Western District of North Carolina

The Public Is Reminded Gathering Ginseng On The Nantahala National Forest Without A Permit Is Illegal

ASHEVILLE, N.C. – U.S. Magistrate Judge Dennis L. Howell sentenced Charles R. Nash, of Whittier, N.C. to serve 10 days in jail for the illegal possession or harvesting of American ginseng from the Nantahala National Forest, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina and Kristin Bail, Forest Supervisor of the U.S. Forest Service National Forests in North Carolina.

According to the January 30, 2014 sentencing hearing and other documents, on October 12, 2013, Nash admitted to illegally possessing 24 American ginseng roots he had dug from the Mosses Creek and Wayehutta Off-Road Vehicle areas in Jackson County. He pleaded guilty to the poaching charge. Staff of the Forest Service replanted the recovered viable roots.

American ginseng is on the list of the Convention of International Trade of Endangered Species. The U.S. Attorney’s Office reminds the public that gathering ginseng on the Nantahala National Forest without a permit is illegal. U.S. Forest Service lands have been severely impacted by ginseng poachers in western North Carolina. American ginseng was formerly abundant throughout the eastern mountains, but due to repeated poaching, populations have been reduced to a point that they can barely reproduce. 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 plant’s populations could recover if poaching ceased.

The Division of Scientific Authority, U.S. Fish & Wildlife Service is the regulatory agency that evaluates the biological and management status of wild American ginseng throughout its native range. The Division issues an annual or biennial report detailing if any harvest conditions need to be modified to ensure the sustainable harvest of wild native ginseng. Permits to collect ginseng root in National Forests are issued through the U.S. Forest Service in early September. Permits are not available in National Park lands such as the Blue Ridge Parkway and the Great Smoky Mountains National Park, where even the possession of American Ginseng is prohibited.

The investigation of the case was handled by the U.S. Forest Service. The U.S. Attorney’s Office in Asheville handled the prosecution.

To report illegal harvesting activities of American ginseng, please call 828-257-4200.

Defendants and their Co-Conspirators Promised High Returns to Attract Victim-Investors

CHARLOTTE, N.C. – ZeekRewards’ former Chief Operating Officer, Dawn Wright Olivares, 45, and the company’s former Senior Technology Officer, Daniel C. Olivares, 31, both of Clarksville, Ark., have agreed to plead guilty to federal charges for their roles in an $850 million Internet Ponzi scheme that promised victims a bogus return on investments, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. The two Arkansas residents were associated with the Lexington, N.C. based Rex Venture Group, LLC (RVG), which owned and operated Zeekler and ZeekRewards.

“ZeekRewards used the enormous power of the Internet to rip off $850 million from hundreds of thousands of victims in less than two years. We will continue to work with our law enforcement partners to take down greedy scam artists who think nothing of stealing the savings of hard working people.”

“As today’s technology continues to evolve, cybercriminals use these advances and enhancements to perpetrate an expanding range of crimes,” said Secret Service Assistant Director of Investigations Paul Morrissey. “As we have seen with this case, even with the increasing complexity of online Ponzi schemes, it remains difficult for criminals to remain anonymous. The Secret Service continues to seek new and innovative ways to combat emerging cyber threats. Our success in this case and other similar investigations is a result of our close work with our network of law enforcement partners.”

“This case shows that the appearance of success can be a mask for a tangled financial web of lies” said Richard Weber, Chief, IRS Criminal Investigation. “The underlying structure can fall apart at any time and leave many investors in financial ruin. Criminal Investigation is committed to investigating Ponzi schemes in an effort to protect the financial well-being of the American public.”

According to the criminal charges and plea documents filed today in U.S. District Court in Charlotte:

From January 2010 through August 2012, Dawn Wright Olivares, her step-son, Daniel Olivares, their unindicted co-conspirator and owner of RVG (identified in the charging document as “P.B”) and others engaged in a Ponzi scheme that raised more than $850 million through a sham internet-based penny auction company named “Zeekler” and its purported advertising division “ZeekRewards.” The defendants and their co-conspirators lured investors by falsely representing that ZeekRewards was generating massive profits from its penny auctions, and promised substantial returns on their investment, as much as 125%. Zeekler’s purported profits were bogus and ZeekRewards operated as a fraudulent Ponzi scheme whereby the co-conspirators used monies from victim-investors to pay fraudulent returns to earlier victim-investors and to personally enrich themselves. As a result, Dawn Wright Olivares, Daniel Olivares, “P.B.” and others induced victims worldwide, including over 1,500 victims in the Charlotte, N.C. area, to invest, thereby sustaining losses of at least $750 million.

Dawn Wright Olivares was closely involved in the strategic operations and ultimately served as the Chief Operations Officer of Zeekler and ZeekRewards (together “Zeek”). Dawn Wright Olivares also owned 95% of Wandering Phoenix, LLC, a company that she used, among other things, to receive payments from Zeek and RVG. During the course of the conspiracy, Dawn Wright Olivares and Wandering Phoenix received approximately $7.2 million in victim funds.

Daniel Olivares was RVG’s senior technology officer and was responsible for, among other things, database design, management and operations for Zeek. During the course of the conspiracy, Daniel Olivares personally enriched himself with victim funds totaling approximately $3.1 million. Other unnamed co-conspirators also personally enriched themselves with millions of dollars of victim funds.

In addition to the penny auction scheme, Dawn Wright Olivares, Daniel Olivares, and their co-conspirators represented that victim-investors in ZeekRewards could participate in what came to be known as the Retail Profit Pool (“RPP”), which supposedly allowed victims collectively to share 50% of Zeek’s “massive” net retail profits. However, the reported “daily net profit” was illusory and had no relationship at all to actual penny auction revenues or retail profits. The co-conspirators often re-used bogus daily profit figures from preceding days to report that new day’s purported profits and did not even keep books and records needed to calculate such a figure. Rather, the owner of RVG simply made up the “daily net profit” reported to victims. The true revenue from the scheme – approximately 98% of all incoming funds – came from victim-investors and not “massive” retail revenue and profits from the penny auctions as the co-conspirators claimed.

As the Ponzi scheme grew in size and scope, the co-conspirators took several steps to conceal the true nature of their scam by making a series of cosmetic changes to the ZeekRewards’ RPP. Ultimately, the Ponzi scheme began failing because the outstanding liability resulting from the bogus 125% return on investment continued to rise beyond control. By August 2012, the co-conspirators fraudulently represented to the collective victims that their investments were worth approximately $2.8 billion. Yet the co-conspirators had no accurate books and records to even determine how much cash on hand was available to pay such liability. In fact, by August 17, 2012, the co-conspirators had only $320 million or approximately 11% of $2.8 billion in value that they claimed investors had.

In the plea agreements also filed today with the Court, Dawn Wright Olivares has agreed to plead guilty to an investment fraud conspiracy charge and to tax fraud conspiracy. Daniel Olivares has agreed to plead guilty to an investment fraud conspiracy charge. Each charge carries a maximum prison term of five years in prison and a $250,000 fine. As part of their plea agreements, the defendants have also agreed to pay full restitution to their victims, the amount of which will be determined by the Court at sentencing.

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.

In making today’s announcement, U.S. Attorney Tompkins praised the U.S. Secret Service for its investigation into ZeekRewards, which is still ongoing, and thanked IRS-CI for its assistance in the case.

In related action today, the United States Securities & Exchange Commission filed civil charges against Dawn Wright Olivares and Daniel Olivares in federal court in Charlotte. Tompkins thanked the U.S. Securities & Exchange Commission, Division of Enforcement for its assistance in the ZeekRewards investigation.

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

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 www.stopfraud.gov.

Defendants and their Co-Conspirators Promised High Returns to Attract Victim-Investors

CHARLOTTE, N.C. – ZeekRewards’ former Chief Operating Officer, Dawn Wright Olivares, 45, and the company’s former Senior Technology Officer, Daniel C. Olivares, 31, both of Clarksville, Ark., have agreed to plead guilty to federal charges for their roles in an $850 million Internet Ponzi scheme that promised victims a bogus return on investments, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. The two Arkansas residents were associated with the Lexington, N.C. based Rex Venture Group, LLC (RVG), which owned and operated Zeekler and ZeekRewards.

“ZeekRewards used the enormous power of the Internet to rip off $850 million from hundreds of thousands of victims in less than two years. We will continue to work with our law enforcement partners to take down greedy scam artists who think nothing of stealing the savings of hard working people.”

“As today’s technology continues to evolve, cybercriminals use these advances and enhancements to perpetrate an expanding range of crimes,” said Secret Service Assistant Director of Investigations Paul Morrissey. “As we have seen with this case, even with the increasing complexity of online Ponzi schemes, it remains difficult for criminals to remain anonymous. The Secret Service continues to seek new and innovative ways to combat emerging cyber threats. Our success in this case and other similar investigations is a result of our close work with our network of law enforcement partners.”

“This case shows that the appearance of success can be a mask for a tangled financial web of lies” said Richard Weber, Chief, IRS Criminal Investigation. “The underlying structure can fall apart at any time and leave many investors in financial ruin. Criminal Investigation is committed to investigating Ponzi schemes in an effort to protect the financial well-being of the American public.”

According to the criminal charges and plea documents filed today in U.S. District Court in Charlotte:

From January 2010 through August 2012, Dawn Wright Olivares, her step-son, Daniel Olivares, their unindicted co-conspirator and owner of RVG (identified in the charging document as “P.B”) and others engaged in a Ponzi scheme that raised more than $850 million through a sham internet-based penny auction company named “Zeekler” and its purported advertising division “ZeekRewards.” The defendants and their co-conspirators lured investors by falsely representing that ZeekRewards was generating massive profits from its penny auctions, and promised substantial returns on their investment, as much as 125%. Zeekler’s purported profits were bogus and ZeekRewards operated as a fraudulent Ponzi scheme whereby the co-conspirators used monies from victim-investors to pay fraudulent returns to earlier victim-investors and to personally enrich themselves. As a result, Dawn Wright Olivares, Daniel Olivares, “P.B.” and others induced victims worldwide, including over 1,500 victims in the Charlotte, N.C. area, to invest, thereby sustaining losses of at least $750 million.

Dawn Wright Olivares was closely involved in the strategic operations and ultimately served as the Chief Operations Officer of Zeekler and ZeekRewards (together “Zeek”). Dawn Wright Olivares also owned 95% of Wandering Phoenix, LLC, a company that she used, among other things, to receive payments from Zeek and RVG. During the course of the conspiracy, Dawn Wright Olivares and Wandering Phoenix received approximately $7.2 million in victim funds.

Daniel Olivares was RVG’s senior technology officer and was responsible for, among other things, database design, management and operations for Zeek. During the course of the conspiracy, Daniel Olivares personally enriched himself with victim funds totaling approximately $3.1 million. Other unnamed co-conspirators also personally enriched themselves with millions of dollars of victim funds.

In addition to the penny auction scheme, Dawn Wright Olivares, Daniel Olivares, and their co-conspirators represented that victim-investors in ZeekRewards could participate in what came to be known as the Retail Profit Pool (“RPP”), which supposedly allowed victims collectively to share 50% of Zeek’s “massive” net retail profits. However, the reported “daily net profit” was illusory and had no relationship at all to actual penny auction revenues or retail profits. The co-conspirators often re-used bogus daily profit figures from preceding days to report that new day’s purported profits and did not even keep books and records needed to calculate such a figure. Rather, the owner of RVG simply made up the “daily net profit” reported to victims. The true revenue from the scheme – approximately 98% of all incoming funds – came from victim-investors and not “massive” retail revenue and profits from the penny auctions as the co-conspirators claimed.

As the Ponzi scheme grew in size and scope, the co-conspirators took several steps to conceal the true nature of their scam by making a series of cosmetic changes to the ZeekRewards’ RPP. Ultimately, the Ponzi scheme began failing because the outstanding liability resulting from the bogus 125% return on investment continued to rise beyond control. By August 2012, the co-conspirators fraudulently represented to the collective victims that their investments were worth approximately $2.8 billion. Yet the co-conspirators had no accurate books and records to even determine how much cash on hand was available to pay such liability. In fact, by August 17, 2012, the co-conspirators had only $320 million or approximately 11% of $2.8 billion in value that they claimed investors had.

In the plea agreements also filed today with the Court, Dawn Wright Olivares has agreed to plead guilty to an investment fraud conspiracy charge and to tax fraud conspiracy. Daniel Olivares has agreed to plead guilty to an investment fraud conspiracy charge. Each charge carries a maximum prison term of five years in prison and a $250,000 fine. As part of their plea agreements, the defendants have also agreed to pay full restitution to their victims, the amount of which will be determined by the Court at sentencing.

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.

In making today’s announcement, U.S. Attorney Tompkins praised the U.S. Secret Service for its investigation into ZeekRewards, which is still ongoing, and thanked IRS-CI for its assistance in the case.

In related action today, the United States Securities & Exchange Commission filed civil charges against Dawn Wright Olivares and Daniel Olivares in federal court in Charlotte. Tompkins thanked the U.S. Securities & Exchange Commission, Division of Enforcement for its assistance in the ZeekRewards investigation.

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

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 www.stopfraud.gov.

Defendant Allegedly Defrauded Over 200 Investors

CHARLOTTE, N.C. – The operator of a $44 million Ponzi scheme that defrauded more than 200 investors has been indicted on federal charges, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. A federal grand jury sitting in Charlotte returned the criminal indictment on Wednesday, December 18, 2013, charging Daniel H. Williford, 55, of Statesville, N.C. with one count of securities fraud, one count of wire fraud, and five counts of money laundering. The indictment also includes a forfeiture allegation seeking a money judgment in the amount of $44,000,000.

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).

“For those fraudsters who have not gotten the message yet, I am committed to prosecuting financial crimes and going after those who take money from victims with fake promises. Let me make it simple: you rip people off, you get indicted,” said U.S. Attorney Tompkins.

“For years, Daniel Williford swindled hundreds of people, including his own co-workers out of their hard-earned money. While most people struggle to afford college, he paid those expenses using cash from his investors. Now he will be held accountable for his actions because of the agents and prosecutors who worked so diligently to bring him to justice,” said John A. Strong, Special Agent in Charge of the FBI in North Carolina.

According to allegations contained in the indictment, from January 2007 through July 2013, Williford induced over 200 investors in Charlotte and elsewhere to invest over $44 million, by promising his victims their money would be invested in wireless internet equipment, internet towers, and other facilities and companies. Instead of investing the money, the indictment alleges, Williford used it to run a Ponzi-style scheme and to fund his personal lifestyle. According to the indictment, during the course of the fraud, Williford invested only $7.7 million of the victims’ money as promised. The indictment alleges that Williford used approximately $32 million of the investor’s money to cover personal expenses and to pay some of his victims supposed “profits” on their investments. However, these payouts came from funds contributed by new investors, known as “Ponzi” payments.

Williford has been ordered by the U.S. District Court to appear on a summons for his initial appearance, which will be scheduled by the Court. If convicted, Williford faces a maximum of 20 years in prison each for the securities fraud and wire fraud counts, and a maximum of 10 years imprison for each of the money laundering counts. The securities fraud count carries a maximum fine of $5,000,000, the wire fraud count a maximum fine of $250,000, and each of the money laundering counts carries a maximum fine of $250,000 or twice the amount of criminally derived proceeds.

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.

The FBI investigated the case. The prosecution is being handled by Assistant U.S. Attorney Kurt Meyers of the Western District of North Carolina.

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 www.stopfraud.gov.

Seven Arrested During Round-up; Three Remain Fugitives

ASHEVILLE, N.C. – Twelve members of a methamphetamine trafficking ring have been charged with conspiracy to possess with intent to distribute methamphetamine. Seven of those charged were arrested on Tuesday, December 10, 2013, during an early morning round-up conducted by federal, state and local law enforcement, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Three of the named defendants remain fugitives (please see attached photos).

U.S. Attorney Tompkins is joined in making today’s announcement by Harry S. Sommers, Special Agent in Charge of the Atlanta Field Division of the Drug Enforcement Administration (DEA), which oversees the Charlotte District Office and Wayne L. Dixie, Special Agent in Charge of the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF).

The arrests are the result of a multi-agency investigation to target and reduce the trafficking of methamphetamine in Western North Carolina and was conducted by DEA, ATF, the North Carolina State Bureau of Investigation, the North Carolina State Highway Patrol, the Marion Police Department, the McDowell County Sheriff’s Office, the Yancey County Sheriff’s Office, the Rutherford County Sheriff’s Office, as well as the South Carolina Law Enforcement Division, the Cowpens Police Department and the Spartanburg County Sheriff’s Office in South Carolina.

According to allegations contained in the criminal indictment unsealed on Wednesday, December 11, 2013 in U.S. District Court, from about June 2011 to July 2013, the defendants did knowingly conspire to possess with intent to distribute more than 50 grams of actual methamphetamine or more than 500 grams of a mixture or substance containing a detectable amount of methamphetamine. The indictment alleges that the defendants carried out their drug conspiracy primarily in Buncombe, Cleveland and McDowell counties in Western North Carolina.

The following individuals were named and charged in the methamphetamine conspiracy indictment.

• George Wade Cook (a/k/a “Rooster”), 52 , of Caser, N.C. (in custody)
• Gergory Ray DeHart, 44, of Marion, N.C. (in custody)
• Ramona Jamison Lail, 48 ,of Marion. (in custody)
• Jimmy Dwayne Lawing (a/k/a “Dick”), 45 of Marion. (in custody)
• Carlos Alvarado Mendoza (a/k/a “Tequila”), 39 of Candler, N.C. (in custody)
• John Louis Pivonka, 42 of Marion. (in custody)
• Tommy Ray Sisk, 56 of Old Fort, N.C. (in custody)
• John Matthew Frady, (a/k/a “Ghost”), 39, of Cowpens, S.C. (in state custody)
• Jeffrey Kirkland, 41, of Gainesville, Ga. (in federal custody in Georgia)
• Miguel Santos-Maldonado (a/k/a “Mateo Segura”), 42, of Gainesville, Ga. (fugitive)
• Rigoberto Alvarado Mendoza (a/k/a “Big Boy”), 42 of Arden, N.C.(fugitive)
• Taide Alvarado Vergara, 27, of Candler. (fugitive)

All twelve defendants in the methamphetamine trafficking ring have been charged with engaging in a narcotics conspiracy and they face a statutory minimum prison term of ten years and a maximum term of life imprisonment, and a $10 million fine. (See chart below for a breakdown of additional federal charges and maximum penalties for each defendant).

The seven defendants arrested in North Carolina had their arraignment and detention hearings on Monday, December 16, 2013, before U.S. District Court before U.S. Magistrate Judge Dennis L. Howell. All seven were detained pending trial.

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

The investigation is being handled by DEA, ATF, the North Carolina State Bureau of Investigation, the North Carolina State Highway Patrol, the Marion Police Department, the McDowell County Sheriff’s Office, the Yancey County Sheriff’s Office, the Rutherford County Sheriff’s Office, as well as the South Carolina Law Enforcement Division, the Cowpens Police Department and the Spartanburg County Sheriff’s Office in South Carolina.

The prosecution is being handled for the government by Assistant U.S. Attorney Thomas Kent of the U.S. Attorney’s Office in Asheville.

ASHEVILLE, N.C. – Tap Root Dairy, LLC, one of North Carolina’s largest dairy farms located in Fletcher, N.C., and one of its owners pleaded guilty in federal court today to criminal violations of the Clean Water Act, 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 Special Agent in Charge Maureen O’Mara of the U.S. Environmental Protection Agency, Criminal Investigation Division (EPA-CID), Atlanta Area Office, and Greg McLeod, Director of the North Carolina State Bureau of Investigation (NC SBI).

A criminal bill of information filed in U.S. District Court on November 11, 2013, charged Tap Root Dairy, LLC (Tap Root) and William “Billy” Franklin Johnston, 60, of Mills River, N.C., with one count of violation of the Clean Water Act, in connection with the discharging of cow feces into the French Broad River. According to filed documents and statements made in court, Tap Root maintains several hundred cows and manages hundreds of acres of crop fields in Fletcher. In the annual course of its operations, Tap Root disposes millions of pounds of solid and liquid animal waste, which are considered pollutants under the Clean Water Act.

Court documents indicate that beginning in 2009, Johnson let his certification lapse as Operator in Charge (OIC) of Tap Root’s animal waste management system. Despite receiving repeated warnings and notices, court records show that as of December 4, 2012, Tap Root still had not designated a valid OIC to oversee its waste management system. Furthermore, according to filed documents, from September 3, 2012 to December 4, 2012, for a total of 93 days, Tap Root failed to check and maintain the levels of cow waste in their on-site waste containment lagoons. This resulted in the spillover and discharge of 11,000 gallons of cow feces and other waste into the French Broad River on December 4, 2012.

In addition to pleading guilty to violating the Clean Water Act, Tap Root has also agreed: 1) to pay a fine of $80,000, which will be directed to entities that safeguard the French Broad River and other environmental concerns in the Southeast; 2) to abandon any appeal to a related $13,507.82 North Carolina State civil penalty; 3) to serve a probationary term of four years during which regulators and investigators can inspect their records and facilities without notice and without a warrant; and 4) to design and implement a compliance plan subject to approval by the EPA. At sentencing, Johnston faces a maximum prison term of one year and has agreed to pay an additional fine of $15,000. A sentencing date has not been set yet.

The Clean Water Act is a federal law enacted to prevent, reduce and eliminate pollution, and to restore and maintain the chemical, physical, and biological quality, of the Nation’s waters for the protection and propagation of fish and aquatic life and wildlife, for recreational purposes, and for the use of such waters for public drinking water, agricultural, and industrial purposes. The French Broad River supplies drinking water more than one million people and is frequently used for recreational water activities, such as swimming and kayaking. In 2012, North Carolina listed the French Broad River from Mud Creek to NC Highway 146 as impaired for fecal coliform bacteria. Tap Root is located on this impaired section of the French Broad River.

The investigation of this case was conducted by special agents of the EPA’s Criminal Investigation Division, and NC SBI’s Diversion and Environmental Crimes Unit. The prosecution is being handled by Assistant United States Attorney Steven R. Kaufman of the U.S. Attorney’s Office in Charlotte.

Defendant Submitted Over $700,000 In Fraudulent Reimbursement Claims To Medicaid

CHARLOTTE, N.C. – A federal jury sitting in Charlotte returned a guilty verdict today for a Charlotte man accused of conspiring to defraud Medicaid of at least $700,000, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Calvin Cantrell Estrich, 32, of Charlotte, was convicted following a four-day trial before U.S. District Judge Max O. Cogburn, Jr. Estrich was also found guilty of committing health care fraud, making false statement in connection with a health care program, stealing the identities of children and clinicians to commit the fraud, money laundering and making false statements to investigators.

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).

“We will not allow the likes of Estrich to use Medicaid or any other taxpayer funded health care program as their personal ATMs,” said U.S. Attorney Tompkins in making today’s announcement of the guilty verdict. “Working together with our state partners we will find and prosecute those who pilfer precious health care resources from patients who need them and use scams to pocket taxpayer dollars.”

“Ripping off Medicaid harms needy patients, wastes tax dollars and contributes to rising health care costs,” North Carolina Attorney General Roy Cooper said. “This conviction sends a strong message that criminals who cheat Medicaid will pay, and it’s a great example of our ongoing partnership to stamp out health care fraud here in North Carolina.”

According to filed court documents and trial proceedings, from October 2009 to November 2010, Estrich and his co-conspirator, Joye Strong, participated in a scheme to defraud Medicaid for medically unnecessary services. Estrich’s company, Everyday’s Blessing, was approved by Medicaid to provide Intensive In-Home Community Intervention Services, which are mental and behavioral services designed to stabilize living arrangements for youth and children and prevent out-of-home therapeutic treatment. Trial evidence showed that Estrich and Strong stole and misused the identities of a nurse practitioner and two therapists in order to complete the necessary paperwork for Medicaid to approve services for Medicaid recipients to receive these services. According to evidence presented at trial, once Medicaid approved Everyday’s Blessing to provide services to these recipients based upon the fraudulent paperwork, Estrich and Strong sought and received payment from Medicaid for the fraudulent services. Evidence presented at trial established that in many instances, the Medicaid recipients did not receive any services at all. For example, evidence presented at trial established that Estrich, aided and abetted by others, used the Medicaid recipient identification number of a juvenile identified as “J.R.” and falsely and fraudulently billed Medicaid for services that J.R. never received. Estrich and Strong, through Everyday’s Blessing, received over $24,000 in payments from Medicaid for these false services.

Evidence presented at trial also showed that Estrich and Strong stole the identity of therapist “J.O.” in order to obtain approval from Medicaid for fraudulent and medically unnecessary services. Trial testimony revealed that J.O. provided her name and credentials to Strong when she sought employment at another company operated by Strong. Thereafter, Estrich and Strong stole and misused J.O.’s identity by forging J.O.’s signature to paperwork for diagnostic and therapeutic services which J.O. did not perform.

According to trial evidence, based on the fraudulent claims Medicaid reimbursed Estrich and Strong $462,178, from which Estrich received $192,000 for his role in the scheme. Trial evidence also showed that when investigators interviewed Estrich about the fraud scheme in December 2012, Estrich made materially false and fraudulent statements to investigators.

Estrich remains free on bond pending sentencing. At sentencing, Estrich faces a maximum term of ten years in prison for the health care fraud conspiracy count and for each of the four counts of health care fraud. Each of the four counts of making false statements in connection with health care matters carries a maximum term of five years in prison. Each of the eight aggravated identity theft counts carries a mandatory prison term of two years. Estrich also faces a maximum of 10 years in prison for the money laundering charge and a maximum of five years in prison for the one count of making false statements to investigators in a federal health care fraud investigation. Each count of conviction carries a maximum fine of $250,000. A sentencing date for Mr. Estrich has not yet been set.

Estrich’s co-conspirator, Joye Strong, pleaded guilty to eight counts of health care fraud and two counts of money laundering on October 4, 2011. Strong is awaiting sentencing on these charges.

The investigation into Estrich and Strong was handled by MID with assistance from the North Carolina Division of Medical Assistance.

The prosecution was handled by Special Assistant United States Attorneys Timothy Rodgers and Laura Lansford of the Western District of North Carolina. Mr. Rodgers is a Special Deputy Assistant Attorney General and Ms. Lansford is an Assistant Attorney General with the North Carolina Department of Justice Medicaid Investigations Division. The SAUSA position is reflection of the partnership between the Medicaid Investigations Division and the United States Attorney that helps ensure the effective and vigorous prosecution of Medicaid fraud.

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 prosecutors, 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. – Paul Douglas Tharp, 53, of Greensboro, N.C., was arrested today on a federal criminal indictment charging him with lying to the Federal Aviation Administration (FAA) about his qualifications as mechanic and a pilot and for flying an airplane without the proper pilot’s license, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. The five-count criminal indictment was unsealed today following the arrest of Tharp by law enforcement in Winston-Salem, N.C.

Kathryn A. Jones, U.S. Department of Transportation, Office of Inspector General (DOT-OIG) regional Special Agent-In-Charge, joins U.S. Attorney Tompkins in making today’s announcement.

According to allegations contained in the criminal indictment:

From in or around 2011, Tharp was hired by Warriors and Warbirds, a group based in Monroe, N.C., to repair and refinish a multi-engine Curtiss Wright C-46F (C-46F) airplane that the group had purchased from an aviation museum in Midland, Texas. The Warriors and Warbirds group planned to feature the C-46F airplane at the museum located at the Charlotte-Monroe Executive Airport. Tharp currently operates an airport in Davidson County, N.C., and at the time he was certified to fly only single-engine aircrafts. Tharp did not have a multi-engine pilot license and did not hold an FAA Mechanic Certificate with an Airframe and Powerplant (A&P) rating. The Warriors and Warbirds hired Tharp to repair and fly their aircraft, after Tharp told a group representative that he was an A&P mechanic and could get the C-46F in good condition, and that he was licensed to operate a multi-engine plane like the C-46F.

As part of his services to the group, Tharp regularly traveled to Midland, Texas, where he performed maintenance on the C-46F, knowing he was not certified to do so. In addition to providing mechanic services, on several occasions Tharp acted as second in command during flights, even though he lacked the proper authorization to fly this type of airplane. On or about June 4, 2011, Tharp, acting again as second in command pilot, and other persons traveled via the C-46F from Monroe to an air show in Reading, Penn. Because the airplane still needed additional mechanical work to improve its airworthiness, the FAA required a special ferry permit before the plane could be flown back to Monroe. On or about June 5, 2011, an FAA inspector asked Tharp if someone had inspected the airplane’s condition to determine if the C-46F was safe for the return flight from Pennsylvania to North Carolina, and Tharp falsely represented he was an A&P mechanic who could make that determination. When the FAA inspector asked Tharp about his A&P certificate, Tharp lied and told the inspector that he had forgotten his A&P certificate in a rush to prepare the C-46F for the flight to Pennsylvania. Tharp then gave the FAA inspector the A&P certificate number of another A&P certificate holder who Tharp knew. This person did not give permission to Tharp to use his certificate number, and he became upset when he learned about Tharp’s unauthorized use of his number.

Based upon Tharp’s false representation about his status as an A&P mechanic and his unauthorized use of another person’s certificate number, the FAA inspector issued a special ferry permit that allowed the C-46F and its passengers to fly from Pennsylvania back to Monroe. Tharp again acted as second in command of the multi-engine C-46F even though he should not have been flying this airplane.

After Tharp completed the return trip to North Carolina, the FAA inspector who issued the special ferry permit checked on the certificate number Tharp had provided and learned that Tharp had lied about having an A&P certificate. The FAA opened an investigation and when Tharp received a letter from the FAA inquiring whether he was an A&P mechanic and whether he had a pilot’s certificate that allowed him to fly a multi-engine airplane like the C-46F, Tharp sent a reply letter to the FAA falsely stating, “I have been putting a time line of when I received my multi engine rating,” despite knowing he had never had this rating.

“Tharp knowingly and repeatedly lied about his qualifications to his clients and the FAA and in the process put lives at risk. Tharp’s lack of proper certification as a pilot and a mechanic is a serious safety hazard and now Tharp must face the legal consequences of these dangerous lies,” said U.S. Attorney Tompkins.

“The arrest today is a clear signal that safety of the Nation’s air transportation system remains a high priority for both OIG and DOT,” said Kathryn A. Jones, DOT-OIG regional Special Agent-In-Charge. “Working with the FAA, and our law enforcement and prosecutorial colleagues, we will continue our vigorous efforts to prevent and detect unlawful use of, and false statements related to, pilot and mechanic certificates; and punish to the fullest extent of the law those who would seek to compromise the integrity of DOT’s safety programs.”

Tharp had his initial appearance today in U.S. District Court in Winston-Salem. At sentencing he faces a maximum of five years in prison and a $250,000 fine for each of the two criminal counts of making false statements to the FAA, and a maximum of three years in prison and a $250,000 fine for each of the three counts of flying without proper authorization.

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

U.S. Attorney Tompkins credited the special agents of the U.S. Department of Transportation, Office of Inspector General for the investigation leading to Tharp’s indictment.

Assistant United States Attorney Kenneth M. Smith of the U.S. Attorney’s Office in Charlotte is prosecuting the case.

Defendants Sought More Than $3 Million In Tax Refunds Using False Tax Identification Numbers

CHARLOTTE, N.C. – Two Charlotte women were sentenced to prison by U.S. District Court Judge Max O. Cogburn, Jr. on Thursday, November 7, 2013, for obtaining false and fraudulent income tax refunds, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina.

Jeannine Hammett, Special Agent in Charge of the Internal Revenue Service-Criminal Investigation Division and Keith Fixel, Inspector in Charge of the Charlotte Division of the U.S. Postal Inspection Service join U.S. Attorney Tompkins in making today’s announcement.

Candida Figueroa, 42, of Charlotte, was sentenced to serve 30 months in prison, to be followed by two years of supervised release. Figueroa pleaded guilty in November 2012 to one count of false claims conspiracy. Her co-defendant, Cathy Cisneros, 31, also of Charlotte, was sentenced to 37 months in prison and was ordered to serve three years under court supervision following her prison term. Cisneros also pleaded guilty to one count of false claims conspiracy in October 2012. Judge Cogburn ordered both defendants to pay restitution to IRS in the amount of $1,658,477.67.

“Figueroa and Cisneros thought they could get away with ripping off the government and honest taxpayers who file truthful and honest tax returns. But instead of a pot of gold, the pair found prison cells waiting at the end of their tax fraud rainbow,” said U.S. Attorney Tompkins.

Special Agent in Charge Jeannine A. Hammett, IRS Criminal Investigation said, “IRS CI is committed to stopping those who undermine the federal tax system. Preparers like these defendants seek to enrich themselves by essentially stealing from all of us who pay our taxes honestly.”

According to filed court documents and yesterday’s sentencing hearing, from January to July 2012, Figueroa and Cisneros conspired to defraud the U.S. Treasury Department by participating in a scheme to obtain false tax refunds, using fraudulently obtained Individual Taxpayer Identification Numbers (ITINs). Court records indicate that the two women obtained ITIN numbers for various individuals using Mexican birth certificates and other documents. Then, using these ITIN numbers, the defendants prepared fraudulent federal tax returns seeking refunds based on false wage, income, and withholding tax information and claiming multiple dependents.

According to filed court records, Figueroa and Cisneros rented apartments at complexes with clustered mailboxes and then used the multiple apartment addresses on the fraudulent tax returns they submitted to IRS seeking refunds, causing the Treasury Department to mail false tax refund checks to these addresses.

Court records reflect that at least 1,104 fraudulent tax returns claiming $5.1 million in refunds have been associated with the pair’s conspiracy. Of this amount, the IRS issued refunds totaling approximately $1.6 million. As part of the scheme, Figueroa and Cisneros arranged for the Treasury checks to be cashed, and then they deposited the cash into bank accounts or held it in safety deposit boxes before wiring it to Mexico. To date, law enforcement have recovered $136,334.

Figueroa and Cisneros 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.

A third co-conspirator, Ana Portillo, 42, of Charlotte, (also known as Ana Portillo-Flores, Ana Flores-Portillo, Peladita Portillo or Lety Portillo), pleaded guilty in May 2013, to one count of false claims conspiracy for participating in the tax fraud scheme. Portillo is currently released on bond and is awaiting sentencing. She faces a maximum prison term of 10 years, a $250,000 fine, or both.

The case was investigated by the IRS-Criminal Investigations Division with substantial assistance from the U.S. Postal Service. The prosecution is being handled for the government by Assistant U.S. Attorney Jenny Grus Sugar of the U.S. Attorney’s Office in Charlotte.

CHARLOTTE, N.C. – On Thursday, November 7, 2013, U.S. District Court Judge Robert J. Conrad, Jr. ordered a Charlotte man to serve 10 years in prison for possessing child pornography, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. In addition to the prison term, Jerry Keith Kramer, 58, of Charlotte, was ordered to serve a lifetime of supervised release and to continue to register as a sex offender.

Brock D. Nicholson, Special Agent in Charge of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) in Georgia and the Carolinas joins U.S. Attorney Tompkins in making today’s announcement.

In May 2012, a federal criminal indictment charged Kramer with one count of possession of child pornography. According to filed documents and statements made in court, the investigation began while Kramer was on state probation, after a North Carolina probation officer discovered questionable images involving children on Kramer’s computer during a routine home visit. Court records indicate that law enforcement executed a search warrant at Kramer’s Charlotte residence and seized his home computer. A forensic examination revealed that Kramer’s computer contained several images of child pornography. In December 2012, Kramer pleaded guilty to the charge in the indictment.

Kramer’s registered sex offender status stems from his prior convictions for sexually assaulting two minors, in 1992 and 1997, respectively. At yesterday’s hearing, Kramer’s sentence was enhanced because of his prior state convictions.

Kramer has been in federal custody since May 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 making today’s announcement U.S. Attorney Tompkins thanked the North Carolina Department of Corrections’ Community Supervision Section for their assistance in this case. Assistant U.S. Attorney Kimlani Ford of the U.S. Attorney’s Office in Charlotte prosecuted the case.

The case is being prosecuted by Assistant U.S. Attorney Kimlani M. Ford of the Western District of North Carolina and Trial Attorney Michael W. Grant of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS). The investigation was conducted by ICE-HSI.

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.

Nine Suspects Also Arrested On State Charges

CHARLOTTE, N.C. – Federal and local law enforcement agencies arrested 19 suspects today in Hickory, N.C. and the surrounding area charged with drug trafficking, illegal firearm possession and other federal offenses, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Another nine individuals were arrested on state charges.

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, Chief Tom Adkins of the Hickory Police Department (HPD); and James C. Gaither, Jr., District Attorney for Burke, Caldwell and Catawba Counties.

The federal indictments were returned by a grand jury on October 15 and 16, 2013, but remained sealed until today’s arrests. The investigation began in October 2012, targeting individuals who participated in illegal drug transactions and gun trafficking in and around Hickory. The seven-month anti-violence initiative resulted in the seizure of more than 80 firearms, including 53 handguns, 19 rifles, 10 shotguns and one short barrel shotgun. Law enforcement also seized more than 1,425 grams of narcotics, including over 1,125 grams of cocaine and more than 230 grams of marijuana, with a total street value of over $55,000.

In making today’s announcement U.S. Attorney Tompkins stated, “This morning’s arrest of 19 offenders is part of my office’s ongoing effort to combat drug trafficking and gun violence throughout our district. The law enforcement partners who participated in this anti-violence initiative share a common goal: to fight and reduce violent drug crime by joining forces, so our citizens can reclaim their neighborhoods from drug dealers and put an end to the collateral violence that comes with drug and gun trafficking.”

“ATF will continue to work with our law enforcement partners to identify those individuals that contribute to the number of crime guns used in violent crime in the Hickory area. Violent gun crime is the scourge in our society and any contribution to illegal firearms trafficking cannot stand,” said ATF Special Agent in Charge Wayne L. Dixie. “Our mandate is to do everything we lawfully can to allow the citizens of Hickory to live in a safe and secure environment without the fear of having needless violent crime as a part of their lives. We accept that mandate and today’s law enforcement action should send that message loud and clear.”

“I am very proud of our local law-enforcement and agents and staff of the ATF who worked together to bring about this initiative. This is a major commitment of resources from the ATF for a city the size Hickory. These defendants will be prosecuted by both the U.S. Attorney’s office and the 25th prosecutorial district. We intend to follow up on this excellent collaborative effort with aggressive prosecution,” said James C. Gaither, Jr., District Attorney for the 25th Prosecutorial District, which encompasses Burke, Caldwell and Catawba counties.

“Hickory Police Department is committed to making our community safe,” said Chief of Police Tom Adkins. “HPD along with other area jurisdictions are members of the Catawba County Safe Communities Initiative, which directs law enforcement resources to reducing the violence and drugs in our communities. This focused investigation with ATF and our officers will have a lasting impact on reducing violence and taking drugs off the streets of Hickory and other communities in Catawba County.”

The round-up was conducted by the ATF, U.S. Marshals Service, Hickory Police Department, Newton Police Department, Catawba County Sheriff’s Office, Conover Police Department, and Longview Police Department. Those arrested include drug traffickers, members and associates of drug trafficking organizations, convicted felons, as well as several local gang members. The federal suspects arrested during the round-up were:

• Kadeem Jamal Albright, 21, address unknown.

• Marquice Tyrone Streeter, 25, of Hickory.

• Kianta Martese Davis, 21, of Conover, N.C.

• Keon Maurquie Gaither, 25, address unknown.

• Chaetez Sean Clayton, 23, of Hickory.

• Tyree Dorian Rhinehardt, 21, of Hickory.

• Isreal Lerock Linebarger, 22, of Conover.

• Larry Jermaine Linebarger, 26, address unknown.

• Larry Elwood Steptoe, 33, address unknown.

• Jeffrey Lashaw Maddox 27, address unknown.

• Anthony Roger Mull, 28, of Hickory.

• Kenneth Demond Norman, 35, of Hickory.

• Eric Jay Ramirez, 33, of Hickory.

• Cortez Lamar Rogers, 31, address unknown.

• Dorrian Debrell Shuford, 20, of Newton, N.C.

• Traquon Rashaad Davis, 20, of Conover.

• Brandon Jaqwan Sifford, 22, of Hickory.

• Anthony Lamar Mason, 24, of Hickory.

• Donnell Lavon Thomas, 39, of Hickory.

Click on the links below to view a chart of federal charges and penalties for each defendant: Penalties

Nine additional defendants currently in state custody on state violations have been charged with federal offenses in connection with this investigation, bringing the total number of those charged federally to 28. They are:

• Damion Jordan Armstrong, 22, address unknown.

• Xavier Ahmad Cade, 22, of Hickory.

• Brandon Colbert, 26, of Hickory.

• Kerston Deshawn Edwards, 24, of Lincolnton, N.C.

• William Shalon Linebarger, 27, address unknown.

• Kenteze Rayvon Martin, 23, of Shelby, N.C.

• Christopher Durand Myers, 34, address unknown.

• Donald Lavar Ramseur, 24, of Hickory.

• Paris Michael Thompson, 24, address unknown.

Another nine defendants arrested this morning face state criminal charges.

The federal defendants arrested today are currently in federal custody. Their initial appearances were held in U.S. District Court before U.S. Magistrate Judge David C. Keesler.

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

The investigation is being conducted by the ATF and Hickory PD. U.S. Attorney Tompkins thanked all the law enforcement agencies involved in today’s round-up for their assistance in making today’s arrests.

Assistant U.S. Attorney Jennifer Dillon of the U.S. Attorney’s Office in Charlotte is leading the prosecution.

CHARLOTTE, N.C. – Steve Hale, 64, and owner of Double D Distributing, LLC, formerly based in Denver, N.C., has been indicted on conspiracy to transport stolen goods in interstate commerce, interstate transportation of stolen property and related charges, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. The indictment remained under seal until today, following Hale’s arrest yesterday afternoon.

U.S. Attorney Tompkins is joined in making today’s announcement by Russell F. Nelson, Special Agent in Charge of the United States Secret Service, Charlotte Field Division; Jeannine A. Hammett, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (IRS-CI); Chief James W. Buie of Gaston County Police Department; and Chief Stacy Conley, of the Gastonia Police Department.

The federal charges against Hale are the result of “Operation Cash Back,” an investigation that began in September 2010 into the buying and selling of stolen over-the-counter (OTC) non-prescription drug and health and beauty aid (HBA) products. Six defendants have been sentenced to date in connection with Operation Cash Back. Bonnie Bridges, Kimberley Morris, Michael Morris, Darlene Schoener, William Schoener, and Darryl Brock were sentenced in January 2013 to prison terms ranging from 18 to 86 months. The amount of stolen property involved in the Bridges case from 2006 to 2011 exceeded $16 million.

The 30-count federal criminal indictment against Hale was returned by a grand jury sitting in Charlotte on October 17, 2013. According to allegations contained in the indictment, from 2006 to March 2011, Hale was a second-level “fence” for an organized retail theft scheme involving millions of dollars’ worth of stolen consumer goods transported in interstate commerce. The indictment alleges that professional shoplifters, known as “boosters,” committed large-scale retail theft of thousands of consumer products, including popular name brand over-the-counter non-prescription drug products and over-the-counter health and beauty aid products, and sold the stolen goods for cash to multi-level fencing operators, known as “fences.”

According to allegations contained in the indictment, Hale provided Bonnie Bridges with a “shopping list” of consumer products along with the prices that Hale would pay for those goods. The indictment alleges that Bonnie Bridges, Kimberly Morris, Michael Morris, Darlene Schoener, William Schoener, Darryl Brock and other first-level fences bought bulk quantities of stolen retail products from the boosters, and delivered the unsorted stolen merchandise to Hale at the Double D Distributing warehouse in plastic garbage bags, boxes and plastic containers, in exchange for cash payments. The indictment also alleges that Hale only accepted products with undamaged packaging and extended expiration dates, known as “shelf life,” that were marketable in retail stores. According to allegations contained in the indictment, Hale and his employees then removed the retail store security stickers contained on some of the stolen goods and organized the “cleaned” products for shipment to Hale’s customers. The indictment alleges that Hale shipped some of the stolen merchandise out-of-state, including to Florida. Hale sold the stolen consumer products, including name brand OTC-drug products and name brand OTC-HBA products, at discounted prices, up to fifty-two percent (52%) below wholesale prices in the legitimate marketplace, the indictment alleges.

According to allegations contained in the indictment, Hale made false statements in his 2006, 2007 and 2008 income tax returns by failing to include gross receipts substantially in excess of the amounts he claimed on his tax returns. Hale also was charged with failing to collect, truthfully account for and pay over to the IRS quarterly federal income taxes and Federal Insurance Contribution Act (FICA) taxes from the total wages of one of his employees for the tax years 2007 through 2010.

Hale has been charged with one count of conspiracy to transport stolen goods in interstate commerce, which carries a maximum prison term of five years; twelve counts of interstate transportation of stolen property, which carry a maximum prison term of 10 years per count; three counts of false statements on income tax returns, which carry a maximum prison term of three years per count; and fourteen counts of failing to collect, truthfully account for and pay quarterly federal income taxes and FICA taxes for a former employee, which carry a maximum prison term of five years per count. Each count also carries a $250,000 fine.

The indictment includes a notice of forfeiture, which gives notice that the defendant must forfeit to the United States all of the property, currency and monetary instruments involved in the offenses charged in the indictment. The government will pursue a forfeiture money judgment in the amount of at least $8,265,145, which the government contends constitutes the proceeds of the violations alleged in the indictment.

Hale had his initial appearance this morning in federal court in Charlotte. He was released on bond and was ordered to home detention with electronic monitoring. Hale is also prohibited from working in the wholesale goods business.

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

The investigation was handled by USSS, IRS-CI, the Gaston County Police Department and the Gastonia Police Department. This prosecution is handled by Assistant United States Attorneys Tom O’Malley and Ben Bain-Creed of the Western District of North Carolina.

Seven More Arrested This Morning Will Face Criminal State Charges

CHARLOTTE, N.C. – A total of 14 defendants were arrested earlier today and face federal and state criminal charges, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Seven of the defendants have been charged with federal drug and gun offenses, and seven face state criminal charges.

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; Andrew Murray, District Attorney for Mecklenburg County; and Chief Rodney D. Monroe, of the Charlotte-Mecklenburg Police Department (CMPD).

The defendants were apprehended during an early morning round-up conducted by ATF, the U.S. Marshals and CMPD. Those arrested and charged by federal criminal complaints include, in alphabetical order:

• Donuell Johnson a/k/a “Rock,” 29, of Charlotte.

• Waycus Luckett, a/k/a “Lucky,” 31, of Charlotte.

• Erecai Lynch, 26, of Charlotte.

• David Ray McCullough, 37, of Charlotte.

• Christopher Roseboro, 33, of Charlotte.

• Brandon Tate, 26, of Charlotte.

• Terrence Tate, 21, of Charlotte.

Click on the links below to view a chart of federal charges and penalties for each defendant: Penalties

Federal arrest warrants have also been issued against Rodney Reid, 37, Jimareo Sherrill, 21, and Quandarius Shine, 23, all of Charlotte, who are still wanted by law enforcement.

Five additional defendants previously arrested on state charges have now been charged with federal offenses in connection with this investigation, bringing the total number of those charged federally to 15. They are: Jerry Lee Edwards, 27; Isiah Ezechukwu, a/k/a “Donte,” 26; Denis Joel Argueta Gonzalez, 20; Jamil Weaks, 19; and Darryl Whiteside, Jr., 26, all of Charlotte.

Seven more defendants arrested during this morning’s round-up face state criminal charges.

Over the course of the investigation law enforcement seized 10 firearms, including two loaded SKS rifles and stolen firearms brought into North Carolina from out of state.

Today’s arrests are the result of a four-month investigation targeting drug trafficking and violent crime in and around the Sugar Creek/Interstate 85 corridor. The agencies involved in this initiative are dedicated to working together to identify violent and repeat offenders for federal prosecution. This investigation, which began in early summer, is part of U.S. Attorney General Eric Holder’s Anti-Violence Initiative, which calls for federal, state and local agencies to target violent crime hot spots and collaborate on developing strategies to reduce crime and violence in those communities.

In making today’s announcement U.S. Attorney Tompkins stated, “This morning’s arrests are the result of a joint law enforcement investigation targeting an area of Charlotte that is afflicted by crime and drug-fueled violence. I want to thank our law enforcement partners who united to identify and remove violent felons from our streets and let this be a warning that we will not sit on the sidelines while our neighborhoods are polluted with drugs and violence.”

“Today’s law enforcement operation in the Interstate 85 corridor area in Charlotte should send the clearest message possible. As long as those individuals who insist on returning here again and committing violent crimes and violations of gun and drug laws, the ATF/CMPD Violent Crimes Task Force and our law enforcement partners will continue to identify you and put you behind bars where you belong,” said ATF Special Agent in Charge Wayne L. Dixie. “Our commitment to providing a safe and secure community for the citizens of Charlotte should not continue to be challenged, because we have demonstrated that we will utilize all of our joint resources and rise to that challenge if necessary.”

“We will continue to work to improve the quality of life for the citizens in this community by working with our committed partners in reducing crime,” said Charlotte-Mecklenburg Police Chief Rodney D. Monroe.

“We’re proud to stand beside our U.S. Attorney’s Office and law enforcement partners today and every day in our efforts to seek justice in our community,” said Mecklenburg County District Attorney Andrew Murray.

The seven federal defendants arrested today are currently in federal custody. Their initial appearances will be held in U.S. District Court before U.S. Magistrate Judge David Keesler.

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

The investigation is being conducted by the ATF and CMPD. U.S. Attorney Tompkins also thanked the U.S. Marshals for their invaluable assistance in making today’s arrests.

Assistant U.S. Attorney Ann Claire Phillips of the U.S. Attorney’s Office in Charlotte is leading the prosecution.

Defendants Were Among 91 Defendants Charged In Operation Wax House

CHARLOTTE, N.C. – Following a week and a half long trial, a federal jury today convicted a real estate agent and a loan processor on all charges relating to a $75 million racketeering conspiracy, announced the U.S. Attorney’s Office for the Western District of North Carolina. Today’s convictions are the latest in Operation Wax House, an investigation which began in 2007 and has netted 91 defendants to date, 80 of which have pleaded guilty or have been convicted following a trial.

Nathan Shane Wolf, 42, of Charlotte, a licensed real estate agent in North Carolina, was convicted of all three charges against him in the indictment: Racketeering Conspiracy, Bank Fraud, and Money Laundering Conspiracy.

Denetria Montresa Myles, 42, of Charlotte, a loan processor and licensed notary public in North Carolina, was also convicted of all charges against her in the indictment: Racketeering Conspiracy, and Bank Fraud.

The United States Attorney’s Office 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 Jeannine A. Hammett, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation (IRS-CI).

The federal criminal trial began on Tuesday, October 15, 2013, before Senior U.S. District Judge Graham Mullen. According to evidence introduced at trial, the enterprise operated from about 2005 until 2012, when indictment was unsealed. The enterprise 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, defendants Wolf and Myles were participants in the enterprise’s mortgage fraud operations, accounting together for over $13 million in fraudulently-obtained loans. Witnesses testified that Wolf arranged for builders of luxury real estate to pretend to sell such real estate at an inflated price – what Wolf called the “gross price” – in order to get an inflated mortgage loan from a bank. In reality, the builders accepted the true, lower, price – what Wolf called the “strike price” – while Wolf arranged for the difference between the inflated price and the true price to be paid from the loan proceeds as kickbacks. Such kickbacks were funneled through sham companies and disguised to look like payments for work actually done on the real estate. The evidence established that the work was never done, but instead these kickbacks were payments to the buyers and promoters who helped bring the parties to the fraud together. According to the evidence at trial, the kickbacks generally ranged from approximately $50,000 to almost $600,000.

According to trial testimony, defendant Myles was a promoter for the enterprise, working with one of her co-conspirators also charged in the superseding indictment, Nazerre Saddig (currently a fugitive), to purchase a luxury home so that Myles could receive a $100,000 kickback disguised as a payment for “upgrade repairs” that were never done. According to trial evidence, Myles also purchased one such home in her own name for a kickback of nearly $80,000, paid to a company in the name of her husband. In other transactions, Myles facilitated the identity theft of a victim whose name and credit information was used to buy two homes and obtain in excess of $1 million in loans by Myles falsely notarizing that the victim had signed the loan documents, when, in fact, the victim’s identity had been stolen and the victim never signed the documents nor appeared in front of Myles.

Following the jury’s convictions, both defendants consented to forfeiture in an amount to be determined, and were released on bond pending the scheduling of their sentencing hearings. At sentencing, Wolf faces a maximum prison term of 70 years, and Myles faces a maximum prison term of 50 years. In determining their actual sentence, the Court will consider the U.S. Sentencing Guidelines, which are not binding but provide advisory sentencing ranges. Sentencing dates for the defendants have not been set yet.

Twenty-six defendants were charged in the case. Eleven defendants remain for trial, including two who 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.

• Frank DeSimone, 41, of Charlotte is charged with racketeering conspiracy, securities fraud, wire fraud to defraud investors, and money laundering conspiracy. Role: Promoter. Status: On bond; Scheduled for trial in January 2014.

• Lori Dooley, 49, of Washington, D.C. is charged with racketeering conspiracy, mortgage fraud, and bank bribery. Role: Promoter. Status: Detained; Scheduled for trial after January 2014.

• Toby Hunter, 38, of Fort Mill, S.C. is charged with racketeering conspiracy, securities fraud, wire fraud to defraud investors and money laundering. Role: Promoter. Status: On bond; Scheduled for trial January 2014.

• Steven Jones, 45, of Waxhaw, is charged with securities fraud, wire fraud to defraud investors, money laundering conspiracy and racketeering conspiracy. Role: Promoter. Status: On bond; Scheduled for trial January 2014.

• Kurosh Mehr, 52, of Charlotte is charged with racketeering conspiracy, mortgage fraud and money laundering. Role: Promoter and buyer. Status: On bond; Scheduled for trial after January 2014.

• Ann Tyson Mitchell, 62, of Charlotte, is charged with racketeering conspiracy, mortgage fraud and money laundering. Role: Facilitator. Status: On bond; Scheduled for trial after January 2014.

• 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 January 2014.

• Nazeere Saddig, 41, formerly of Charlotte, is charged with racketeering conspiracy and mortgage fraud. Role: Promoter and buyer. Status: International Fugitive.

• Carrie Tyson, 59, of Winterville, N.C., is charged with racketeering conspiracy, securities fraud, mortgage fraud, wire fraud to defraud investors and money laundering. Role: Leader and promoter. Status: Detained (bond review pending); Scheduled for trial January 2014.

• James Tyson, Jr., 32, of Dakar, Senegal, is charged with racketeering conspiracy, securities fraud, mortgage fraud, wire fraud to defraud investors, bank bribery and money laundering. Role: Leader and promoter. Status: Detained; Scheduled for trial January 2014.

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 United States Attorney’s Office also relied heavily on the expertise and assistance of the North Carolina Real Estate Commission. The Wolf and Myles 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 www.stopfraud.gov.

The names and case numbers of the all the defendants charged to date in Operation Wax House are listed below, organized by their alleged role in the scheme.

Attorneys and Paralegals
Crawford/Mallard, Michelle 3:11cr374
Gates, Christine 3:09cr100
Norwood, Kelli, 3:09cr162
Rainer, Demetrius 3:08cr239/241
Smith, Troy, 3:08cr264

Bank Insiders
Brown, Jamilia, 3:10cr124
Eason, Danyelle, 3:10cr116
Henson, Vic. F., 3:10cr124
Jackson, Mitzi, 3:11cr374
Ramey, Bonnie Sue, 3:10cr124

Builders and Sellers
Fink, James, 3:11cr374; 3:12cr239
Jackson, Jennifer, 3:09cr241
Smith, Kelvis, 3:12cr238
Viegas, Jeffrey, 3:12cr298
Wittig, Mark, 3:12cr335
Wood, Gary, 3:09cr208

Facilitators and Financiers
Hickey, Denis, 3:09cr103
McClain, Landrick, 3:10cr124
Mitchell, Ann Tyson, 3:12cr239
Panayoton, Sherrill, 3:11cr176
Taylor, Alicia Renee, 3:10cr124
Wilson, Willard, 3:09cr161

Buyers
Banks, Arketa, 3:12cr297
Hillian, Kirk, 3:12cr83
Mathis, Charles, 3:10cr1
Mobley, Sarena, 3:10cr124
Moore, George, 3:12cr337
Richards, Dan, 3:10cr119
Smith, Kevin, 3:12cr341
Tyler, Glenna, 3:11cr200
Vaughn, Mary, 3:12cr329
Wallace, Jamaine, 3:12cr330
Wellington, William, 3:12cr333

Notary Public
Willis, Anthony, 3:09cr218

Appraiser
Darden, Clinton 3:10cr108

Mortgage Brokers
Bradley, Bonnette, 3:12cr299
Clarke, Linda, 3:10cr120
Flood, Ericka, 3:10cr124
Goodson-Hudson, Crystal, 3:12cr339
Mahaney, Robert, 3:12cr34-0
Scagliarini, Coley, 3:11cr374
Staton, Walter, 3:10cr113
Vaughn, Danielle, 3:12cr329
Williams, Marcia, 3:12cr334
Williams, Sean, 3:12cr336

Woods, Joseph, 3:09cr178

Real Estate Agents
Belin, Chris, 3:11cr374
Clark, Christina, 3:09cr44
Lee, Shannon, 3:12cr338
Pasut, Holly Hardy, 3:12cr331
Wolf, Nathan Shane, 3:12cr239
Wood, Gary, 3:09cr208

Promoters
Amini, Ramin, 3:12cr239
Barnes, Vonetta Tyson, 3:12cr239
Brown, William, 3:12cr239
Bumpers, Travis, 3:12cr239
Carr, Stephen, 3:10cr124
Clarke, Benjamin, 3:12cr239
Clarke, Reuben, 3:10cr120
Coleman, Gregory, 3:10cr118
DeSimone, Frank, 3:12cr239
Dooley, Lorie, 3:12cr239
Hitchcock, Jimmy, 3:11cr374
Hubbard, Glynn, 3:12cr239
Hunt, Victoria, 3:12cr239
Hunter, Toby, 3:12cr239
Johnson, Ralph, 3:12cr239
Jones, Steven, 3:12cr239
Jones, Tyree, 3:10cr230
Long Waylon, 3:12cr239
Marshall, Michael, 3:07cr283
McDowell, John, 3:12cr239
McPhaul, Elizabeth, 3:10cr114
Mehr, Kurosh, 3:12cr239
Mitchell, Ann Tyson, 3:12cr239
Moye, Melvin, 3:12cr239
Myles, Denetria, 3:12cr239
Newland, Matthew, 3:12cr239
Perry, John Wayne, Jr., 3:12cr239
Perry, Kim, 3:10cr25
Phillips, Rick, 3:10cr115
Saddig, Nazeere, 3:12cr239
Sharreff-El, Drew, 3:10cr124
Sherald, Kiki, 3:10cr117
Simmons, Aaron, 3:09cr240
Snead, Todd, 3:10cr124
Staton, Lisa, 3:10cr113
Thorogood, Donte, 3:12cr239
Tyson, Carrie, 3:12cr239
Tyson, James, Jr. 3:12cr239
Tyson, James, Sr., 3:12cr239
Wellington, Phillip, 3:12cr332
Wood, Purnell, 3:12cr239

CHARLOTTE, N.C. – A Charlotte federal jury delivered guilty verdicts today against three defendants charged with marijuana trafficking conspiracy and related offenses, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Evelyn LaChapelle, 28, Natalia Wade, 30, and Corvain Cooper, 33, all from California, were convicted following a four-day trial before U.S. District Court Judge Robert J. Conrad, Jr, which ended today.

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 Atlanta and the Carolinas and Chief Rodney D. Monroe of the Charlotte-Mecklenburg Police Department.

According to court records, LaChapelle, Wade, and Cooper were initially charged on January 15, 2013 with marijuana trafficking conspiracy and money laundering conspiracy in a multiple-defendant criminal bill of indictment. The indictment was later superseded to include a third charge of structuring financial transactions through banking institutions to avoid reporting requirements. According to evidence presented at trial, the marijuana was shipped to the Charlotte area in commercial crate shipments and overnight packages. Trial evidence revealed that the conspiracy involved more than 35 tons of marijuana being shipped to Charlotte and millions of dollars of laundered proceeds funneled back to the sources of supply in California.

The defendants were convicted of all three charges. At sentencing, LaChapelle and Wade face a mandatory minimum of five and a maximum of 40 years in prison and a $4 million fine for the marijuana trafficking conspiracy charge. Because of his prior conviction and the drug weight for which he has been held liable, Cooper faces a mandatory minimum of 20 years and a maximum of life in prison and a $20 million fine for the same charge. All three defendants face a maximum of 20 years in prison for the money laundering conspiracy charge and the greater of $500,000 or twice the value of the property laundered as a monetary fine. For the structuring of financial transactions offense in a pattern exceeding $100,000 in a 12-month period, all three defendants face a maximum of 10 years in prison and a $250,000 fine. The defendants will remain in federal custody until their sentencing hearing which will be scheduled by the court at a later date.

This prosecution is part of an extensive Organized Crime Drug Enforcement Task Force (OCDETF) investigation that has resulted in the conviction of more than 50 defendants for marijuana trafficking, money laundering, and firearms violations over the past four years.

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 investigation was led by HSI and CMPD, with the assistance of several other law enforcement agencies, to include the Gastonia Police Department, the Concord Police Department, the Mooresville Police Department, the Pineville Police Department, the Huntersville Police Department, the Kannapolis Police Department, the Cornelius Police Department, the Waxhaw Police Department, North Carolina Alcohol Law Enforcement, North Carolina State Bureau of Investigation, the Iredell County Sheriff’s Office, the Union County Sheriff’s Office, and the Beverly Hills and Culver City, California Police Departments. 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. – A Charlotte federal jury delivered guilty verdicts today against three defendants charged with marijuana trafficking conspiracy and related offenses, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Evelyn LaChapelle, 28, Natalia Wade, 30, and Corvain Cooper, 33, all from California, were convicted following a four-day trial before U.S. District Court Judge Robert J. Conrad, Jr, which ended today.

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 Atlanta and the Carolinas and Chief Rodney D. Monroe of the Charlotte-Mecklenburg Police Department.

According to court records, LaChapelle, Wade, and Cooper were initially charged on January 15, 2013 with marijuana trafficking conspiracy and money laundering conspiracy in a multiple-defendant criminal bill of indictment. The indictment was later superseded to include a third charge of structuring financial transactions through banking institutions to avoid reporting requirements. According to evidence presented at trial, the marijuana was shipped to the Charlotte area in commercial crate shipments and overnight packages. Trial evidence revealed that the conspiracy involved more than 35 tons of marijuana being shipped to Charlotte and millions of dollars of laundered proceeds funneled back to the sources of supply in California.

The defendants were convicted of all three charges. At sentencing, LaChapelle and Wade face a mandatory minimum of five and a maximum of 40 years in prison and a $4 million fine for the marijuana trafficking conspiracy charge. Because of his prior conviction and the drug weight for which he has been held liable, Cooper faces a mandatory minimum of 20 years and a maximum of life in prison and a $20 million fine for the same charge. All three defendants face a maximum of 20 years in prison for the money laundering conspiracy charge and the greater of $500,000 or twice the value of the property laundered as a monetary fine. For the structuring of financial transactions offense in a pattern exceeding $100,000 in a 12-month period, all three defendants face a maximum of 10 years in prison and a $250,000 fine. The defendants will remain in federal custody until their sentencing hearing which will be scheduled by the court at a later date.

This prosecution is part of an extensive Organized Crime Drug Enforcement Task Force (OCDETF) investigation that has resulted in the conviction of more than 50 defendants for marijuana trafficking, money laundering, and firearms violations over the past four years.

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 investigation was led by HSI and CMPD, with the assistance of several other law enforcement agencies, to include the Gastonia Police Department, the Concord Police Department, the Mooresville Police Department, the Pineville Police Department, the Huntersville Police Department, the Kannapolis Police Department, the Cornelius Police Department, the Waxhaw Police Department, North Carolina Alcohol Law Enforcement, North Carolina State Bureau of Investigation, the Iredell County Sheriff’s Office, the Union County Sheriff’s Office, and the Beverly Hills and Culver City, California Police Departments. The prosecution for the government was handled by Assistant U.S. Attorney Steven R. Kaufman of the U.S. Attorney’s Office in Charlotte.

The Defendants Obtained Mortgage Loans Based On Falsified Mortgage Applications To Purchase Investment Properties In Charlotte’s Dilworth Neighborhood

CHARLOTTE, N.C. – Six individuals, including three licensed mortgage brokers and a real estate agent, have agreed to pay civil penalties ranging from $5,000 to $85,000 to the United States to resolve civil fraud allegations stemming from false statements they made in mortgage loan applications, announced Anne M. Tompkins, United States Attorney for the Western District of North Carolina.

In addition to the civil penalties, Kyle Frey, Adam Goulet, Roger Sterling Moore, William S. Nunemaker, Tyler P. Nunemaker and Daniel Brewton (Defendants) have also agreed to pay to the United States any profits from the sale of the real estate properties they purchased with those loans.

The civil complaints filed against the defendants pursuant to the Financial Institutions Reform, Recovery, and Enforcement Act, (“FIRREA”), allege that beginning in or about 2005 to in or about 2008, the defendants obtained mortgage loans from various financial institutions and purchased real estate properties as speculative investments in Charlotte’s Dilworth neighborhood. A federal investigation revealed that the loan applications the defendants submitted contained false statements. The civil complaints filed in U.S. District Court allege that the defendants falsified information on the mortgage applications, including the borrower’s income, assets, liabilities, and/or net worth.

According to court records, the defendants also falsely represented on the mortgage applications that they were buying the houses as their primary residences when, in fact, they had no intention of living in them. According to allegations contained in filed documents, the defendants purchased the properties with the intention of building new houses and then selling them quickly for a profit. By representing to the financial institutions that the mortgage loans were for primary residences, the defendants were able to obtain favorable “no recourse” loans, which typically means that if they defaulted on the mortgages, the lender’s only recourse would be against that one property bought and built with the loan and the defendants’ other assets would not be at risk. Under such circumstances, a borrower is attempting to use the bank’s money, risk free, to speculate in real estate development. The United States contends that through the false statements alleged in these actions, the defendants avoided having to obtain commercial loans which typically would have required larger down payments, personal guarantees, or the pledging of other assets, and further avoided the risk associated with being personally liable for the success of their real estate speculation.

The defendants were on notice of the requirement to provide truthful statements in mortgage applications as they were either licensed mortgage originators, licensed real estate agents, experienced real estate investors, or closely related to such persons. In addition, all of the misrepresentations were made on the mortgage applications, despite the fact that each loan application contained a warning against making false statements or misrepresentations on the form. The mortgage loans obtained based on the false applications were generally in the range of $775,000 to $890,000.

In the FIRREA civil actions filed by the U.S. Attorney’s Office, without admitting liability, the defendants have agreed to settle the cases by paying civil penalties ranging from $5,000 to $85,000 and to sell properties which the United States alleges were purchased with mortgages obtained by false statements. Also, pursuant to these settlements, the profits – if any – from the sale of these properties will be surrendered to the United States.

Congress enacted FIRREA in 1989 as part of a comprehensive legislative plan to reform and strengthen the banking system and the federal deposit insurance system that protects the public from bank failures. FIRREA also authorizes the Department of Justice to file civil actions to recover monetary penalties of up to $1 million per false statement made in transactions affecting financial institutions.

In making today’s announcement, U.S. Attorney Tompkins thanked the Charlotte Division of the FBI and the Enforcement Division of the North Carolina Office of the Commissioner of Banks for their assistance in investigating this case. The case is being handled by Special Assistant United States Attorney Allison Carroll, and Assistant United States Attorneys Paul Taylor and Mike Savage of the U.S. Attorney’s Office for the Western District of North Carolina. The investigation is ongoing.

Defendant Was A Licensed Emissions Inspector At Carolina Tire & Auto In Pineville

CHARLOTTE, N.C. – U.S. District Judge Robert J. Conrad, Jr. sentenced a Charlotte man today to 12 months in prison for conducting false vehicle emission inspections, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Jose Manuel Cabrera, 28, of Charlotte, was also ordered to serve three years under court supervision following the prison term with the condition that he will not obtain a license to or actually conduct any vehicle emissions testing. Cabrera was also ordered to pay a $10,000 fine and to complete 100 hours of community service.

U.S. Attorney Tompkins is joined in making today’s announcement by Special Agent in Charge Maureen O’Mara of the U.S. Environmental Protection Agency, Criminal Investigation Division (EPA-CID), Atlanta Area Office; Greg McLeod, Director of the North Carolina State Bureau of Investigation (NC SBI); and Steven M. Watkins, Director of the North Carolina Division of Motor Vehicles License & Theft Bureau (NC DMV L&T).

According to court records and today’s sentencing hearing, Cabrera worked at Carolina Tire & Auto service center (Carolina Tire) in Pineville, as a mechanic and a vehicle emissions inspector licensed by the state of North Carolina. As a state-licensed emissions inspector, Cabrera tested vehicles to ensure they met federally-mandated emissions requirements. Court records show that from February 2011 to May 2012, and while employed at Carolina Tire, Cabrera conducted 164 illegal vehicle emissions inspections using surrogate vehicles to falsely pass vehicles that would have failed emissions inspection. According to court records, Cabrera performed these fraudulent emissions tests at Carolina Tire by entering into the state database the information of the vehicle that needed to be tested but then connected the testing equipment to a vehicle that was either being worked on at Carolina Tire or had already been repaired and had not been picked by the owner. The illegal practice of utilizing substitute vehicles for emissions testing is referred to in the industry as “clean scanning.” Court records indicate that Cabrera charged $60 to clean scan a vehicle. Carolina Tire’s Pineville service center was suspended from conducting emissions testing for ten years by the NC DMV L&T.

Cabrera’s sentence was enhanced because of Cabrera’s criminal history, including membership in the MS-13 gang. Cabrera was taken into custody following the sentencing hearing. He will be transferred into the custody of the Federal Bureau of Prisons upon designation of a federal facility. Federal sentences are served without the possibility of parole.

The Clean Air Act is a federal law that authorizes the EPA to establish air quality standards to protect public health and welfare and to regulate emissions of hazardous air pollutants. As required by the Act, the State of North Carolina has established a vehicle emissions testing program that requires cars in 48 out of North Carolina’s 100 counties be inspected to ensure that their emissions do not exceed limits for hydrocarbons, nitrogen oxides, and other compounds. According to the EPA, the Charlotte metropolitan area exceeds the 8-hour standard set for ozone, a potent irritant that can cause lung damage and other types of respiratory problems. The Clean Air Act prohibits making false statements in records, including emissions certificates and database records that are required to be maintained by the Act.

The investigation of this case was conducted by the EPA’s Criminal Investigation Division, NC SBI’s Diversion and Environmental Crimes Unit and the NC DMV License & Theft Bureau, with assistance from the North Carolina Division of Air Quality, Mobile Sources Compliance Branch. The prosecution was handled by Assistant United States Attorney Steven R. Kaufman of the U.S. Attorney’s Office in Charlotte.

CHARLOTTE, N.C. – Federal agents with the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) and officers with the Gaston County and Bessemer City Police Departments arrested eight defendants today during an early morning sweep, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Those arrested are charged with multiple federal drug trafficking and gun offenses.

U.S. Attorney Tompkins is joined in making today’s announcement by Wayne L. Dixie, Special Agent in Charge of ATF’s Charlotte Field Division, Chief James W. Buie, of the Gaston County Police Department and Chief Thomas Ellis of the Bessemer City Police Department.

Today’s arrests and indictments are the result of an ongoing joint law enforcement action that began in April 2012 as a focused initiative to reduce drug trafficking and violent crime in Gaston County, with special emphasis placed in the Vantine Neighborhood.

A 60-count criminal bill of indictment against the defendants was returned by a Charlotte grand jury on Wednesday, September 18, 2013. Portions of the indictment were unsealed today following the arrest of eight of the named defendants. Those arrested and charged are:

• Patrick Gerard Chambers, a/k/a “P-Chains,” 30 of Gastonia. • Robert Chavius Floyd, 23, of Bessemer City, N.C. • Rashon Donte Hunter, 18, of Bessemer City. • Omaris Dushawn McMiller, a/k/a “Turbo,” 32, of Gastonia. • Darral Javarius Anderson, a/k/a “Little Pete,” 25, of Bessemer City. • Michael Travis Floyd, a/k/a “Chad,” 34, of Bessemer City. • Joshua Rodregus Glenn, a/k/a “Paper,” 28, of Bessemer City/Gastonia. • Bryan Anthony Sanders, a/k/a “Bubba,” 35, of Kings Mountain, N.C.

Over the course of the investigation, law enforcement have seized five handguns, two SKS rifles (one with ammunition and scope attached), U.S. currency, a vehicle, drugs and drug-making paraphernalia.

The eight defendants’ initial appearances were held today in U.S. District Court in Charlotte. Detention hearings have been scheduled for Thursday, September 26, 2013. The remaining defendants charged in the indictment are considered fugitives. Their names will remain under seal until they have been apprehended by law enforcement.

“Reducing violent crime across our district is a top priority for my office. Federal, state and local law enforcement partners are coordinating their efforts to identify communities plagued by rampant drug trafficking and to prosecute offenders who spread crime in our neighborhoods. Our mission is to make our streets safer and to protect our communities from drugs and violence,” said U.S. Attorney Tompkins.

“The use of firearms to commit violent criminal acts involved in the drug trade that terrorizes our communities simply cannot be tolerated,” said Charlotte ATF Special Agent in Charge Wayne Dixie. “Along with our law enforcement partners, ATF will continue to identify those violent felons that just don’t get that message. We will use all of our joint resources to hold the violent drug dealers accountable and make the streets of our neighborhoods a safer place to live.”

“A successful operation like this one can only be accomplished through collaboration and communication. Together with our law enforcement partners, were are committed to reducing crime, bringing violent offenders to justice and improving the quality of life for the citizens of Gaston County,” stated Chief Buie of Gaston Co. Police Department.

“Continued joint special operations like this keep the citizens of Bessemer City safe. The sharing of information on violent criminals and their movements assist all law enforcement agencies to keep their citizens safe. The Bessemer City Police is dedicated to effective and efficient law enforcement operations to protect our citizens,” said Chief Ellis of Bessemer City Police Department.

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

The investigation is being handled by the ATF, Gaston Co. PD, and Bessemer City PD. The prosecution is being handled by Assistant U.S. Attorney Ann Claire Phillips of the U.S. Attorney’s Office in Charlotte.

One Remaining Fugitive Sought

CHARLOTTE, N.C. – Nine of the ten men named in a federal criminal indictment were arrested this morning by law enforcement on federal drug conspiracy charges, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. A federal criminal indictment returned by a Charlotte grand jury on Tuesday, September 17, 2013, was unsealed today following the early morning round-up of the nine defendants. The last of the ten defendants named in the indictment remains a fugitive. The indictment is the result of a joint Organized Crime Drug Enforcement Task Force (OCDETF) investigation conducted by federal, state, and local law enforcement agencies.

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; Brock D. Nicholson, Special Agent in Charge of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) in Georgia and the Carolinas; Greg McLeod, Director of the North Carolina State Bureau of Investigations (NC SBI); Chief Stacy Conley of the Gastonia Police Department; Chief Rodney D. Monroe of the Charlotte-Mecklenburg Police Department; and Chief David Belk of the Mount Holly Police Department.

The indictment alleges that from in or around 2002 to the present, the defendants conspired with each other and others to distribute and to possess with intent to distribute 5 kilograms or more of cocaine and 280 grams or more of crack cocaine in Gaston and Mecklenburg Counties. The 10 defendants charged with one count of drug conspiracy are:

• Derwin Durham, a/k/a “Red,” 56, of Gastonia, N.C. • James Michael Barber, a/k/a “Big Cheese,” 41, of Gastonia. • Carroll Macarthur Williams, Jr., 34, of Kings Mountain, N.C. • Thomas Monteres Burris, 33, of Gastonia. • Larry Donnell Erby, Jr., 34, of Gastonia. • Mario Demond Floyd, 33, of Gastonia. • Tony Lamar Floyd, 45, of Gastonia. • Lance Richardson Pagan, 43, of Gastonia. • Torben Lamont Jackson, 33, of Charlotte. • James Russell “Rusty” Coulter, 34, of Gastonia.

All individuals except Coulter were taken into custody this morning and made their initial appearances today in federal court in Charlotte before U.S. Magistrate Judge David S. Cayer. Coulter remains a fugitive (see attached photo).

While executing the arrest warrants and search warrants, law enforcement seized three firearms, approximately $67,000 in cash, two motorcycles, three vehicles, bullets, drugs and drug making paraphernalia.

The drug conspiracy charge against Durham and Barber carries a statutory mandatory life sentence and $20 million fine. The drug conspiracy charge against Pagan and Jackson carries a statutory minimum term of 20 years and a maximum of life in prison and a $20 million fine. And the drug conspiracy charge against the remaining defendants carries a statutory minimum term of 10 years and a maximum of life in prison and a $10 million fine.

The nine defendants’ detention hearings have been scheduled for Tuesday, September 24, 2013, before U.S. Magistrate Judge Keesler.

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

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 investigation was handled by the FBI, HSI, SBI, the Gastonia Police Department, the Mount Holly Police Department and the Charlotte Mecklenburg Police Department. The case is being prosecuted by Assistant U.S. Attorney Steven R. Kaufman of the U.S. Attorney’s Office in Charlotte.

ASHEVILLE, N.C. – U.S. District Court Judge Martin Reidinger sentenced today a former charter school principal and a former special education teacher on charges related to child pornography, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Chadwick Hamby, 42, of Hendersonville, N.C., was sentenced to 51 months in prison, to be followed by lifetime of supervised release. He was also ordered to register as a sex offender for a period of 15 years. Deborah Lee Tipton, 45, of Burt, N.C. was sentenced to 216 months in prison and a lifetime of supervised release. She was ordered to register as a sex offenders for a period of 25 years.

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

In August 2012, Hamby, a former principal at Mountain Community School, pleaded guilty to one count of receiving child pornography. In September 2012, Tipton, who was a teacher at the same school as Hamby at the time of the offense, pleaded guilty to one count of possession and one count of transportation of child pornography. According to filed court documents and today’s sentencing hearing, in or about September 10, 2011, Tipton produced two sexually explicit videos of a child under the age of 12. Court records indicate that Tipton sent these videos to Hamby via the internet. Court documents show that Hamby admitted to viewing the videos at least once before deleting them.

In handing down Hamby’s sentence, Judge Reidinger noted that the offense is one of lasting damage, and that the crime is all the more serious in light of Hamby being an educator and a principal. In announcing Tipton’s sentence, the Judge said that he had never seen a case like this.

Hamby has been in federal custody in the Western District since August 2012. Tipton has been in custody since April 2012. Each defendant 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 case was investigated by the FBI. The prosecution was handled by Assistant U.S. Attorneys David Thorneloe and Cortney Escaravage of the U.S. Attorney’s Office.

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.

STATESVILLE, N.C. – On Tuesday, September 3, 2013, U.S. District Judge Richard Voorhees sentenced a former supervisor with the U.S. Postal Service to serve 16 months in prison for submitting false information on a 2008 workman’s compensation benefits application, 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 Paul Bowman, Area Special Agent in Charge of the United States Postal Service, Office of Inspector General (USPS –OIG).

Joseph Catone, Jr., 58, of Boone, was convicted in March 2012 by a federal jury for lying on a federal document Catone submitted in 2008 which contained false information. Catone submitted the false information on an application in order to receive workman’s compensation benefits. According to evidence presented at trial and yesterday’s sentencing hearing, on or about July 21, 2006, Catone, while employed as a USPS supervisor at a post office in Boone, claimed that he had developed a stress-related condition as a result of excessive driving in the performance of his duties. The Department of Labor, Office of Workers’ Compensation Program (DOL OWCP) accepted Catone’s claim for temporary aggravation of sleep apnea, and Catone became eligible to receive compensation benefits because of the claimed disability.

According to court records, as a condition of his receipt of compensation benefits, Catone was required to periodically report, among other things, any employment, self-employment and volunteer work he had undertaken or income he had earned in the preceding fifteen months on the DOL OWCP Form EN1032 (EN1032). At trial, the government submitted evidence showing that in 2008 Catone completed, signed, and submitted an EN1032 that contained materially false responses. Specifically, the defendant answered in the negative questions about being employed elsewhere or having received any type of money or other compensation for volunteer work done while he was receiving compensation benefits. The government’s evidence included checks made payable to Catone that showed he had worked for and received a salary as a custodian for Angelo Nigro, doing business as Angelo’s Maintenance, from in or around August 2006 to August 2008. Witnesses testified that they regularly saw Catone vacuum, pick up trash, and perform other cleaning services at the Hayes Performing Arts Center in Blowing Rock, N.C. The government’s evidence also showed that the defendant received $132,214.31 (gross amount) in worker’s compensation from April 2007 to September 2009.

In handing down Catone’s sentence, Judge Voorhees stated that the defendant had “reaped financial benefits” from his dishonesty and that he imposed 16 months imprisonment because of “the need to deter others from similar conduct.” In addition to the prison term, Judge Voorhees also ordered Catone to serve three years under court supervision after he is released from prison, and to pay $106,411.83 as restitution.

The defendant was ordered to self-report to the Federal Bureau of Prisons upon designation of a federal facility. Federal sentences are served without the possibility of parole.

The investigation of the case was handled by USPS-OIG. The prosecution for the government was handled by Assistant United States Attorney Kenneth M. Smith of the U.S. Attorney’s Office in Charlotte.

WASHINGTON – Jocelyn Samuels, Acting Assistant Attorney General for the Civil Rights Division and Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina, announced today that former North Carolina Department of Correction’s Division of Community Corrections Probation Officer Willie James Steele Jr., 43, has been sentenced for violating the constitutional rights of a female probationer that he was supervising by coercing her into sexual acts on two separate occasions.

According to an indictment and evidence presented in court, Steele supervised the female probationer in 2008 after her probation was transferred to North Carolina from another state and he had the authority to recommend to a court or other agency that the victim be incarcerated or otherwise sanctioned if she violated the conditions of her probation. On Dec. 12, 2012, after a two-day trial, a jury found Steele guilty of two civil rights violations for depriving the victim of her constitutional right to bodily integrity by having non-consensual sexual intercourse with her during two separate probation meetings.

Chief Judge Robert J. Conrad, who presided over the trial, sentenced Steele to serve the statutory maximum incarceration of 24 months in prison, to be followed by one year of supervised release, for his convictions at trial.

“Probation officers are given a great deal of power in order to carry out their critical responsibilities, but this officer abused that power and violated the civil rights of a woman under his supervision,” said Acting Assistant Attorney General Samuels. “We will vigorously prosecute any probation officer who uses his position of trust to prey upon those he supervises.”

“Any time a law enforcement officer breaks the law it undermines the public’s trust in the legal system and we will do everything we can to ensure that trust is not compromised,” said U.S. Attorney Tompkins. “My office will prosecute those who abuse their position of power and use it to violate the civil rights of others.”

This case was investigated by the FBI and the North Carolina State Bureau of Investigation, and is being prosecuted by the Assistant U.S. Attorney Kimlani Ford from the Western District of North Carolina and Trial Attorney Shan Patel from the Civil Rights Division.

CHARLOTTE, N.C. – On Thursday, August 29, 2012, U.S. District Judge Max O. Cogburn, Jr. sentenced five men to prison in connection with a 2011 armed home invasion in Mooresville, N.C., announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. The five men received sentences ranging from 11 to 18 years in prison.

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

Judge Cogburn sentenced Osman White, 42, of Summerville, S.C. to serve 140 months in prison; Roderick Darnell Hardin, 40, of Charlotte, was sentenced to 150 months in prison; Timothy James Donahue, 44, of Mt. Pleasant, N.C. was ordered to serve 188 months in prison; Leo McIntyre, Jr., 39, of Charlotte, was sentenced to 140 months in prison; and Otis Sutton, 23, of Charlotte, was sentenced to 219 months in prison. Judge Cogburn also ordered the defendants to serve three years under court supervision following their prison terms, and to pay $1,500.000 as restitution, joint and severally.

According to court documents and court proceedings, the robbery was planned while White, McIntyre and Hardin were incarcerated in Mecklenburg County. While in jail, White told McIntyre and Hardin that Donahue knew of which places and people to rob.

Court records show that on July 21, 2011, the six victims of the home invasion – three adults and three young children – were sitting outside in front of the Mooresville residence. One of the adult victims is the owner and operator of a car dealer and salvage yard located on the same property as the residence. According to court records, Hardin and Sutton, armed with firearms, pulled into the driveway of the residence, demanded money from the owner of the business, and then ordered the entire family into the residence. Court records show that once inside the residence, Hardin demanded the owner to hand over the money kept in the safe inside the residence and threatened to shoot the children if the owner did not comply. Court records indicate that Hardin and Sutton took approximately $1.5 million from the safe. After obtaining the money from the safe, Hardin and Sutton tied up the adult victims. During the course of the robbery, Hardin also struck the owner in the head, all according to court records.

According to court documents, after the robbery Hardin rented a storage unit in Charlotte where he kept some of the stolen money. On July 29, 2011, law enforcement seized approximately $550,000 from the storage unit and arrested Hardin the next day when he arrived at the storage unit.

All defendants except Donahue entered guilty pleas. Otis Sutton pleaded guilty in May 2012 to Hobbs Act robbery and possession of a firearm in furtherance of a crime of violence. White and McIntyre also pleaded guilty to Hobbs Act robbery, in August and October 2012, respectively. In December 2012, Hardin pleaded guilty to conspiracy to commit Hobbs Act robbery and Hobbs Act robbery. Also in December 2012, following a six-day trial, a federal jury found Donahue guilty of conspiracy to commit Hobbs Act robbery and Hobbs Act robbery.

A sixth defendant, Abdul White, 44, of Charlotte pleaded guilty in November 2012 to being an accessory after the fact, in connection with the robbery. He faces a maximum prison term of 10 years and a $125,000 fine. Abdul White has not been sentenced yet.

In announcing the lengthy sentences, Judge Cogburn consistently emphasized the violent nature of the crimes.

The defendants have been in federal custody in the Western District of North Carolina 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 case was investigated by ATF and the Rowan County Sheriff’s office The prosecution was handled by Assistant U.S. Attorney Ann Claire Phillips, of the U.S. Attorney’s Office in Charlotte.

CHARLOTTE, N.C. – A Charlotte man was ordered to serve more than 24 years in prison in connection with the armed robbery of an auto parts store, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. On Wednesday, August 28, 2013, U.S. District Judge Max O. Cogburn, Jr., sentenced Lavonte Lamont Hallman, 25, of Charlotte to 294 months in federal prison, to be followed by 3 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.

In March 2012, a criminal indictment charged Hallman with conspiracy to commit Hobbs Act robbery; Hobbs Act robbery; possession of firearm in furtherance of the Hobbs Act Robbery; and possession of a firearm by a felon. In July 2012, a federal jury found Hallman guilty of all charges following a four-day trial. According to trial evidence and court documents, on December 26, 2011, Hallman entered an O’Reilly’s Auto Parts Store located on Old Statesville Road, in Charlotte, with a yellow cloth covering his face and carrying a loaded .25 caliber pistol. Court records indicate that Hallman pointed the firearm at store employees, told them they had ten seconds to empty their cash drawers and proceeded to count down from ten. The employees complied and Hallman obtained a total of $336.00 from two registers. Hallman ran out of the store and hid in the bushes across the street until his getaway driver, Ronald Demetrius Campbell, picked him up in a white Mercury Marquis. Court records show that law enforcement spotted and stopped the getaway vehicle shortly thereafter and Campbell was arrested at the scene of the traffic stop. Hallman fled the Marquis on foot with his pistol in hand, but was apprehended and arrested by law enforcement after a brief footchase.

In June 2012, Campbell, 37, also of Charlotte, pleaded guilty to conspiracy to commit Hobbs Act robbery and was sentenced to 41 months in prison and to three years of supervised release in March 2013.

Hallman had two prior felony convictions for armed robberies of other auto parts stores in the Charlotte area. In issuing the sentence, Judge Cogburn recognized the serial nature of Hallman’s criminal conduct, and emphasized the need for a sentence which would protect the community from this repeated violent behavior.

Hallman has been in local federal custody in the Western District of North Carolina since his arrest in April of 2012. Upon designation of a federal facility he will be transferred into custody of the Federal Bureau of Prisons. Federal sentences are served without the possibility of parole.

U.S. Attorney Tompkins thanked CMPD and ATF for conducting the investigation and the North Carolina Highway Patrol for their assistance in locating and stopping the getaway vehicle.

The prosecution for the government was handled by Assistant U.S. Attorney George Guise and Special Assistant United States Attorney Erin Comerford of the U.S. Attorney’s Office in Charlotte.

Erin Comerford, a state prosecutor with the Mecklenburg County District Attorney’s Office, was assigned by District Attorney Andrew Murray to serve as a Special Assistant United States Attorney (SAUSA) with the U.S. Attorney’s Office in Charlotte. Ms. Comerford is duly sworn in both state and federal courts, and prosecutes gang, violent crime and high level drug trafficking cases in federal court. Funded by the Governor’s Crime Commission, the goal of this partnership is to make Mecklenburg County safer through a coordinated enforcement effort.

CHARLOTTE, N.C. – A former Charlotte area realtor pleaded guilty on Monday, August 26, 2013, to selling household appliances she unlawfully removed from vacant homes owned by the U.S. Department of Housing and Urban Development (HUD), announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Sember Lynn Smathers, 49, formerly of Shelby, N.C., pleaded guilty before U.S. Magistrate Judge David S. Cayer to one count of conspiracy to steal government property.

U.S. Attorney Tompkins is joined in making today’s announcement by Lester Fernandez, Special Agent in Charge, Office of the Inspector General, Office of Investigation of the Department of Housing and Urban Development (HUD – OIG).

According to the criminal indictment and plea agreement, Smathers was a real estate agent and, in that capacity, had access to listings of vacant HUD real estate owned properties in Charlotte and surrounding communities in North and South Carolina. According to court records, from September 2008 to July 2009, Smathers used a master key to enter the vacant HUD homes and unlawfully remove appliances – such as refrigerators, stoves, washers and dryers – and other items from the homes. Smathers and her co-conspirators usually conducted these “clean outs” one or two times per week. Court records indicate that Smathers then sold these items from her home in Shelby.

In February 2009, Smathers and a co-conspirator leased a building in Shelby and set up a business called “Cheap Stuff,” from which they sold the household appliances as well as clothes and lawn maintenance equipment stolen from the HUD properties. According to filed documents, Smathers and another co-conspirator also maintained a storage unit in Shelby to store the stolen appliances, and used Craig’s List, the Shelby Shopper and the Shelby Star to advertise and sell these appliances. Court records indicate that in one instance, Smathers and another person were conducting a “clean out” while subcontractors were working at the same vacant HUD property. When the subcontractors questioned Smathers about the removal of the appliances from the home, Smathers falsely represented that she and her co-conspirator also worked for the same subcontractors and had been directed to remove the appliances from the home. Court records show that Smathers stole over $13,678 worth of appliances from the vacant homes.

Smathers has been released on bond pending sentencing. She faces a maximum prison term of five years and a $250,000 fine. A sentencing date for Smathers has not been set yet.

The investigation into Smathers was handled by HUD-OIG. The prosecution is handled by Assistant U.S. Attorney Kenneth Smith of the U.S. Attorney’s Office in Charlotte.

CHARLOTTE, N.C. – On Monday, August 26, 2013, Chief U.S. District Judge Frank D. Whitney sentenced a Charlotte man on charges stemming from the 2010 armed robbery of a Family Dollar store, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Robert Hikeen Seigle, a/k/a “Bam Bam,” 23, of Charlotte, was ordered to serve 136 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, on the morning of October 3, 2010, Seigle robbed a Family Dollar store located on University City Boulevard in Charlotte. Seigle, who had previously worked for Family Dollar, entered the store shortly after it opened and pulled a gun on the Family Dollar employee working at the cash register. Court records indicate that Seigle pointed the gun at the employee, racked the slide on the pistol and asked the employee if he wanted to die. Seigle stole $100 from the cash register and then walked the employee at gun point to the back of the store. According to information in court documents and court proceedings, Seigle then bound the employee’s hands together at the wrist with wire ties and shoved the employee into the men’s restroom. Seigle barricaded the restroom door with shelves of merchandise and fled the store. When CMPD officers arrested Seigle on October 15, 2010, he had in his possession the same .45 caliber pistol used during the Family Dollar store robbery. In October 2011, Seigle pleaded guilty to Hobbes Act robbery, and to possession and brandishing a firearm during and in relation to a crime of violence.

In announcing the 11-year sentence, Judge Whitney stated that the robbery was an “extraordinarily dangerous offense.” Judge Whitney observed that Seigle was lucky that he and the victims were not injured.

Seigle is currently in local federal custody in the Western District of North Carolina and will be transferred into 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.

CHARLOTTE, N.C. – A federal jury handed down a guilty verdict late on Wednesday, August 14, 2013, for a Charlotte man charged with sex trafficking of a minor, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Juan Brandon Gray-Sommerville, 23, of Charlotte was charged on April 16, 2013, with one count of knowingly obtaining, harboring, providing and transporting a minor to engage in prostitution.

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. According to trial testimony, the three of them drove back to Charlotte and checked into a motel. Trial testimony established that the defendant took pictures of the minor at the motel and created an online advertisement on Backpage.com to recruit clients to engage in sex acts with her. 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.

In making today’s announcement U.S. Attorney Tompkins stated, “Gray-Sommerville prayed upon a vulnerable young girl and exploited her in the worst possible way. Sex trafficking is a reprehensible crime that dehumanizes victims and strips them of their dignity. My Office will continue to work closely with our law enforcement partners to identify and prosecute sex traffickers who profit from prostituting minors.”

“The defendant lured a young girl away from her family with promises of money, but instead sold her as a sex slave. It is inconceivable that someone would sexually exploit a child for financial gain, but it does happen and the FBI will aggressively pursue those who victimize our children,” said John A. Strong, Special Agent in Charge of the Charlotte Division of the FBI.

“The verdict sends a loud message that these type of disgraceful offenses against children will not be tolerated in our community. We will continue to work with our federal partners in our efforts to protect children,” said Chief Monroe, Charlotte Mecklenburg Police Department.

Gray-Sommerville has been in local federal custody since April 2013. At sentencing, he faces a mandatory minimum term of 10 years and a maximum of life in prison and a $250,000 fine. A sentencing date has not been set yet.

The investigation of the case was handled by the FBI assisted by CMPD. The prosecution of the case is handled by Assistant U.S. Attorney Kimlani Ford, of the U.S. Attorney’s office in Charlotte.

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.

Another Defendant Pleaded Guilty Today; Two Others Previously Pleaded Guilty And Are Awaiting Sentencing

CHARLOTTE, N.C. – The former senior vice president of a manufactured housing retailer, two of his former sales managers and a former loan officer associated with the retailer have been indicted on federal charges involving a $158 million consumer and mortgage fraud conspiracy, announced the U.S. Attorney’s Office for the Western District of North Carolina.

The superseding criminal indictment filed on August 6, 2013, stems from an ongoing investigation into allegations that the defendants were involved in a consumer and mortgage fraud conspiracy that defrauded North Carolina buyers of manufactured and modular housing and originated $158 million in fraudulent federally-secured loans for their purchase. Another defendant pleaded guilty today in connection with the scheme and two others have already pleaded guilty to related charges and awaiting sentencing.

U.S. Attorney Tompkins is joined in making today’s announcement by Lester Fernandez, Special Agent in Charge, Office of the Inspector General, Office of Investigation of the Department of Housing and Urban Development (HUD-OIG); Karen Citizen-Wilcox, Special Agent in Charge, Office of the Inspector General, Office of Investigation of the U.S. Department of Agriculture (USDA-OIG); Keith Fixel, Inspector in Charge of the Charlotte Division of the U.S. Postal Inspection Service (USPIS); and North Carolina Attorney General Roy Cooper who oversees the North Carolina State Bureau of Investigation (NC SBI).

The superseding indictment charges Dennis Wayne Parris, 55, of Pinehurst, N.C., Fabian Sparrow, 35, of Burlington, N.C., Andrew B. McKeown, 38, of Asheboro, N.C., and Isaac “Ike” A. Vinson, IV, 46, of Pawleys Island, S.C., with one count of conspiracy to make false statements to the U.S. Departments of Housing and Urban Development (HUD) and Agriculture (USDA) and one count of wire fraud conspiracy. Parris, Sparrow and Vinson are also charged with one count of aiding and abetting the destruction of documents with intent to impede a federal investigation.

According to allegations contained in the superseding indictment, from in or about April 2005 to October 2010, Parris, Sparrow, and McKeown were employed by Phoenix Housing Group (“PHG”), a manufactured and modular housing retailer headquartered in Greensboro, N.C. with sales offices throughout North and South Carolina. Parris was Senior Vice President at PHG. Sparrow and McKeown worked as sales managers at PHG’s sales centers doing business as “Southern Showcase Housing” in Burlington and Asheboro, respectively. A fourth former PHG employee also involved in the scheme, Roger Dean Bailey, Jr., 40, of Hickory, was the sales manager of PHG’s sales center in Granite Falls, N.C., doing business as “Homes America.”

The superseding indictment alleges that Parris, Sparrow, McKeown and Bailey executed a mortgage fraud scheme to sell PHG manufactured and modular homes to consumers in North and South Carolina. Parris, Sparrow, McKeown, Bailey, and other PHG officers allegedly created a culture at PHG wherein employees were compelled to generate as many sales as possible regardless of whether their customers could afford the homes they were sold. Furthermore, the indictment alleges that, even after the HUD investigation into Bailey and Homes America became known, Parris, Sparrow and McKeown continued the scheme at other PHG locations.

According to the indictment, the co-conspirators were able to secure financing on those loans with the assistance of three loan officers of W.R. Starkey Mortgage (“WRSM”), a mortgage loan originator with corporate offices in North and South Carolina, among other states. WRSM was approved to originate loans insured by the Federal Housing Administration (“FHA”) or guaranteed by USDA. Vinson was a WRSM branch manager and loan officer in Myrtle Beach, S.C. Marina McCuen, 49, of Asheville, N.C. was a loan officer for WRSM’s Asheville office. Vinson originated loans for PHG customers in Burlington and supervised McCuen, who originated loans for PHG customers in Granite Falls, N.C. Joseph Klakulak, 37, of Charlotte, was a loan officer for WRSM’s Charlotte office. The indictment alleges that the three loan officers conspired with PHG’s management to fraudulently obtain federally-secured mortgages for PHG customers’ purchase of home/land deals.

In all, Parris, Sparrow, McKeown, Bailey and their conspirators sold over 1,100 homes to North Carolina consumers from PHG stores in Burlington, Asheboro, Granite Falls, and elsewhere, financed with more than $158 million in government-insured loans. The fraudulent loans resulted in hundreds of mortgage insurance claims totaling more than $24 million and net losses to the United States presently exceeding $16 million. According charging documents in Klakulak’s case, he originated over 400 of these loans, totaling more than $60 million, causing net losses to the federal government in excess of $3 million.

The superseding indictment further charges that, beginning in September 2008, Parris, Vinson, Sparrow, McCuen and Bailey obstructed HUD’s investigation into PHG’s and WRSM’s fraudulent activities at PHG’s Granite Falls sales office by destroying and attempting to destroy documents and asking witnesses to lie to investigators.

Today, Klakulak pleaded guilty before U.S. Magistrate Judge David S. Keesler to one count of conspiracy to defraud the United States and to make false statements to HUD and USDA. He was released on bond pending sentencing, which has not been set yet. At sentencing, Klakulak faces a maximum of five years in prison and a $250,000 fine.

Bailey pleaded guilty in October 2011 to conspiracy to commit wire fraud and to make false statements to HUD, making false statements to HUD, and wire fraud. McCuen pleaded guilty in June 2012 to one count of conspiracy to make false statements to HUD and USDA in connection with this scheme. Both McCuen and Bailey have been released on bond and await sentencing.

Also today, Vinson had his initial appearance on the superseding indictment before Judge Keesler. Vinson was released on bond. His co-defendants, Parris and McKeown, have been ordered to appear on a summons and will be arraigned on the charges on September 3, 2013. An arrest warrant has been issued for Sparrow, who is currently believed to be a fugitive. A photo of Sparrow is attached.

If convicted on all offenses, Parris, Sparrow, and Vinson face a maximum of 55 years in prison and a $1.5 million fine. McKeown faces a maximum of 35 years in prison and a $1.25 million fine if convicted on counts one and two of the indictment.

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

In January 2011, PHG ceased business operations as part of a settlement with the Consumer Protection Division of the North Carolina Attorney General’s office. This settlement stemmed from a state civil action filed in November 2009, claiming Bailey, then the owner of K and B Home Builders in Hickory, N.C., along with other employees and/or managers of PHG and WRSM, as well as other businesses and individuals, were involved in deceptive consumer practices.

The prosecution for the case is being handled by Assistant United States Attorney Michael Savage and Benjamin Bain-Creed of the U.S. Attorney’s Office in Charlotte. The investigation is being handled HUD-OIG, USDA-OIG, USPS-OIG, and state investigators with NC SBI, the Office of Commissioner of Banks and the Consumer Protection Division of the N.C. Department of Justice.

U.S. Probation Office Contracted the Facility to Conduct Drug Testing and Counseling Services to Federal Probationers and Parolees

ASHEVILLE, N.C. – A Burke County drug and alcohol treatment center, its owner and two of its employees have been indicted on False Claims Act conspiracy and bribery charges announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. The six-count indictment was returned by a federal grand jury sitting in Asheville on August 6, 2013.

John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division and Gregory A. Forest, Chief of the United States Probation Office for the Western District of North Carolina join U.S. Attorney Tompkins in making today’s announcement.

Charged in the federal criminal indictment are Clean on Green, PLLC (“Clean on Green”), based out of Morganton and Lenoir, N.C.; Lewis R. Dorman, III, 62, of Morganton and owner of Clean on Green; Levi J. Michaels, 41, also of Morganton; and Lerry Ratley, 60, of Rock Hill, S.C. All defendants are charged with one count of conspiracy to violate the False Claims Act. Dorman and Ratley are charged with one count of bribery of a public official and Michaels with four such counts. Dorman and Clean on Green also face one count of making false, fictitious or fraudulent claims.

According to the indictment, Clean on Green was a facility providing alcohol and drug treatment services in Morganton. Dorman was the owner and operator of Clean on Green, and in that capacity Dorman signed contracts with the U.S. Probation Office for the Western District of North Carolina to provide counseling services and to administer the collection and processing of urinalysis samples of individuals on federal pretrial release, supervised release, parole, or probation. According to the indictment, Michaels was employed by Clean on Green, and was responsible for managing the office, scheduling appointments, processing persons for substance abuse assessments, administering and monitoring urinalysis screening for persons on federal probation and scheduling individual drug and alcohol abuse counseling sessions. Also according to the indictment, Ratley worked at Clean on Green and his primary duty was to conduct group counseling sessions.

The indictment alleges that under its contract with the U.S. Probation Office, Clean on Green was required to collect and test urine samples from probationers or parolees for the presence of controlled substances and to provide the results to the U.S. Probation Office. The U.S. Probation office relied upon these results to inform the U.S. District Court or the Parole Commission as to whether a probationer or parolee was using controlled substances, which would be a violation of the conditions of release or parole. According to the indictment, the contract between Clean on Green and the U.S. Probation Office specified a urine collection protocol to ensure that the test results were accurate and reliable.

The indictment alleges that between 2010 and 2012, Dorman and Michaels did not follow the specific protocol for the urinalysis collection and instead allowed individuals to fraudulently submit substitute urine samples to avoid the detection of a controlled substance. According to the indictment, on multiple occasions Michaels accepted $40 to $50 as cash payments in exchange for allowing individuals under federal supervision to bypass proper urine collection protocols. On at least occasion, according to the indictment, Dorman also accepted a cash payment.

According to the indictment, Clean on Green also had a contract with U.S. Probation to provide individual and group counseling sessions to persons under federal supervision. The procedure required that such persons sign in and out of the counseling sessions and a Clean on Green employee was responsible for verifying the accuracy of the attendance records. From 2010 and continuing until around July of 2012, according to the indictment, Doman and Ratley repeatedly allowed individuals supervised by U.S. Probation to claim attendance at counseling sessions when they did not attend the required sessions. The indictment alleges that, on several occasions, Ratley accepted cash payments from federally supervised persons for allowing them to skip the required counseling sessions. The indictment alleges that on one such occasion, a supervised individual scheduled to attend a three-hour group counseling session only stayed at the facility approximately three minutes and, in return, paid Ratley $40 in cash to falsify the sign in/out forms. The indictment alleges that Dorman submitted these false forms to the U.S. Probation Office along with Clean on Green invoices for those services provided.

U.S. Attorney Tompkins stated, “The defendants’ brazen conduct and utter disregard of the trust bestowed upon them compromised the integrity of the legal system. This kind of conduct cannot be allowed to go on unchecked.”

“These individuals allowed countless criminals to cheat the judicial system in order to line their own pockets. Now they will be held accountable for taking money from those offenders unwilling to follow the conditions of their release,” said John A. Strong, Special Agent in Charge, FBI Charlotte.

“The U.S. Probation Office would like to thank U.S. Attorney Tompkins, the U.S. Attorney’s Office and the FBI for their quick action in this case. The fraud associated in this case had the potential to impact public safety and the safety of U.S. Probation Officers in the Western District of North Carolina. This serves and an outstanding example of federal agencies working together to protect the public and their interests,” said Chief U.S. Probation officer Gregory A. Forest.

The False Claims conspiracy charge carries a maximum of 10 years in prison and a $250,000 fine. The false, fictitious or fraudulent claims charge carries a maximum of five years in prison and a $250,000 fine, and each bribery of public official charge carries a maximum of 15 years in prison and a $250,000 fine.

Dorman and Michaels were arrested on Friday, August 9, 2013, and have been released on bond. Ratley was arrested earlier today. His initial appearance will be scheduled by the Court.

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

The case is being investigated by the FBI in cooperation with the U.S. Probation Office. The prosecution is handled by Assistant U.S. Attorney Richard Lee Edwards of the U.S. Attorney’s Office in Asheville.

Defendant Continued To Conduct Illegal Emissions Inspections After Entering Guilty Plea

CHARLOTTE, N.C. – A Charlotte man was sentenced on Thursday, August 8, 2013, to serve 18 months in prison for conducting over 530 false vehicle emission inspections, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. U.S. District Judge Max O. Cogburn, Jr. also ordered Jassim Juburi, 40, of Charlotte, to stay under court supervision for three years following the prison term, and to a pay a $15,000 fine, which, if paid in full, can reduce Juburi’s term of supervised release to two years.

U.S. Attorney Tompkins is joined in making today’s announcement by Special Agent in Charge Maureen O’Mara of the U.S. Environmental Protection Agency, Criminal Investigation Division (EPA-CID), Atlanta Area Office; Greg McLeod, Director of the North Carolina State Bureau of Investigation (NC SBI); and Steven M. Watkins, Director of the North Carolina Division of Motor Vehicles License and Theft Bureau (NC DMV L&T).

According to court records and yesterday’s sentencing hearing, Juburi worked at Central Auto Inspection & Repair (Central Auto) in Charlotte, as a mechanic and a vehicle emissions inspector licensed by the state of North Carolina. As a state-licensed emissions inspector, Juburi conducted onboard diagnostic (OBD) inspections to test federally-mandated vehicle emissions. Court records show that from August 2010 to March 2012, and while employed at Central Auto, Juburi conducted 534 illegal vehicle emissions inspections, using surrogate vehicles to falsely pass those that would have failed emissions inspections. The illegal practice of utilizing substitute vehicles for emissions testing is referred to in the industry as “clean scanning.” Court records indicate that Juburi charged as much as $100 to clean scan a vehicle. According to yesterday’s sentencing hearing, law enforcement agents were able to obtain a fraudulent vehicle emissions certificate from Central Auto without ever producing a vehicle to be inspected. The fraudulent emissions test and certificate were generated by Juburi.

In March 2012, Juburi pleaded guilty to one count of conspiracy to violate the Clean Air Act by conducting false vehicle emissions inspections. Court records indicate that Juburi continued to conduct false inspections, even after entering a guilty plea on the charge. According to filed documents, between March and April 2012, Juburi conducted an additional 11 clean scans at Central Auto. Court records show that Juburi was unable to continue clean scanning vehicles after NC DMV L&T suspended Central Auto’s license to conduct emissions inspections. Central Auto’s license has been suspended for a period of 10 years.

Juburi has been in local federal custody since October 2012, following a court-ordered bond revocation for continuing the fraudulent conduct after entering a guilty plea. Juburi will remain in the custody of the U.S. Marshals Service pending placement by the Federal Bureau of Prisons. All federal sentences are served without the possibility of parole.

The Clean Air Act requires vehicle emission inspections in geographic regions that exceed national ambient air quality standards. According to the EPA, the Charlotte metropolitan area exceeds the 8-hour standard set for Ozone, a potent irritant that can cause lung damage and other types of respiratory problems.

The investigation of this case was conducted by the EPA’s criminal investigation division, NC SBI’s Diversion and Environmental Crimes Unit, and NC DMV License and Theft Bureau, with assistance from the North Carolina Division of Air Quality, Mobile Sources Compliance Branch. The prosecution was handled by Assistant United States Attorney Steven R. Kaufman of the U.S. Attorney’s Office in Charlotte.

Defendant Used Proceeds To Purchase $500,000 In Jewelry And Vehicles

CHARLOTTE, N.C. – A mental health counselor who admitted overseeing a health care scheme that defrauded Medicaid of at least $6.1 million for sham mental and behavioral health services was sentenced to 72 months in prison today, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Linda Smoot Radeker, 72, of Shelby, N.C. was also sentenced to serve two years under court supervision and to pay $6,156,674.68 as restitution to Medicaid.

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); John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division; Jeannine A. Hammett, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation (IRS-CI); and Derrick Jackson, Special Agent in Charge, Department of Health and Human Services, Office of the Inspector General (HHS-OIG), Office of Investigations, Atlanta Region.

In September 2012, Radeker pleaded guilty to one count of health care fraud conspiracy and two counts of money laundering. In her plea agreement filed with the court, Radeker admitted that from 2008 to 2011 she obtained at least $6.1 million in fraudulent reimbursement payments from false claims submitted to Medicaid. According to filed court documents and today’s sentencing hearing, Radeker, a licensed professional counselor enrolled with North Carolina Medicaid, falsely claimed in billings submitted to Medicaid that she was the attending clinician for services provided to Medicaid recipients, when no such services were provided. Court records show that Radeker “rented out” her Medicaid provider number to a network of co-conspirators operating in Gaston and Cleveland Counties and elsewhere and, in return, kept a percentage of the fraudulent Medicaid reimbursements, sometimes as much as 50%.

Court records show that the co-conspirators used on the fraudulent claims primarily the Medicaid numbers of children whose parents thought were being enrolled in after school programs located in Shelby, Kings Mountain and Bessemer City, N.C. These after school programs were, in fact, owned and operated by Radeker’s co-conspirators.

According to court documents, Radeker made several large purchases using criminal proceeds including $21,500 to purchase a 2010 Ford Ranger and $44,440 to purchase a 2010 Lincoln MKS SUV. Radeker also used Medicaid money to purchase a recreational vehicle (RV) and at least $500,000 in jewelry.

In making today’s announcement, U.S. Attorney Tompkins stated, “Health care fraud harms all of us – government programs, private insurers, health care providers and individual patients. We remain committed to finding and prosecuting those who steal from important health care programs and putting a stop to the egregious assault of precious health care resources.”

North Carolina Attorney General Roy Cooper said, “This type of fraud hurts patients who really need care, wastes taxpayers’ money, and drives up health care costs for all of us. Our investigators and attorneys will continue to work with their federal partners to find and root out Medicaid cheaters.”

“Instead of assisting North Carolina families in need, Linda Radeker exploited them, using their Medicaid benefits to file false claims for her own profit. Today’s sentencing should be a warning to those who abuse their position of trust within the medical community, the FBI and our law enforcement partners will investigate and prosecute such fraud to the fullest extent of the law,” said John A. Strong, Special Agent in Charge, FBI Charlotte.

“The State’s Medicaid program is intended to serve those in need – not purchase luxury vehicles for criminals at taxpayer expense,” said Derrick L. Jackson, Special Agent in Charge of the U.S. Department of Health and Human Services, Office of Inspector General for the region including North Carolina. “Along with our law enforcement partners, we will ferret out and prosecute those defrauding our government health programs.”

“This is a very serious matter because health care fraud damages everyone,” said Jeannine A. Hammett, Special Agent in Charge, IRS-Criminal Investigation. “Ms. Radeker received money she was not entitled to and she created false documents to hide the true nature of the funds.”

In sentencing the defendant, U.S. Chief District Judge Frank D. Whitney noted that “health care costs have been skyrocketing” and that “legitimate providers like [Radeker] . . . take scarce resources and stretch them even further” through theft and fraud. Judge Whitney observed that this was a “glaring example of health care fraud” where Radeker “personally pocketed in excess of $3 million.” In announcing the six year sentence, Judge Whitney stated that we have to make it clear that we trust health providers and that the trust placed on the individual is critical. Radeker breached that trust and the message has to be sent to others.

Radeker 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 into Radeker was handled by the FBI, MID, IRS, and HHS-OIG. Special Assistance to the Task Force was provided by the North Carolina Division of Medical Assistance, Program Integrity Section. The prosecution was handled by Assistant U.S. Attorneys Kelli Ferry and Jenny Grus Sugar 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 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.

Bank Of America Structured, Offered And Sold Purportedly Prime Securities After Failing To Conduct Due Diligence On Any of the Mortgage Loans

CHARLOTTE, N.C. - Attorney General Eric Holder and U.S. Attorney for the Western District of North Carolina Anne M. Tompkins announced today that the United States has filed a civil lawsuit against Bank of America Corporation and certain of its affiliates, including Merrill Lynch, Pierce, Fenner & Smith f/k/a/ Banc of America Securities, LLC, Bank of America, N.A., and Banc of America Mortgages Securities, Inc. (collectively “Bank of America”). The complaint alleges that Bank of America lied to investors about the relative riskiness of the mortgage loans backing the residential mortgage-backed securities (RMBS), made false statements after intentionally not performing proper due diligence and filled the securitization with a disproportionate amount of risky mortgages originated through third party mortgage brokers.

This announcement is part of the ongoing efforts of President Obama’s Financial Fraud Enforcement Task Force’s RMBS Working Group and is accompanied by an announcement by the Securities and Exchange Commission (SEC) that it has filed civil charges in federal court in Charlotte, N.C. against Bank of America for defrauding investors.

“Today's filing marks the latest step forward in the Justice Department’s ongoing efforts to hold accountable those who engage in fraudulent or irresponsible conduct,” said Attorney General Eric Holder. “As this action proves, President Obama’s Financial Fraud Enforcement Task Force will continue to take an aggressive approach to combating financial fraud and uncovering abuses in the residential mortgage-backed securities market. As we proceed with this case, and pursue a range of additional investigations, we will continue to use every tool, resource, and appropriate authority to ensure stability, accountability, and – above all – justice for those who have been victimized.”

“This is the RMBS Working Group’s most recent legal enforcement targeting misconduct in the RMBS market, but it will not be our last,” said Associate Attorney General Tony West. “Combating financial fraud is a top priority for the Department of Justice. By filing this lawsuit today, we reaffirm an important principle – that everyone must play by the same set of rules, and no institution is too big or too powerful to escape appropriate enforcement. It is also a testament to the cooperation and coordination among the Working Group’s members, as the Justice Department and the SEC brought to bear their collective expertise and resources to build these cases against Bank of America.”

“Bank of America’s reckless and fraudulent origination and securitization practices in the lead-up to the financial crisis caused significant losses to investors,” U.S. Attorney Tompkins said. “Now, Bank of America will have to face the consequences of its actions. We have made a commitment to the American people to hold financial institutions accountable for practices that violated the law and wreaked havoc on the financial system, and my office takes that commitment very seriously. Our investigation into Bank of America’s mortgage and securitization practices continues.”

“I applaud Attorney General Holder for taking this important step toward holding Bank of America accountable for packaging and selling toxic loans to investors and brokers, a key cause of the housing collapse that crashed our economy and still plagues communities to this day,” said New York Attorney General Eric Schneiderman. “As a Co-Chair of the Working Group, I look forward to further action to address the causes and consequences of the financial crisis. The housing crisis in New York is far from over, and actions like these are necessary to ensure that homeowners are protected from similar conduct by banks and lenders in the future.”

A residential mortgage-backed security is a bond backed by of a pool of residential mortgage loans that were packaged together and sold in different tranches (or risk-levels) to investors.

The civil complaint filed today in U.S. District Court in Charlotte alleges that Bank of America defrauded investors, including federally insured financial institutions, who purchased more than $850 million in RMBS from Bank of America Mortgage Securities 2008-A (BOAMS 2008-A) securitization. The government’s civil complaint also seeks civil penalties from Bank of America under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA). According to the complaint, in or about January 2008, Bank of America sold BOAMS 2008-A RMBS certificates to investors by knowingly and willfully making materially false and misleading statements and by failing to disclose important facts about the mortgages collateralizing the RMBS, including Bank of America’s failure to conduct loan level due diligence in the offering documents filed with the U.S. Securities and Exchange Commission (SEC). These misstatements and omissions concerned the quality and safety of the mortgages collateralizing the BOAMS 2008-A securitization, how it originated those mortgages and the likelihood that the “prime” loans would perform as expected.

First, according to the filed complaint, a material number of the mortgages in the BOAMS 2008-A collateral pool failed to materially adhere to Bank of America’s underwriting standards. Specifically, more than 40% of the 1,191 mortgages in the BOAMS 2008-A collateral pool did not substantially comply with Bank of America’s underwriting standards in place at the time they were originated and did not have sufficient documented compensating factors. As alleged in the complaint, Bank of America knew that specific loans in the BOAMS 2008-A collateral pool did not materially adhere or comply with Bank of America’s underwriting standards.

Second, Bank of America did not conduct any loan-level due diligence at the time of securitization. According to the complaint, this was a violation of Bank of America’s own policies, procedures and prior practice, and was contrary to industry standards and investor expectations. Moreover, this decision allowed Bank of America to keep bad loans in the deal. According to the complaint, these bad loans had a range of glaring origination problems, such as overstated income, fake employment, inflated appraisals, wrong loan-to-value ratios, undisclosed debt, occupancy misrepresentation, mortgage fraud and other red flags wholly inconsistent with a purportedly prime securitization. As a result of this lack of due diligence, Bank of America had no basis to make many of the representations it made in the offering documents regarding the credit quality of the underlying mortgages.

Finally, Bank of America concealed important risks associated with the mortgages backing the BOAMS 2008-A securitization. For example, Bank of America originated more than 70% of the loans through third party mortgage brokers. These loans, known as “wholesale mortgages,” were riskier than similar mortgages originated directly by Bank of America. More significantly, at the same time Bank of America was finalizing this deal, it was receiving a series of internal reports that showed an alarming and significant decrease in the quality and performance of its wholesale mortgages. According to the complaint, Bank of America did not disclose that important information or the associated risks to investors.

Investors in the BOAMS 2008-A certificates have already suffered millions of dollars in losses and it is estimated that total losses sustained by investors will exceed $100 million.

FIRREA permits the Attorney General to commence civil actions to recover penalties from, among others, people who violate specified provisions of Title 18 of the United States Code, including 18 U.S.C. § 1001 (false statement to government) and 18 U.S.C. § 1014 (false statement to financial institution). In such actions, the civil penalties assessed may equal $1.1 million per violation, or, for a continuing violation, up to $1.1 million per day or $5.5 million, whichever is less pursuant to(12 U.S.C. § 1833(a)(b)(1)-(2); see also 28 C.F.R. § 85.3. The statute further provides that the penalty can exceed these limits to permit the recovery of the amount of monetary gain received from or the amount of monetary loss caused by the violations under 12 U.S.C. §1833a(b)(3).

Attorney Tompkins thanked the U.S. Securities and Exchange Commission, Division of Enforcement, Atlanta Regional Office for its significant cooperation. The case is being handled by Assistant United States Attorneys Daniel S. Ryan and Mark T. Odulio of the United States Attorney’s Office in Charlotte.

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, ten U.S. Attorneys’ Offices, the FBI, the SEC, the Department of Housing and Urban Development (HUD), HUD’s Office of Inspector General, the Federal Housing Finance Agency’s Office of Inspector General, 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 ten state Attorneys General offices around the country.

The RMBS Working Group is led by five co-chairs: Acting Assistant Attorney General for the Criminal Division Mythili Raman, Assistant Attorney General for the Civil Division Stuart Delery, Co-Director of the SEC’s Division of Enforcement George Canellos, U.S. Attorney for the District of Colorado John Walsh and New York Attorney General Eric Schneiderman.

Learn more about the Residential Mortgage- Backed Securities Working Group and the Financial Fraud Enforcement Task Force at www.stopfraud.gov.

A copy of DOJ's civil complaint against Bank of America is available here: BofA Civil Complaint

For more information on the SEC’s charges against Bank of America, please visit:www.sec.gov/News/PressRelease/Detail/PressRelease/1370539751924.

The Defendant Unlawfully Retransmitted Satellite TV Programming To Over 550 Customers

BRYSON CITY, N.C. – A cable TV operator pleaded guilty today before U.S. Magistrate Judge Dennis L. Howell to wire fraud and mail fraud charges for fraudulently acquiring and unlawfully rebroadcasting DIRECTV satellite television programming to the customers of Highlands Cable Group, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina.

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

According to the criminal indictment filed in April 2013, Ninian Ulysses Bond, II, 60, of Highlands, N.C., was the owner and principal operator of Highlands Cable Group, a company engaged in the business of providing cable TV programming to customers in Macon County, N.C. According to the indictment, from July 2002 to December 13, 2011, Bond devised and executed a fraudulent scheme to establish and maintain multiple DIRECTV residential and commercial lodging subscriber accounts for the purpose of fraudulently acquiring DIRECTV satellite TV systems. The fraudulent scheme enabled Bond to acquire and maintain over 30 DIRECTV integrated satellite receiver units and DIRECTV satellite access cards required to decode DIRECTV’s satellite TV signals. According to the indictment and today’s plea hearing, Bond used the fraudulently-acquired DIRECTV equipment to unlawfully retransmit DIRECTV’s satellite television signals to Highlands Cable Group’s subscribers. Court records show that as of December 2011, Highlands Cable Group had more than 550 customers.

According to court documents and court proceedings, Bond paid DIRECTV less than $500 per month to maintain the fraudulent DIRECTV subscriber accounts. Court records indicate that Bond received monthly payments from Highlands Cable Group’s subscribers who had been receiving DIRECTV’s TV programming. According to court records, the fraudulently-acquired DIRECTV television programming that was rebroadcast to Highlands Cable Group’s subscribers was valued at over $45,000 per month, and enabled Bonds and Highlands Cable Group to unfairly compete against other local cable TV companies. At the plea hearing, the government stated that the loss attributable to the fraudulent scheme is estimated at $4.5 million.

The defendant has been released on bond since May 2013. The wire fraud and mail fraud charge each carry a maximum of 20 years in prison and a $250,000 fine. A sentencing date has not been set yet.

The investigation was handled by the Federal Bureau of Investigation. This prosecution was handled by Assistant U.S. Attorneys Tom O’Malley and Ben Bain-Creed of the U.S. Attorney’s Office in Charlotte.

Defendant Did Not Show Up For His January 2013 Sentencing Hearing

CHARLOTTE, N.C. –U.S. District Judge Robert J. Conrad, Jr. sentenced a Salisbury man to 121 months in prison for operating a Ponzi scheme that defrauded his victims of more than $2 million and for failing to appear in court for his previously scheduled sentencing hearing on that case, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina.

John Knox Bridges, 52, of Salisbury, was also ordered to serve three years under court supervision following his prison term, and to pay $1,534,536.70 as restitution to his victims.

Joining U.S. Attorney Tompkins in making today’s announcement is John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division, and Jeannine A. Hammett, Special Agent in Charge of the Internal Revenue Service - Criminal Investigation Division (IRS-CI).

According to filed court documents and court proceedings, from 2004 to 2010 Bridges engaged in a series of schemes to defraud individual investors and charitable organizations by soliciting his victims to invest in a fictitious company, “Logan Investments.” Court documents show that Bridges made false representations to his investors, including that their money would be invested in a private oil company in Texas and that the company was building a pipeline to transport liquid petroleum across the U.S. Court records indicate that Bridges further misrepresented to his victims that their money would be deposited into the oil company’s account and be used for construction expenses. To further the fraudulent scheme, Bridges told the victim investors that he would provide them with quarterly dividends while the pipeline was being constructed. In reality, none of the representations Bridges made to the victims were true. Information contained in court documents indicates that Bridges deposited the money in his own personal bank account, and used the money to fund personal trips abroad and to pay for his personal living expenses.

According to filed documents and statements made in court, Bridges made payments to some existing investors using funds contributed by new investors, typical of a “Ponzi” scheme. To cover his fraud and to induce individuals to further invest in his fictitious company, Bridges regularly sent investors bogus profit and loss statements from Logan Investments, which falsely showed positive returns. In reality, Bridges generated those fictitious statements from his home computer and were entirely false.

Court records show that in 2008 Bridges solicited a charitable organization known as “L.F.” to invest $350,000 in a fictitious company, which Bridges falsely represented as an oil and gas company identified as Ligon-Johnson. Among the misrepresentations made to “L.F.” was that the investment guaranteed returns of approximately 9.75 percent. Instead of investing the money, Bridges used the funds to settle a civil lawsuit filed against him personally, court records show. According to court documents, in early 2009 Bridges received an additional $250,000 from the same charitable organization to invest in a start-up company. Bridges falsely represented that the start-up would “turn a profit of 30% in 6 months,” records indicate. Instead of investing the money in the start-up company, Bridges fraudulently placed the investment funds in his name.

According to filed documents, in the summer of 2009 “L.F.” became suspicious of Bridges’ actions. In an attempt to conceal and prolong the scheme, Bridges wired $600,000 to “L.F.” from a second charitable organization known as “T.M.,” according to court documents. Also, in an effort to further induce additional investment funds, Bridges lied to current and additional investors by fraudulently telling them that his computer had been hacked and $600,000 was emptied out of his personal bank account.

In total, court records show, Bridges obtained approximately $2 million from the victims of the Ponzi scheme. In February 2012, Bridges pleaded guilty to one count of securities fraud and one count of money laundering.

“Today, a greedy con artist got the punishment he deserved,” said U.S. Attorney Tompkins. “This was not a case of a good investment gone bad. Bridges stole money from his investors and used it for trips and personal expenses, while he continued to tell lie after lie to cover his fraud. Potential investors should do their homework before they invest their hard earned money and question promises of large investment returns. Don’t let a con man with a good sales pitch rob you of your precious nest egg,” Tompkins added.

“The FBI is committed to vigorously pursuing scammers who commit financial crimes and rob unsuspecting investors of their savings. This case sends a clear message that criminals who run these illicit investment schemes will face severe penalties for their fraud,” said FBI Charlotte Special Agent in Charge, John A. Strong.

IRS-CI Special Agent in Charge Jeannine Hammett stated, “Promoters of Ponzi schemes prey upon trusting investors and then steal their hard earned money. John Knox Bridges did that in order to finance his lifestyle. Investors should be wary that programs promising unbelievable returns on investment should be looked at carefully.

Judge Conrad also sentenced Bridges today to 18 months in prison on criminal contempt charges for failing to appear at his first sentencing hearing, to be served concurrently. According to court records, despite knowing the date and time he was due to appear in federal court, Bridges did not show up for the sentencing, causing the court to issue a bench warrant for his arrest. According to court documents, the following day Bridges’ vehicle was located in Salisbury at the parking lot of a church. Court records also indicate that when law enforcement arrived at the church, Bridges armed with a shotgun had barricaded himself in the church’s women’s bathroom. Law enforcement convinced Bridges to surrender and the defendant was subsequently arrested. Bridges pleaded guilty on July 23, 2013 to criminal contempt charges in connection with that incident.

In announcing today’s sentence Judge Conrad described the defendant as having “a history of ongoing predatory behavior,” noting that Bridges’ “primary motivation was to fund a lavish lifestyle.”

In addition to providing for restitution to victims, federal law also provides for forfeiture of proceeds of crime. Accordingly, Judge Conrad sentenced Bridges to forfeit certain properties, including numerous pieces of art. The U.S. Attorney’s Office will request that the proceeds from the liquidation of any finally forfeited assets be paid to victims.

Bridges has been in federal custody since he was arrested in January 2013 after he failed to appear at the sentencing hearing. 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 the FBI and IRS-CI. The prosecution was handled by Assistant U.S. Attorney Maria Vento of the U.S. Attorney’s Office in Charlotte.

Government Alleges the Defendants Lied to Obtain Over $87 Million in Federally Funded Construction Contracts and Used Nominee Bank Account to Conceal the Fraud

CHARLOTTE, N.C. – A criminal indictment charging a Monroe-based construction company, its president and owner and his co-conspirators with government procurement fraud was returned by a grand jury today in U.S. District Court, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina.

The 29-count indictment charges Boggs Paving Inc., Carl Andrew Boggs, III, (a/k/a Drew Boggs), 49, of Waxhaw, N.C., Kevin Hicks, 42, of Monroe, N.C., Greg Miller, 59, of Matthews, N.C., Greg Tucker, 40, of Oakboro, N.C., John Cuthbertson (a/k/a Styx Cuthbertson), 68, of Monroe, and Styx Cuthbertson Trucking Company, Inc., of Wingate, N.C., with conspiracy to defraud the United States Department of Transportation (“USDOT”), conspiracy to commit wire fraud, conspiracy to commit mail fraud, money laundering conspiracy, money laundering and wire fraud for a scheme which lasted over 10 years and involved over $87 million in government contracts. All the defendants except Greg Tucker are also charged with mail fraud.

Marlies T. Gonzalez, 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 Jeannine A. Hammett, 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, beginning in 2003 and through the present, Boggs Paving, Inc. (“Boggs Paving”) fraudulently obtained federally and state funded construction contracts by falsely certifying that a disadvantaged business enterprise (“DBE”) or a small business enterprise (“SBE”) would perform and be paid for portion of the work on such contracts. USDOT’s DBE program provides a vehicle for increasing the participation of disadvantaged business enterprises in federally funded transportation-related projects. The indictment alleges that Styx Cuthbertson Trucking Company, Inc. (“Styx”), a road construction hauler based in Monroe, N.C., owned by Styx Cuthbertson, was a certified DBE and SBE used by the defendants as a “pass through” entity to obtain such contracts.

To create the illusion that Styx was doing and being paid for the necessary work, the indictment alleges that, among other things, the conspirators ran payments through a nominee bank account in Styx’s name, but funneled checks back to Boggs Paving and its affiliates, which were not DBEs or SBEs, but were doing the actual work. The indictment further alleges that each time a deposit was made into the nominee account as supposed payment for construction work performed by Styx, a Boggs Paving employee would immediately cut a check from that Styx nominee account to the Boggs entity or another firm that had actually performed the work. In return, according to allegations contained in the indictment, Styx Cuthbertson received a kickback for allowing his name and DBE status to be used by Boggs Paving.

The indictment further alleges that the defendants took careful steps to conceal their fraud. For example, according to allegations contained in the indictment, the defendants made false and misleading statements to both the North and South Carolina Department of Transportation on DBE applications, renewal statements and certifications. The indictment alleges that the defendants submitted bids purporting to be from Styx when in fact they were from Boggs Paving. The indictment also alleges that the defendants further tried to conceal the fraud by using magnetic decals bearing the “Styx” company logo to cover the “Boggs” logo on company trucks to create the appearance that Styx was the company performing the work. The indictment alleges that Boggs Paving also performed numerous clerical functions in Styx’s name including creating quotes on Styx letterhead for construction contracts; drafting fraudulent contracts between Boggs Paving and Styx for subcontract work purportedly performed by Styx; creating invoices for work supposedly done by Styx; and giving Styx Cuthbertson pre-prepared documents (including quotes, contracts and DBE reports) for his signature.

The indictment alleges that from June 2004 through the present, Boggs Paving was the prime contractor on 35 federally-funded contracts, and was a subcontractor for two additional contracts, worth more than $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, all according to the indictment.

The conspiracy charge carries a maximum of five years in prison. Each wire and mail fraud count carries a maximum of 20 years in prison. The money laundering conspiracy charge carries a maximum of 20 years in prison. The money laundering charge carries a maximum of 10 years in prison. Each of the charges also carries a $250,000 fine.

The defendants’ initial appearances in federal court have been set for August 20, 2013.

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

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

Government Alleges the Defendants Lied to Obtain Over $87 Million in Federally Funded Construction Contracts and Used Nominee Bank Account to Conceal the Fraud

CHARLOTTE, N.C. – A criminal indictment charging a Monroe-based construction company, its president and owner and his co-conspirators with government procurement fraud was returned by a grand jury today in U.S. District Court, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina.

The 29-count indictment charges Boggs Paving Inc., Carl Andrew Boggs, III, (a/k/a Drew Boggs), 49, of Waxhaw, N.C., Kevin Hicks, 42, of Monroe, N.C., Greg Miller, 59, of Matthews, N.C., Greg Tucker, 40, of Oakboro, N.C., John Cuthbertson (a/k/a Styx Cuthbertson), 68, of Monroe, and Styx Cuthbertson Trucking Company, Inc., of Wingate, N.C., with conspiracy to defraud the United States Department of Transportation (“USDOT”), conspiracy to commit wire fraud, conspiracy to commit mail fraud, money laundering conspiracy, money laundering and wire fraud for a scheme which lasted over 10 years and involved over $87 million in government contracts. All the defendants except Greg Tucker are also charged with mail fraud.

Marlies T. Gonzalez, 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 Jeannine A. Hammett, 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, beginning in 2003 and through the present, Boggs Paving, Inc. (“Boggs Paving”) fraudulently obtained federally and state funded construction contracts by falsely certifying that a disadvantaged business enterprise (“DBE”) or a small business enterprise (“SBE”) would perform and be paid for portion of the work on such contracts. USDOT’s DBE program provides a vehicle for increasing the participation of disadvantaged business enterprises in federally funded transportation-related projects. The indictment alleges that Styx Cuthbertson Trucking Company, Inc. (“Styx”), a road construction hauler based in Monroe, N.C., owned by Styx Cuthbertson, was a certified DBE and SBE used by the defendants as a “pass through” entity to obtain such contracts.

To create the illusion that Styx was doing and being paid for the necessary work, the indictment alleges that, among other things, the conspirators ran payments through a nominee bank account in Styx’s name, but funneled checks back to Boggs Paving and its affiliates, which were not DBEs or SBEs, but were doing the actual work. The indictment further alleges that each time a deposit was made into the nominee account as supposed payment for construction work performed by Styx, a Boggs Paving employee would immediately cut a check from that Styx nominee account to the Boggs entity or another firm that had actually performed the work. In return, according to allegations contained in the indictment, Styx Cuthbertson received a kickback for allowing his name and DBE status to be used by Boggs Paving.

The indictment further alleges that the defendants took careful steps to conceal their fraud. For example, according to allegations contained in the indictment, the defendants made false and misleading statements to both the North and South Carolina Department of Transportation on DBE applications, renewal statements and certifications. The indictment alleges that the defendants submitted bids purporting to be from Styx when in fact they were from Boggs Paving. The indictment also alleges that the defendants further tried to conceal the fraud by using magnetic decals bearing the “Styx” company logo to cover the “Boggs” logo on company trucks to create the appearance that Styx was the company performing the work. The indictment alleges that Boggs Paving also performed numerous clerical functions in Styx’s name including creating quotes on Styx letterhead for construction contracts; drafting fraudulent contracts between Boggs Paving and Styx for subcontract work purportedly performed by Styx; creating invoices for work supposedly done by Styx; and giving Styx Cuthbertson pre-prepared documents (including quotes, contracts and DBE reports) for his signature.

The indictment alleges that from June 2004 through the present, Boggs Paving was the prime contractor on 35 federally-funded contracts, and was a subcontractor for two additional contracts, worth more than $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, all according to the indictment.

The conspiracy charge carries a maximum of five years in prison. Each wire and mail fraud count carries a maximum of 20 years in prison. The money laundering conspiracy charge carries a maximum of 20 years in prison. The money laundering charge carries a maximum of 10 years in prison. Each of the charges also carries a $250,000 fine.

The defendants’ initial appearances in federal court have been set for August 20, 2013.

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

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

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CHARLOTTE, N.C. – A Charlotte man and owner of a behavioral health company was sentenced on Thursday, July 11, 2013, to serve 24 months in prison for attempting to obtain nearly $400,000 in fraudulent reimbursement claims from North Carolina Medicaid, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Gregory Benny Lassiter, Jr., 32, of Charlotte, was also ordered to remain under court supervision for two years, following his prison term.

U.S. Attorney Tompkins is joined in making today’s announcement by Derrick Jackson, Special Agent in Charge, Department of Health and Human Services, Office of the Inspector General (HHS-OIG), Office of Investigations, Atlanta Region and Attorney General Roy Cooper, who oversees the North Carolina Medicaid Investigations Division (MID).

In August 2012, Lassiter pleaded guilty to one count of conspiracy to commit health care fraud. According to court documents filed in the case, Lassiter was the owner of VisionOne Health Services, Inc., (“VisionOne”), a Charlotte-based company approved by Medicaid to provide outpatient behavioral health services to Medicaid recipients. Court documents indicate that Lassiter and VisionOne hired Dr. M.T. to provide certain review services at VisionOne, but Dr. M.T. did not see any clients while employed by VisionOne. Dr. M.T. only worked for Lassiter for a few months in 2009. According to court records and yesterday’s sentencing hearing, Lassiter misappropriated Dr. M.T.’s Medicaid provider number and submitted fraudulent claims to Medicaid, falsely stating that Dr. M.T. had provided services to clients long after Dr. M.T. had terminated her relationship with Lassiter and VisionOne. These false and fraudulent claims were submitted to Medicaid between November 2009 and April 2011 and resulted in Medicaid payments to Lassiter exceeding $191,000.

Lassiter also admitted that he submitted false claims to Medicaid for services that his company never provided. According to court records and proceedings, in October 2010, Lassiter agreed with co-conspirator Erika Holland to submit claims through VisionOne’s Medicaid provider number for services that Holland and her companies allegedly provided. Holland was not approved by Medicaid to provide mental and behavioral health services and did not employ any licensed therapists. Court documents reveal that Lassiter, nevertheless, submitted fraudulent claims to Medicaid on Holland’s behalf, claiming that VisionOne and other clinicians had provided the claimed behavioral health services. In many instances, the services were never provided at all. In exchange for submitting these false claims through his company’s Medicaid provider number, Lassiter kept 30% of the Medicaid reimbursement for the false claims. From late October 2010 to December 2010, Lassiter and Holland received approximately $93,000 from Medicaid based upon these false claims.

At the sentencing hearing, U.S. District Judge Robert J. Conrad, Jr. ordered Lassiter to pay $234,787.91 in restitution. In announcing the sentence, Judge Conrad noted that the offense involved the theft from a fund established to help the disadvantaged and was not intended to “enrich others who prey upon the system.”

Lassiter has been released on bond since entering his guilty plea in August 2012. He will be ordered to report to a federal facility, at which time he will be transferred into the custody of the Federal Bureau of Prisons. Federal sentences are served without the possibility of parole.

Co-conspirator Erika Holland was sentenced on March 2, 2012, to serve 54 months in prison for her role in the scheme, and was ordered to pay $1,585,093 in restitution.

The investigation was handled by HHS-OIG and MID. The prosecution of the case is handled by Assistant U.S. Attorney Kelli Ferry.

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

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

Lawyer Was Among 91 Defendants Charged in Operation Wax House

CHARLOTTE, N.C. – A former Charlotte lawyer pleaded guilty mid-trial on Wednesday, July 10, 2013, to mortgage fraud related charges, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. The former lawyer’s plea of guilty is the latest conviction in Operation Wax House, a mortgage fraud investigation which began in 2007 and has netted 91 defendants to date, 72 of which have pleaded guilty.

Michelle V. Mallard, 46, of Charlotte, pleaded guilty to mortgage fraud conspiracy, money laundering conspiracy and embezzlement in violation of the wire fraud statute.

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 Jeannine A. Hammett, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation (IRS-CI).

Mallard’s federal criminal trial began on Monday, July 8, 2013, before Chief U.S. District Judge Frank D. Whitney. Mallard, a/k/a Michelle Crawford, was charged with embezzlement and with serving as a mortgage fraud lawyer for a mortgage fraud cell in the Operation Wax House investigation. According to evidence introduced at trial, Mallard agreed to use her law license to further mortgage fraud primarily in South Charlotte and Waxhaw, N.C. According to trial testimony, the co-conspirators purchased houses at inflated prices in exchange for large kickbacks representing the difference between the true price and the inflated price. Trial witnesses testified that Mallard agreed to pay such kickbacks to other members of the conspiracy and, among other things, accepted bogus checks to make it appear as though buyers had provided money when they had not. According to trial evidence and statements made by the prosecutors, Mallard participated in the mortgage fraud after having stolen over $30,000 from clients by embezzling from her trust account.

Following the presentation of evidence by the government on Monday and Tuesday, Mallard announced to Judge Whitney on Wednesday that she wished to change her plea from “not guilty” to “guilty” on all the counts she was charged with in a second superseding indictment returned by a Charlotte grand jury in September 2012. The remaining five defendants charged in that indictment have already pleaded guilty and are included in the list of defendants below.

Following her guilty plea, Mallard was released on bond pending the scheduling of her sentencing hearing. At sentencing, Mallard faces a maximum prison term of 70 years. In determining Mallard’s actual sentence, the Court will consider the U.S. Sentencing Guidelines, which are not binding but provide advisory sentencing ranges. A sentencing date for the defendant has not been set yet.

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

Today’s announcement is part of an effort by President Obama’s Financial Fraud Enforcement Task Force (FFETF), created in November 2009, to combat financial fraud crimes by waging aggressive, coordinated and proactive investigations and prosecutions. With more than 20 federal agencies, 94 U.S. Attorneys’ Offices and state and local partners, the task force is 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. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.

The names and case numbers of the all the defendants charged to date in Operation Wax House are listed below, organized by their alleged role in the scheme.

Attorneys and Paralegals
Crawford/Mallard, Michelle 3:11cr374
Gates, Christine 3:09cr100
Norwood, Kelli, 3:09cr162
Rainer, Demetrius 3:08cr239/241
Smith, Troy, 3:08cr264

Bank Insiders
Brown, Jamilia, 3:10cr124
Eason, Danyelle, 3:10cr116
Henson, Vic. F., 3:10cr124
Jackson, Mitzi, 3:11cr374
Ramey, Bonnie Sue, 3:10cr124

Builders and Sellers
Fink, James, 3:11cr374; 3:12cr239
Jackson, Jennifer, 3:09cr241
Smith, Kelvis, 3:12cr238
Viegas, Jeffrey, 3:12cr298
Wittig, Mark, 3:12cr335
Wood, Gary, 3:09cr208

Facilitators and Financiers
Hickey, Denis, 3:09cr103
McClain, Landrick, 3:10cr124
Mitchell, Ann Tyson, 3:12cr239
Panayoton, Sherrill, 3:11cr176
Taylor, Alicia Renee, 3:10cr124
Wilson, Willard, 3:09cr161

Buyers
Banks, Arketa, 3:12cr297
Clark, Benjamin, 3:12cr239
Hillian, Kirk, 3:12cr83
Mathis, Charles, 3:10cr1
Mobley, Sarena, 3:10cr124
Moore, George, 3:12cr337
Richards, Dan, 3:10cr119
Smith, Kevin, 3:12cr341
Tyler, Glenna, 3:11cr200
Vaughn, Mary, 3:12cr329
Wallace, Jamaine, 3:12cr330
Wellington, William, 3:12cr333

Notary Public
Willis, Anthony, 3:09cr218

Appraiser
Darden, Clinton 3:10cr108

Mortgage Brokers
Bradley, Bonnette, 3:12cr299
Clarke, Linda, 3:10cr120
Flood, Ericka, 3:10cr124
Goodson-Hudson, Crystal, 3:12cr339
Mahaney, Robert, 3:12cr34-0
Scagliarini, Coley, 3:11cr374
Staton, Walter, 3:10cr113
Vaughn, Danielle, 3:12cr329
Williams, Marcia, 3:12cr334
Williams, Sean, 3:12cr336

Woods, Joseph, 3:09cr178

Real Estate Agents
Belin, Chris, 3:11cr374
Clark, Christina, 3:09cr44
Lee, Shannon, 3:12cr338
Pasut, Holly Hardy, 3:12cr331
Wolf, Nathan Shane, 3:12cr239
Wood, Gary, 3:09cr208

Promoters
Amini, Ramin, 3:12cr239
Barnes, Vonetta Tyson, 3:12cr239
Brown, William, 3:12cr239
Bumpers, Travis, 3:12cr239
Carr, Stephen, 3:10cr124
Clarke, Benjamin, 3:12cr239
Clarke, Reuben, 3:10cr120
Coleman, Gregory, 3:10cr118
DeSimone, Frank, 3:12cr239
Dooley, Lorie, 3:12cr239
Hitchcock, Jimmy, 3:11cr374
Hubbard, Glynn, 3:12cr239
Hunt, Victoria, 3:12cr239
Hunter, Toby, 3:12cr239
Johnson, Ralph, 3:12cr239
Jones, Steven, 3:12cr239
Jones, Tyree, 3:10cr230
Long Waylon, 3:12cr239
Marshall, Michael, 3:07cr283
McDowell, John, 3:12cr239
McPhaul, Elizabeth, 3:10cr114
Mehr, Kurosh, 3:12cr239
Mitchell, Ann Tyson, 3:12cr239
Moye, Melvin, 3:12cr239
Myles, Denetria, 3:12cr239
Newland, Matthew, 3:12cr239
Perry, John Wayne, Jr., 3:12cr239
Perry, Kim, 3:10cr25
Phillips, Rick, 3:10cr115
Saddig, Nazeere, 3:12cr239
Sharreff-El, Drew, 3:10cr124
Sherald, Kiki, 3:10cr117
Simmons, Aaron, 3:09cr240
Snead, Todd, 3:10cr124
Staton, Lisa, 3:10cr113
Thorogood, Donte, 3:12cr239
Tyson, Carrie, 3:12cr239
Tyson, James, Jr. 3:12cr239
Tyson, James, Sr., 3:12cr239
Wellington, Phillip, 3:12cr332
Wood, Purnell, 3:12cr239

One Remaining Fugitive Sought – Reward Offered

CHARLOTTE, N.C. – Thirty men and women have been charged to date with methamphetamine trafficking and firearms offenses as a result of Operation “Dixie Crystal,” announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. To date, 17 defendants have pleaded guilty to the charges.

Operation “Dixie Crystal” is a joint drug task force operation which began in 2012, targeting significant methamphetamine traffickers in Ashe, Allegheny, Caldwell, Watauga, Wilkes Counties, and Johnson County in Tennessee.

“The success of this investigation speaks of the continued dedication of our local, state and federal law enforcement partners in targeting and dismantling meth distribution rings that profit by spreading their poison in our communities. Strong partnerships such as this one underscore the power of our combined forces and demonstrate our collective impact on the war against meth,” said U.S. Attorney Tompkins.

According to filed court documents and court proceedings, beginning in 2003 and continuing to the present, the co-conspirators have sold more than 200 pounds of methamphetamine, with a street value of more than $4,000,000. Over the course of the investigation, law enforcement seized approximately 30 firearms, five vehicles, 20 pounds of methamphetamine, and $150,000 in U.S. currency.

Federal criminal indictments unsealed today in U.S. District Court have charged the following 10 defendants with federal drug charges and related offenses:

1. Larry Mitchell Snyder, 59, of Trade, Tenn., is charged with a drug trafficking charge that carries a mandatory minimum sentence of 10 years to life. He was indicted by a federal grand jury on June 18, 2013. Snyder is currently a fugitive in the case and a warrant for his arrest remains outstanding. A reward is available for information leading to Snyder’s arrest. Tips can be called in to 1-866-DHS-2-ICE (1-866-347-2423). All tipsters will remain anonymous.

2. Earl Butler Potter, 55, of Todd, N.C., is charged with a drug trafficking offense that carries a mandatory minimum sentence of 10 years to life in prison. He has been in custody since his arrest on July 11, 2012. He was indicted by a federal grand jury on June 18, 2013.

3. Stephanie Lynn Shatley, 31, of Lansing, N.C., is charged with a drug trafficking offense that carries a mandatory minimum sentence of 10 years to life in prison. Shatley was indicted by a federal grand jury on June 18, 2013. She is currently in state custody.

4. Jared William Pardue, 33, of Zionville, N.C., is charged with a drug trafficking offense that carries a mandatory minimum sentence of 10 years to life in prison. Pardue was indicted by a federal grand jury on June 18, 2013. He has been in federal custody on June 25, 2013.

5. Tawana M. Sparks, 31, of Hudson, N.C., is charged with a drug trafficking offense that carries a mandatory minimum sentence of 10 years to life in prison. She was indicted by a federal grand jury on June 18, 2013 and has been in federal custody since July 11, 2013.

6. Courtney Wayne Patterson, 28, of Todd, is charged with drug trafficking and firearms offenses that carry a mandatory minimum sentence of 15 years to life in prison. He has been in custody since his arrest on July 11, 2012, and was indicted by a federal grand jury on June 18, 2013.

7. Deborah Phillips Lewis, 36, of Todd, is charged with drug trafficking and firearms offenses which carry a mandatory minimum sentence of 15 years to life in prison. She has been in custody since her arrest on July 11, 2012, and was indicted by a federal grand jury on June 18, 2013.

8. James Foy Parsons, 45, of West Jefferson, N.C., is charged with a drug trafficking offense that carries a mandatory minimum sentence of 10 years to life. He has been in custody since his arrest on July 11, 2012. He was indicted by a federal grand jury on June 18, 2013.

9. Tina Ann Wheeler (a/k/a Tina Ann Miller), 38, of Crumpler, N.C., is charged with a drug trafficking offense that carries a mandatory minimum sentence of 10 years to life in prison. She has been in custody since her arrest on July 11, 2012. She was indicted by a federal grand jury on June 18, 2013.

10. Ricky Allen Latham, 32, of Creston, N.C., is charged with a drug trafficking offense that carries a mandatory minimum sentence of 10 years to life in prison. He was indicted by a federal grand jury on June 18, 2013, and is not yet in custody.

Three additional defendants facing federal drug charges are currently scheduled for trial:

• Mauricio “Mario” Baltazar, 20, of Lake City, Ga., is charged with four counts of drug trafficking and firearms offenses that carry a mandatory minimum sentence of 40 years to life in prison. Baltazar has been in custody since his arrest on April 23, 2013, and was indicted by a federal grand jury on May 22, 2013. His trial is set for July 2013.

• Kenneth Herman Bennett, 50, of West Jefferson, is charged with a drug trafficking offense that carries a mandatory minimum sentence of 20 years to life in prison. He has been in custody since his arrest on April 20, 2013. He was indicted by a federal grand jury on May 22, 2013. Bannett’s trial is set for July 2013.

• Martin Martinez Saldana, 43, of West Jefferson, is charged with drug trafficking and firearms offenses that carry a mandatory minimum sentence of 25 years to life in prison. Saldana has been in custody since his arrest and indictment on December 13, 2012, and has a September 2013 trial date.

The following 17 defendants have entered guilty pleas and are awaiting sentencing:

1. Jason Michael Benfield, 33, of Laurel Springs, N.C., pleaded guilty on June 6, 2013, to drug trafficking and firearm offenses that carry a mandatory minimum sentence of 15 years to life in prison. Benfield has been in custody since his arrest on March 22, 2013.

2. Ernest Monroe Parlier, Jr., 28, of Crumpler, pleaded guilty on May 16, 2013, to drug trafficking and firearm offenses that carry a mandatory minimum sentence of 15 years to life in prison. Parlier has been in custody since his arrest on March 21, 2013.

3. Jeremy Keith Nunnenkamp, 40, of North Wilkesboro, N.C., pleaded guilty on June 5, 2013, to a drug trafficking charge that carries a mandatory minimum sentence of 10 years to life in prison. He has been in custody since his arrest on April 20, 2013.

4. Jeffrey Dale Watson, 41, of Fleetwood, N.C., has agreed to plead guilty to a drug trafficking charge that carries a mandatory minimum sentence of 10 years to life in prison. Watson has been released on bond. A plea hearing date has not been set yet.

5. James Thomas Hawkins, 39, of Laurel Springs, N.C., has agreed to plead guilty to a drug trafficking charge which carries a mandatory minimum sentence of 10 years to life in prison. Hawkins has been released on bond since April 23, 2013. A plea hearing date has not been set yet.

6. Chad Morgan Yates, 38, of Chattahoochee Hills, Ga., pleaded guilty on May 17, 2013, to a drug trafficking charge which carries a mandatory minimum sentence of 10 years to life in prison. He is currently in federal custody.

7. Christy Lee Latham, 36, of Warrensville, N.C., pleaded guilty on June 19, 2013, to a drug trafficking charge that carries a mandatory minimum sentence of 10 years to life in prison. She has been in custody since entry of her guilty plea.

8. Melanie Virginia Osley, 37, of Chattahoochie Hills, Tenn., pleaded guilty on June 11, 2013, to a drug trafficking charge that carries a mandatory minimum sentence of 10 years to life in prison. Osley has been in custody on the federal charges since her arrest on March 21, 2013.

9. Luis Enrique Garcia, 46, of Mexico, pleaded guilty on February 4, 2013, to drug trafficking charge that carries a mandatory minimum sentence of 10 years to life in prison. Garcia has been in custody since his arrest on the federal charges on December 20, 2012.

10. Jose Francisco Jimenez Pina, 46, of Mexico, pleaded guilty on February 20, 2013, to a drug trafficking charge that carries a mandatory minimum sentence of 10 years to life in prison. He has been in custody since his arrest on the federal charges on December 13, 2012.

11. Jose Humberto Jimenez Pina, 25, of Mexico, pleaded guilty on February 20, 2013, to a drug trafficking charge that carries a mandatory minimum sentence of 10 years to life in prison. He has been in custody since his arrest on the federal charges on December 13, 2012.

12. Bobby Giles Shore, 59, of Lansing, pleaded guilty on February 22, 2013, to a drug trafficking charge that carries a mandatory minimum sentence of 10 years to life in prison. Shore has been in custody since his arrest on the federal charges on December 13, 2012.

13. Danny Eller, 53, of West Jefferson, pleaded guilty on April 16, 2013, to a drug trafficking charge that carries a mandatory minimum sentence of 10 years to life in prison. Eller has been in custody since his arrest on the federal charges on December 13, 2012.

14. Cristie Aldridge Dollar, 45, of Foscoe, N.C., pleaded guilty on April 3, 2013, to a drug trafficking charge that carries a mandatory minimum sentence of 10 years to life in prison. She has been in custody since her arrest on the federal charges on December 19, 2012.

15. Pamela Ann Corum, 31, of Zionville, pleaded guilty on February 13, 2013, to a drug trafficking charge that carries a mandatory minimum sentence of 10 years to life in prison. She has been in custody since her arrest on the federal charges on December 19, 2012.

16. Tammy Wynette Woody, 43, of West Jefferson, pleaded guilty on May 15, 2013, to a bill of information charging her with a single drug trafficking offense which carries a mandatory minimum sentence of 5 years to 40 years in prison. Woody has been in custody since her arrest on April 22, 2013.

17. Javier Sanchez Chavez, 32, of Mexico, pleaded guilty on March 21, 2013, to a charge of misprision of a felony, which carries a maximum sentence of 3 years in prison. He has been in custody since his arrest on the federal charges on December 20, 2012.

In making today’s announcement, U.S. Attorney Tompkins recognized the following federal, state and local agencies which partnered in Operation Dixie Crystal, and thanked them for their continued cooperation and support:

Brock D. Nicholson, Special Agent in Charge of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) in Georgia and the Carolinas; Harry S. Sommers, Special Agent in Charge of the Atlanta Field Division of the Drug Enforcement Administration (DEA), which oversees the Charlotte District Office; Wayne L. Dixie, Special Agent in Charge of the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), Charlotte Field Division; Greg McLeod, Director of the North Carolina State Bureau of Investigation (NC SBI); Sheriff James Williams of the Ashe County Sheriff’s Office; Sheriff David Edwards of the Allegheny County Sheriff’s Office; Chief Dana Crawford of the Boone Police Department; Sheriff Alan C. Jones of the Caldwell County Sheriff’s Office; Sheriff Len D. Hagaman of the Watauga County Sheriff’s Office; Sheriff Chris Shew of the Wilkes County Sheriff’s Office; and Sheriff Mike Reece of the Johnson County Sheriff’s Office in Tennessee.

The investigation is ongoing. The case is being prosecuted by Assistant U.S. Attorney Steven R. Kaufman of the U.S. Attorney’s Office in Charlotte.

Law Enforcement Shut Down Over 15 Methamphetamine Labs and Seized 5 Firearms

CHARLOTTE, N.C. – A criminal indictment charging 17 men and women with a large-scale methamphetamine trafficking conspiracy and related charges was unsealed in U.S. District Court on Wednesday, July 10, 2013, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. The federal indictment was returned by a grand jury sitting in Charlotte on June 19, 2013, and was unsealed following arrests of the named defendants by law enforcement on Tuesday, July 9, 2013.

The indictment is the result of a large-scale, multi-year joint federal and state investigation targeting the manufacture and distribution of methamphetamine in Western 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 McLeod, Director of the North Carolina State Bureau of Investigation (NC SBI); Sheriff Chris Shew of the Wilkes County Sheriff’s Office; Chief Monroe Wagoner of the Elkin Police Department; Sheriff David Edwards of the Allegheny County Sheriff’s Office; and Chief Joe Rankin of the North Wilkesboro Police Department.

The defendants were charged with conspiring to distribute, possess with the intent to distribute, and manufacture more than 500 grams of methamphetamine and possession of pseudoephedrine. Those named in the indictment are:

• Stoney Shew, 32, of Wilkes County.

• Tony Lee Blevins, 45, of Wilkes County.

• Daniel Lee Foster, 36, of Wilkes County.

• Stephen Franklin Wood, 35, of Wilkes County.

• Brannon Allen McManus, 37, of Wilkes County.

• Crystal Gail Gregory, 34, of Wilkes County.

• Chad Douglas Church, 36, of Wilkes County.

• Michael Combs, A/K/A MC Hammer, 43, of Wilkes County.

• Abby Wilmoth, A/K/A Abby Jones, 33, of Wilkes County.

• Stephen James Blankenship, 36, of Wilkes County.

• Larry Don Brown, 53, of Wilkes County.

• Misty Ann Fender, A/K/A Misty Fender Gilbreath, 31, of Alleghany County.

• Matthew Chad Lovette, 32, of Wilkes County.

• Brookelyn Michelle Miller, 21, of Wilkes County.

• Rikki Ann Osborne, 37, of Wilkes County.

• Tony Steven Steelman, 26, of Wilkes County.

• Frankie Wayne Blevins, 46, of Wilkes County.

All defendants, except Shew, are also charged with possession of materials to make methamphetamine. Tony Blevins, Foster, Wood, Church, Combs, Wilmoth, Blankenship, Brown, Fender, Lovette and Osborne are also charged with maintaining a drug-involved premises. Foster, Osborne, Blackenship, Fender, Miller, and Steelman are also charged with possession of firearms in furtherance of the drug conspiracy. All defendants named in the indictment are in custody except McManus, who remains a fugitive.

According to allegations contained in the indictment, in Wilkes and other counties in Western North Carolina, between January of 2009 and June 18, 2013, the defendants conspired with each other to manufacture, possess, and distribute methamphetamine and, in furtherance of the same, possessed and distributed pseudoephedrine. The indictment also lists other materials possessed by the defendants in furtherance of their scheme, including, but not limited to, Coleman fuel, coffee filters, lithium batteries, and two-litre plastic bottles used to manufacture methamphetamine. According to court records and statements made in court, law enforcement seized the items when they detected and shut down 15 different methamphetamine laboratories.

Those arrested will remain in custody pending their detention hearings, which have been scheduled for Monday, July 15, 2013. The methamphetamine conspiracy charge carries a mandatory minimum term of 10 years in prison and a maximum of life in prison and a $10 million fine. The possession of pseudoephedrine charge carries a term of imprisonment up to 20 years in prison and a $250,000 fine. The defendants charged with maintaining a drug-involved premises face a potential 20 year prison term and a $250,000 fine for each count. The defendants charged with possession of materials to make methamphetamine face a prison term of up to 20 years and a $250,000 fine for each count. The defendants charged with possession of a firearm in furtherance of a drug trafficking crime face an additional, consecutive five-year prison term.

Including the defendants in this indictment, a total of 49 individuals have been prosecuted to date on federal charges for their involvement in conspiracies to manufacture, possess, and distribute methamphetamine in Wilkes and other counties in Western North Carolina.

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

U.S. Attorney Tompkins thanked all of the law enforcement agencies involved in this investigation for their continued cooperation and assistance. The case is being prosecuted by Assistant United States Attorneys Ann Claire Phillips and Rebecca McNerney.

ASHEVILLE, N.C. – The U.S. Attorney’s Office, in conjunction with the U.S. Forest Service, today announced that Tyler Pace was sentenced to 90 days incarceration by United States Magistrate Judge Dennis Lee Howell for vandalizing parts of Max Patch, a scenic area in the Appalachian Ranger District, Pisgah National Forest North Carolina.

“This sentence sends a message to vandals that damaging our public lands will not be tolerated,” said United States Attorney Anne Tompkins.

Pace received the sentence during an appearance in U.S. District Court in Asheville on July 9, 2013. Prior to his sentencing hearing, Pace paid restitution for his share of the damage to Max Patch.

Pace was with a group of men who illegally drove vehicles in the Max Patch area in January 2013, causing more than $5,000 of damage to that scenic area. Pace facilitated that damage by tearing down the entrance gate and fence, thereby enabling the other persons to drive their vehicles into the protected area where vehicles are prohibited. Pace is 24 years old and a resident of Canton, North Carolina.

Max Patch sits next to the Tennessee state line in the Harmon Den area and is intersected by the Appalachian Trail. At 4,629 feet this bald offers 360-degree vistas of Mount Mitchell to the east and the Great Smoky Mountains to the southwest. An abundance of ferns and grasses blanket the area making it perfect for picnics.

The case was prosecuted by Assistant United States Attorney Richard Edwards.

CHARLOTTE, N.C. – On Monday, July 8, 2013, a Charlotte federal jury convicted Antonio Donte Smith, 29, of Charlotte, of robbing a Rite Aid pharmacy in September 2012 and related firearms violations, 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 Chief Rob Merchant of the Pineville Police Department (PPD) join U.S. Attorney Tompkins in making today’s announcement.

On January 15, 2013, Smith was indicted by a federal grand jury on one count of Hobbs Act Robbery, one count of possession of a firearm in furtherance of a crime of violence, and one count of possession of a firearm by a convicted felon. After nearly three days of trial, Smith was found guilty of all charges.

According to filed documents, evidence presented at trial and witness testimony:

On September 4, 2012, Smith entered a Rite Aid pharmacy located in Pineville, N.C. wearing a white hooded sweatshirt and a cut-off black tee-shirt sleeve across his face, and carrying a Ruger, .45 caliber pistol. Smith waited for a customer to leave the register counter, then pointed the firearm at the store clerk and demanded money from the cash register. The cashier opened the register and Smith took the money out of the drawer. While Smith was taking the money, a customer approached the register. Smith pointed his firearm at the customer, told the customer to get on his knees, and robbed the customer of his wallet. Smith then proceeded to the store’s office, where forced the store manager to give him all the money kept in the store’s safe.

Smith fled the scene, got into his get-away vehicle and led law enforcement officers on a high speed chase. After running two red lights and hitting another vehicle, Smith abandoned his damaged car and ran into a wooded area where he dropped the firearm, the white hooded sweatshirt, and the cloth he used as a mask. Police officers, assisted by the K-9 unit, tracked Smith who was hiding in a nearby apartment complex. Smith attempted to flee again at which time the K-9 handlers released the dog after Smith. Smith was apprehended by law enforcement, after he sustained a dog bite in his thigh. In the area where Smith was apprehended, officers found money and a receipt that belonged to the Rite Aid customer who Smith had robbed earlier.

At trial, the pharmacy customer Smith had robbed in the store testified that he was scared for his life during the robbery. Witnesses also testified that while Smith was in the office with the store manager, Smith pointed the firearm at her and began to count down from ten while she tried to open the safe. At trial, Smith claimed that it was his brother who had robbed the Rite Aid pharmacy.

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 that case, Smith robbed three Charlotte-area Eckerd Drugs and a KFC 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 and will remain in custody until his sentencing date, which has not yet been set. At sentencing, Smith faces a faces a minimum of 22 years and a maximum of life in prison, a $250,000 fine or both.

The case was investigated by ATF and PPD. The prosecution is being handled by Assistant U.S. Attorney Jennifer Dillon.

CHARLOTTE, N.C. – Chief U.S. District Judge Frank D. Whitney sentenced a Charlotte armed career criminal to 20 years in prison for firearms violations, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Shirley Ingram, Jr., a/k/a Rahim, 56, of Charlotte, was also sentenced to three years of supervised release following his prison term.

Wayne L. Dixie, Special Agent in Charge of the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), Charlotte Field Division, joins U.S. Attorney Tompkins in making today’s announcement.

In January 2011, following a four-day trial, a Charlotte jury convicted Ingram for possessing a firearm in furtherance of a drug trafficking crime and for being a felon in possession of a firearm. According to evidence presented at trial and yesterday’s sentencing hearing, on August 8, 2009, law enforcement responded to a 911 emergency call involving domestic violence. Court records indicate that when law enforcement arrived at the scene and while investigating the call, they discovered that Ingram had a Glock, Model 27, .40 caliber pistol in a cooler in the trunk of a 2003 BMW vehicle he was driving. Along with the pistol in the car, law enforcement also found marijuana residue and a digital scale. Ingram’s prior felony convictions prohibit him from carrying a firearm.

At sentencing, Ingram was deemed an armed career criminal and received an enhanced sentence. Ingram had been previously convicted of over 20 crimes, including second degree kidnapping; breaking, entering and larceny; assault on a female; and possession of controlled substances. Ingram had been previously deemed an armed career criminal in 1993 and was sentenced to 235 months in prison in U.S. District Court in Charlotte. In that case, Ingram was observed by a Charlotte police officer walking down a street in Charlotte carrying a shotgun, which was later found to be stolen.

“Ingram’s 20-year prison sentence was warranted given the facts of this case and his extensive criminal history. Protecting our community by taking violent repeat offenders off the streets remains one of the cornerstone functions of this office,” said U.S. Attorney Tompkins.

Ingram has been in federal custody in the Western District of North Carolina since his arrest in April of 2010. Upon designation of a federal facility, he will be transferred into the custody of the Federal Bureau of Prisons. Federal sentences are served without the possibility of parole.

The ATF, assisted by the Charlotte-Mecklenburg Police Department, handled the investigation, as part of ATF’s ongoing commitment to reduce violent crime and other threats to public safety. The prosecution was handled by Assistant U.S. Attorney Ann Claire Phillips, of the U.S. Attorney’s Office in Charlotte.

CHARLOTTE, N.C. – Three separate criminal indictments and a criminal complaint charging 30 men and women with conspiracy to distribute and to possess with intent to distribute synthetic drugs and related charges have been unsealed in U.S. District Court, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina.

The indictments and criminal complaint are the result of joint local, state and federal investigations into head shops operating in Mecklenburg, Buncombe, Henderson, Transylvania and Mitchell Counties. According to filed court documents and court proceedings, the head shops sold synthetic drugs, such as synthetic marijuana, commonly referred to as “K2” or “Spice” and/or synthetic cathinones, commonly referred to as “Bath Salts.”

The federal indictments and the criminal complaint remained sealed until the named defendants were arrested by law enforcement over a two-day period. (A list of each defendant’s individual charges and penalties is attached).

“Masking synthetic drugs with creative names and deceptive packaging does not change the fact that these substances are illegal, highly addictive and potentially deadly to those who use them. Whether such drugs are sold in Asheville, Spruce Pine or Charlotte, let it be known that the law enforcement community stands united in the fight against these harmful chemicals that wreak havoc in our communities and pose serious health risks, particularly among young people,” said U.S. Attorney Tompkins.

Harry S. Sommers, the Special Agent in Charge of the DEA Atlanta Field Division stated, “The rise of synthetic drug use in the United States alone has reached epidemic proportions and has resulted in a sustained rise in emergency room visits, deaths, and violence among teens and young adults. DEA and its law enforcement partners will continue to attack this issue aggressively. Many thanks to the joint efforts by all law enforcement personnel involved.”

“The sale of synthetic drugs has become a growing epidemic nationwide,” said Brock D. Nicholson, Special Agent in Charge of Homeland Security Investigations Atlanta, which oversees offices in North Carolina, South Carolina and Georgia. “These drugs are made from a variety of dangerous chemical compounds that are not meant for human consumption. These arrests send a clear message to synthetic drug distributors that HSI and our law enforcement partners will utilize every resource available to ensure these activities are thwarted.”

A criminal complaint charged the owners of High Life Smoke Shops and their co-conspirators with conspiracy to distribute and to possess with intent to distribute a quantity of a mixture and substance containing a detectable amount of synthetic cathinones. According to filed court documents, from the Spring of 2012 through the present, the co-conspirators sold synthetic marijuana and bath salts at six head shops throughout Charlotte and surrounding areas. The synthetic drugs were sold under brand names such as “Blue Kush, “Zombie Matter,” “Demon Free Ritual Sachet,” “Sonic Zero” and “Red Dragon.” At least two of the co-conspirators owned “Dark Matter, Inc.,” a company that manufactured synthetic substances containing “alpha-PVP,” which is a banned substance. Those drugs were labeled “Zumos,” “Velocity” and “Xantopia” and were marketed as dietary supplements sold at the head shops and over the internet, court records indicate. The defendants are:

• Sonia Sudhir Thaker, 35, of Charlotte.

• Imran Yaseen, 45, of Mooresville, N.C.

• Gautam Savla, 33, of Charlotte.

• Jeffrey B. Davies, II, 34, of Charlotte.

• Poojan Patel, 28, of Charlotte.

Court documents show that the drug conspirators stored and distributed the synthetic drugs from two Charlotte-area warehouses. Court records indicate that along with the illegal drugs, the co-conspirators stored at the warehouses other drug paraphernalia, such as glass pipes, which were also sold at the head shops.

“We have to protect our community, especially our youth, from being exposed to synthetic drugs in any way possible,” said Chief Rodney Monroe, Charlotte-Mecklenburg Police Department. “With regional operations, we’re sending a strong message that illegal activities like these will not be tolerated and thereby jeopardizing the well-being of our citizens.”

A criminal indictment charged the owner of the Octopus Garden Smoke Shops, seven store managers and seven employees with conspiracy to distribute and to possess with intent to distribute a quantity of a mixture and substance containing a detectable amount of synthetic marijuana and related charges. According to the indictment, the alleged conduct occurred between September 2011 and December 2012 in Buncombe, Henderson and Transylvania counties. The synthetic marijuana was sold at Octopus Gardens’ seven locations under brand names such as “Mind Eraser”, Caution-Chronic 20x”, “Crippler”, “Dead and Berry’d”, “Krypt Twilight Zone”, “Black Rain”, “Vesuvius”, “Bizzaro”, “Tales from the Krypt”, “Voo Doo Child”, “Zeus Gods of Aroma”, “F.U.B.A.R”, “7H Kush”, “O.G. Kush”, “O.G. Kush II”, “Avalanche”, “Hades”, “Gro-Hi”, “Poseiden”. “Head Hunter”, “Be Marley”, “Armageddon”, and “Defcon 5.” The named defendants are:

• Gregory Scott Casey, age 38, of Asheville, N.C.

• James Scott Covington, Jr., age 28, of Asheville.

• Patricia Davis, age 54, of Asheville.

• Richard William Delalio, Jr., age 31, of Asheville.

• George Coleman Freiberg, age 32, of Arden, N.C.

• Kristi Diane Key, age 41, of Asheville.

• Peter Andrew Kunza, age 26, of Weaverville, N.C.

• Gerald William Locklear, age 60, of Asheville.

• Muriel Annette Ring, age 32, of Maggie Valley, N.C.

• Zachary Adam Shuford, age 33, of East Flat Rock, N.C.

• Sidney David Tureff, age 85, of Asheville.

• Jeffery Shane Vendernick, age 44, of Asheville.

• Jessica Michelle Webb, age 27, of Candler, N.C.

• Timothy Gary Wilson, age 30, of Asheville.

All defendants except Delalio and Ring are also charged with selling or offering to sell drug paraphernalia, such as glass pipes, intended for use in inhaling a controlled substance. Casey and Locklear are also charged with money laundering. During the course of the investigation law enforcement seized over $700,000 in cash and 247 ounces of silver, four vehicles and drug paraphernalia. The indictment includes a notice of forfeiture, which gives notice that the defendants must forfeit to the United States all of the property, currency and monetary instruments involved in the offenses charged in the indictment, and all property, currency and monetary instruments which are proceeds of such offenses.

“We hope by pursuing these cases as well as the new synthetic drug law that will go into effect on July 1, 2013, we will be able to curtail the sale of these very dangerous substances,” stated Buncombe County Sheriff Van Duncan.

“I would like to commend all the agencies involved for their tireless work and cooperative efforts in disrupting the flow of synthetic drugs into the streets of Western North Carolina,” said Henderson County Sheriff Charles S. McDonald. “Anyone wishing to establish a ‘head shop’ or similar type of business should not look to Henderson County as a community where they will be welcome or overlooked by law enforcement,” Sheriff McDonald added.

“Synthetic marijuana has been a problem we have dealt with for some time. It has caused many problems for its users in Transylvania County. I appreciate the partnership we have enjoyed with HSI and the US Attorney's Office during this investigation. The results of this investigation demonstrate the success that great partnerships can bring and these results will make a big impact in Transylvania County,” said Transylvania County Sheriff David Mahoney.

The investigation into Octopus Garden was handled by the Department of Homeland Security (HSI), the Drug Enforcement Administration (DEA), the Henderson County Sheriff’s Office, the Buncombe County Sheriff’s Office, the Transylvania County Sheriff’s Office, the Buncombe County Anti-Crime Task Force, and the Transylvania County Narcotics Task Force.

A separate criminal indictment charged seven defendants with conspiracy to distribute and to possess with intent to distribute a quantity of a mixture and substance containing a detectable amount of synthetic cathinones and related charges. According to that indictment, the alleged conduct occurred in Mitchell and Mecklenburg Counties from July 2012 to May 2013. The Bath Salts were sold at Pandora’s Dreams head shop in Spruce Pine, N.C., under brand names such as “White Water Rapids”, “Snowman”, “Super Glass Cleaner”, “Anti Monkey Butt Powder”, “Dragon”, and “Bushman’s Repellant.” The named defendants are:

• Matt Davis, age 32, of Charlotte.

• Kelly Higgins, age 24, of Burnsville, N.C.

• John Newberry, age 40, of Spruce Pine, N.C.

• Albert Tomes, age 41, of Bakersville, N.C.

• Tina Tomes, age 43, of Bakersville.

• Kevin Vickers, age 22, of Bakersville.

• Lori Watts, age 46, of Spruce Pine.

Newberry, Watts, Albert Tomes and Tina Tomes are also charged with selling or offering to sell drug paraphernalia, such as glass pipes, intended for use in inhaling a controlled substance. Matt Davis and Tina Tomes are also charged with money laundering. The indictment includes a notice of forfeiture, which gives notice that the defendants must forfeit to the United States all of the property, currency and monetary instruments involved in the offenses charged in the indictment, and all property, currency and monetary instruments which are proceeds of such offenses, including over $45,000 in cash, a vehicle, and a firearm seized during the course of the investigation.

Mitchell County Sheriff Donald Street said, “I am very thankful for the assistance from the federal authorities on closing down these head shops. Our local head shop was creating a real nightmare for our county and was destroying many people’s lives along the way. The arrest of the individuals involved in these businesses will hopefully show them and others the consequences of selling these very dangerous substances. This investigation is perfect example of what can be accomplished when local, state and federal authorities work together to solve problems in our local communities.”

“Synthetic cathinones (bath salts) and synthetic cannabinoids are two of the most widely abused drugs in Yancey County. My office has seen a large increase in the number of users of these controlled substances over the past couple of years. I feel like this is directly related to the fact that these drugs were very easy to obtain in both Mitchell and Buncombe Counties. Also, typically users of these controlled substances had the impression that these substances were ‘legal’ to purchase and possess. I would like to thank everyone for their assistance in this investigation,” said Yancey County Sheriff Gary Banks.

The investigation into Pandora’s Dreams was handled by the DEA, the Mitchell County Sheriff’s Office, the Yancey County Sheriff’s Office and the Spruce Pine Police Department.

The third indictment filed in the Western District charged Scott Baddock, age 47, of Inman, S.C.; Isam Jaradat, age 40, of Mars Hill, N.C.; and Hermant Sahney, age 53, of Fletcher, N.C. with conspiracy to distribute and to possess with intent to distribute a quantity of a mixture and substance containing a detectable amount of synthetic cathinones and a quantity of a mixture and substance containing a detectable amount of synthetic marijuana. According to that indictment, the alleged conduct occurred in Buncombe and Henderson Counties between June 2012 and January 2013. The “Bath Salts” were sold at the Just Like That Smoke Shop in Weaverville, N.C. and elsewhere, under brand names such as “Snake Eyes”, “Eight Ballz”, “White Girl”, “White Angel”, “Ivory Wave Bath Salts”, Tran Quility Bath Salts”, “Diamond Dust”, “Loco Motion Bath Salts” and “Bang Bath Salts”. The “K2” was sold at Just Like That Smoke Shop and elsewhere, under brand names such as “Cool Beanz”, “Krypt”, “Purple Diesel Hydro”, “Nugz Hipnotic”, “Spectacular”, “Zero Gravity”, “Hydro Purple Haze”, “Mr. Nice”, “Zombie Breath”, “Super Kush”, “Mr. Kush”, “7H Hydro”, “Posh”, “K2 Super Kush”, “Route 69 Cherry”, “One Love”, “Smoke XXX”, “Woodstock”, “Platinum”, “Donkey”, “7H Kush 100% High”, “Diablo”, “Pure Evil”, “F.U.B.A.R.”, “Pure Fire”, and “Nightmare”.

Baddock and Jaradat are also charged with offering to sell drug paraphernalia, such as glass pipes, intended for use in inhaling a controlled substance. The indictment includes a notice of forfeiture, which gives notice that the defendants must forfeit to the United States all of the property, currency and monetary instruments involved in the offenses charged in the indictment, and all property, currency and monetary instruments which are proceeds of such offenses, including over $36,000 in cash, a vehicle, drug paraphernalia and three firearms seized during the course of the investigation.

The investigation was handled by HSI, the Buncombe County Anti-Crime Task Force, the Buncombe County Sheriff’s Office and the Henderson County Sheriff’s Office.

The defendants are scheduled to have initial appearances today in U.S. District Court in Charlotte. The charges contained in the indictments are allegations. The defendants are presumed innocent unless and until they proven guilty beyond a reasonable doubt in a court of law.

U.S. Attorney Tompkins thanked all the law enforcement agencies involved for their continued cooperation and assistance. The prosecution for the case is handled by Assistant U.S. Attorneys Dana Washington, Thomas Kent and Elizabeth Greene, of the U.S. Attorney’s Office in the Western District of North Carolina.

CHARLOTTE, N.C. – A former schoolteacher faces federal charges for orchestrating a Ponzi scheme that took over $1 million from investor victims, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. A criminal bill of information filed on Monday, June 24, 2013, in U.S. District Court charged C. David Wright, 52, of Iron Station, N.C. with one count of mail fraud in connection with the Ponzi scheme.

Greg McLeod, Director of the State Bureau of Investigation (SBI) and Keith Fixel, Inspector in Charge of the Charlotte Division of the U.S. Postal Inspection Service (USPIS) join U.S. Attorney Tompkins in making today’s announcement.

The filed criminal bill of information alleges that Wright engaged in a scheme and artifice to defraud victims by making a series of false and fraudulent representations, omissions of material facts and deceptive half-truths. According to information contained in the charging document, beginning in August 2008 and continuing through March 2013, Wright executed a Ponzi scheme by inducing victims to invest in a “Commodity Investment Group” based in Cherryville, N.C., which Wright purportedly managed. According to court documents on the record, Wright collected over $1 million from investor victims through false and fraudulent misrepresentations. Court records show that Wright lied to investors by promising a 20-30% return on their investments, over a short period of time, when Wright knew that this return was not possible. Wright also misled his victims by falsely representing to his victims that his Commodities Investment Group would invest money in hedge funds, commodities and Quick Trip stores. Court records indicate that Wright falsely told his victims that the Commodities Investment Group owned a significant number of Quick Trip gas stations and had even sold one for $1.6 million.

According to court records, Wright did not invest the over $1 million he collected from investor victims as promised. Instead, Wright used the money to make Ponzi style payments to other victims and to fund his personal lifestyle, according to court records. In some instances, as filed documents show, Wright took a large percentage of victim money immediately upon the initial deposit. Court records show that Wright was known to carry a significant amount of cash in a black duffel bag. Court records also show that Wright required many victims to invest by cashier’s check. Many local victims would invest by meeting Wright in a parking lot in Cherryville, while out-of-state victims would mail money for investment to Wright’s post office box in Cherryville. According to court documents, over $500,000 in principle owed to the victims has been misappropriated by Wright, and as of March 2013, Wright had less than $1,000 left of the investors’ fund. Wright has agreed to plead guilty to the mail fraud charge.

Wright’s initial appearance and plea hearing have not been set yet by the Court. At sentencing, Wright faces a maximum of 20 years in prison and a $250,000 fine. As part of his plea agreement, Wright has agreed to pay full restitution to his victims, the amount of which will be determined by the Court at sentencing.

In a related action, yesterday the Commodities Futures Trading Commission (CFTC) also filed a civil enforcement action against Wright.

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

The case was investigated by USPIS and SBI. U.S. Attorney Tompkins also acknowledged the invaluable assistance of CFTC in this case.

The prosecution is being handled by Assistant U.S. Attorney Kurt W. Meyers of the Western District of North Carolina.

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 www.stopfraud.gov.

Former Chief “Woody” Burgess Has Agreed To Plead Guilty

CHARLOTTE, N.C. – The former Police Chief for the City of Cherryville has been charged with one count of program embezzlement, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Woodrow Paul Burgess “Woody Burgess,” 60, of Cherryville, N.C. has agreed to plead guilty to the charge.

John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division and Greg McLeod, Director of the State Bureau of Investigation (NC SBI) join U.S. Attorney Tompkins in making today’s announcement.

According to the criminal bill of information and plea agreement filed today in U.S. District Court, Burgess was the Chief of Police for the City of Cherryville until his retirement in October 2012. During the relevant time period, Bonny Alexander, was Cherryville’s Finance Director, and had authority to process payroll payments to Cherryville employees, direct payments for city expenses and issue checks on behalf of the city. According to court records and the filed plea agreement, Burgess embezzled and caused Alexander to embezzle approximately $11,048 of the city’s funds. Court records show that beginning in January 2007 through November 2008, Burgess instructed Alexander to issue approximately nine Cherryville city checks payable to “The Great Outdoors, Inc.” for the purchase of firearms for Burgess’ personal use. According to the charging document, Burgess told Alexander that the checks and the expenditure of the City’s funds for personal use had been authorized as a “cash-out” for “compensatory time.” Court records indicate that Alexander issued the checks as requested by Burgess and placed entries in the City’s accounting records that the expenditures were for a certain amount of “sick time” or “comp time” due to “Woody.” According to court documents, Burgess was aware that he was not entitled to cash payments for sick or vacation leave or compensatory time. In addition, Burgess knew that no hours were deducted from his sick or vacation leave balances for the City’s purchase of guns for his personal use.

The bill of information contains a notice of forfeiture, which gives notice that the defendant must forfeit to the United States all property and currency involved in the offense charged in the charging document, and all property and currency which are proceeds of such offense, including approximately $8,490 in cash, and three firearms seized during the course of the investigation.

“Woody Burgess was sworn to uphold the law but instead thought he was above the law. While prosecuting a law enforcement officer is always difficult, my Office will not allow the likes of Woody Burgess to dishonor the uniform proudly worn by all other Cherryville police officers who are dedicated to serving and protecting their community,” said U.S. Attorney Tompkins.

“It is both disappointing and disheartening to learn a senior law enforcement officer took advantage of his trusted position for his own profit. Public corruption is the number one criminal priority of the FBI and we will continue to work aggressively to hold public officials of all levels accountable, especially those who erode the public’s trust in those who have sworn to protect and serve others,” said Special Agent in Charge John A. Strong, of the FBI in Charlotte.

“Our agents are dedicated to finding the truth and bringing criminals to justice, and this case is an excellent example of the work that they do,” said SBI Director Greg McLeod. “We’ll continue our efforts to solve crime, root out public corruption, and protect the people of North Carolina.”

Burgess has agreed to plead guilty to one count of program embezzlement, which carries a maximum sentence of 10 years in prison, a $250,000 fine, or both. Burgess’ initial appearance and plea hearing have been set for Tuesday, June 25, 2013, at 2:00 p.m. According to the filed plea agreement, Burgess has also agreed to pay full restitution the amount of which will be determined by the Court at sentencing.

In January 2013, Alexander pleaded guilty to five counts of program embezzlement for stealing over $435,000 from the City of Cherryville. She faces a maximum term of 10 years in prison and a $250,000 fine per count. A sentencing date for Alexander has not been set yet.

The investigation is handled by the FBI and SBI. The prosecution is handled by Michael Savage, of the U.S. Attorney’s Office in Charlotte.

More Than 25 Defendants Face Tribal And State Drug Charges

ASHEVILLE, N.C. – A criminal indictment charging seven defendants with drug trafficking conspiracy and related charges was unsealed today in U.S. District court, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. The federal indictment was returned by a grand jury sitting in Asheville on June 4, 2013, and remained sealed until today, following yesterday’s arrests of the named defendants by law enforcement.

U.S. Attorney Tompkins is joined in making today’s announcement by Harry S. Sommers, Special Agent in Charge of the Atlanta Field Division of the Drug Enforcement Administration (DEA), which oversees the Charlotte District Office; Jason O’Neal, Deputy Associate Director of the Bureau of Indian Affairs, Division of Drug Enforcement; Wayne L. Dixie, Special Agent in Charge of the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), Charlotte Field Division; 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; Sheriff Greg Christopher of the Haywood County Sheriff’s Office; and Sheriff Jimmy Ashe of the Jackson County Sheriff’s Office.

The indictment is the result of a large scale two-year joint federal, tribal and state investigation targeting the distribution of narcotics, with a focus on prescription drugs, on and around the Cherokee Indian Reservation.

The defendants named in the indictment are charged with one count of conspiracy to possess with intent to distribute controlled substances, including oxycodone, cocaine, marijuana and alprazolam. According to the indictment, the alleged conduct took place between January 2007 and December 2012 in Swain and Jackson Counties. Those charged are:

• Jackie Lee Rattler, 54, of Cherokee, N.C.

• Jacob Hunter Rattler, 21, of Cherokee.

• Evan Thomas Norris, Jr., 54, of Robbinsville, N.C.

• Taryn Krista Elizabeth Toineeta Rattler, 25, of Cherokee.

• Timothy Leroy Rattler, 50, of Cherokee.

• Justina Nacole Rattler, 31, of Cherokee.

• Mark Allen Winstead, 26, of Cherokee.

Jackie Lee Rattler also faces six additional counts of possession with intent to distribute controlled substances, and one count of being a controlled substance user in possession of firearms. Jacob Hunter Rattler is also charged with one additional count of possession with intent to distribute a controlled substance.

The indictment includes a notice of forfeiture, which gives notice that the defendants must forfeit to the United States all of the property and currency involved in the offenses charged in the indictment, and all property and currency which are proceeds of such offenses, including approximately $48,900 in cash, 44 firearms, three vehicles and two Harley Davidson motorcycles seized during the course of the investigation.

Six of the seven defendants charged in the indictment are in custody. Taryn Rattler remains a fugitive. Those arrested will remain in custody pending their detention hearings, which have been scheduled for Friday, June 21, 2013. Each drug offense carries a maximum prison term of 20 years, a $1 million fine, or both. The user of narcotics in possession of firearms offense carries a maximum prison term of 10 years, a $250,000 fine, or both.

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

Tribal and state law enforcement officers have arrested and charged more than 25 defendants on tribal and state drug offenses.

Those facing tribal drug charges are: Deborah Smith, Charles Taylor, Austin Gunter, Humberto Corral, Deanna Smith (not arrested), Kevin Smith, Shenna Crowe, Lisa Toineeta, Sam Thompson, Mike Walkingstick (not arrested), Annie Cucumber, Robert Tramper, Ashley Keel (not arrested), Chadwick Feather, Walter Bradley, Thomas Rickman, Victoria Cucumber (not arrested), Delores Cabrera, Sally Bryson, Raymond Whitecotton, Rachel Taylor and Regan Parton.

Those facing state drug charges are: Alea Ohmart, James Murphy, Ceegee Bird (not arrested), Clyde Taylor, Rogelio Cabrera, Eric Dossett, Anthony Dossett (not arrested), Frankie Dyer and Christin Hodgins (Not arresged).

U.S. Attorney Tompkins thanked all the law enforcement agencies involved in this investigation for their continued cooperation and assistance. The prosecution for the case is handled by Special Assistant U.S. Attorney John Pritchard, of the U.S. Attorney’s Office in Asheville.

CHARLOTTE, N.C. – Chief U.S. District Court Judge Frank D. Whitney sentenced a Charlotte woman on Tuesday, June 18, 2103, to serve 60 months in prison and two years under court supervision for defrauding Medicaid of $650,000, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Charlotte Elizabeth Garnes, 39, of Charlotte, was also ordered to pay $792,184.52 in restitution.

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 Derrick Jackson, Special Agent in Charge, Department of Health and Human Services, Office of the Inspector General (HHS-OIG), Office of Investigations, Atlanta Region.

In sentencing the defendant, Judge Whitney emphasized that the crime had numerous victims, including not only the federal and state governments who fund Medicaid, but also the children and patients whose names and identities were stolen. Judge Whitney observed, “Now they have medical records out there that are outright fraudulent” and noted that the defendant and her co-conspirators not only stole from the taxpayers “but also harm[ed] young men and young women.”

In February 2013, a Charlotte jury convicted Garnes of health care fraud conspiracy, obstruction of official proceedings and false statements relating to health care matters. According to evidence presented at trial and yesterday’s sentencing hearing, Garnes was a Licensed Professional Counselor approved by Medicaid to provide mental and behavioral health services to qualified individuals. Trial evidence established that Garnes claimed to have personally provided mental health services to Medicaid recipients when in fact she did not. Evidence showed that Garnes conspired with others to permit unqualified individuals to submit claims to Medicaid under Garnes’ Medicaid number for therapy services purportedly provided by those individuals. In reality, most of the services were never provided. At Garnes’ trial numerous Medicaid recipients or their parents testified that they or their children never received the therapy services Garnes claimed to have provided.

According to trial evidence, Garnes kept 30% of the paid out Medicaid reimbursements and distributed the remainder to her co-conspirators. From March 2009 to April 2011, Medicaid paid Garnes and her company, Charlotte’s Insight, Inc., approximately $740,349, and approximately 90% of that amount ($666,062) was based upon false claims for services that Garnes did not provide. During trial, the government established that for many of the claimed dates of services Garnes was outside of the country, including in Germany, working on a government contract. The evidence also established that Garnes routinely billed for more than 24 hours of therapy services in a single day, including providing 69 hours of individual therapy services in a single day in December 2009.

Trial evidence demonstrated that Garnes used the fraud proceeds to purchase a Mercedes-Benz vehicle and plastic surgery.

In making today’s announcement, U.S. Attorney Tompkins stated, “Garnes’ first mistake was to steal from Medicaid. Her second mistake was to think she would not get caught. Today’s sentence is a stark warning to those who believe that committing healthcare fraud will not land them in prison. Our District’s Health Care Fraud Task Force consists of a team of determined prosecutors and investigators committed to going after anyone who steals money from taxpayer supported programs put in place to cover the medical needs of needy North Carolinians.”

“Our attorneys and investigators are working closely with our federal partners to find Medicaid violators and make them pay,” Attorney General Roy Cooper said. “Medicaid fraud wastes taxpayers’ money, squanders funds that should go to needed care, and drives up health care costs for everyone. Cases like this one will help discourage other health care providers from cheating.”

Following the sentencing hearing, Garnes was remanded to the custody of the U.S. Marshals Service. She will be transferred into 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 HHS-OIG and MID. The prosecution of the case is handled by Assistant U.S. Attorneys Kelli Ferry and Jenny Grus Sugar 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. To report Medicaid fraud in North Carolina, call the North Carolina Medicaid Investigations Division at 919-881-2320.

CHARLOTTE, N.C. – Miguel Eduardo Silva, 20, of Charlotte, was sentenced on Tuesday, June 18, 2013, by U.S. District Judge Max O. Cogburn, Jr. to serve 127 months in prison, to be followed by three years of supervised release for drug trafficking and firearms offenses, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina.

Brock D. Nicholson, Special Agent in Charge of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) in Georgia and the Carolinas and Chief Rodney Monroe of the Charlotte-Mecklenburg Police Department (CMPD) join U.S. Attorney Tompkins in making today’s announcement.

In April 2012, a superseding criminal indictment charged Silva with one count of possession with intent to distribute marijuana, one count of attempt to distribute marijuana and one count of use of a firearm in furtherance of such drug trafficking crimes. According to evidence presented at Silva’s trial and yesterday’s sentencing hearing, Silva had arranged a drug deal involving the sale of $60 worth of marijuana to a buyer. Trial evidence established that on the evening of October 3, 2011, the defendant and the buyer met at the parking lot of an apartment complex in Charlotte. The buyer got into the rear seat of Silva’s vehicle, but instead of purchasing the marijuana, the buyer attempted to rob at gunpoint Silva and another front seat passenger of their drugs and money. Court records show that in response, Silva pulled a handgun and shot and killed the buyer. A federal jury convicted Silva on all counts, in September 2012.

In sentencing Silva, Judge Cogburn acknowledged the inherent danger that exists whenever guns and drugs are intertwined.

Silva has been in federal custody in the Western District of North Carolina since his arrest in January of 2012. Upon designation of a federal facility, he will be transferred into the custody of the Federal Bureau of Prisons. Federal sentences are served without the possibility of parole.

The federal investigation was led by HSI with the assistance of CMPD. The prosecution for the government was handled by Assistant U.S. Attorney J. George Guise of the U.S. Attorney’s Office in Charlotte.