators purchased over $400,000 in merchandise. Brown pleaded guilty to one count of wire fraud conspiracy and one count of aggravated identity theft in May 2013.

Following the sentencing hearing, Brown was permitted to remain 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.

Brown’s conspirators, Tiffany Sherise Young, 22, of Charlotte and Trina Monique Young, 41, of Bronx, N.Y. were each sentenced earlier this year to 10 months in prison and to two years of supervised release on wire fraud conspiracy charges.

The investigation was handled by USPIS, with assistance from the Charlotte- Mecklenburg Police Department. The prosecution was handled by Assistant U.S. Attorneys Tom O’Malley and Benjamin Bain-Creed of the U.S. Attorney’s Office in Charlotte.

STATESVILLE, N.C. – On Monday, October 27, 2014, U.S. District Judge Richard L. Voorhees sentenced Denise Swanson of Lenoir, N.C. to 24 months in prison for tax evasion, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Swanson was also ordered to serve three years under court supervision following her release from prison and to pay restitution in the amount of $839,830.99 to client victims and $249,912 to IRS.

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

According to court documents and yesterday’s sentencing hearing, Swanson was the owner and operator of “Bottom-line Accounting,” a tax preparation and bookkeeping business. Filed court documents show that from 2006 to 2012, Swanson performed tax preparation services for her clients, J.W. and K.W., and their business, C.B. (“the clients”), which included making related tax payments on their behalf. According to court records, Swanson received funds from her clients that were supposed to be used to pay their various tax obligations to IRS and other state agencies. But instead of making the payments, court records show, Swanson embezzled the money and used it to pay for personal expenses including her daughter’s college tuition, renovations to her house and gambling. In total, Swanson embezzled approximately $839,830 from her clients. According to court records, Swanson failed to report the embezzled income on her own individual tax returns for tax years 2006 through 2011. Swanson pleaded guilty to tax evasion for tax year 2010 in August 2013.

Following the sentencing hearing, Swanson was permitted to remain 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.

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

STATESVILLE, N.C. – On Monday, October 27, 2014, U.S. District Judge Richard L. Voorhees sentenced Denise Swanson of Lenoir, N.C. to 24 months in prison for tax evasion, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Swanson was also ordered to serve three years under court supervision following her release from prison and to pay restitution in the amount of $839,830.99 to client victims and $249,912 to IRS.

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

According to court documents and yesterday’s sentencing hearing, Swanson was the owner and operator of “Bottom-line Accounting,” a tax preparation and bookkeeping business. Filed court documents show that from 2006 to 2012, Swanson performed tax preparation services for her clients, J.W. and K.W., and their business, C.B. (“the clients”), which included making related tax payments on their behalf. According to court records, Swanson received funds from her clients that were supposed to be used to pay their various tax obligations to IRS and other state agencies. But instead of making the payments, court records show, Swanson embezzled the money and used it to pay for personal expenses including her daughter’s college tuition, renovations to her house and gambling. In total, Swanson embezzled approximately $839,830 from her clients. According to court records, Swanson failed to report the embezzled income on her own individual tax returns for tax years 2006 through 2011. Swanson pleaded guilty to tax evasion for tax year 2010 in August 2013.

Following the sentencing hearing, Swanson was permitted to remain 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.

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

CHARLOTTE, N.C. – Today, U.S. District Judge Robert J. Conrad, Jr. sentenced Carl David Wright, 54, of Iron Station, N.C., to serve four years in prison followed by three years of supervised release for stealing more than $1 million from investors, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Judge Conrad also ordered Wright to pay $817,975 as restitution to his victim investors.

Thomas L. Noyes, Inspector in Charge of the Charlotte Division of the U.S. Postal Inspection Service (USPIS) and B.W. Colier, Acting Director of the North Carolina State Bureau of Investigation (SBI) join U.S. Attorney Tompkins in making today’s announcement.

According to filed court documents and today’s sentencing hearing, Wright was a schoolteacher who solicited investors to invest more than one million dollars in a Ponzi scheme that Wright claimed was a purported “Commodity Investment Group” based in Cherryville, N.C. From August 2008 through March 2013, Wright told investors that he managed the Commodity Investment Group for the purpose of investing in hedge funds, commodities, and Quick Trip service stores. In reality, Wright invested no victim money in anything resembling hedge funds, commodities, or service stores and diverted most victim money to pay supposed returns to other victim investors, commonly referred to as a Ponzi scheme. According to court documents, Wright diverted other victim money to support his lifestyle. Court records show that Wright often siphoned off a large percentage of victim money in cash immediately upon the initial deposit. Indeed, Wright was known at times to carry a significant amount of cash in a black duffel bag, court records indicate. When the scheme collapsed in 2013, Wright had less than $1,000, causing losses to victims of more than half a million dollars. Wright pleaded guilty in July 2013 to one count of mail fraud.

Following the sentencing hearing, Wright was permitted to remain 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.

The investigation was handled by USPIS and SBI. U.S. Attorney Tompkins also thanked the Commodities Futures Trading Commission for their invaluable assistance in this case. Assistant United States Attorney Kurt Meyers of the U.S. Attorney’s Office in Charlotte prosecuted the case.

Son embezzled at least $3.7 million to pay for strip clubs, alcohol, jewelry and lavish residence

CHARLOTTE, N.C. – The two operators of a third party payroll company have been indicted for stealing more than $11 million from at least 113 clients and using the money to support their personal lifestyles, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. The criminal indictment was returned by a federal grand jury on Thursday, October 23, 2014, and was unsealed today following the arrest of James William Staz, 43, of Iron Station, N.C. James Staz’s father, William James Staz, 72, of Huntersville, N.C., is the co-defendant named in the 10-count indictment.

U.S. Attorney Tompkins 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 Thomas J. Holloman III, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (IRS-CI).

According to the allegations contained in the indictment:

William and James Staz operated “Employee Services.Net, Inc.” (ESN), a third party payroll company the two men formed in 2004 in Cornelius, N.C. James Staz was the vice president and financial manager of ESN until August 2011, when he became the company’s president. His father, William Stanz, was a company shareholder and managed ESN’s day-to-day operations until 2008, when he was incarcerated for a federal bank fraud conviction. William Stanz returned to ESN following his release from prison and continued to be involved in company operations.

As a third party payroll company, ESN provided various personnel services to its client companies, including processing payroll, collecting and paying federal, state and local employment taxes, and preparing and filing the required employment tax forms. In order to provide these services and make payments on behalf of its clients, ESN had access to the clients companies’ bank accounts and directly drafted the funds needed to cover the expenses. At its height, ESN had approximately 500 client companies located throughout the United States.

From about 2008 to March 2014, the defendants defrauded at least 113 ESN clients of approximately $11 million dollars intended for payroll and employment tax payments and used it to support their personal lifestyles. The victim companies include, among others, a company dedicated to delivering services for children with developmental disabilities or chronic illness, families in poverty, and families caring for the elderly and a company involved in the production of racing engines for a number of NASCAR Sprint Cup teams.

During that time period, James Staz embezzled at least $3.7 million in client funds and directed the money to his personal bank account. In order to conceal his embezzlement, James Staz made false entries into ESN’s accounting system to make it appear as though the stolen funds were used for legitimate client expenses. In reality, James Staz used the money to pay for alcohol, strip club entertainment, jewelry, a Mercedes Benz and a luxury home with a lavish three-tiered pool, a cascading waterfall, wet bar and dining area. For example, on October 25, 2012, James Staz embezzled nearly $125,000 from ESN and in the next four days, he spent the stolen funds on nearly $40,000 in charges at strip clubs and night clubs and nearly $120,000 on a new Mercedes Benz. Over the course of the fraudulent scheme, William Staz drew a salary from ESN as high as $200,000, including for the 9-month period he was incarcerated in federal prison.

To conceal their theft and to cover the losses and tax penalties caused to ESN clients by the delinquent payments, the defendants comingled and used client funds ESN collected for a current payroll/tax period to cover the previous period’s payroll and taxes. To further cover their scheme, the defendants then sent regular emails to clients, falsely stating that all employment taxes had been paid, which was not true for some of ESN’s clients.

The indictment charges William and James Staz with one count of wire fraud. James Staz is also charged with nine counts of money laundering. James Staz had his initial appearance today before U.S. Magistrate Judge David Keesler and will remain in custody pending his arraignment and detention hearing, which have been scheduled for Friday, October 31, at 9:30 a.m. William Staz will be ordered to appear on a summons.

The maximum prison term for the wire fraud charge is 20 years and a $250,000 fine. The maximum prison term for each of the money laundering charges is 20 years in prison and a $500,000 fine or twice the amount of the criminally derived proceeds, whichever is greater.

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

The investigation for the case was handled by the FBI and IRS-CI. The prosecution of the case is being handled by Assistant U.S. Attorney Kelli H. Ferry of the U.S. Attorney’s Office, in Charlotte.

CHARLOTTE, N.C. – The president of ZeekRewards, Paul Burks, has been indicted on federal charges for operating an Internet Ponzi scheme that took in more than $850 million dollars, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. The criminal indictment was returned today by a federal grand jury sitting in Charlotte, charging Burks, 67, of Lexington, N.C., with wire and mail fraud conspiracy, wire and mail fraud, and tax fraud conspiracy.

Russell F. Nelson, Special Agent in Charge of the United States Secret Service, Charlotte Field Division and Thomas J. Holloman III, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (IRS-CI) join U.S. Attorney Tompkins in making today’s announcement.

According to allegations contained in the indictment, from January 2010 through August 2012, Paul Burks was the owner of Rex Venture Group, LLC (RVG), through which he owned and operated Zeekler, a sham Internet-based penny auction company, and its purported advertising division, ZeekRewards (collectively “Zeek”). The indictment alleges that Burks and his conspirators induced victims – including over 1,500 victims in the Charlotte area – to invest in their fraudulent scheme, by falsely representing that Zeekler was generating massive retail profits from its penny auctions, and that the public could share in such profits through investment in ZeekRewards. Indeed, the indictment alleges that Burks and others claimed, at one point, that investors would be guaranteed a 125% return on their investment.

The indictment alleges that Burks and his conspirators represented that victim-investors in ZeekRewards could participate in the Retail Profit Pool (RPP), which supposedly allowed victims collectively to share 50% of Zeek’s daily net profits. The indictment alleges that Burks and his conspirators did not keep books and records needed to calculate such daily figures, and that Burks simply made up the daily “profit” numbers. The indictment further alleges that, contrary to the conspirators’ claims, the true revenue from the scheme did not come from the penny auction’s “massive profits.” Instead, approximately 98% of all incoming funds came from victim-investors, which were then used to make Ponzi-style payments to earlier victim investors.

In addition to promising massive returns on investments, the indictment alleges that the conspirators also used a number of ways to promote Zeek to current and potential investors. For example, according to the indictment, the conspirators hosted weekly conference calls and leadership calls, where participants could call in listen to Burks and others make false representations intended to encourage victim-investors to continue to invest money and to recruit others to invest in Zeek. The indictment further alleges that Burks also organized and attended “Red Carpet Events,” where victim investors came to hear details of the scheme in person. During these events, according to the indictment, Burks and his conspirators made false representations about the massive retail profits generated by Zeek. The conspirators also used electronic and print media, including websites, emails and journals, to make false and misleading statements about the success of Zeekler to recruit victim investors.

The indictment alleges that as the Ponzi scheme grew in size and scope, it began to unravel as the outstanding liability resulting from the bogus 125% return on investment continued to rise beyond control. According to the indictment, by August 2012, the conspirators fraudulently represented to the collective victims that their investments were worth approximately $2.8 billion, but had no accurate books and records to even determine how much cash on hand was available to pay such liability. According to the indictment, by August 17, 2012, Burks and his conspirators had only $320 million (or approximately 11% of $2.8 billion) available to pay out investors. The indictment alleges that over the course of the scheme, Burks diverted approximately $10.1 million to himself.

Burks is also charged with tax fraud conspiracy for failing to file corporate tax returns or to make corporate tax payments for his companies, among other things. In addition, the indictment alleges, for tax year 2011, Burks issued fraudulent IRS Forms 1099s, causing victim-investors to file inaccurate tax returns for phantom income they never actually received.

The court has issued a summons against Burks and he is expected to appear in federal court for his initial appearance in the coming days. The wire and mail fraud conspiracy charge, the mail fraud charge and wire fraud charge each carry a maximum prison term of 20 years and a $250,000 fine. The tax fraud conspiracy charge carries a maximum prison term of five years and a $250,000 fine.

The details contained in this indictment are allegations. The defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

Two of Burks’ conspirators, Dawn Wright Olivares, Zeek’s Chief Operating Officer, and her step-son and Zeek’s Senior Technology Officer, Daniel C. Olivares, pleaded guilty in December 2013 to investment fraud conspiracy. Dawn Wright Olivares also pleaded guilty to tax fraud conspiracy. Both defendants await sentencing.

In making today’s announcement, U.S. Attorney Tompkins thanked the U.S. Secret Service and IRS-CI for investigating the case, and the U.S. Securities & Exchange Commission, Division of Enforcement for its assistance with the investigation.

The prosecution is handled by Assistant United States Attorneys Jenny Grus Sugar, Corey Ellis and Mark T. Odulio of the U.S. Attorney’s Office in Charlotte.

Additional information and updated court filings about this and related cases filings can be accessed at the district’s website: www.justice.gov/usao/ncw/ncwvwa.html.

The Defendant Stole the Identities of Clients and Sold them to Conspirator in Exchange for Cash and Gifts

CHARLOTTE, N.C. – A social worker with the Mecklenburg County Department of Social Services (DSS) appeared in federal court today and pleaded guilty to federal charges for her role in a healthcare fraud scheme involving the stolen identities of clients enrolled with the Medicaid program, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Ieshia Hicks Watkins, 33, of Charlotte, pleaded guilty before U.S. Magistrate Judge David S. Cayer to one count of health care fraud conspiracy and one count of receiving illegal kickbacks.

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

According to filed court documents and today’s plea hearing, October 2010 to February 2012, while employed at DSS, Watkins stole the names and identities of DSS clients, most of whom were minors. As a social worker, Watkins had access to the information contained in the client files on her caseload and the caseload of others within DSS. Court records indicate that Watkins sold the stolen information to her conspirator, Ronnie Lorenzo Robinson, who then used it to file fraudulent reimbursement claims with Medicaid for sham mental and behavioral health services that were never provided to those Medicaid recipients.

Watkins admitted in court today that she sold the misappropriated information in exchange for cash and gifts. According to information contained in court filings, Watkins received at least $10,000 as payment for selling DSS client names and identifying information to Robinson. Robinson then submitted nearly $30,000 in false and fraudulent claims to Medicaid using the stolen information.

“Driven by greed, Watkins used her position to access the personal information of DSS clients and sold it to her conspirator in exchange for cash and gifts. This case is particularly troubling because these were families and minor children whose welfare Watkins was assigned to protect. Instead, she turned them into victims of identity theft for her own benefit. Since Watkins’ conscience wasn’t enough to stop her from committing this crime, my office will make sure she’s held accountable for it,” said U.S. Attorney Tompkins.

“Ieshia Watkins utilized her trusted position as a social worker to victimize some of the most vulnerable families in North Carolina. Instead of putting the best interests of those parents dependent on Medicaid for their children’s care, Ms. Watkins allowed personal greed to override the commitment she made to those families. Health care fraud wastes taxpayer’s money and increases costs for everyone,” said John Strong, Special Agent in Charge of the FBI in North Carolina.

At sentencing, Watkins faces a maximum term of 10 years in prison and a $250,000 fine for the health care fraud conspiracy charge. She also faces a maximum of five years in prison and a $250,000 fine for receiving illegal kickbacks. In her plea agreement, Watkins has agreed to pay full restitution to Medicaid for any losses resulting from her criminal scheme. The final restitution amount will be determined by the court at Watkins’ sentencing hearing, which has not been scheduled yet. Watkins remains free on bond pending sentencing.

Robinson pleaded guilty in January 2014 to two counts of health care fraud and is currently awaiting sentencing.

The investigation into Watkins was handled by the FBI with assistance from the North Carolina Medicaid Investigations Division. The prosecution was handled by Assistant U.S. Attorney Kelli Ferry of the U.S. Attorney’s Office in Charlotte.

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 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.

CHARLOTTE, N.C. – U.S. District Judge Robert J. Conrad, Jr. handed down a 15-month prison sentence to a Pineville woman today for stealing money from her former employer, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Joan Elliott, 69, of Pineville, was also ordered to serve three years under court supervision and to pay $406,929 as restitution.

Russell F. Nelson, Special Agent in Charge of the United States Secret Service, Charlotte Field Division joins U.S. Attorney Tompkins in making today’s announcement.

According to court to documents and today’s sentencing hearing, Elliott was employed as a bookkeeper by a Charlotte-based association representing the lumber and building material industry. Court records show that among Elliott’s responsibilities were issuing company checks to pay business expenses and depositing to the company’s bank account check payments for administrative fees from the insurance company used by members of the association. According to court filings, from 2006 to 2009, Elliott used company checks to pay for personal expenses, falsely representing that the funds were used as payment of legitimate business expenses.

Court records indicate that during the same time period, Elliott further defrauded her employer by failing to deposit to her employer’s bank account checks sent by the company’s insurance company. Instead, records show, Elliott used those checks to pay for personal expenses, by taking the checks to the bank and directing the bank to rewrite official bank checks for the same amounts that Elliott then used toward personal expenditures. Elliott fraudulently obtained between $200,000 and $400,000 from her former employer, court records indicate. According to today’s sentencing hearing, Elliott used some of the stolen funds to pay for, among other things, a car, furniture, and spa visits. Elliott pleaded guilty in January 2013 to one count of forged securities.

Elliott has been released on bond and will be allowed to self-report to begin serving her prison term once the Federal Bureau of Prisons has designated a federal facility. All federal sentences are served without the possibility of parole.

The investigation was handled by the U.S. Secret Service. The case was prosecuted by Assistant United States Attorney Jenny G. Sugar of the U.S. Attorney’s Office in Charlotte.

ASHEVILLE, N.C. – David Chadwick Crisp, 35, of Graham Co., appeared before U.S. Magistrate Judge Dennis L. Howell and pleaded guilty to one count of misdemeanor Lacey Act violation, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. He will be sentenced by U.S. District Judge Martin K. Reidinger on that offense at a later date.

Today, Crisp also pleaded guilty to four offenses involving illegal hunting activities within the Nantahala National Forest, one illegal hunting activity on Fontana Lake, and one boating violation on Fontana Lake. For those six offenses, he was sentenced to serve a total of 20 months in prison. In addition to the prison term, Judge Howell ordered Crisp to serve one year of probation upon his release from prison, and ordered him to pay $3,000 in fines, and to surrender his North Carolina hunting and fishing licenses for a period of one year. Crisp also agreed that when he is later sentenced by Judge Reidinger he will pay $2,232 to the North Carolina Wildlife Resources Commission as restitution for one of the black bears he killed.

According to court documents and court records, the misdemeanor Lacey Act violation Crisp pleaded guilty to earlier in the day involved the illegal transportation of an American black bear the defendant knew had been killed in the Nantahala National Forest in violation of state and federal laws.

The six offenses to which Crisp pleaded guilty and for which he was sentenced today were:

• Knowingly operating a vessel on the waters of the State of North Carolina between sunset and sunrise without the use of navigational lights.
• Knowingly and intentionally hunting bear at night and during closed season.
• Knowingly and intentionally hunting dear at night.
• Knowingly and intentionally hunting deer with the use and aid of artificial light.
• Knowingly and intentionally hunting without a license.
• Knowingly and intentionally hunting deer with a firearm during closed season.

According to court records, Crisp’s illegal activities took place in the Nantahala National Forest and elsewhere in Graham Co., between November 2010 and October 2012. According to the filed factual basis presented in open court today, which Crisp agreed under oath was accurate, Crisp and his conspirators used illegal hunting techniques on a number of occasions to illegally hunt for bears, hogs, deer and other wildlife in the National Forest and within the Great Smoky Mountains National Park. Court records indicate that among the illegal techniques used were spotlights, bear baiting using chocolate, and equipping a bait barrel with a dog collar that could then be used to track the bear, as well as hunting at night and out of season.

According to court records, to conceal his illegal hunting activities from law enforcement, Crisp took further measures, for example, keeping a “throw away” rifle hidden in a hollow tree, to avoid detection going in an out the national park with a gun. Court records also indicate that when an undercover agent said to Crisp that there would probably be a lot of bears in the national park, but that bear hunting there is illegal, Crisp responded, “You can if you don’t get caught.” On another occasion, court records show, Crisp told an undercover agent that he had not tagged a bear yet, even though he had helped kill four bears and had killed one himself.

Following Crisp’s guilty plea and in announcing Crisp’s sentence, Judge Howell said that he had never seen this quantity or level of wildlife violations.

* * *

The following defendants have also been prosecuted for illegal hunting activities and related violations:

On September 5, 2014, Walter Stancil and Jerry Parker were convicted of conspiracy to violate the Lacey Act and are awaiting sentencing.

On October 2, 2014, Walter Stancil was convicted of removing Forest Service property, a game camera that was set up on one of his bear bait sites. He received a sentence of 15 days in jail.

On October 9, 2014, David Crisp was convicted at trial of aiding and abetting the illegal placement of chocolate, for bear bait, in the Nantahala National Forest. He was sentenced to 90 days in jail and a $2,000 fine.

Jerry Parker pled guilty yesterday to illegally conducting a commercial enterprise, that is, a bear hunting guide service, in the Nantahala National Forest without a commercial special use permit. He was sentenced to a fine of $1,500 and was ordered to forfeit his North Carolina hunting and fishing license for two years and was ordered not to hunt or fish in North Carolina for two years.

The investigations were conducted by the U.S. Fish and Wildlife Service, the US Forest Service, the NC Wildlife Resources Commission, and the Georgia Department of Natural Resources. The prosecutions are being handled by Assistant U.S. Attorney Richard Edwards of the U.S. Attorney’s Office in Asheville.

CHARLOTTE, N.C. – Today, Chief U.S. District Judge Frank D. Whitney sentenced former Charlotte Mayor Patrick D. Cannon, 47, to 44 months in prison followed by two years of supervised release for accepting more than $50,000 in bribes while serving in office, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina and John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division. Judge Whitney also ordered Cannon to pay a $10,000 fine and forfeiture in the amount of $50,500.

U.S. Attorney Tompkins stated, “Patrick Cannon betrayed the public’s trust and embarrassed the city he was elected to serve. Cannon accepted more than $50,000 in bribes, but the social injury to this community is far deeper. While the perception of rampant public corruption can slowly tear a community apart, justice can bind us together and restore our faith in our government. Today, Cannon was held accountable for using his official position for personal gain. His sentence is also a reminder that my office will prosecute those who put personal interests ahead of the people they were elected to serve.”

“Patrick Cannon sold his oath of office, violated the integrity of our government, and betrayed the citizens of Charlotte. Public corruption will not be tolerated; no matter the position or names of those involved. As outlined in the criminal complaint, the FBI is uniquely positioned to dedicate whatever resources necessary to expose even the most deeply entrenched and secretive pay to play schemes," said John Strong, Special Agent in Charge of the FBI in North Carolina.

According to filed court documents and today’s sentencing hearing, from 2009 to March 2014, while serving as City Council Member and/or Mayor Pro Tem, and later as the Mayor of Charlotte, Cannon solicited and accepted bribes such as gifts, cash and other things of value totaling over $50,000, in exchange for a pattern of official actions. Court records show that Cannon accepted the bribes from a Charlotte business owner and two undercover agents posing as investors interested in opening businesses in Charlotte, in exchange for use of his official position on an “as needed” basis. Court records indicate that Cannon promised to use his influence with city and county officials and others to assist his payors’ with business projects and to intervene with any zoning, permitting and transportation issues, among others. In June 2014, Cannon pleaded guilty to one count of honest services wire fraud.

In announcing today’s sentence, Judge Whitney commented on the seriousness of the offense, stating that public corruption undermines the legitimacy of government and the public’s faith in its elected leaders and it feeds the cynics who believe that all government is corrupt.

Following the sentencing hearing, Cannon was released on bond. The court rejected the defendant’s request for a later reporting date and he will be ordered to self- report to 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 Charlotte Division of the FBI. Assistant United States Attorneys Michael E. Savage and Craig D. Randall of the U.S. Attorney’s Office in Charlotte prosecuted the case.

ASHEVILLE, N.C. – U.S. District Judge Martin Reidinger sentenced Isaac H. Birch today to 21 months in prison followed by one year of supervised release for filing a false tax return, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Birch was also ordered to pay $480,047 as restitution to the United States Treasury.

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 U.S. Attorney Tompkins in making today’s announcement.

According to filed court documents and today’s sentencing hearing, Birch, 38, of Franklin, N.C. filed false tax returns for tax years 2007-2009, claiming he was entitled to hundreds of thousands of dollars in tax refunds. Court records indicate that Birch filed a false 2007 income tax return that contained fraudulent information, including other income in the amount of $735,425 and federal income tax withheld in the amount of $735,424. According to information in court documents and court proceedings, Birch filed these fraudulent returns after attending a tax return preparation seminar in Albany, N.Y., which taught participants how to file large refund claims against the Treasury Department using fraudulent methods. Court records show that Birch’s fraudulent action caused the Treasury Department to issue fraudulent tax refund checks in the amount of $480,047. Birch pleaded guilty in August 2013 to one count of filing a false tax return.

Birch was released on bond and will be ordered to self-report to 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 IRS and USPIS. The prosecution of the case is handled by Assistant U.S. Attorney Don Gast of U.S. Attorney’s Office in Asheville.

ASHEVILLE, N.C. – U.S. District Judge Martin Reidinger today sentenced Taryn Krista Elizabeth Toineeta Rattler, 26, of Cherokee, N.C., to 70 months in prison on drug trafficking conspiracy charges, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Rattler was also ordered to serve three years under court supervision upon completion of her prison term.

U.S. Attorney Tompkins is joined in making today’s announcement by John S. Comer, Acting Special Agent in Charge of the Atlanta Field Division of the Drug Enforcement Administration (DEA), which oversees the North Carolina; Jason O’Neal, Deputy Associate Director of the Bureau of Indian Affairs, Division of Drug Enforcement; Chief Ben Reed of the Cherokee Indian Police Department; Sheriff Curtis Cochran of the Swain County Sheriff’s Office; Sheriff Mickey Anderson of the Graham County Sheriff’s Office; and Sheriff Jimmy Ashe of the Jackson County Sheriff’s Office.

According to filed court documents and court proceedings, from January 2007 to December 2012, Rattler and her conspirators engaged in a conspiracy to distribute narcotics including Oxycodone, cocaine, marijuana and Alprazolam in Swain and Jackson Counties. At today’s sentencing hearing, Rattler was found to be accountable for trafficking 404,400 milligrams of Oxycodone over the course of the conspiracy, with a street value of $404,400. In September 2013, Rattler pleaded guilty to one count of conspiracy to distribute a Schedule I controlled substance.

Three of Rattler’s conspirators have already have received prison sentences: Mark Allen Winstead was sentenced to 38 months; Timothy Leroy Rattler was sentenced to 18 months; and Jacob Hunter Rattler was sentenced to 15 months. Jackie Lee Rattler and Evan Thomas Norris, Jr. have also pleaded guilty and currently await sentencing.

In a separate case, Judge Reidinger also sentenced today Kandace Rhean Griffin to 70 months in prison, followed by three years of supervised release. According to court records, from March to October 2012, Griffin conspired with other individuals to distribute Oxycodone and other narcotics in Swain County. Griffin, 25, of Cherokee, pleaded guilty in September 2013 to one count of conspiracy to possess with intent to distribute a Schedule II controlled substance.

All federal sentences are served without the possibility of parole. U.S. Attorney Tompkins thanked all the law enforcement agencies involved in these investigations for their continued cooperation and assistance. The prosecution was handled by Assistant U.S. Attorney John Pritchard, of the U.S. Attorney’s Office in Asheville.

STATESVILLE, N.C. – On Monday, October 6, 2014, U.S. District Judge Richard L. Voorhees sentenced Miquan Limik Smith, 27, of Iron Station, N.C. to 63 months in prison, followed by 24 months of supervised release for conspiracy to receive stolen firearms by committing burglaries and violating other federal firearms laws, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina.

Wayne L. Dixie, Special Agent in Charge of the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), Charlotte Field Division and Sheriff Phillip H. Redmond of the Iredell County Sheriff’s Office join U.S. Attorney Tompkins in making today’s announcement.

According to court documents and yesterday’s sentencing hearing, on or about January 31, 2013, Smith and his co-conspirator, Trishton Philemon Johnson, 26, of Charlotte, carried out two home burglaries in Iredell County, stealing firearms and other items of value. Court records show that law enforcement officers were alerted to the break-ins, identified the vehicle the defendants were in, and pulled the vehicle over on Interstate 77 in Iredell County. According to court records, the defendants drove off and, after a high speed chase, law enforcement officers stopped the vehicle. Johnson was arrested at the vehicle stop but Smith, who had fled the scene on foot, was arrested shortly thereafter.

Johnson pleaded guilty in July 2013 to one count of receiving stolen firearms and aiding and abetting. He was sentenced in March 2014 to 24 months in prison, followed by two years of supervised release.

In November 2013, a federal jury convicted Smith on all charged violations, including one count of conspiracy to receive stolen firearms by committing burglaries, one count of receiving stolen firearms, and one count of possession of a firearm by a felon.

Smith has been 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 Iredell County Sheriff’s Office. The case was prosecuted by Assistant United States Attorneys Jennifer L. Dillon and Kenneth M. Smith of the U.S. Attorney’s Office in Charlotte.

CHARLOTTE, N.C. – On Wednesday, October 1, 2014, a federal jury returned a guilty verdict against Kurosh Mehr for his role in a $75 million racketeering conspiracy, announced the U.S. Attorney’s Office for the Western District of North Carolina. This conviction is the latest in Operation Wax House, an investigation which began in 2007 and has netted 91 defendants to date, of which 88 have pleaded guilty or have been convicted at trial. Mehr, 53, of Charlotte was convicted of racketeering conspiracy, mortgage fraud, and money laundering conspiracy.

U.S. Attorney Tompkins 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 Thomas J. Holloman III, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (IRS-CI).

The federal criminal trial began on Monday, September 29, 2014 before Senior U.S. District Judge Graham Mullen. According to evidence introduced at trial, the enterprise, which operated from 2005 to 2012, engaged in an extensive pattern of racketeering activities, which included investment or securities fraud, mortgage fraud in the form of wire fraud and bank fraud, and money laundering.

According to trial evidence, Mehr was a promoter and buyer in the enterprise’s mortgage fraud operations. The evidence at trial showed that initially Mehr served as a promoter, providing tens of thousands of dollars as down payment money for the enterprise’s purchase of luxury homes utilizing several straw buyers. In exchange, trial evidence showed that the conspiracy would divide up the loan funds that were supposed to be the seller’s proceeds, paying themselves back the down payment money they fronted plus a 10% kickback following the closing of the loan. According to trial evidence, Mehr later agreed to serve as a buyer for the enterprise in a flip transaction, in which he bought a house from a straw buyer for a price that was approximately $500,000 over the price the enterprise had purchased the house for months earlier. The evidence showed that this $500,000 difference was used to cover the down payment (which was netted from the seller’s proceeds) and to pay kickbacks to members of the enterprise, including more than $300,000 which was transferred to Mehr and his coconspirators. Following the jury’s conviction, the defendant was remanded to custody. The racketeering conspiracy charge carries a maximum term of 20 years in prison and a $250,000 fine or twice the gross profits or other proceeds. The money laundering conspiracy charge carries a maximum term of 20 years in prison and a $500,000 fine or twice the amount of criminally derived proceeds. The mortgage fraud conspiracy charge carries a maximum prison term 30 years in prison and $1 million fine. A sentencing date for the defendant has not been set yet.

Three defendants have charges pending in the case, two of which, including one of the leaders, are international fugitives. Each remaining defendant and his or her status are listed below:

• Ramin Amini, 45, of Tehran, Iran, is charged with racketeering conspiracy, mortgage fraud and money laundering conspiracy. Role: Leader and promoter in the scheme. Status: International fugitive.
• John Wayne Perry, Jr., 32, of Charlotte, is charged with racketeering conspiracy and money laundering conspiracy. Role: Promoter. Status: On bond; Scheduled for trial after September 2014.
• Nazeere Saddig, 41, formerly of Charlotte, is charged with racketeering conspiracy and mortgage fraud. Role: Promoter and buyer. Status: International fugitive.

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. The case was tried by Assistant United States Attorneys Maria K. Vento and Jenny Grus Sugar.

Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 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 the inception of FFETF in November 2009, the Justice Department has filed more than 12,841 financial fraud cases against nearly 18,737 defendants including nearly 3,500 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.

CHARLOTTE, N.C. – On Tuesday, September 23, 2014, Chief U.S. District Judge Frank D. Whitney sentenced George Beall to 78 months in prison on federal child pornography charges, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Beall was also ordered to register as a sex offender and to serve the rest of his life under court supervision after he is released from prison. Judge Whitney also ordered Beall to pay $66,000 as restitution to eleven separate victims of child pornography.

Also on Tuesday, Judge Whitney sentenced Richard Lee Miller to 78 months in prison on federal child pornography charges. Miller was also ordered to register as a sex offender and to a lifetime of supervised release.

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

In June 2013, Beall, 68, of Matthews, N.C. pleaded guilty to one count of possessing child pornography. According to filed documents and statements made in court, in May 2011, law enforcement became aware of Beall’s collection of child pornography after it was discovered by computer repair technicians. Court documents indicate that law enforcement later seized additional computer equipment pursuant to a search warrant. Court records indicate that a forensic examination revealed that Beall possessed thousands of images and videos which included 96 different children already identified by law enforcement as victims of child pornography.

Beall has been in federal custody since his bond was revoked in June 2013. He 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.

In August 2013, Miller, 63 of Charlotte, N.C. pleaded guilty to one count of possessing child pornography. According to filed documents and statements made in court, in March 2012, law enforcement were alerted to Miller’s collection of child pornography after it was discovered by computer repair technicians. According to court records, law enforcement later seized additional computer equipment from Miller’s residence. Court records indicate that a forensic examination revealed that Miller possessed thousands of images and videos which included eight different children already identified by law enforcement as victims of child pornography.

Miller has been in federal custody since his bond was revoked in August 2013. He 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.

Both investigations were handled by the FBI. Assistant U.S. Attorneys Cortney S. Randall and David A. Thorneloe prosecuted the case.

This case was 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.

COLUMBIA, S.C. – On Tuesday, September 23, 2014, U.S. District Judge Margaret B. Seymour sentenced Joenathan Shelly Chaplin, an attorney in Columbia, S.C. to three years of probation for making a false statement to a federal agent, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Judge Seymour ordered Chaplin to spend the first six months of his probationary sentence in home confinement with electronic monitoring and to pay a $100 assessment fee.

Thomas J. Holloman III, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (IRS-CI); John S. Comer, Acting Special Agent in Charge of the Atlanta Field Division of the Drug Enforcement Administration (DEA) which overseas South Carolina, and Wayne L. Dixie, Special Agent in Charge of the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) join U.S. Attorney Tompkins in making today’s announcement.

According to court documents and yesterday’s sentencing hearing, Chaplin, 47, admitted to knowingly and willfully making a materially false, fictitious, and fraudulent statement and representation to the government. According to court records, Chaplin’s false statements to federal agents occurred when he was questioned in relation to a drug and firearm investigation. Court records show that during that investigation, it was determined that Chaplin was directing his criminal defendant clients to pay his fees in a structured manner to avoid reporting those payments to the IRS. When questioned about this practice Chaplin lied to federal investigators. Court records indicate that Chaplin also told an IRS agent that he was not aware of the reporting requirements of IRS’s Form 8300, which is a “Report of Cash Payments Over $10,000 Received in a Trade or Business” and must be filed with the IRS if a person or business has received over $10,000 in one transaction or a series of related transactions while conducting their trade or business.

The case was investigated by IRS-CI, DEA and ATF. The prosecution was handled by Assistant U.S. Attorney Jill Westmoreland Rose of the U.S. Attorney’s Office for the Western District of North Carolina in Charlotte, upon recusal of the U.S. Attorney’s Office for the District of South Carolina.

Defendant Received More Than $500,000 In Mortgage Fraud Proceeds

CHARLOTTE, N.C. – Former NFL football player Jimmy Hitchcock was sentenced on Tuesday, September 23, 2014, to serve 46 months in federal prison, to be followed by two years of supervised release, for his role in a multi-million mortgage fraud conspiracy, announced U.S. Attorney Anne M. Tompkins.

U.S. Attorney Tompkins 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).

Hitchock, 43, of Clemmons, N.C., pleaded guilty in June 2013 to one count of mortgage fraud conspiracy, one count of bank bribery conspiracy and one count of money laundering conspiracy. In sentencing Hitchcock yesterday, Chief U.S. District Judge Frank D. Whitney found that Hitchcock was the leader or organizer of this mortgage fraud conspiracy and further that Hitchcock had engaged in a sophisticated scheme by, among other things, creating bogus “official checks” that could be used to make it appear as if buyers had made down payments when in fact they had not. According to court documents, Hitchcock created other false documents to support the mortgage fraud transactions and recruited a bank insider to assist in the fraud, by paying her bribes to provide bogus verifications of deposit to support the mortgage fraud transactions.

According to information presented at the sentencing hearing, the losses incurred by financial and lending institutions associated with the mortgage fraud transactions that Hitchcock participated in were approximately $4.5 million. Additionally, Hitchcock personally received more than $500,000 from the loan proceeds fraudulently obtained by the conspiracy during the sixteen months it operated.

Hitchcock has been in federal custody since his September 2012 arrest in on these charges.

Hitchcock was one of six defendants charged in a second superseding bill of indictment for their role in this mortgage fraud conspiracy, and is the fourth in this conspiracy to be sentenced. The other defendants sentenced to date are:

• Christopher T. Belin, 35, of Norfolk, Va. - Real estate agent and promoter was sentenced to 33 months in prison, followed by three years of supervised release.
• Mitzi Jackson, 41, of Mint Hill, S.C. - Bank insider, sentenced to nine months in prison, followed by one year of supervised release with nine months home detention.
• Coley Scagliarini, 40, of Charlotte - Mortgage broker, sentenced to 46 months in prison, followed by two years supervised release.

Co-defendant Michelle Mallard, 47, of Montgomery, Ala. is scheduled to be sentenced on October 28, 2014. A sentencing date has not yet been set for co-defendant James E. Fink, 44, of Waxhaw, N.C.

Ninety-one (91) people have been charged to date in Operation Wax House. To date, eighty-four (84) defendants have pleaded guilty and three have been found guilty at trial. Operation Wax House in the Western District of North Carolina is being handled by the Charlotte Division of the FBI and the Criminal Investigation 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 prosecution for the government was handled by Assistant United States Attorneys Kurt W. Meyers and Maria K. Vento.

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

CHARLOTTE, N.C. – A total of 138 defendants have been arrested and currently face state charges in connection with operation “Southern Snare,” an anti-gang and violent crime reduction initiative led by the United States Marshals Service in coordination with federal, state and local law enforcement agencies. The arrests took place over the course of the four-month long operation, which began in May and concluded on September 5, 2014.

This anti-gang and violent crime reduction initiative targeted gang activities and violent crime in Gaston and Cleveland counties, with special emphasis placed on communities within Gastonia and Shelby, N.C. During this operation, authorities seized 56 firearms, narcotics with an approximate street value of $178,000, and an estimated $15,000 in U.S. currency.

Kelly M. Nesbit, United States Marshal of the United States Marshals Service (USMS) for the Western District of North Carolina; Wayne L. Dixie, Special Agent in Charge of the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), Charlotte Field Division; Ryan L. Spradlin, Acting Special Agent in Charge of ICE/Homeland Security Investigations (HSI) in Atlanta and the Carolinas; B.W. Collier, Acting Director of the North Carolina State Bureau of Investigation; Johnny Hawkins, Director of Security Services, North Carolina Department of Public Safety; Chief James W. Buie of the Gaston County Police Department; Chief Robert Helton of the Gastonia Police Department; Sheriff Alan Cloninger of the Gaston County Sheriff’s Office; Locke Bell District Attorney for Gaston County; Chief Jeffrey H. Ledford of the Shelby Police Department; Chief Melvin Proctor of the Kings Mountain Police Department; Sheriff Alan Norman of the Cleveland County Sheriff’s Office; and Rick Shaffer, District Attorney for Cleveland and Lincoln Counties join Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina in making today’s announcement.

“I commend the law enforcement partners involved in this cross-jurisdictional and multi-agency operation for their hard work and their commitment to making our streets and communities safer,” stated Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina.

“The success of Operation Southern Snare is the result of our close cooperation and coordination with our law enforcement partners. Targeted initiatives like this one bring relief to communities afflicted by gang activity and the violence it brings. I want to thank all our law enforcement partners for their involvement and support throughout this operation, and I look forward to our continued partnership, as we work together to remove gang members and violent offenders from our streets and to protect our neighborhoods from the spread of violence. Most of all, I commend the law enforcement agents and officers who worked tirelessly to make this initiative a success and I want to thank them for continuing to put their lives at risk to safeguard our communities,” said Kelly M. Nesbit, U.S. Marshal, Western District of North Carolina.

“ATF’s mission is to identify, pursue and perfect criminal cases against individuals who illegally possess and use firearms in furtherance of their criminal activities,” said ATF’s Special Agent in Charge Wayne L. Dixie. “We will continue to work with the U.S. Marshals Service and our local counterparts in Cleveland and Gaston Counties to ensure that those who foster violence in this region are held to account for their activities.”

“Operation Southern Snare’s arrests have made a significant difference in eliminating Shelby and Gastonia’s gang activity and apprehending those who commit violent crimes,” SBI Director B.W. Collier said. “A lot of effort and collaboration among the participating law enforcement agencies has led to safer communities in Cleveland and Gaston counties. I applaud this successful operation.”

“Collaborating with our partners at the federal and local levels on operations like this one brings tremendous benefits,” said Johnny Hawkins, Director of Security Services for the North Carolina Department of Public Safety. “The law enforcement agencies benefit from the sharing of expertise and resources and citizens know that their communities are safer due to these efforts.”

“The efforts of all the law enforcement officers involved in this operation will result in amazing returns for our community. This project is a great example of the impact we can make by working hand-in-hand with our federal and state partners. Together, we have addressed issues such as gangs, drugs and guns, which have been deteriorating our communities. Although this operation is coming to a close, we see it as a beginning instead of an ending. The partnerships formed over the past few months will continue to grow and our communities will reap the benefits,” said Chief of Shelby Police Department, Jeffrey H. Ledford.

“The success of Operation ‘Southern Snare’ had a positive and lasting impact on our community. This type of multiagency cooperation sends a clear message to the citizens of Kings Mountain and to criminals who think they can conduct their illegal activities in our area: The Kings Mountain Police Department will work alongside our federal and state law enforcement partners to protect the safety of the communities we serve,” said Chief Melvin Proctor of Kings Mountain Police Department.

“The U.S. Marshalls Service has been very beneficial in assisting us in dealing with our gang members in Cleveland County. We are looking forward to continuing this team approach with future operations,” said Sheriff Alan Norman of the Cleveland County Sheriff’s Office.

The defendants arrested during this operation currently face state charges in connection with this investigation which include: narcotics-related offenses, firearms violations and other violent crimes. The investigations are ongoing which may result in additional charges against the defendants.

This initiative was led by the U.S. Marshals Service in coordination with ATF, HSI, NC SBI, NC Dept. of Public Safety, Gaston Co. PD, Gastonia PD, Gaston Co. SO, Shelby PD, Kings Mountain PD, and Cleveland County SO.

WASHINGTON – Amy Ray, Assistant United States Attorney and Chief of the Appellate Division of the U.S. Attorney’s Office in the Western District of North Carolina was one of 243 members of the Department of Justice recognized by Attorney General Eric Holder and Executive Office for U.S. Attorneys (EOUSA) Director Monty Wilkinson at the 30th annual Director’s Awards Ceremony today in Washington D.C.

The Western District of North Carolina was one of the 44 districts represented at the ceremony which was held in the Great Hall at the Robert F. Kennedy Department of Justice Building.

In his prepared remarks to awardees, Attorney General Holder said, “Locally, nationally, and internationally, you represent the very best that this Department has to offer. Your work embodies our ongoing commitment – not merely to win cases, but to do justice; to protect our fellow citizens from crime, violence, and terrorism; to empower the most vulnerable among us; and to uphold the rule of law.”

EOUSA Director Monty Wilkinson echoed those sentiments, saying to the recipients, “You have persevered, and remained focused and motivated – achieving remarkable results in work that makes a difference in the lives of citizens across our great country. The vast scope of your collective accomplishments is nothing short of exceptional.”

AUSA Ray was recognized for her outstanding appellate advocacy in United States v. Simmons, a significant appellate decision that impacted hundreds of federal criminal cases. She also is recognized for her leadership in advising other districts and in working with the Department of Justice’s Criminal Division and the Solicitor General’s office in determining the Department’s positions on the many legal issues that arose as a result of Simmons. AUSA Ray handled not only the Simmons appeal, but also two other Simmons-related appeals, United States v. Powell and United States v. Miller. Both Powell and Miller were significant appeals for which numerous cases were held in abeyance. AUSA Ray has not only been outstanding in her advocacy on behalf of the Department in the wake of Simmons, but she has become a national expert at the United States Attorney’s office level on Simmons and its consequences.

Ms. Ray received her Bachelor’s Degree in English from the University of Virginia and her law degree from Florida State University. She is originally from Mount Dora, Florida.

“Amy Ray is a very deserving recipient of this prestigious award. The award recognizes her exemplary work and outstanding achievements as an appellate lawyer. Amy is a talented Assistant United States Attorney, a committed public servant, and is dedicated to furthering the mission of the Department of Justice in enforcing the laws of our nation and protecting the rights of our citizens,” said Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina.

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.

CHARLOTTE, N.C. – A Shelby woman appeared before U.S. Magistrate Judge David S. Keesler today and pleaded guilty to stealing more than $410,000 from her employer and filing a false tax return, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Tara Gist-Savage, 40, of Shelby, N.C. pleaded guilty to one count of wire fraud and one count of filing a false tax return.

U.S. Attorney Tompkins is joined in making today’s announcement by Thomas J. Holloman III, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation (IRS-CI) and Chief James W. Buie of the Gaston County Police Department.

According to charging documents and today’s court proceedings, from 2008 to 2013, Gist-Savage was employed by an energy services company based in Belmont, N.C. Gist-Savage was in charge of the energy company’s payroll, as well as the payroll of an affiliated company. Court records show that beginning in at least 2008, Gist-Savage used her position to access the personal identity information of the companies’ former and inactive employees and used that information to generate fraudulent payroll checks and wires in the names of at least 49 individuals. According to court documents, Gist-Savage provided the fraudulent information to various payroll businesses used by the companies to generate payroll payments, and directed the fraudulent payroll checks and wires to four different bank accounts held in her name. In all, court documents indicate that Gist-Savage embezzled $410,936.04 in this manner from her former employer.

According to charging documents and today’s court proceedings, for years 2008 through 2012, Gist-Savage failed to report the fraudulently obtained income on her U.S. Individual Income Tax Returns. The estimated tax due and owing relative to the unreported income was approximately $101,650.

Gist-Savage has been released on bond. The wire fraud charge carries a maximum prison term of 20 years and a $250,000 fine. The filing false tax return charge carries a maximum prison term of three years and a $250,000 fine. As part of her plea agreement, Gist-Savage 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 IRS-Criminal Investigation and the Gaston County Police Department. The prosecution for the government is being handled by Assistant United States Attorney Jenny Sugar of the U.S. Attorney’s Office in Charlotte.

ASHEVILLE, N.C. – A federal jury sitting in Asheville convicted on Monday, September 8, 2014, Jerry Francis Parker, 63 and Walter Henry Stancil, 66, both of Rabun County, Georgia for their involvement in illegal bear hunting activities and related offenses, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. The defendants are subject to one year in prison, a $100,000 fine, the loss of their hunting licenses for five years, and a period of banishment from the national forests.

According to evidence presented at trial and documents filed with the court, the defendants engaged in a number of illegal hunting activities in 2011, including using chocolate candy as bait at a site that one of the defendants described as “probably the most active bait site in the United States.” The defendants were convicted of violating the Lacey Act, which criminalizes the interstate transportation of wildlife taken in violation of state or federal hunting laws.

American black bears are a species of special concern warranting federal and state protection. The hunting of American black bears is illegal at any time within the National Parks. Hunting on Forest Service land is only permitted during open season and in compliance with federal and state law. The U.S. Attorney is committed to the protection of natural resources from illegal hunting activities, including baiting, spot-lighting and exceeding hunting limits.

The investigation was conducted by the US Fish and Wildlife Service, the US Forest Service, the NC Wildlife Resources Commission, and the Georgia Department of Natural Resources. The prosecution was handled by Assistant U.S. Attorney Richard Edwards of the U.S. Attorney’s Office in Asheville.

CHARLOTTE, N.C. – On Wednesday, September 3, 2014, U.S. District Judge Robert J. Conrad, Jr. sentenced three hedge fund managers in connection with a $40 million investment fraud conspiracy, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Jeffrey M. Toft, 51, of Sioux Fall, S.D., was sentenced to 66 months in prison followed by two years of supervised release. Chad A. Sloat, 36, of Kansas City, Mo. was sentenced to 70 months in prison, followed by two years of supervised release, and Michael J. Murphy, 54, of Deep Haven, Minn., was sentenced to 48 months in prison, and two years of supervised release.

Judge Conrad also ordered the defendants to pay restitution to victims as follows: Toft in the amount of $2,172,666; Sloat in the amount of $3,747,130 and Murphy in the amount of $2,552,824.30. Sloat was also ordered to pay $93,727 in restitution to the Internal Revenue Service. A fourth codefendant, Jonathan D. Davey, 50, of Newark, N.J. is currently awaiting sentencing.

At sentencing, Judge Conrad noted that the callous greed displayed by the defendants caused devastating financial ruin to hundreds of elderly and vulnerable victims. Judge Conrad also stressed that the lengthy sentences were appropriate given the predatory nature of the scheme.

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 U.S. Attorney Tompkins in making today’s announcement.

According to filed court documents and court proceedings, the defendants operated “hedge funds” as part of a $40 million Ponzi scheme operating under the name Black Diamond Capital Solutions (Black Diamond). Court documents show that from 2007 to 2010, the defendants induced their investor victims to turn over their money by claiming, among other things, that they had done due diligence on Black Diamond and were operating legitimate hedge funds with significant safeguards, when, in reality, those claims were false. Court records also show that as Black Diamond began collapsing, the defendants and others created a new Ponzi scheme and used a series of separate bank accounts administered by Davey to further the scheme. Specifically, the defendants deposited new victim money into these bank accounts and used the money to make lulling payments to other victims and to fund the defendants’ lifestyles.

Toft pleaded guilty in November 2012 to securities fraud conspiracy, wire fraud conspiracy and money laundering conspiracy. Sloat pleaded guilty in October 2012 to securities fraud conspiracy and Murphy pleaded guilty to the same charge in January 2013. Davey was convicted at trial of securities fraud conspiracy, wire fraud conspiracy, money laundering conspiracy and tax evasion. He will be sentenced by the court at a later date.

Toft remains free on bond and will be transferred to the custody of the Federal Bureau of Prisons upon designation of federal facility. Murphy and Sloat have been in federal custody since their bonds were revoked due to bond violations in March 2012 and August 2013, respectively. All federal sentences are served without the possibility of parole.

The case is prosecuted by Assistant United States Attorneys Kurt W. Meyers and Mark T. Odulio of the Western District of North Carolina. The investigation was handled by the FBI and the IRS.

CHARLOTTE, N.C. – On Wednesday, September 3, 2014, U.S. District Judge Robert J. Conrad, Jr. sentenced Reginald Lashawn Lockhart, 30, of Charlotte to serve to 180 months in prison to be followed by five years of supervised release for a federal gun offense, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina.

U.S. Attorney Tompkins is joined in making today’s announcement by Wayne L. Dixie, Special Agent in Charge of the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), Charlotte Field Division and Chief Rodney D. Monroe of the Charlotte Mecklenburg Police Department (CMPD).

According to filed court documents and statements made in court, on September 12, 2012, CMPD police officers received information that Lockhart was in possession of two stolen firearms. Court records indicate that when law enforcement searched Lockhart’s Charlotte residence they found a Smith & Wesson, .40 caliber pistol, which was loaded with 15 rounds. According to court records and court proceedings, law enforcement later determined that the pistol was stolen. Court records show that Lockhart had six prior convictions for robbery with a dangerous weapon and two prior convictions for assault with a deadly weapon inflicting serious injury. Lockhart’s prior convictions prohibit him from carrying a firearm. Lockhart pleaded guilty in April 2013 to possession of a firearm by a convicted felon and he was sentenced as an armed career criminal.

Lockhart has been in federal custody since November 2012. He 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 CMPD. The case was prosecuted by Assistant United States Attorney Robert J. Gleason of the U.S. Attorney’s Office in Charlotte.

CHARLOTTE, N.C. – On Wednesday, September 3, 2014, U.S. District Judge Robert J. Conrad, Jr. sentenced Reginald Lashawn Lockhart, 30, of Charlotte to serve to 180 months in prison to be followed by five years of supervised release for a federal gun offense, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina.

U.S. Attorney Tompkins is joined in making today’s announcement by Wayne L. Dixie, Special Agent in Charge of the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), Charlotte Field Division and Chief Rodney D. Monroe of the Charlotte Mecklenburg Police Department (CMPD).

According to filed court documents and statements made in court, on September 12, 2012, CMPD police officers received information that Lockhart was in possession of two stolen firearms. Court records indicate that when law enforcement searched Lockhart’s Charlotte residence they found a Smith & Wesson, .40 caliber pistol, which was loaded with 15 rounds. According to court records and court proceedings, law enforcement later determined that the pistol was stolen. Court records show that Lockhart had six prior convictions for robbery with a dangerous weapon and two prior convictions for assault with a deadly weapon inflicting serious injury. Lockhart’s prior convictions prohibit him from carrying a firearm. Lockhart pleaded guilty in April 2013 to possession of a firearm by a convicted felon and he was sentenced as an armed career criminal.

Lockhart has been in federal custody since November 2012. He 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 CMPD. The case was prosecuted by Assistant United States Attorney Robert J. Gleason of the U.S. Attorney’s Office in Charlotte.

CHARLOTTE, N.C. – Darren White, 49, of Mooresville, N.C. was sentenced on Tuesday, September 2, 2014, to serve 33 months in prison for stealing more than $600,000 from his former employer, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Chief U.S. District Judge Frank D. Whitney also imposed a $10,000 fine and two years of supervised release after White’s incarceration.

U.S. Attorney Tompkins 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 Rodney D. Monroe of the Charlotte-Mecklenburg Police Department (CMPD).

According to filed court documents and court proceedings, from 2008 to 2011, White was employed by an international labeling solutions company (the “company”) with offices in Charlotte, as the company’s controller and director of financial planning and analysis. In that capacity, White managed the company’s credit card program, which included overseeing his employer’s credit card accounts and related financial statements. Court records indicate that White was the only employee with administrative access to the accounting records related to the company’s credit card program.

According to documents filed in the case, over the course of his employment, White exploited his position and used the company’s corporate credit card to pay for more than $600,000 in personal expenditures. Court filings reflect that White used the company’s credit card to buy personal items such as firearms, diving equipment, clothing, and household goods and electronics, and to pay for personal expenditures including travel expenses and entertainment. As described in further court documents, White created a series of fraudulent accounting entries in the company’s books and records to conceal his scheme. Court records indicate that when White was initially confronted by his employer about the credit card transactions, White characterized them as legitimate business expenses authorized by the company’s management. White pleaded guilty in January 2014 to one count of wire fraud.

In handing down White’s sentence, Judge Whitney noted that White’s multi-year criminal scheme caused great harm to the victim company. Judge Whitney also stressed that general deterrence was an important factor in reaching his decision to imprison White for 33 months.

White will remain free 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.

The investigation was handled by the FBI and CMPD. The prosecution for the government is being handled by Assistant United States Attorneys Mark T. Odulio and Benjamin Bain-Creed of the U.S. Attorney’s Office in Charlotte.

CHARLOTTE, N.C. – Carlos Edgar Sandoval-Uriel, 31, of Mexico, was sentenced today by Chief District Judge Frank D. Whitney to serve 252 months in prison, for his role as the leader of the Charlotte cell of an international drug trafficking and money laundering conspiracy, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Judge Whitney also sentenced Sandoval-Uriel to five years of supervised release.

U.S. Attorney Tompkins is joined in making today’s announcement by Ryan L. Spradlin, Acting Special Agent in Charge of ICE/Homeland Security Investigations (HSI) in Atlanta and the Carolinas; Chief Rodney Monroe of the Charlotte-Mecklenburg Police Department, Chief Cleveland Spruill of the Huntersville Police Department; and Chief Bence Hoyle of the Cornelius Police Department.

According to filed documents and court proceedings, Sandoval-Uriel was the leader of the Charlotte cell of a transnational drug trafficking organization that shipped marijuana across the United States-Mexico border. Court records indicate that Sandoval-Uriel’s cell operated in and around Charlotte from 2008 to April 2012, and was responsible for trafficking over a ton of marijuana to the area. Court records show that on April 2, 2012, the drug organization transported into the United States 3,168 pounds of marijuana with an estimated value of more than $2.5 million. The marijuana was hidden inside industrial-sized metal farming equipment.

According to court records, on April 9, 2012, law enforcement agents conducted a controlled delivery of the marijuana to the organization’s initial staging location in Charlotte. On April 17, 2012, law enforcement in Charlotte arrested members of the local drug cell and executed search warrants at homes suspected to be involved in the conspiracy. While executing a search warrant at a local stash house, law enforcement recovered two kilograms of cocaine and a handgun. At Sandoval-Uriel’s house, law enforcement found $192,730 in cash, an automatic money counter, a computer with ledgers of prior drug-related transactions, and bank slips for deposits of drug proceeds that conspirators made on Sandoval-Uriel’s behalf. Sandoval-Uriel pleaded guilty in November 2013 to one count of conspiracy to distribute and to possess with intent to distribute marijuana, and one count of money laundering conspiracy.

This prosecution is part of an extensive investigation by the Organized Crime Drug Enforcement Task Force (OCDETF) that has resulted in the conviction of 12 defendants on marijuana trafficking and money laundering 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 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.

In addition to Sandoval-Uriel, the following convictions stem from this investigation:

• Jose Luis Sandoval-Godoy - 168 months in prison, followed by five years of supervised release.
• Victor Aurelio Guerra - 151 months in prison, followed by five years of supervised release.
• Andres G. Herbas - 121 months in prison, followed by five years of supervised release.
• Guillermo Garza-Sanchez - 121 months in prison, followed by five years of supervised release.
• Paul Isaac Ayala, Jr. - 70 months in prison, followed by two years of supervised release.
• Cesar Garcia: 57 months in prison, followed by two years of supervised release.
• Jose Alejandro Segovia - 57 months in prison, followed by five years of supervised release.
• Ricardo Munoz-Contreras - 57 months in prison, followed by two years of supervised release.
• Jose Zenteno - 30 months in prison, followed by three years supervised release.
• Carla Georgina Moscoso Romay - two years of probation (including with 6 months home detention) and a $3,000 fine.
• Rigoberto Pacheco-Carrillo - time-served sentence, followed by one year of supervised release.

Sandoval-Uriel has been in custody since April 17, 2012. He 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.

The investigation was led by HSI, CMPD, Huntersville PD, and Cornelius PD, with assistance from the Pineville Police Department, North Carolina State Bureau of Investigation, North Carolina Alcohol Law Enforcement, North Carolina Highway Patrol, Concord Police Department, Gastonia Police Department, Rowan County Sheriff’s Office, and Iredell County Sheriff’s Office.

The prosecution for the government was handled by Assistant U.S. Attorney Steven R. Kaufman of the U.S. Attorney’s Office in Charlotte.

CHARLOTTE, N.C. – The president and part-owner of Boggs Paving, Inc. (Boggs Paving) pleaded guilty in U.S. District Court today to federal charges stemming from a criminal investigation into the illegal use of a disadvantaged business enterprise to obtain government-funded construction contracts, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Carl Andrew Boggs, III, 50, of Waxhaw, N.C. pleaded guilty to one count of conspiracy to defraud the United States Department of Transportation (USDOT) and one count of money laundering conspiracy.

Marlies T. Gonzalez, Regional Special Agent in Charge, U.S. Department of Transportation, Office of Inspector General (DOT-OIG), Region IV; 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 (IRS-CI), join U.S. Attorney Tompkins in making today’s announcement.

The purpose of USDOT’s disadvantaged business enterprise (DBE) program is to increase the participation of disadvantaged business enterprises (DBEs), such as minority and women-owned businesses and small business enterprises (SBEs) in federally-funded public construction and transportation-related projects.

“Cheating to obtain publicly-funded construction contracts enriched Boggs Paving and its owners and undermined the goal of the DBE program, which helps small and minority-owned businesses thrive by ensuring their ability to work on federal construction and transportation projects. This illegal conduct prevented contractors who played by the rules and legitimate DBEs from getting a fair chance to obtain work and undermines public trust. Prime contractors and subcontractors who engage in this type of illegal activity will be prosecuted and will have to face the consequences of their fraudulent acts,” said U.S. Attorney Tompkins.

“It is disheartening to think anyone would defraud government programs designed to help hard-working Americans, essentially robbing worthy business men and women of the chance to achieve their dreams. The FBI will continue to work with our state and federal law enforcement partners to aggressively investigate, expose, and dismantle criminal enterprises that engage in this type of fraud,” said John Strong, Special Agent in Charge of the FBI in North Carolina.

“DBE fraud harms the integrity of the DBE program and law-abiding contractors, including many small businesses, by defeating efforts to ensure a level playing field in which all firms can compete fairly for contracts,” said Marlies Gonzalez, Regional Special Agent-in-Charge of the U.S. Department of Transportation, Office of Inspector General. “Our agents will continue to work with the Secretary of Transportation, and other federal, state, and local law enforcement and prosecutorial colleagues to expose and shut down DBE fraud schemes that adversely affect public trust and DOT-assisted transportation programs throughout North Carolina and elsewhere.”

“When individuals and businesses attempt to conceal their criminal profits, complex financial transactions and money laundering schemes will exist. IRS Criminal Investigation and our law enforcement partners will be present as well, unraveling such schemes in order to bring those responsible to justice” stated Thomas J. Holloman, Special Agent in Charge, IRS Criminal Investigation.

Drew Boggs is the latest defendant to plead guilty in this case. According to documents filed in the case and statements made in court, from 2003 through 2013, Drew Boggs, Boggs Paving and the other defendants fraudulently obtained federally and state funded construction contracts by falsely certifying that a DBE or an SBE would perform and be paid for portion of the work on those contracts. As described in court documents, the conspirators used Monroe-based Styx Cuthbertson Trucking Company, Inc. (“Styx”), a road construction hauler and a certified DBE and SBE, to obtain the lucrative government-funded construction contracts. Court documents indicate that the conspirators took steps to conceal their fraud, including running payments for the work performed through a nominee bank account in Styx’s name and using magnetic decals bearing the “Styx” company logo to cover the “Boggs” logo on company trucks, among others. According to court records, the money was funneled back to Boggs Paving and its affiliates, and John Cuthbertson, owner of Styx, received kickbacks for allowing his company’s name and DBE status to be used by Boggs Paving.

Court records show that from June 2004 to July 2013, Boggs Paving was the prime contractor on 35 federally-funded contracts, and was a subcontractor for two additional contracts, worth over $87.6 million. Boggs Paving claimed DBE credits of approximately $3.7 million on these contracts for payments purportedly made to Styx. Styx only received payments of approximately $375,432 for actual work on these contracts, court records show.

To date, six defendants have pleaded guilty to charges stemming from this investigation. Greg Miller, 60, of Matthews, N.C., Arnold Mann, 55, of Fort Mill, S.C., Greg Tucker, 41, of Oakboro, N.C., and John Cuthbertson, 69, of Monroe have each plead guilty to one count of conspiracy to defraud USDOT. Kevin Hicks, 43, of Monroe has pleaded guilty to one count of conspiracy to defraud USDOT and one count of money laundering conspiracy. Charges against Boggs Paving, Inc. remain pending.

Drew Boggs has been released on bond and will be sentenced by the Court at a later date. The conspiracy to defraud USDOT charge carries a maximum of five years in prison and $250,000 fine. The money laundering conspiracy charge carries a maximum of 20 years in prison and a $500,000 fine or twice the value of the property involved in the transaction.

The investigation of the case was handled by USDOT-OIG, FBI and IRS. The case is being prosecuted by Assistant United States Attorneys Jenny G. Sugar and Michael E. Savage of the U.S. Attorney’s Office in Charlotte.

Another Poacher Sentenced To Jail For The Illegal Harvesting Of 298 Ginseng Roots

ASHEVILLE, N.C. – U.S. Magistrate Judge Dennis L. Howell sentenced Billy Joe Hurley, 46, of Bryson City, N.C. to serve five months and fifteen days in jail for the illegal possession or harvesting of American ginseng from the Great Smoky Mountains National Park, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina.

Steve Kloster, Acting Chief Ranger of the Great Smoky Mountains National Park and Cindy MacLeod, Acting Superintendent of the Great Smoky Mountains National Park join U.S. Attorney Tompkins in making today’s announcement.

“Illegally harvesting American ginseng from federally protected land areas poses a serious danger to a plant that is part of our national heritage. It is also a crime, and my office will continue to work closely with National Park Service Rangers to prosecute poachers who profit from the illegal harvesting and sale of this endangered national resource,” said U.S. Attorney Tompkins.

“Our rangers remain committed to protecting ginseng which is now locally threatened by poaching and recently placed on the North Carolina watch list for plants in peril due to exploitation,” said Acting Chief Ranger Steve Kloster. “We are hopeful that this conviction will serve as a deterrent to others considering illegally taking this special resource.”

“I am proud of the rangers who work to protect ginseng from poachers,” said Acting Superintendent Cindy MacLeod. “Ginseng is a precious resource, a difficult plant to grow, and one that we have been using losing to illegal and unsustainable harvests as the forests are being robbed of younger and younger plants.”

According to today’s sentencing hearing and filed documents, on June 28, 2014, Hurley admitted to illegally possessing 83 American ginseng roots he had illegally dug from areas in the Great Smoky Mountains National Park. Hurley pleaded guilty to the poaching charge, which marked his fourth 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 today’s 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 the 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.

In a separate case, on August 6, 2014, Christopher Ian Jacobson, 31, of Cosby, Tenn. was sentenced to 80 days in prison and was ordered to pay a $1,000 fine. Jacobson pleaded guilty to the illegal possession of 298 roots of ginseng.

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 ceased.

The investigation of the case was handled by Park Rangers of the Great Smoky Mountains National Park assisted by special agents with the U.S. Fish and Wildlife Service. 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.

CHARLOTTE, N.C. – U.S. District Judge Robert J. Conrad, Jr. sentenced two California residents to prison on Tuesday, August 26, 2014, for their role involving computer theft from a nation-wide online mortgage broker (the “company”), announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Brian Matthew Rich, 40, of Laguna Beach, Calif., was sentenced to 24 months in prison, followed by two years of supervised release. Marcus Alan Avritt, 42, of Seal Beach, Calif. was sentenced to 15 months in prison and two years of supervised release. Judge Conrad also ordered both defendants to pay restitution to the company, the amount of which will be determined by the court at a later date.

John A. Strong, Special Agent in Charge for the Federal Bureau of Investigation, Charlotte Division, joins U.S. Attorney Tompkins in making today’s announcement.

According to filed court documents and court proceedings, Rich and Avritt were the co-owners of Chapman Capital, Inc., a California-based mortgage broker firm also doing business as “Home Loan Consultants.” Court records show that Rich and Avritt purchased unauthorized access to the victim company’s database, which contained data on consumers who had used the company’s online mortgage lending exchange network to apply for new and refinanced mortgage loans, from 2007 until January 2008. According to court records, Rich and Avritt purchased the unauthorized access from another California-based mortgage broker and co-defendant, Steve Kenneth Rosene. Court records indicate that Rosene had obtained the unauthorized computer access from the fourth member of the conspiracy, Jarrod Beddingfield, who was a former employee of the victim company.

According to court records, the victim company’s online mortgage lending exchange network facilitated millions of consumer loan requests for new and refinanced mortgages. Mortgage loan consumers used the internet to access the company’s network and to complete online mortgage application forms containing contact, non-public financial data and other information necessary to the mortgage application process. Court records indicate that the information submitted through this online process comprised the company’s mortgage referral information, known individually as “mortgage leads.” According to court documents, the mortgage referral information, which contained thousands of such individual mortgage leads, was valuable information because it consisted of mortgage loan consumers who were ready, willing and financially-able to close on mortgage loans, refinancing loans and home equity loans, court records show. By obtaining this information without paying the requisite fees and dues, Rich and Avritt avoided paying the victim company an estimated $745,152 for the stolen mortgage leads.

Avrit and Rich pleaded guilty in August and September 2013, respectively, to one count of conspiracy to illegally access and use the company’s customer database. The other two co-defendants, Rosene and Beddingfield, have also pleaded guilty to the same charge. Rosene has also pleaded guilty to one count of unauthorized computer access/exceeded authorized access for commercial advantage and financial gain. Rosene and Beddingfield will be sentenced by the court at a later date.

Avritt and Rich have been released on bond and will be ordered to the report to 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. This prosecution is handled by Assistant United States Attorneys Tom O’Malley and Ben Bain-Creed of the U.S. Attorney’s Office in Charlotte.

WASHINGTON - Attorney General Eric Holder and Associate Attorney General Tony West announced today that the Department of Justice has reached a $16.65 billion settlement with Bank of America Corporation – the largest civil settlement with a single entity in American history ¬— to resolve federal and state claims against Bank of America and its former and current subsidiaries, including Countrywide Financial Corporation and Merrill Lynch. As part of this global resolution, the bank has agreed to pay a $5 billion penalty under the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) – the largest FIRREA penalty ever – and provide billions of dollars of relief to struggling homeowners, including funds that will help defray tax liability as a result of mortgage modification, forbearance or forgiveness. The settlement does not release individuals from civil charges, nor does it absolve Bank of America, its current or former subsidiaries and affiliates or any individuals from potential criminal prosecution.

“This historic resolution - the largest such settlement on record - goes far beyond ‘the cost of doing business,’” said Attorney General Holder. "Under the terms of this settlement, the bank has agreed to pay $7 billion in relief to struggling homeowners, borrowers and communities affected by the bank’s conduct. This is appropriate given the size and scope of the wrongdoing at issue.”

This settlement is part of the ongoing efforts of President Obama’s Financial Fraud Enforcement Task Force and its Residential Mortgage-Backed Securities (RMBS) Working Group, which has recovered $36.65 billion to date for American consumers and investors.

“At nearly $17 billion, today’s resolution with Bank of America is the largest the department has ever reached with a single entity in American history,” said Associate Attorney General West. “But the significance of this settlement lies not just in its size; this agreement is notable because it achieves real accountability for the American people and helps to rectify the harm caused by Bank of America’s conduct through a $7 billion consumer relief package that could benefit hundreds of thousands of Americans still struggling to pull themselves out from under the weight of the financial crisis.”

The Justice Department and the bank settled several of the department’s ongoing civil investigations related to the packaging, marketing, sale, arrangement, structuring and issuance of RMBS, collateralized debt obligations (CDOs), and the bank’s practices concerning the underwriting and origination of mortgage loans. The settlement includes a statement of facts, in which the bank has acknowledged that it sold billions of dollars of RMBS without disclosing to investors key facts about the quality of the securitized loans. When the RMBS collapsed, investors, including federally insured financial institutions, suffered billions of dollars in losses. The bank has also conceded that it originated risky mortgage loans and made misrepresentations about the quality of those loans to Fannie Mae, Freddie Mac and the Federal Housing Administration (FHA).

Of the record-breaking $16.65 billion resolution, almost $10 billion will be paid to settle federal and state civil claims by various entities related to RMBS, CDOs and other types of fraud. Bank of America will pay a $5 billion civil penalty to settle the Justice Department claims under FIRREA. Approximately $1.8 billion will be paid to settle federal fraud claims related to the bank’s origination and sale of mortgages, $1.03 billion will be paid to settle federal and state securities claims by the Federal Deposit Insurance Corporation (FDIC), $135.84 million will be paid to settle claims by the Securities and Exchange Commission. In addition, $300 million will be paid to settle claims by the state of California, $45 million to settle claims by the state of Delaware, $200 million to settle claims by the state of Illinois, $23 million to settle claims by the Commonwealth of Kentucky, $75 million to settle claims by the state of Maryland, and $300 million to settle claims by the state of New York.

Bank of America will provide the remaining $7 billion in the form of relief to aid hundreds of thousands of consumers harmed by the financial crisis precipitated by the unlawful conduct of Bank of America, Merrill Lynch and Countrywide. That relief will take various forms, including principal reduction loan modifications that result in numerous homeowners no longer being underwater on their mortgages and finally having substantial equity in their homes. It will also include new loans to credit worthy borrowers struggling to get a loan, donations to assist communities in recovering from the financial crisis, and financing for affordable rental housing. Finally, Bank of America has agreed to place over $490 million in a tax relief fund to be used to help defray some of the tax liability that will be incurred by consumers receiving certain types of relief if Congress fails to extend the tax relief coverage of the Mortgage Forgiveness Debt Relief Act of 2007.

An independent monitor will be appointed to determine whether Bank of America is satisfying its obligations. If Bank of America fails to live up to its agreement by Aug. 31, 2018, it must pay liquidated damages in the amount of the shortfall to organizations that will use the funds for state-based Interest on Lawyers’ Trust Account (IOLTA) organizations and NeighborWorks America, a non-profit organization and leader in providing affordable housing and facilitating community development. The organizations will use the funds for foreclosure prevention and community redevelopment, legal assistance, housing counselling and neighborhood stabilization.

As part of the RMBS Working Group, the U.S. Attorney’s Office for the District of New Jersey conducted a FIRREA investigation into misrepresentations made by Merrill Lynch to investors in 72 RMBS throughout 2006 and 2007. As the statement of facts describes, Merrill Lynch regularly told investors the loans it was securitizing were made to borrowers who were likely and able to repay their debts. Merrill Lynch made these representations even though it knew, based on the due diligence it had performed on samples of the loans, that a significant number of those loans had material underwriting and compliance defects - including as many as 55 percent in a single pool. In addition, Merrill Lynch rarely reviewed the unsampled loans to ensure that the defects observed in the samples were not present throughout the remainder of the pools. Merrill Lynch also disregarded its own due diligence and securitized loans that the due diligence vendors had identified as defective. This practice led one Merrill Lynch consultant to “wonder why we have due diligence performed” if Merrill Lynch was going to securitize the loans “regardless of issues.”

“In the run-up to the financial crisis, Merrill Lynch bought more and more mortgage loans, packaged them together, and sold them off in securities – even when the bank knew a substantial number of those loans were defective,” said U.S. Attorney Paul J. Fishman for the District of New Jersey. “The failure to disclose known risks undermines investor confidence in our financial institutions. Today’s record-breaking settlement, which includes the resolution of our office’s imminent multibillion-dollar suit for FIRREA penalties, reflects the seriousness of the lapses that caused staggering losses and wider economic damage.”

This settlement also resolves the complaint filed against Bank of America in August 2013 by the U.S. Attorney’s Office for the Western District of North Carolina concerning an $850 million securitization. Bank of America acknowledges that it marketed this securitization as being backed by bank-originated “prime” mortgages that were underwritten in accordance with its underwriting guidelines. Yet, Bank of America knew that a significant number of loans in the security were “wholesale” mortgages originated through mortgage brokers and that based on its internal reporting, such loans were experiencing a marked increase in underwriting defects and a noticeable decrease in performance. Notwithstanding these red flags, the bank sold these RMBS to federally backed financial institutions without conducting any third party due diligence on the securitized loans and without disclosing key facts to investors in the offering documents filed with the SEC. A related case concerning the same securitization was filed by the SEC against Bank of America and is also being resolved as part of this settlement.

“Today’s settlement attests to the fact that fraud pervaded every level of the RMBS industry, including purportedly prime securities, which formed the basis of our filed complaint,” said U.S. Attorney Anne M. Tompkins for the Western District of North Carolina. “Even reputable institutions like Bank of America caved to the pernicious forces of greed and cut corners, putting profits ahead of their customers. As we deal with the aftermath of the financial meltdown and rebuild our economy, we will hold accountable firms that contributed to the economic crisis. Today’s settlement makes clear that my office will not sit idly while fraud occurs in our backyard.”

The U.S. Attorney’s Office for the Central District of California has been investigating the origination and securitization practices of Countrywide as part of the RMBS Working Group effort. The statement of facts describes how Countrywide typically represented to investors that it originated loans based on underwriting standards that were designed to ensure that borrowers could repay their loans, although Countrywide had information that certain borrowers had a high probability of defaulting on their loans. Countrywide also concealed from RMBS investors its use of “shadow guidelines” that permitted loans to riskier borrowers than Countrywide’s underwriting guidelines would otherwise permit. Countrywide’s origination arm was motivated by the “saleability” of loans and Countrywide was willing to originate “exception loans” (i.e., loans that fell outside of its underwriting guidelines) so long as the loans, and the attendant risk, could be sold. This led Countrywide to expand its loan offerings to include, for example, “Extreme Alt-A” loans, which one Countrywide executive described as a “hazardous product,” although Countrywide failed to tell RMBS investors that these loans were being originated outside of Countrywide’s underwriting guidelines. Countrywide knew that these exception loans were performing far worse than loans originated without exceptions, although it never disclosed this fact to investors.

“The Central District of California has taken the lead in the department’s investigation of Countrywide Financial Corporation,” said Acting U.S. Attorney Stephanie Yonekura for the Central District of California. “Countrywide’s improper securitization practices resulted in billions of dollars of losses to federally-insured financial institutions. We are pleased that this investigation has resulted in a multibillion-dollar recovery to compensate the United States for the losses caused by Countrywide’s misconduct.”

In addition to the matters relating to the securitization of toxic mortgages, today’s settlement also resolves claims arising out of misrepresentations made to government entities concerning the origination of residential mortgages.

The U.S. Attorney’s Office for the Southern District of New York, along with the Federal Housing Finance Agency’s Office of Inspector General and the Special Inspector General for the Troubled Asset Relief Program, conducted investigations into the origination of defective residential mortgage loans by Countrywide’s Consumer Markets Division and Bank of America’s Retail Lending Division as well as the fraudulent sale of such loans to the government sponsored enterprises Fannie Mae and Freddie Mac (the “GSEs”). The investigation into these practices, as well as three private whistleblower lawsuits filed under seal pursuant to the False Claims Act, are resolved in connection with this settlement. As part of the settlement, Countrywide and Bank of America have agreed to pay $1 billion to resolve their liability under the False Claims Act. The FIRREA penalty to be paid by Bank of America as part of the settlement also resolves the government’s claims against Bank of America and Countrywide under FIRREA for loans fraudulently sold to Fannie Mae and Freddie Mac. In addition, Countrywide and Bank of America made admissions concerning their conduct, including that they were aware that many of the residential mortgage loans they had made to borrowers were defective, that many of the representations and warranties they made to the GSEs about the quality of the loans were inaccurate, and that they did not self-report to the GSEs mortgage loans they had internally identified as defective.

“For years, Countrywide and Bank of America unloaded toxic mortgage loans on the government sponsored enterprises Fannie Mae and Freddie Mac with false representations that the loans were quality investments,” said U.S. Attorney Preet Bharara for the Southern District of New York. “This office has already obtained a jury verdict of fraud and a judgment for over a billion dollars against Countrywide and Bank of America for engaging in similar conduct. Now, this settlement, which requires the bank to pay another billion dollars for false statements to the GSEs, continues to send a clear message to Wall Street that mortgage fraud cannot be a cost of doing business.”

The U.S. Attorney’s Office for the Eastern District of New York, together with its partners from the Department of Housing and Urban Development (HUD), conducted a two-year investigation into whether Bank of America knowingly made loans insured by the FHA in violation of applicable underwriting guidelines. The investigation established that the bank caused the FHA to insure loans that were not eligible for FHA mortgage insurance. As a result, HUD incurred hundreds of millions of dollars of losses. Moreover, many of Bank of America’s borrowers have defaulted on their FHA mortgage loans and have either lost or are in the process of losing their homes to foreclosure.

“As a Direct Endorser of FHA insured loans, Bank of America performs a critical role in home lending,” said U.S. Attorney Loretta E. Lynch for the Eastern District of New York. “It is a gatekeeper entrusted with the authority to commit government funds earmarked for facilitating mortgage lending to first-time and low-income homebuyers, senior citizen homeowners and others seeking or owning homes throughout the nation, including many who live in the Eastern District of New York. In obtaining a payment of $800 million and sweeping relief for troubled homeowners, we have not just secured a meaningful remedy for the bank’s conduct, but have sent a powerful message of deterrence.”

“Bank of America failed to make accurate and complete disclosure to investors and its illegal conduct kept investors in the dark,” said Rhea Kemble Dignam, Regional Director of the SEC’s Atlanta Office. “Requiring an admission of wrongdoing as part of Bank of America’s agreement to resolve the SEC charges filed today provides an additional level of accountability for its violation of the federal securities laws.”

“Today’s settlement with Bank of America is another important step in the Obama Administration’s efforts to provide relief to American homeowners who were hurt during the housing crisis,” said U.S. Department of Housing and Urban Development (HUD) Secretary Juliàn Castro. “This global settlement will strengthen the FHA fund and Ginnie Mae, and it will provide $7 billion in consumer relief with a focus on helping borrowers in areas that were the hardest hit during the crisis. HUD will continue working with the Department of Justice, state attorneys general, and other partners to take appropriate action to hold financial institutions accountable and provide consumers with the relief they need to stay in their homes. HUD remains committed to solidifying the housing recovery and creating more opportunities for Americans to succeed.” “Bank of America and the banks it bought securitized billions of dollars of defective mortgages,” said Acting Inspector General Michael P. Stephens of the FHFA-OIG. “Investors, including Fannie Mae and Freddie Mac, suffered enormous losses by purchasing RMBS from Bank of America, Countrywide and Merrill Lynch not knowing about those defects. Today’s settlement is a significant, but by no means final step by FHFA-OIG and its law enforcement partners to hold accountable those who committed acts of fraud and deceit.”

The attorneys general of California, Delaware, Illinois, Kentucky, Maryland and New York also conducted related investigations that were critical to bringing about this settlement. In addition, the settlement resolves investigations conducted by the Securities and Exchange Commission (SEC) and litigation filed by the Federal Deposit Insurance Company (FDIC).

The RMBS Working Group is a federal and state law enforcement effort focused on investigating fraud and abuse in the RMBS market that helped lead to the 2008 financial crisis. The RMBS Working Group brings together more than 200 attorneys, investigators, analysts and staff from dozens of state and federal agencies including the Department of Justice, 10 U.S. Attorneys’ Offices, the FBI, the Securities and Exchange Commission (SEC), the Department of Housing and Urban Development (HUD), HUD’s Office of Inspector General, the FHFA-OIG, the Office of the Special Inspector General for the Troubled Asset Relief Program, the Federal Reserve Board’s Office of Inspector General, the Recovery Accountability and Transparency Board, the Financial Crimes Enforcement Network, and more than 10 state attorneys general offices around the country.

The RMBS Working Group is led by Director Geoffrey Graber and five co-chairs: Assistant Attorney General for the Civil Division Stuart Delery, Assistant Attorney General for the Criminal Division Leslie Caldwell, Director of the SEC’s Division of Enforcement Andrew Ceresney, U.S. Attorney for the District of Colorado John Walsh and New York Attorney General Eric Schneiderman.

Investigations were led by Assistant U.S. Attorneys Leticia Vandehaar of the District of New Jersey; Dan Ryan and Mark Odulio of the Western District of North Carolina; George Cardona and Lee Weidman of the Central District of Carolina; Richard Hayes and Kenneth Abell of the Eastern District of New York; and Pierre Armand and Jaimie Nawaday of the Southern District of New York.

Learn more about the RMBS Working Group and the Financial Fraud Enforcement Task Force at:www.stopfraud.gov.

Related Material:

DV Conference Training Announcement & Registration Form
Settlement Agreement
Annex 1 - Statement of Facts
Annex 2 - Consumer Relief
Annex 3 - Tax Fund
Annex 3 - Transaction List
Exhibit A - FDIC
Exhibit B - SEC Documents

 

CHARLOTTE, N.C. – On Wednesday, August 13, 2014, Chief U.S. District Judge Frank D. Whitney sentenced Charles Kevin Bridges to 121 months in prison on federal child pornography charges, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Bridges was ordered to register as a sex offender and to serve the rest of his life under court supervision after he is released from prison. Judge Whitney also ordered Bridges to pay $3,000 as restitution to a child pornography victim.

U.S. Attorney Tompkins is joined in making today’s announcement by John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation, Charlotte Division and Chief Stacy Conley of the Gastonia Police Department.

In March 2014, Bridges, 56, of Kings Mountain, N.C. pleaded guilty to one count of receiving child pornography and one count of possession of child pornography. According to filed documents and statements made in court, in January 2013, a law enforcement officer conducting an investigation downloaded images and videos containing child pornography from Bridges’ computer, using a peer-to-peer network. Law enforcement executed a search warrant at Bridges’ residence and seized a laptop computer and a USB drive. Court records indicate that a forensic examination revealed that Bridges possessed an extensive collection of images and videos depicting children as young as toddlers engaging in sexual acts with adults.

Bridges has been in federal custody since his bond was revoked in March 2013. He 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.

The investigation was handled by the FBI and Gastonia Police department with assistance from the Cleveland County Sheriff’s Office. Assistant U.S. Attorneys Cortney S. Randall and David A. Thorneloe of the U.S. Attorney’s Office handled the prosecution.

This case was 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. – On Wednesday, August 13, 2014, Chief U.S. District Judge Frank D. Whitney sentenced Charles Kevin Bridges to 121 months in prison on federal child pornography charges, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Bridges was ordered to register as a sex offender and to serve the rest of his life under court supervision after he is released from prison. Judge Whitney also ordered Bridges to pay $3,000 as restitution to a child pornography victim.

U.S. Attorney Tompkins is joined in making today’s announcement by John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation, Charlotte Division and Chief Stacy Conley of the Gastonia Police Department.

In March 2014, Bridges, 56, of Kings Mountain, N.C. pleaded guilty to one count of receiving child pornography and one count of possession of child pornography. According to filed documents and statements made in court, in January 2013, a law enforcement officer conducting an investigation downloaded images and videos containing child pornography from Bridges’ computer, using a peer-to-peer network. Law enforcement executed a search warrant at Bridges’ residence and seized a laptop computer and a USB drive. Court records indicate that a forensic examination revealed that Bridges possessed an extensive collection of images and videos depicting children as young as toddlers engaging in sexual acts with adults.

Bridges has been in federal custody since his bond was revoked in March 2013. He 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.

The investigation was handled by the FBI and Gastonia Police department with assistance from the Cleveland County Sheriff’s Office. Assistant U.S. Attorneys Cortney S. Randall and David A. Thorneloe of the U.S. Attorney’s Office handled the prosecution.

This case was 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. – U.S. District Judge Max O. Cogburn, Jr. sentenced Timothy Massey, 32, of Charlotte to serve to 144 months in prison to be followed by two years of supervised release for federal gun, drug and supervision violations, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina.

U.S. Attorney Tompkins is joined in making today’s announcement by Wayne L. Dixie, Special Agent in Charge of the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), Charlotte Field Division; Greg Forest, Chief Probation Officer of the U.S. Probation Office (USPO); and Chief Rodney D. Monroe of the Charlotte Mecklenburg Police Department (CMPD).

According to filed court documents and statements made in court, in May 2012, CMPD police officers conducted a traffic stop of the vehicle Massey was driving. Over the course of the traffic stop, law enforcement found a gun and marijuana in a backpack stored in the vehicle’s trunk. Massey’s prior convictions prohibit him from carrying a weapon. Massey pleaded guilty in November 2013 to possession of a firearm by a convicted felon and possession with intent to distribute marijuana.

Massey has been in federal custody since August 2013. He 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, USPO and CMPD. The case was prosecuted by Assistant United States Attorney Robert J. Gleason of the U.S. Attorney’s Office in Charlotte.

CHARLOTTE, N.C. – Zulfiqar Ali Kacho, 40, of Vale, N.C. was sentenced today to serve 33 months in prison on a federal arson charge, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. U.S. District Judge Max O. Cogburn, Jr. also sentenced Kacho to serve one year under court supervision.

U.S. Attorney Tompkins 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 today’s court proceedings, in or about March 2013, Kacho solicited an undercover law enforcement agent to burn down the home of a man who, according to Kacho, had purportedly wronged him. Court records show that during a meeting on March 8, 2013, Kacho showed the undercover agent images of the victim’s home, located in South Carolina. At that meeting, Kacho told the undercover agent that he wanted the victim’s home to burn “to the ground,” and provided details to the undercover agent about using gas or petroleum in the crawl space to carry out the arson, court records indicate. On March 13, 2013, Kacho and the undercover agent met again, and over the course of that meeting, Kacho told the undercover agent he would pay him $1,000 to commit the arson, of which $300 would be paid in advance. Law enforcement arrested Kacho on March 15, 2013. He pleaded guilty in July 2013, to one count of solicitation to commit a crime of violence (arson), affecting interstate commerce.

Kacho has been in custody since March 2013 arrest, 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.

The investigation was handled by the FBI. Assistant U.S. Attorney Craig D. Randall of the U.S. Attorney’s Office in Charlotte prosecuted the case.