Northern District of New York

ALBANY, N.Y. — Ronald L. Simons, 58, of Vestal, New York, was sentenced today to one year probation and ordered to pay a $5,000 fine by United States Magistrate Judge Christian F. Hummel, announced United States Attorney Richard S. Hartunian, Special-Agent-in-Charge Toni M. Weirauch of the Internal Revenue Service, Criminal Investigation, New York Field Office, and Andrew W. Vale, Special Agent-in-Charge, Federal Bureau of Investigation, Albany Division. The sentencing follows Simons’ November 8, 2011 guilty plea.

In October 2007, Simons, a certified public accountant and partner in the accounting firm of Piaker & Lyons in Binghamton, New York, submitted a false 2006 income tax return on behalf of David L. and Lynn A. Smith. David L. Smith is a former owner of the Albany broker-dealer McGinn, Smith & Co., Inc., and was convicted of conspiracy to commit mail and wire fraud, mail fraud, wire fraud, securities fraud, and filing false tax returns on February 6, 2013 following a fourweek jury trial.

The return, prepared and submitted to the Internal Revenue Service by Simons, did not report $407,000 in fees distributed to David L. Smith from TDM Funding LLC in 2006. Simons reclassified the $407,000 as loans despite knowing that the McGinn Smith controller initially booked the $407,000 as fees and that David L. Smith previously characterized the majority of the $407,000 as fees.

This case was investigated by the Internal Revenue Service, Criminal Investigation and the Federal Bureau of Investigation. This case was prosecuted by Assistant United States Attorneys Elizabeth C. Coombe, Richard D. Belliss, and Wayne A. Myers.

LOCAL CONTACT: Elizabeth C. Coombe
Assistant U.S. Attorney
Tel: (518) 431-0247

RICHARD S. HARTUNIAN, United States Attorney for the Northern District of New York, announced that yesterday TERRY DUNLAP., age 28, of Norfolk, Virginia, was sentenced in U.S. District Court in Utica to serve a 16 month term of imprisonment followed by two years of supervised release following his guilty plea to unlawful sale of a firearm to an unauthorized person. Dunlap pled guilty to selling an Iberia Arms .40 caliber semiautomatic pistol on the street in Watertown, New York to an unknown person in August 2007. The pistol was recovered by Syracuse Police during a vehicle stop on September 27, 2007. A trace of the pistol’s serial number led ATF Special Agents in Virginia to interview Dunlap, the pistol’s last known owner. Dunlap initially falsely claimed to Norfolk ATF Agents, that he was still in possession of the firearm. Dunlap subsequently admitted that he sold the firearm in August 2007 to an unknown person in Watertown. Still later, Dunalp admitted to selling a second pistol to an unknown person in Syracuse, New York in October 2007.

This case was investigated by the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives (“ATF”) Field Offices in Syracuse, New York and Norfolk, Virginia. Assistance was also provided by the Syracuse Police Department. The case was prosecuted by Assistant U.S. Attorney Richard R. Southwick.

Defendant Who Received Multiple Still Images and Videos of Child Pornography Sentenced to 96 Months in Prison

Albany, New York — WAYNE L. CONRAD, JR., age 47, of Ganesvoort, New York, was sentenced today by United States District Court Judge Mae A. D’Agostino, in Albany to ninety-six (96) months of imprisonment for receiving child pornography images, announced United States Attorney Richard S. Hartunian, Andrew W. Vale, Special Agent-in-Charge, Federal Bureau of Investigation, Albany Division, and Joseph D’Amico, Superintendent of New York State Police. CONRAD, who had entered a guilty plea on October 15, 2012, was also ordered to have no unsupervised contact with minors and to register with the New York State Sex Offender Registry Program.

Between May 2007 and February 1, 2012, CONRAD used the Internet to access various child pornography websites and various file sharing networks. While accessing some of the child pornography websites or file sharing networks, CONRAD downloaded multiple still images and videos of child pornography onto his home computer and external hard drives.

This case was investigated by the Federal Bureau of Investigation and the New York State Police.

LOCAL CONTACT: Rick Belliss
Assistant U.S. Attorney
Tel: (518) 431-0247

RICHARD S. HARTUNIAN, United States Attorney, Northern District of New York, announces that a three-count Indictment was returned today in United States District Court charging TERRELL WRIGHT, age 28, of Syracuse, with: (1) assaulting two detectives from the Syracuse Gang Violence Task Force (“GVTF”) (Count One); (2) use and carry of a handgun during the assault (Count Two); and (3) being a convicted felon in possession of a handgun (Count Three).1

The charges arose from an incident on December 18, 2012 in which WRIGHT pulled a handgun from his waistband and pointed it at two Syracuse Police detectives from the GVTF. WRIGHT then fled the scene and was apprehended minutes later. The gun used in the assault - a loaded .40 caliber semi-automatic handgun - was recovered.

If convicted of these crimes WRIGHT faces the following penalties:

Count One: Up to 20 years imprisonment, followed by three years of supervised release, and up to a $250,000 fine;

Count Two: At least seven years imprisonment that must run consecutive to any sentence on Counts One and Three, followed by three years of supervised release, and up to a $250,000 fine;

Count Three: Up to 10 years imprisonment, followed by three years of supervised release, and up to a $250,000 fine;

Further questions or inquiries may be directed to Assistant U.S. Attorney John M. Katko, who is prosecuting the case, at (315) 448-0672.

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1The charges are merely accusations and the defendant is presumed innocent until and unless proven guilty.

RICHARD S. HARTUNIAN, United States Attorney for the Northern District of New York, and KEVIN NILAND, Inspector in Charge, Boston Division of the U.S. Postal Inspection Service, announced that yesterday and today six members of a stolen mail/counterfeit check cashing ring pled guilty in Federal Court in Syracuse. Yesterday, Jamaine L. Ryder, 37, of Charlotte, NC; Wallik Ryer, 37, of Oswego, NY; Diana Sacco, 29, of Fulton, NY; Timothy Matthew Johnson, 37, of Syracuse, NY and Charles Koflan, 55, of Pennelville, NY, all entered pleas to conspiracy to commit mail fraud and commission of mail fraud in U.S. District Court in Syracuse. A sixth man, Peter Napolitano, 27, of North Syracuse, N.Y. pled guilty today to conspiracy to commit mail fraud and possession of stolen mail. Jamaine Ryder, Wallik Ryer, and Peter Napolitano will be sentenced on June 17, 2013. Diana Sacco, Timothy Matthew Johnson, and Charles Koflan will be sentenced on June 19, 2013 in Syracuse, NY. They face sentences of up to thirty years imprisonment and fines of up to a million dollars for these federal felony offenses.

Three other defendants have previously pled guilty and are awaiting sentencing. Arcenio Sepulveda, 46, of Syracuse, NY, pled guilty to the same offenses on October 16, 2012 and will be sentenced on March 26, 2013 in Syracuse, NY. Warren G. Johnson pled guilty on December 13, 2012 and will be sentenced on April 17, 2013. Marsha O’Berry pled guilty on November 1, 2011 and will be sentenced on March 27, 2013.

An additional defendant, Donald Ryder, 33, of Charlotte, North Carolina was sentenced on January 17, 2013 to serve 46 months imprisonment, followed by five years of supervised release and restitution in the amount of $101, 071.18.

The ring, based in Charlotte, North Carolina, obtained stolen corporate checks from the mail boxes of local businesses in Syracuse, Binghamton and Oswego. The leaders of the group recruited homeless people, drug addicts and others to cash the stolen checks in return for a small portion of the proceeds. The stolen checks were altered to show the check casher’s names as the payees. On November 29, 2010 Syracuse based Postal Inspectors followed members of the ring as they cashed stolen checks at banks in Dewitt. When Postal Inspectors and Dewitt Police moved in to make a traffic stop, a high speed chase ensued through Dewitt during which $18,000.00 was thrown from a vehicle driven by Donald Ryder and occupied by Wallik Ryer as a passenger. The money was recovered by police. The conspiracy operated from November 2010 through June 2011 in Binghamton, Syracuse, and Oswego, New York and resulted in the passing of counterfeit checks worth $141,008.09.

This case was investigated by United States Postal Inspectors from Syracuse, New York and Charlotte, North Carolina. They were assisted in the investigation by Police Departments from the Town of Dewitt and the Village of East Syracuse. The case was prosecuted by Assistant U.S. Attorney Richard R. Southwick.

RICHARD S. HARTUNIAN, United States Attorney, Northern District of New York announces that KAREEM HIGHSMITH (37, of Syracuse, New York) entered a guilty plea to an indictment charging him with access device fraud, in violation of Title 18, United States Code, Section 1029(a)(1), and aggravated identity theft, in violation of Title 18, United States Code, Section 1028A. KAREEM HIGHSMITH also entered a guilty plea to a separate indictment charging him with being a convicted felon in possession of a firearm, in violation of Title 18, United States Code, Section 922(g)(1).

On June 13, 2011, KAREEM HIGHSMITH used a counterfeit access device to make purchases at Wegmans in Fayetteville, New York, and at Price Chopper in Syracuse, New York. Specifically, HIGHSMITH used a counterfeit credit card to make purchases using a re-encoded card issued to another person by American Express. Between June 9, 2011 and June 13, 2011, HIGHSMITH used this counterfeit credit card to make purchases totaling approximately $5,000.00 in the Syracuse area. On February 13, 2012, HIGHSMITH possessed on his computer at his residence 399 credit card account numbers that belonged to other persons. The defendant also possessed at his residence equipment used to manufacture counterfeit credit cards and a Kimber .45 caliber pistol.

The defendant is facing a statutory maximum sentence of 10 years imprisonment, a mandatory minimum term of imprisonment of 2 years, a term of supervised release of up to 3 years, and a maximum fine of $250,000.00. The sentencing is scheduled for June 17, 2013 in Syracuse, NY.

These arrests followed a lengthy investigation conducted by the United States Secret Service, Syracuse Resident Office, the Syracuse Police Department, the New York State Police, and the Manlius Police Department. The case is being prosecuted by Assistant United States Attorney Ransom P. Reynolds. Further questions may be directed to Executive Assistant U.S. Attorney John Duncan at (315) 448-0672.

United States Attorney Richard S. Hartunian announced today that a Utica woman has been sentenced for her role in an insurance and health care fraud scheme.

Today CYNTHIA MORGAN, age 54, was sentenced by United States District Court Judge Norman A. Mordue in Syracuse. MORGAN was sentenced to 27 months imprisonment and ordered to pay restitution in an amount exceeding $1.4 million. MORGAN will also serve three years of supervision following her release from incarceration. She was remanded to prison immediately following sentencing.

MORGAN pled guilty on August 23, 2012 to conspiracy to commit mail and health care fraud. MORGAN admitted that in or about 2005 she agreed with Joseph Demme, Joseph Dellerba, Michael Matrulli and her husband David Morgan to participate in an insurance and health care fraud scheme. The scheme involved a staged motor vehicle accident on Harbor Lock Road in Utica on March 20, 2006. On that date, MORGAN claimed to have been driving a Ford van which was struck by a Ryder truck driven by Matrulli. In fact, the collision was staged and MORGAN was not injured. The defendant, however, claimed to have been injured as a result of the accident and submitted false insurance claims, including claims for personal injuries, no fault benefits and disability benefits. MORGAN sought medical treatment for non-existent injuries or injuries that were not related to the collision. The bills for this medical care were submitted to and paid by a health care benefit program, specifically an insurance policy issued by Progressive Insurance Company. MORGAN collected $108,000 from Mutual of Omaha under a disability policy with that company. MORGAN also commenced a civil lawsuit seeking damages for personal injuries sustained in the accident. She received a payment of $30,000 to settle that suit.

The case was investigated by the Federal Bureau of Investigation and the New York State Insurance Frauds Bureau. The case was prosecuted by Assistant United States Attorney Edward R. Broton.

Albany New York--RICHARD S. HARTUNIAN, United States Attorney, Northern District of New York, announces that Dr. WAYNE D. LONGMORE, age 63, of Woodstock, New York, was sentenced on February 7, 2013, in Albany by the Honorable Lawrence E. Kahn, United States District Court Judge, to 6 months home detention, 3 years probation, 200 hours of community service, and ordered to forfeit his New York State medical license, and his DEA license to issue narcotic drugs. In addition to these penalties Dr. Longmore was ordered to pay a $200,000 money judgment which represents proceeds of his drug trafficking activities.

Dr. Longmore previously pled guilty on October 17, 2012, to a felony Information that charged him with knowingly and intentionally distributing and dispensing and possessing with intent to distribute and dispense hydrocodone, a Schedule III controlled substance, without a legitimate medical purpose and outside the usual course of professional practice, contrary to Title 21, United States Code, Sections 841(a)(1) and (b)(1)(E) and Title 21, Code of Federal Regulations, Section 1306.04.

The Plea Agreement states that:

(1) From in or around November 3, 2011, through on or about March 21, 2012, in the Northern District of New York and elsewhere, LONGMORE did knowingly and intentionally distribute and dispense and possess with intent to distribute and dispense hydrocodone, a Schedule III controlled substance, without a legitimate medical purpose and outside the usual course of professional practice.

(2) In order to earn illicit profits from his medical practice, LONGMORE wrote and issued unlawful prescriptions to individuals for drugs containing controlled substances without a legitimate medical purpose and outside the usual course of professional practice.

(3) Longmore wrote these prescriptions in return for $60 cash payments. Longmore would write the illicit prescriptions for only a 7 day period.

(4) Contrary to accepted medical practice, LONGMORE prescribed Schedule III controlled substances to individuals at their first appointment with him and without conducting a thorough

Syracuse, NY—United States Attorney Richard S. Hartunian announced that four individuals entered guilty pleas yesterday in U.S. District Court in Syracuse to conspiring to distribute a controlled substance analogue, known on the street as “Molly.” The pleas were in connection with a large scale drug trafficking conspiracy, based in Central New York, that involved twenty-two coconspirators located in New York, California, Texas, Virginia and the Peoples Republic of China. Yesterday’s proceedings brings the number of defendants entering guilty pleas to sixteen. Five remaining defendants are scheduled to go on trial on April 29th in Syracuse. One defendant, Lei Zhang, a.k.a., Eric Chang, remains a fugitive.1

Appearing before U.S. District Judge, Glenn T. Suddaby, WILLIAM HARPER (age 54) of Syracuse, NY, CHARLES DEMOTT, JR. (age 45) of Liverpool, NY, and MARY OOTGAMBUZZA, (age 45), of East Syracuse, NY, and JON RADWAY, (age 33) of Pompey, NY, admitted to conspiring to distribute 4-Methylmethcathinone (4-MMC) and 4-Methyl-NEthylcathinone (4-MEC), often referred to as “Molly.” 4-MMC and 4-MEC are controlled substance analogues of a Schedule I controlled substance also referred to, on the street, as ‘Bath Salts’. HARPER also entered a guilty plea to money laundering, a federal felony, in admitting that he wired $2700 from a Bank of America account in the name of Orange Line Gallery, Ltd. to CEC Limited, in Shanghai, China to pay for a quantity of “Molly”.

At sentencing, each defendant faces a term of imprisonment of up to twenty (20) years, up to a $1 million fine, and at least three (3) years of supervised release following any period of incarceration. Sentencings are scheduled for August, 2013.

These prosecutions resulted from an investigation first undertaken in the spring of 2009 by the Syracuse Resident Office of the Drug Enforcement Administration (DEA), the Onondaga County Sheriff’s Office, the Syracuse Police Department, Immigration and Customs Enforcement, the Onondaga County District Attorney’s Office, the United States Marshals Service, the New York State Police, and the United States Attorney’s Office for the Northern District of New York. The investigation, which included wiretaps revealed that this “Molly” trafficking organization was responsible for the distribution of over one hundred (100) kilograms of “Molly” during the course of the conspiracy from January 2010 through April 2011. The “Molly,” believed to be manufactured in factories in China, was shipped to distributors in the Syracuse area, as well as other areas in the United States.

The case is being prosecuted by Assistant U.S. Attorneys Carla Freedman and John Duncan. Further questions or inquiries may be directed to Executive Assistant United States Attorney John Duncan at (315) 448-0672.

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1As to these defendants, the charges are mere allegations and the defendants are presumed innocent unless and until proven guilty in a court of law. - 2 -

RICHARD S. HARTUNIAN, United States Attorney, Northern District of New York, announces that DONALD JOHNSON, JR., age 25, of Syracuse, pled guilty this morning in U.S. District Court in Syracuse to an indictment which charged him and ten others with conspiring to exploit their membership in the V-NOT Gang to engage in a pattern of racketeering activity which included acts of murder, attempted murder, drug trafficking, and robbery. JOHNSON is the fifth defendant to plead guilty in this case. The case against six co-defendants remains pending.1

At sentencing, JOHNSON faces up to life imprisonment, a $250,000 fine, and three years of supervised release following any period of incarceration. The Indictment to which JOHNSON pled alleges that from at least 2003 through May 2012 members of the V-Not Gang: (1) maintained a specific geographic territory within the City of Syracuse in which only gang members can sell crack cocaine and marijuana; (2) protected that exclusive crack distribution territory with violence; (3) obtained drugs from various suppliers; (4) projected a very violent attitude and responded to violence with violence in order to preserve their stature in the gang community; (5) used graffiti, hand signs, and tributes on their clothing to slain gang members to signify their gang membership; (6) used criteria such as a willingness to use violence, ability to sell drugs, and familial connections to determine membership; and (7) routinely carried and used firearms in connection with their gang activity.

There are multiple acts of violence and drug distribution set forth in the Indictment, including 1 murder, 10 other shootings, 8 other acts of gun possession, and 18 acts of crack distribution and/or possession with intent to distribute crack. With respect to the murder, the Indictment includes allegations that on November 26, 2010, gang member Kahari Smith shot and killed Kihary Blue on Interstate 81 in downtown Syracuse as part of an ongoing feud between the V-Not and Bricktown gangs.

This prosecution resulted from a long-term investigation conducted by the Syracuse Gang Violence Task Force, which is comprised of agents and detectives from the following agencies:

United States Department of Justice, Bureau of Alcohol, Tobacco, and Firearms (Syracuse Office), the Syracuse Police Department, the Onondaga County Sheriff's Department, the New York State Police, and the United States Marshals Service. The Onondaga County District Attorney’s Office and the Drug Enforcement Administration - Syracuse office, also assisted in the investigation.

Further questions or inquiries may be directed to Assistant U.S. Attorney John M. Katko, who is prosecuting the case, at (315) 448-0672.

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1The allegations contained in the Indictment are mere accusations; and the defendants are presumed innocent unless and until proven guilty in a court of law.

RICHARD S. HARTUNIAN, United States Attorney, Northern District of New York, announces that DARNELL WILLIAMS, age 27, of Syracuse, was sentenced today in U.S. District Court in Syracuse to 150 months imprisonment for his role in conspiring to engage in a pattern of racketeering activity through his membership in the Bricktown Gang, a violent street gang operating on the streets of Syracuse.

As part of his plea, WILLIAMS admitted that the Bricktown Gang operated within the City of Syracuse from at least 2000 through the present and that members of the Bricktown Gang: (1) maintain a specific geographic territory within the City of Syracuse in which only gang members can sell crack cocaine, cocaine and marijuana; (2) protect that exclusive crack distribution territory with violence if necessary; (3) obtain drugs from suppliers in New York City and elsewhere; (4) project a very violent attitude and respond to violence with violence in order to preserve their stature in the gang community; (5) on occasion use hand signs, wear blue colored bandanas and have tattoos, all of which are intended to signify their gang membership; (6) use criteria such as willingness to use violence, ability to sell drugs, and familial connections to determine membership; and (7) routinely carry and use firearms in connection with their gang activity.

This prosecution resulted from a long-term investigation conducted by the Syracuse Gang Violence Task Force, which is comprised of agents and detectives from the following agencies: United States Department of Justice, Bureau of Alcohol, Tobacco, and Firearms (Syracuse Office), the Syracuse Police Department, the Onondaga County Sheriff's Department, the New York State Troopers, and the United States Marshals Service. The Onondaga County District Attorney’s Office also assisted in the investigation.

Further questions or inquiries may be directed to Assistant U.S. Attorney, John M. Katko, who is handling the case, at (315) 448-0672.

SYRACUSE, NY – Richard S. Hartunian, United States Attorney for the Northern District of New York, announces that COREY LEITZ, age 42, of Frankfort, New York, was sentenced today in U.S. District Court in Syracuse to 151 months, followed by 5 years supervised release and a $100 special assessment. Leitz had previously pled guilty to a onecount information charging him with knowingly manufacturing over one thousand (1000) marijuana plants.

As part of the plea LEITZ admitted the following:

From August 2011 until December 14, 2011, LEITZ did knowingly manufacture marijuana plants at 162 McIntyre Road, Frankfort, New York. LEITZ set up and maintained a marijuana manufacturing operation inside a barn at this location. By December 14, 2011, LEITZ had successfully grown 3200 marijuana plants. LEITZ then sold the marijuana he manufactured to numerous customers in Herkimer County and elsewhere.

This marks the second felony drug conviction for Leitz who has a prior felony drug conviction in 1998 in Herkimer County.

This prosecution resulted from a joint investigation undertaken by the Drug Enforcement Administration, the New York State Police, and the New York National Guard Counterdrug Task Force. The case is being prosecuted by Assistant U.S. Attorney Geoffrey Brown. Further questions may be directed to Executive Assistant U.S. Attorney John Duncan at (315) 448-0672.

Albany, New York — A federal jury in Utica returned its verdict following the four-week trial of Timothy M. McGinn and David L. Smith, former owners of the Albany broker-dealer McGinn, Smith & Co., Inc., announced United States Attorney Richard S. Hartunian, Toni M. Weirauch, Special Agent-in-Charge, Internal Revenue Service, Criminal Investigation, New York Field Office, and Andrew W. Vale, Special Agent-in-Charge, Federal Bureau of Investigation, Albany Division. After 4 days of deliberation, the jury convicted McGinn of 27 of 29 counts and Smith of 15 of 29 counts. Both defendants were convicted of conspiracy to commit mail and wire fraud, mail fraud, wire fraud, securities fraud, and filing false tax returns.

U.S. Attorney Hartunian commented, “With today's guilty verdicts against Timothy McGinn and David Smith, a measure of justice has been achieved for the many investors who placed their trust - and in some cases, their life savings - in these two men and their brokerage firm. While the harm they have caused may never be fully undone, this verdict sends the strong message that fraudulent business practices and tax cheating will not be tolerated. Law enforcement will do everything possible to bring to justice those whose greed and self- interest make them lose sight of their responsibilities to investors and regulators.”

U.S. Attorney Hartunian also thanked the many agents, investigators, and analysts from the Internal Revenue Service and the Federal Bureau of Investigation for their tireless efforts and dedication to seeing that justice was served. He also congratulated the trial team from the United States Attorney's Office, including Deputy Criminal Chief Elizabeth C. Coombe, Assistant United States Attorneys Richard D. Belliss and Wayne Myers, and Information Technology Specialist Ron Kittelson, all of whom spent long hours preparing and presenting this complex case.

Special Agent-in-Charge Weirauch stated, "The guilty verdicts against Timothy M. McGinn and David L. Smith are a victory for the people of the Capital Region of New York and beyond. People must be able to trust those who invest money on their behalf. They must also trust that all Americans are paying their fair share of taxes. When that trust is violated, people suffer, and our economy as a whole suffers. IRS Criminal Investigation, along with our law enforcement partners, remains committed to ensuring that people who violate the law are held accountable for their actions."

Special Agent-in-Charge Vale stated, "The actions of Timothy M. McGinn and David L. Smith destroyed dreams and ruined lives, and although today's verdict will not erase the financial and emotional harm they caused, we hope their victims will find solace in knowing that they will now face consequences for their damaging actions. Today's verdict supports the commitment of the FBI and our law enforcement partners to bring to justice those individuals who engage in such fraudulent schemes."

According to the superseding indictment, the purpose of the conspiracy was to mislead investors and the Financial Industry Regulatory Authority, Inc. (“FINRA”) regarding the safekeeping and use of investor money raised by 17 trusts, one corporation, and other entities; the risks of the trust offerings; the performance of the underlying income streams; the source of investor payments; and the improper diversion of investor money in order to obtain money from investors and enrich themselves. As a result of the defendant’s conduct, the investors were not aware that the defendants had diverted approximately $4.1 million in connection with transactions related to the trusts for their own benefit and the benefit of another person.

The superseding indictment also alleged that, as part of the conspiracy, the defendants improperly diverted nearly $1 million; directed false accounting entries regarding those transactions in response to a document request from the broker-dealer’s regulator, FINRA; and caused the false accounting entries to be submitted to FINRA. The alleged improper diversions fell into two categories: (a) the improper diversion of more than $473,000 of investor money from an escrow account to pay preferred clients who had unrelated investments (between May 15, 2008 and July 8, 2009); and (b) the improper diversion of $525,000 from bank accounts for three unrelated investments to pay the broker-dealer’s employees (between November 14, 2008 and April 15, 2009). The superseding indictment also alleged that the defendants improperly used a corporation to conceal and disguise the true nature of the payroll diversions by passing the money from the three unrelated investments through that corporation and then to the broker-dealer. Finally, the superseding indictment alleged that the defendants misled FINRA about the preferred client diversions and the payroll diversions by (a) directing the creation of false accounting entries to conceal the true nature of these transactions in response to a document request from FINRA; and (b) causing the submission of these false accounting entries to FINRA. The maximum potential penalties for count 1 include imprisonment for 30 years, to be followed by supervised release for 5 years, and a fine of the greater of $1,000,000 or twice the gross pecuniary gain or loss.

Both McGinn and Smith were convicted on Counts 21 through 26 (securities fraud), which relate to the failure to disclose improperly diverted fees to investors in violation of federal securities laws. Counts 21 and 22 relate to $100,000 in fees paid in connection with TDM Verifier Trust 08, and Counts 23 through 26 relate to approximately $855,000 in fees paid in connection with Fortress Trust 08. All of these transaction fees were paid with investor money. The maximum potential penalty for each of Counts 21 through 26 is imprisonment for 20 years, supervised release for 3 years, and a fine of $5,000,000.

McGinn and Smith were also both convicted on the tax charges arising from their failure to declare the improperly diverted money on their personal tax returns for tax years 2006 through 2008 (Counts 27-29 for McGinn and Counts 30-32 for Smith). McGinn and Smith later described the money as “loans,” but did not list them as such on personal financial statements. When FINRA discovered the false loan accounting entries for the diverted money, the defendants misled FINRA by directing the creation of backdated promissory notes. The maximum potential penalty for each of Counts 27 through 32 is imprisonment for 3 years, supervised release for 1 year, and a fine of $100,000.

Both McGinn and Smith were convicted on Count 10, and McGinn was convicted of Counts 4 through 6 and 11 through 13.1 Those mail and wire fraud counts relate to the Firstline Series B Trusts, which raised money from investors in connection with a loan of $2.4 million to Firstline Security, Inc., a company that generated alarm contracts. The superseding indictment alleged that the defendants did not tell investors when Firstline filed for bankruptcy and defaulted on loans. In addition, their firm sold approximately $600,000 of one of the Firstline investments without any disclosure of the bankruptcy or defaults. McGinn directed that investors receive $2 million of lulling payments by transferring money from other entities controlled by McGinn and Smith.

McGinn and Smith were both convicted on Count 14, and McGinn was convicted on Count 7. Those mail and wire fraud counts relate to the Integrated Excellence Trusts, for which the defendants raised about $1.2 million from investors in connection with a loan to benefit Integrated Excellence, Inc., which generated alarm contracts. The superseding indictment alleged that the defendants knew that the payments received from the loan were not sufficient to pay investors, but McGinn directed that investors receive lulling payments by transferring money from other entities controlled by McGinn and Smith.

McGinn and Smith were both convicted of Counts 8 and 9. Those mail fraud counts related to the improper diversion of investor money from an escrow account to pay preferred clients who had unrelated investments.

McGinn was also convicted on Counts 15 and 16. Those counts involved the diversion of approximately $142,000 of investor money from an escrow account to make payments to investors in other trusts.

Both McGinn and Smith were convicted on Count 17, which involved $35,000 Smith took directly from an escrow account holding investor funds for Integrated Excellence Sr. Trust 08. McGinn was convicted on Counts 18, 19, 20 which involved approximately $310,000 that McGinn took directly from escrow accounts holding investor funds.

This case was investigated by the Internal Revenue Service, Criminal Investigation and the Federal Bureau of Investigation. This case is being prosecuted by Assistant United States Attorneys Elizabeth C. Coombe, Richard D. Belliss, and Wayne Myers.

The sentencings are set for June 28, 2013 at 10:00 am for McGinn and 11:00 am for Smith.

LOCAL CONTACT:

Elizabeth C. Coombe
Assistant U.S. Attorney
Tel: (518) 431-0247

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1The maximum potential penalty for each of Counts 4 through 20 is imprisonment for 30 years, supervised release for 5 years, and a fine of the greater of $1,000,000 or twice the gross pecuniary gain or loss.

United States Attorney Richard S. Hartunian announced today that a Utica man has been sentenced for his role in an insurance and health care fraud scheme.

On January 31, 2013, JOSEPH DELLERBA, age 66, was sentenced by United States District Court Judge Norman A. Mordue in Syracuse. DELLERBA was sentenced to 30 months imprisonment and ordered to pay restitution in an amount exceeding $1.4 million, with $102,111 due immediately. DELLERBA will also serve three years of supervision following his release from incarceration.

DELLERBA pled guilty on September 17, 2012 to conspiracy to commit mail and health care fraud. DELLERBA admitted that in or about 2005 he agreed with other conspirators to participate in an insurance and health care fraud scheme. The scheme involved a staged motor vehicle accident on Harbor Lock Road in Utica on March 20, 2006. On that date, DELLERBA claimed to have been injured while a passenger in a Ford van which was struck by a Ryder truck driven by a coconspirator. In fact, the collision was staged and DELLERBA was not a passenger at the time of the impact. The defendant claimed to have been injured as a result of the accident and submitted false insurance claims, including claims for personal injuries, no fault benefits and disability benefits. DELLERBA sought medical treatment for non-existent injuries or injuries that were not related to the collision. The bills for this medical care were submitted to and paid by a health care benefit program, specifically an insurance policy issued by Progressive Insurance Company. DELLERBA also commenced a civil lawsuit seeking damages for personal injuries sustained in the accident. He received a payment of $682,297.21 to settle that suit.

The case was investigated by the Federal Bureau of Investigation and the New York State Insurance Fraud’s Bureau. The case was prosecuted by Assistant United States Attorney Edward R. Broton.

Onondaga County physician settles for $60,000.00

(Syracuse, New York)- United States Attorney Richard S. Hartunian announced that in December of 2012, his office reached a civil settlement with Dr. William Beals, a Liverpool, New York physician, for $60,000.00. The settlement agreement provided for payments over time and Dr. Beals made his final payment to the United States on January 11, 2013. As part of the settlement agreement, Dr. Beals also voluntarily surrendered his Drug Enforcement Administration number, which enables physicians to prescribe controlled substances. The settlement was in connection with violations of the Controlled Substances Act.

On February 1, 2012, DEA investigators conducted an inspection of Dr. Beals’ office and subsequently questioned him about controlled substances he purchased between March 8, 2010 and January 25, 2012. According to the complaint filed in connection with the settlement, Dr. Beals had ordered approximately 5,000 Hydrocodone pills, a Schedule III controlled substance, and 1,100 Zolpidem pills, a Schedule IV controlled substance during this time period. Dr. Beals, however, not only was unable to provide purchase, dispensing, or destruction records for these drugs, he could not account for their whereabouts in any way.

The Controlled Substances Act was enacted to ensure that controlled substances are properly regulated and to help prevent drug diversion. To that end, practitioners who dispense controlled substances are required to properly maintain complete and accurate inventories and records of all controlled substances that they purchase, receive, dispense, or destroy.

Prescription drug abuse is a significant nationwide issue. According to U.S. Attorney Richard S. Hartunian, his office takes drug diversion very seriously and will aggressively pursue those who violate the Controlled Substances Act, especially if they are professionals in the medical field. “It simply is unacceptable for medical professionals to act irresponsibly when handling controlled substances. The potential for these substances to end up in the wrong hands is something we are not willing to risk, and we will take whatever steps are necessary to prevent this from happening.”

Syracuse, NY—United States Attorney Richard S. Hartunian and IRS Criminal Investigation Division Special Agent in Charge Toni Weirauch, announced the sentences imposed in United States District Court in Syracuse on Kevin M. O’Connell and Kevin D. O’Connell, two defendants in a long-term mortgage fraud investigation.

Kevin M. O’Connell, 35, and Kevin D. O’Connell, 62, both of Albany, NY were each sentenced to 24 months incarceration by Senior District Court Judge Norman A. Mordue. In addition, Kevin M. O’Connell was ordered to pay restitution in the amount of $2,275,584.88 and to pay a forfeiture judgment in the amount of $4,628.886.48. Kevin D. O’Connell, was ordered to pay restitution in the amount of $2,136,444.09.

Kevin M. O’Connell was a principal of PB Enterprises and employed his father, Kevin D. O’Connell to assist in a series of transactions that defrauded banks that were offering mortgages in the Albany area. The essence of the fraud was that PB Enterprises found inexpensive properties, usually rental properties that were for sale. They then recruited buyers to purchase the property at higher prices, with promises that the buyer would pay “no money down” and would instead receive a check at the closing. In dozens of transactions, PB Enterprises fraudulently obtained mortgages for those purchasers at the higher purchase price by providing false information to the lenders. PB Enterprises then arranged with closing agents to submit documents to the lenders that disguised the fact that the purchase prices were inflated and that the purchaser and the principals of PB Enterprises were splitting the excess mortgage money. The mortgage lender was falsely led to believe that the mortgage proceeds were necessary to purchase the property, and had not been diverted to pay the buyer and PB Enterprises. The restitution figures imposed by Judge Mordue represent the losses suffered by the lenders from this practice.

The principals of another such organization, Team Title, who were engaged in a similar scheme, pled guilty and were sentenced previously in Albany. Another principal of PB Enterprises, Michael Crowley, is scheduled to be sentenced on February 5, 2013, in Syracuse. A closing agent used by PB Enterprises and Team Title, attorney Michael G. Bouchard, was found guilty of conspiracy and bank fraud after trial in Syracuse in December. Mr. Bouchard and his two paralegals are scheduled to be sentenced in April.

This case is the result of an investigation by the Internal Revenue Service, Criminal Investigation Division in Albany, NY. Further questions or inquiries may be directed to Assistant United States Attorney Michael Olmsted, the prosecutor handling the case, at (315) 448-0672.

SYRACUSE, NEW YORK —United States Attorney Richard S. Hartunian announced that a Syracuse Federal Grand Jury has returned an indictment charging Alexandru Turcan, 29, with wire fraud, false use of a passport, and aggravated identity theft in violation of 18 U.S.C. § 1343, 1543 and 1028A. Turcan, originally from Chisinau, Moldova, is a lawful permanent resident of the United States. He was apprehended while entering the United States through Orlando, Florida.

The indictment alleges that Turcan conducted a scheme to defraud individuals who responded to advertisements listing vehicles on http://www.autotrader.com/, a website that displays automobiles for sale. Two victims, in responding to an advertisement posted by Turcan, believed they were purchasing a 2007 Chevrolet Silverado and a 1968 Ford Shelby Mustang. The victims, citizens of Connecticut and Georgia, wired $17,900 and $21,000 respectively to purchase the vehicles to a bank account established by Turcan in Syracuse, New York. Turcan opened the account under a false name using a counterfeited passport. After transferring the funds to Turcan’s bank account, the victims never received the vehicles they believed they had purchased.

If convicted of aggravated identity theft, Turcan faces a mandatory two year term of imprisonment that would run concurrently with any term of imprisonment imposed for conviction of wire fraud and false use of a passport. If convicted of wire fraud, Turcan faces a 20 year maximum term of imprisonment, a fine of up to $250,000, and an order of restitution compensating the victims for their losses. If convicted of false use of a passport, Turcan faces a 10 year maximum term of imprisonment, a fine of up to $250,000 and an order of restitution.

The indictment is merely an allegation and the defendant is presumed innocent unless and until proven guilty in a court of law.

This case was investigated by the Upstate Electronic Crimes Task Force including the Syracuse Police Department and the United States Secret Service, the Office of the Ohio Attorney General, the Federal Bureau of Investigation, Diplomatic Security Services, and the Department of Homeland Security, Connecticut State Police Computer Crimes Unit. The case is being prosecuted by Assistant U.S. Attorney Gwen Carroll. For further information, contact Executive Assistant U.S. Attorney John G. Duncan at 315-448-0672

Richard S. Hartunian, United States Attorney, Northern District of New York, announced today that Jacqueline MacBlane of the Town of Binghamton, Broome County, New York was sentenced in Federal Court in Binghamton by Senior U.S. District Judge Thomas J. McAvoy in connection with her August 1, 2012, guilty plea to an Information charging her with Subscribing to a False Individual U.S. Income Tax Return. Judge McAvoy sentenced MacBlane to a term of two years of probation supervision and ordered her to perform100 hours community service, pay a $30,000 fine, and make restitution of $78,729. The defendant admitted at the time of her plea that she willfully subscribed to a U.S. Individual Form 1040 Tax Return, for tax year 2007, which substantially and materially understated her adjusted gross income and taxable income. During the 2007 tax year, the defendant managed and operated the Brackney Inn in Susquehanna County, Pa., and her husband managed and operated Charley’s Tavern in Broome County, New York.

During the tax years 2006 and 2007, the defendant filed Individual U.S. Income Tax Returns using the filing status of “married filing jointly.” As part of the plea agreement, the defendant acknowledged that she also underreported taxable income for the tax year 2006, and agreed to pay the full amount of tax owed to the federal government for both tax years. At least $118,248.00 in taxable income for the tax year 2006 was not reported and at least $150,875.00 in taxable income for the tax year 2007 was not reported. The failure to report that taxable income led to an additional federal tax owing of $31,301.00 and $47,428.00, respectively, totaling $78,729.00. This figure does not include penalties and interest that may be assessed by the IRS, or taxes due and owing to New York State and the State of Pennsylvania.

The indictment resulted from an investigation conducted by the Internal Revenue Service. The case was prosecuted by Assistant United States Attorney Kevin P. Dooley of the Binghamton office. Inquiries can be directed to AUSA Dooley at (607) 773-2887.

Sentenced to 720 Months in Prison

Albany, New York — NATHAN BROWN, age 33, of Fulton County, New York, was sentenced today by Chief United States District Court Judge Gary L. Sharpe, in Albany to 720 months of imprisonment and a lifetime period of supervised release for producing and possessing child pornography still images and videos, announced United States Attorney Richard S. Hartunian and Nick DiNicola, Assistant Special Agent in Charge of Homeland Security Investigations (HSI) Albany. BROWN, who had entered guilty pleas on June 19, 2012, was also ordered to pay restitution to his victims, forfeit various computer equipment, have no unsupervised contact with minors, and to register with the New York State Sex Offender Registry Program.

Between January 2010 and November 2011, BROWN produced still images and videos of three different children engaged in sexually explicit conduct. On March 9, 2012, pursuant to a federal search warrant, investigators searched BROWN’s residence and recovered several computers and smart phones. In addition to the child pornography images and videos actually produced by BROWN, over 150,000 still images and 1,500 videos containing child pornography, depicting children from throughout the nation, were recovered during the forensic examinations of the computer media seized.

This case was brought as part of Project Safe Childhood, a nationwide initiative launched by the U.S. Department of Justice in May 2006 to protect children from online exploitation and abuse. Led by the United States Attorneys Offices, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. The goal of Project Safe Childhood is to enhance the national response to the growing threat to America’s youth posed by online sexual solicitation, abuse, and child pornography.

As technology improves and the Internet becomes more vast and accessible, the number of computer-facilitated sexual crimes against children continues to grow. According to one recent study, one in seven children, ages 10 to 17, who are regular Internet users, are sexually solicited online. That statistic translates to millions of kids at risk, and it suggests that there are thousands of offenders whom we have not yet identified and brought to justice. In order to address this problem, the Department of Justice initiated Project Safe Childhood which includes the following five core elements:

1. The creation of integrated partnerships of federal, state, and local law enforcement to investigate and prosecute offenders and identify, rescue, and assist victims; 2. Participation of these partnerships in coordinated national initiatives to pursue evidentiary leads sent out as a result of national operations; 3. Increased federal involvement in child exploitation cases so that all the resources of the federal government are brought to bear to ensure that investigations of online child exploitation crimes are effectively conducted and that offenders receive optimal punishment for their crimes; 4. Training of federal, state, and local law enforcement to ensure that law enforcement keeps up with technological advances; and
5. Increased efforts to raise community awareness and educate the public about the dangers facing children from sexual exploitation and abuse facilitated by technology.

U.S. Attorney Richard S. Hartunian noted that, in the Northern District of New York, the U.S. Attorney’s Office and its federal, state, and local law enforcement partners are actively pursuing the various aspects of the Project Safe Childhood initiative. According to Mr. Hartunian, “these prosecutions, arising from joint investigations by federal and local law enforcement authorities, reflect our deep commitment to work together to target sexual abusers and pornographers who prey on the most innocent and vulnerable of our society–our children.”

Nick DiNicola, assistant special agent in charge of the HSI office in Albany, the office that led the investigation of BROWN, noted that “protecting children from dangerous sexual predators is one of HSI's highest priorities. Even commercial child pornography is not a victimless crime. Such crimes prey on the most vulnerable and innocent segment of society – our children.”

This case was investigated by Homeland Security Investigations, with assistance from members of the New York State Police, the National Center for Missing & Exploited Children (NCMEC), Customs & Border Protection Air Branch in Plattsburgh, N.Y., and HSI’s Cyber Crimes Center (C3) in Fairfax, Virginia.

LOCAL CONTACT: Thomas Spina Jr.
Assistant U.S. Attorney
Tel: (518) 431-0247

(Albany, New York) - United States Attorney Richard S. Hartunian announced today that the Northern District of New York collected a total of $30,811,828.88 in Fiscal Year (FY) 2012 in civil and criminal actions and forfeitures, comprised of $9,876,524.88 in criminal and civil actions and $20,935,304.00 in criminal, civil and administrative forfeitures. Of the $9,876,524.88, $2,715,873.25 was collected in criminal actions, as fines, restitution, and bail bond forfeitures, and $7,160,651.63 was collected in civil actions, as civil settlements, civil penalties, and defaulted loan recoveries.

Nationwide, the U.S. Attorneys’ Offices collected $13.16 billion in criminal and civil actions during FY 2012, more than doubling the $6.5 billion collected in FY 2011. A portion of this amount, $5.3 billion, was collected in shared cases involving more than one U.S. Attorney’s Office and/or Department of Justice litigating division. The $13.16 billion represents more than six times the appropriated budget of the combined 94 U.S. Attorney’s Offices for FY 2012.

“During these challenging economic times, collections are critically important,” said U.S. Attorney Richard S. Hartunian. “The U.S. Attorney’s Office is dedicated to protecting the public and recovering funds for the federal treasury and for victims of federal crime. We are also committed to holding accountable those who seek to profit from their illegal activities.”

Northern District of New York cases resulting in significant recoveries include the following:

A. Criminal Actions

In January of 2012, Lieze Associates, Inc., d/b/a Eagle Recycling, paid a criminal fine of $500,000 in connection with the unlawful disposal of millions of pounds of asbestos contaminated construction and demolition debris in a farmer's field in Frankfort, New York, from June through October of 2006. The owner of Eagle Recycling and his partner created a false New York State Department of Environmental Conservation permit to make it appear that the site was legal when it had nothing that a normal landfill would require, such as fences, scales, methods to capture and treat waste water runoff, intended sets backs from wetlands (and the Mohawk River), and hydro-geologic studies. Defendants included the principal Eagle operator, the landowner, the landfill operator, the owner of another recycling facility and his company from New Jersey (who also sent asbestos contaminated waste), and a waste broker who arranged for truckloads of material to be shipped. All defendants were convicted of conspiracy to violate the Clean Water Act and to commit mail fraud. Several others were convicted of obstruction of justice and making false statements to investigators.

B. Civil Actions

In February of 2012, the Northern District of New York recovered $2,000,000 as part of the settlement in the United States ex rel. Kuney v. Cablexpress Corp. (CXTEC) civil case. The settlement resolved allegations that CXTEC falsely represented where the computer parts it sold to the federal government had been manufactured. CXTEC signed a contract with the General Services Administration to provide computer parts, including cables and gigabit interface converters1 (GBICs), to the federal government. The contract was subject to the Trade Agreements Act, which requires that all products sold under it be manufactured in one of a list of designated countries. The settlement resolves allegations that CXTEC knowingly sold products to the United States from countries which are not on the designated list, such as China, a country that does not have reciprocal trade agreements with the United States. The settlement agreement also resolved allegations that CXTEC sold the government generic GBICs while falsely representing that they were name-brand GBICs.

In January of 2012, the Northern District of New York also recovered $3,576,056 as part of a settlement in the United States ex rel. Jorgenson v. Cayuga Medical Center, et. al. civil case. This settlement resolved a qui tam lawsuit alleging that Cayuga Medical Center recruited physicians into the local Ithaca area pursuant to recruitment agreements which violated a federal law known as the Stark Act. This law (42 U.S.C. §1395nn) applies to recruitment agreements between hospitals and physicians; it prohibits a physician from referring patients to a hospital if the physician has a financial relationship with the hospital, unless an exception applies. The Stark Act also prohibits a hospital from billing Medicare for a prohibited referral. Federal regulations and related guidelines do allow for hospitals to pay for certain expenses of medical practices who employ physicians recruited to the area by the hospital. However, the complaint alleged that Cayuga Medical Center recruited physicians to the area and paid for expenses that were not permitted by said regulations and guidelines, and improperly extended a physician recruitment agreement.

C. Forfeiture Cases

In November of 2012, the Northern District of New York forfeited approximately $11.28 million dollars in the case of United States v. Eric Canori. Canori pled guilty to participating in a conspiracy to distribute 100 or more kilograms of marijuana and was ultimately sentenced to 30 months imprisonment. The execution of search warrants at Canori’s residences in Wilton, New York, and Ross, California, resulted in seizures of currency, marijuana, and drug packaging. Subsequent investigation led to the recovery of precious metals, gold and silver, that were proceeds of the conspiracy. As part of his plea, Canori agreed to forfeit the currency and precious metals to the United States.

In April of 2012, the Northern District of New York collected $6,000,000 in forfeiture proceeds in the case of United States v. IFCO Systems North America (IFCO). IFCO, a Houston based company with a plant in Albany, New York, operated the largest pallet manufacturing company in the United States. The amount collected in April was part of a $20.7 million corporate settlement agreement, entered into in December of 2008, that resolved allegations that IFCO employed illegal aliens in its plants around the country.

The U.S. Attorneys’ Offices, along with the Department of Justice’s litigating divisions, are responsible for enforcing and collecting civil and criminal debts owed to the U.S. and criminal debts owed to federal crime victims. Statistics indicate that the aggregate amount collected nationally in federal criminal actions totaled $3.035 billion in restitution, criminal fines, and felony assessments. The law requires defendants to pay restitution to victims of certain federal crimes who have suffered a physical injury or financial loss. While restitution is paid directly to the victim, criminal fines and felony assessments are paid to the department’s Crime Victims’ Fund, which distributes the funds to state victim compensation and victim assistance programs.

The statistics also indicate that a total of $10.12 billion was collected by the U.S. Attorneys’ Offices in individually and jointly handled civil actions. The largest civil collections were from affirmative civil enforcement cases, in which the United States recovered government money lost to fraud or other misconduct or collected fines imposed on individuals and/or corporations for violations of federal health, safety, civil rights or environmental laws. In addition, civil debts were collected on behalf of several federal agencies, including the U.S. Departments of Housing and Urban Development, Health and Human Services, and Education, as well as the Internal Revenue Service and Small Business Administration.

Additionally, the U.S. Attorneys’ Offices, working with partner agencies and divisions, collected a total of $4.389 billion in asset forfeiture actions in FY 2012. Forfeited assets are deposited into the Department of Justice Assets Forfeiture Fund and Department of Treasury Forfeiture Fund and are used to restore funds to crime victims and for a variety of law enforcement purposes.

The $13.16 billion collected nationwide by the U.S. Attorneys’ offices for FY 2012 nearly matches the $13.18 billion collected in FY 2010 and FY 2011 combined.

For further information, the United States Attorneys’ Annual Statistical Reports can be found on the internet at http://www.justice.gov/usao/resources/annual-statistical-reports.

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1A gigabit interface converter 1 is a hot-swappable input/output device that plugs into a gigabit ethernet port or slot, linking the port with the network.

Richard S. Hartunian, United States Attorney for the Northern District of New York; Peter J. Smith, United States Attorney, Middle District of Pennsylvania; George L. Piro, Acting Special Agent in Charge, Albany Division - Federal Bureau of Investigation; New York State Police Superintendent Joseph D’Amico; Joseph T. Zikuski, Chief, City of Binghamton Police Department; Carl Graziano, Acting Chief, City of Scranton Police Department; and, Larry Hurley, Chief, Athens Township Police Department, make the following announcement:

Samuel A. Parrotti, II, 44, of the Town of Lisle, Broome County, NY, admitted today in United States District Court, Binghamton, to committing a series of bank robberies last summer in Broome County, New York, Lackawanna County, Pennsylvania, and Bradford County, Pennsylvania. During his plea of guilty to four felony counts of bank robbery, Parrotti admitted to committing the following bank robberies in Broome County - the first, on July 16th, 2012, at the M&T Bank branch located at 1170 Vestal Avenue in the City of Binghamton; the second, on August 1st, 2012, at the NBT Bank branch located at 2950 State Route 11 in Whitney Point.

In addition, Parrotti admitted committing two other bank robberies similar to the Broome County robberies - one on August 6, 2012, at the Pennstar Bank branch located at 117 Meadow Avenue, Scranton, PA., and the other on August 27, 2012, at the Visions Federal Credit Union located at 2121 Elmira Street, Sayre, PA. In each of the four bank robberies, Parrotti indicated he possessed a gun, and passed notes to tellers demanding money. Parrotti obtained a total of approximately $38,000 between the four robberies.

Parrotti faces a maximum sentence of 20 years imprisonment, and a maximum fine of $250,000 dollars, on each of the four bank robberies. Parrotti is scheduled to be sentenced on May 23, 2013, by Senior U.S. District Court Judge Thomas J. McAvoy in United States District Court, Binghamton.

The case is being prosecuted by Assistant United States Attorney Thomas P. Walsh. Further inquiries may be directed to the United States Attorney’s Office, Binghamton branch office, at (607) 773-2887.

Richard S. Hartunian, United States Attorney, Northern District of New York, Eric T. Schneiderman, New York State Attorney General, and Joseph Anarumo, Jr., the Special-Agent-in- Charge of the New York Field Office of the United States Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) announced today that Robert C. Oliver, Sr., 53, of Burke, New York, and Jody Swamp, 48, of Hogansburg, New York, pled guilty in U.S. District Court in Utica, New York, to federal charges relating to illegally manufacturing cigarettes on the St. Regis Mohawk Reservation, known as Akwesasne. Each defendant pled guilty to one count charging Manufacturing Cigarettes Without Filing the Bond and Obtaining the Required Permit, in violation of 26 U.S.C. § 5762(a)(1) (Count 1), and one count charging Failure to Maintain Records Concerning the Shipment, Receipt, Sale, and Distribution of Cigarettes, in violation of 18 U.S.C. § 2343(a) (Count 2).

The pleas were entered before U.S. District Court Judge David N. Hurd. Count 1 carries a statutory maximum sentence of imprisonment for up to 5 years, a fine of up to $250,000, a term of supervised release of up to 3 years, and a special assessment of $100. Count 2 carries a statutory maximum sentence of imprisonment for up to three years, a fine of up to $250,000, a term of supervised release of up to three years, and a special assessment of $100. If the terms of the plea agreements signed by the defendants are accepted by the Court, each defendant will be sentenced to a term of imprisonment within the range of 24 to 30 months, to be followed by supervised release for 3 years, a fine of up to $250,000, forfeiture in the amount of $5,000,000 (with $1,000,000 to be paid by the time of sentencing), and a special assessment of $200. Sentencing is scheduled for August 3, 2013, before Judge Hurd in Utica, New York. The defendants were released on their own recognizance pending sentencing.

The defendants admitted that: Between July of 2010 and October of 2011, the defendants manufactured cigarettes on Akwesasne without the required permit from the Alcohol and Tobacco Tax and Trade Bureau of the U.S. Department of the Treasury and failed to pay the federal excise tax of approximately $10 for each carton of cigarettes produced. The defendants had scores of shipments exceeding 10,000 cigarettes made to locations elsewhere in New York, and to Florida and Maine, all without complying with federal record-keeping requirements so they could evade payment of the federal excise tax. At least 2,556 cases totaling 76,680 cartons of unlicensed cigarettes were shipped from a property on Frogtown Road on Akwesasne. The $5,000,000 forfeiture represents the amount of profit realized by the defendants from their illegal cigarette manufacturing.

United States Attorney Hartunian said, “Each year, the United States loses millions of dollars in federal excise taxes as a result of unlicensed cigarette manufacturing operations on Akwesasne. Manufacturers who do not pay their excise taxes have an unfair advantage over licensed manufacturers on and off Akwesasne, as they can charge lower prices and reap substantial extra profits. The U.S. Attorney’s Office will continue its work with federal and tribal authorities to bring unlicensed cigarette manufacturing operations on Akwesasne into compliance with federal regulations. We appreciate very much the cooperation and outstanding work in this case by the Bureau of Alcohol, Tobacco, Firearms and Explosives and the New York State Attorney General’s Office.”

Attorney General Schneiderman said, “Illegally manufacturing tobacco products is a crime that hurts law abiding businesses and the health of our communities. These guilty pleas will bring accountability for a scheme that had many victims. I would like to thank U.S. Attorney Hartunian and our partners in law enforcement who have worked with us to root out this unlawful criminal enterprise. Together, we will remain vigilant to ensure there is one set of rules for everyone and that those rules are vigorously enforced.”

ATF Special-Agent-in-Charge Anarumo, Jr. said, “I would like to formally recognize United States Attorney Richard S. Hartunian and our federal, state and local law enforcement partners. This case demonstrates the cooperative efforts needed to combat large scale contraband tobacco trafficking. ATF remains committed to protecting the citizens of New York State. Our agency will continue to work together and in conjunction with the United States Attorney’s Office for the Northern District of New York to eliminate the illegal manufacture and distribution of tobacco products.”

The indictment resulted from an investigation conducted by the Bureau of Alcohol, Tobacco, Firearms and Explosives, with assistance from the Internal Revenue Service, U.S. Customs and Border Patrol, Immigration and Customs Enforcement, the New York State Police, and the Petroleum, Alcohol, and Tobacco Bureau of the New York State Department of Taxation and Finance. The case is being prosecuted by Assistant United States Attorney Kevin P. Dooley of the Binghamton office, and Assistant Attorney General Meryl Lutsky of the New York Attorney General’s Office, who was cross-designated as a Special Assistant U.S. Attorney for this case. Inquiries can be directed to AUSA Dooley at (607) 773-2887.

Albany, New York —JAMES P. AIMI, age 65, of Ancram, New York, pled guilty on January 14, 2013 in United States District Court in Albany before Chief United States District Court Judge Gary L. Sharpe to twenty-four counts of aiding and assisting in the preparation and presentation of false and fraudulent U.S. income tax returns, announced United States Attorney Richard S. Hartunian and Toni M. Weirauch, Special Agent-in-Charge, Internal Revenue Service, New York Field Office.

AIMI admitted that between 2005 and 2008, he aided numerous taxpayers in the preparation of income tax returns for presentation to the Internal Revenue Service each of which was false and fraudulent, in that each return represented that the taxpayer was entitled to claim deductions that AIMI knew were false or exaggerated.

Sentencing was scheduled by Chief Judge Sharpe for May 7, 2013, at 11:00 a.m. in Albany, New York. Aimi faces a maximum sentence of three years of imprisonment on each of the twenty-four counts.

This case was investigated by the Internal Revenue Service.

LOCAL CONTACT:

Daniel Hanlon
Assistant U.S. Attorney
Tel: (518) 431-0247

SYRACUSE, NY – United States Attorney Richard S. Hartunian announced that LEONARD ALLEN, age 46, of Fulton, New York was sentenced today in U.S. District Court in Syracuse following his earlier guilty plea in January 2012 to knowingly distributing, receiving and possessing child pornography via the Internet.

United States District Court Judge Hon. Norman A. Mordue sentenced ALLEN to concurrent terms of imprisonment of 240 months imprisonment for distributing, receiving and possessing child pornography. Following his term of incarceration ALLEN will be placed on supervised release for life, and he will be required to register as a sex offender.

ALLEN’s arrest came after he sent images of child pornography to an undercover police officer in Keene, New Hampshire, in 2010. Based upon that information, the Oswego County Sheriff’s Office executed a search warrant at ALLEN’s Fulton residence, and found that ALLEN had been distributing child pornography to others on the internet, and that he had downloaded and collected thousands of images and videos depicting children in engaged in sexually explicit conduct.

ALLEN’s arrest is the result of an investigation by the Oswego County Sheriff’s Office, the Keene, New Hampshire Police Department, and the Federal Bureau of Investigation, and was prosecuted by Assistant U.S. Attorney Lisa Fletcher.

ALLEN was prosecuted by the United States Attorney’s Office as part of Project Safe Childhood, a nationwide initiative designed to protect children from online exploitation and abuse. Led by the United States Attorneys Offices, 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 identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.

RICHARD S. HARTUNIAN, United States Attorney, Northern District of New York announces that PAUL HILL (24, of Brooklyn, New York) was sentenced to 60 months imprisonment by United States District Court Judge Norman A. Mordue for Access Device Fraud and Aggravated Identity Theft. Judge Mordue also ordered HILL to pay restitution in the amount of $297,554.00 to seven banks that had been defrauded by the credit card scam.

Pursuant to his plea agreement with the government, HILL admitted that he fraudulently obtained, without permission via the internet, credit and debit card account numbers (account numbers) that belonged to other persons. Those account numbers were issued by financial institutions that engaged in interstate and foreign commerce. After obtaining the account numbers, PAUL HILL stored the information on his computer at his residence in Brooklyn, New York. Thereafter, PAUL HILL converted plastic cards, usually gift cards, into counterfeit credit or debit cards by re-encoding the cards with the fraudulently obtained account numbers and other information that belonged to other persons. Thereafter, PAUL HILL mailed the manufactured counterfeit cards to co-defendant Andre Greaves in Syracuse, New York.

After receiving the counterfeit cards, Andre Greaves utilized the manufactured counterfeit cards to effect transactions at numerous merchant locations in Onondaga County and elsewhere. Specifically, Greaves utilized the manufactured counterfeit cards to purchase stored value gift cards (gift cards). After purchasing the gift cards, Greaves redeemed a portion of the gift cards for his own personal use, and on the instruction of PAUL HILL, mailed a portion of the gift cards to HILL in Brooklyn, New York.

At the time PAUL HILL manufactured and mailed the counterfeit credit cards to Andre Greaves, he knew that the account numbers belonged to real people who had not authorized either Greaves or HILL to make the purchases. HILL, aided and abetted by Greaves, knowingly, willfully, and with the intent to defraud, used the manufactured counterfeit cards during a one year period to obtain items of value amounting to more than $1,000.00. Specifically, between June 2010 and April 2011, Andre Greaves made purchases totaling approximately $16,314.36 using unauthorized access devices that he obtained from HILL.

On March 27, 2012, Andre Greaves pled guilty to Access Device Fraud and Aggravated Identity Theft. On August 1, 2012, Judge Mordue sentenced Greaves to 36 months imprisonment and also ordered him to pay the same amount of restitution as HILL.

These arrests followed from a lengthy investigation conducted by the United States Secret Service, Syracuse Resident Office, the United States Secret Service, New York Field Office, the United States Postal Inspectors, and the Syracuse Police Department. The case is being prosecuted by Assistant United States Attorney Ransom P. Reynolds. Further questions may be directed to Executive Assistant U.S. Attorney John Duncan at (315) 448-0672.

Richard S. Hartunian, United States Attorney, Northern District of New York, announced that JAMES L. TABOLT, JR., age 40, of Tupper Lake, New York was sentenced in U.S. District Court in Albany today in connection with his guilty plea on September 13, 2012 to possession of child pornography. In entering his guilty plea before Senior U.S. District Judge Thomas J. McAvoy, TABOLT had admitted that between June 2012 and February 2011 he possessed more than 1300 images of child pornography on a home computer.

Today, Judge McAvoy sentenced TABOLT to 72 months incarceration to be followed by a 15 year term of federal Supervised Release. He will also be required to register with New York State as a sex offender.

In December of 2010, a New York State Police investigator assigned to the New York Internet Crimes Against Children Task Force detected images of child pornography being made available from an internet protocol address in the Tupper Lake area. Investigators were able to determine the images came from a computer in the defendant’s residence. Following the execution of a search warrant by members of the New York State Police, Tupper Lake Police Department, and the Franklin County Sheriff’s Department, the defendant’s computer was seized. A forensic examination was conducted following the issuance of a federal search warrant, which resulted in the recovery of more than 1300 images of child pornography.

TABOLT’s arrest was the result of a joint investigation conducted by the New York State Police, Tupper Lake Police Department, Franklin County Sheriff’s Department, Clinton County Sheriff’s Department, the U.S. Immigration and Custom’s Enforcement (ICE), Homeland Security Investigations (HSI), and the New York State Internet Crimes Against Children Taskforce (ICAC). Assistance was also provided by the Utica Police Department’s Digital Forensics Laboratory. The joint effort is a part of Project Safe Childhood, a nationwide initiative designed to protect children from online exploitation and abuse. Led by the United States Attorneys Offices, 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 identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.

The case was prosecuted by Executive Assistant U.S. Attorney John G. Duncan.

Richard S. Hartunian, United States Attorney for the Northern District of New York, announced that JOHN GIBSON, III, age 37, of Oswego, N.Y., announced today the federal arrest of a postal customer for theft of government property.

A federal indictment, returned in U.S. District Court in Syracuse, N.Y. on Thursday, January 10, 2013, charged JOHN GIBSON, III with theft of government property in the amount of $33,072.68. The indictment alleges that GIBSON, III purchased 91 postal money orders with checks drawn on closed checking accounts.

JOHN GIBSON, III was arrested today and made his initial appearance before the Hon. Andrew T. Baxter, United States Magistrate Judge. GIBSON, III was released on his own recognizance.

GIBSON, III faces a maximum penalty of 10 years incarceration, a fine of up to $250,000, and a term of supervised release of up to 3 years.

GIBSON, III’s arrest is the result of a joint investigation by U.S. Postal Inspection Service and the United States Postal Service Office of Inspector General. The investigation began in June 2012.

JOHN GIBSON, III is being prosecuted by Assistant U.S. Attorney Tamara B. Thomson, who can be reached at 448-0672.

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

RICHARD S. HARTUNIAN, United States Attorney, Northern District of New York announces that a federal Grand Jury in Syracuse has returned a seven-count Indictment charging GLENN RICHARD UNGER (62, of Ogdensburg, NY) with obstructing and impeding the Internal Revenue Service (“IRS”) by filing numerous false and fraudulent IRS forms seeking refunds. Specifically, the Indictment alleges that GLENN RICHARD UNGER obstructed and impeded the IRS between 2007 and 2011 by filing numerous false and fraudulent claims with the IRS for payment of a refund of taxes totaling approximately 36 million dollars. Upon receiving the false IRS forms, the IRS realized that they were fraudulent and did not issue any refund checks to GLENN RICHARD UNGER. The Indictment also alleges that the defendant filed false claims for refunds, evaded paying income taxes, and filed a fictitious obligation. If found guilty, the defendant faces a statutory maximum sentence of 20 years, a term of supervised release of up to 3 years, and a maximum fine of $250,000.00. The defendant was arraigned in Albany, New York, on January 2, 2013 before United States Magistrate Judge Randolph F. Treece and is currently detained.

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

This prosecution resulted from an investigation conducted by the Internal Revenue Service, Criminal Investigation, New York Field Office, the Federal Bureau of Investigation, Albany Field Office, the New York State Police, and the Treasury Inspector General for Tax Administration. The case is being prosecuted by Assistant United States Attorney Ransom P. Reynolds. Further questions may be directed to Executive Assistant U.S. Attorney John Duncan at (315) 448-0672.

RICHARD S. HARTUNIAN, United States Attorney, Northern District of New York announces that a federal Grand Jury in Syracuse has returned a seven-count Indictment charging GLENN RICHARD UNGER (62, of Ogdensburg, NY) with obstructing and impeding the Internal Revenue Service (“IRS”) by filing numerous false and fraudulent IRS forms seeking refunds. Specifically, the Indictment alleges that GLENN RICHARD UNGER obstructed and impeded the IRS between 2007 and 2011 by filing numerous false and fraudulent claims with the IRS for payment of a refund of taxes totaling approximately 36 million dollars. Upon receiving the false IRS forms, the IRS realized that they were fraudulent and did not issue any refund checks to GLENN RICHARD UNGER. The Indictment also alleges that the defendant filed false claims for refunds, evaded paying income taxes, and filed a fictitious obligation. If found guilty, the defendant faces a statutory maximum sentence of 20 years, a term of supervised release of up to 3 years, and a maximum fine of $250,000.00. The defendant was arraigned in Albany, New York, on January 2, 2013 before United States Magistrate Judge Randolph F. Treece and is currently detained.

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

This prosecution resulted from an investigation conducted by the Internal Revenue Service, Criminal Investigation, New York Field Office, the Federal Bureau of Investigation, Albany Field Office, the New York State Police, and the Treasury Inspector General for Tax Administration. The case is being prosecuted by Assistant United States Attorney Ransom P. Reynolds. Further questions may be directed to Executive Assistant U.S. Attorney John Duncan at (315) 448-0672.

Richard S. Hartunian, United States Attorney for the Northern District of New York, announced today the guilty plea of Brian Lamont Roberts, 54, of Syracuse, New York. Roberts pled guilty in federal district court before the Honorable Judge Norman Mordue, to a one count indictment that charged him with committing robbery at the Veteran’s Administration Hospital in Syracuse, NY on February 2, 2012. The robbery charge carries a maximum possible penalty of 15 years in prison.

During his plea colloquy, Roberts admitted he robbed a delivery truck driver of a can of soda at knife point, while threatening the driver with bodily injury. He further admitted that he committed the offense while high on crack cocaine and alcohol, and that he suffers from addiction to both substances. Roberts has been in prison and drug and alcohol treatment for nearly a year since the robbery. Judge Mordue ordered that such treatment continue. Sentencing has been set for May 13, 2013 at 10 a.m.

This case was investigated by Special Agents of the Veteran’s Administration. The case is being prosecuted by Assistant United States Attorney Craig A. Benedict. Questions may be directed to AUSA Benedict at 315-448-0672.

[Plattsburgh, New York]—United States Attorney Richard S. Hartunian announces that DARRYL FIGUEROA, age 29, pled guilty on January 3, 2013 to conspiracy to possess with the intent to distribute and to distribute more than 280 grams of cocaine base, in violation of Title 21, United States Code, Section 846. On July 25, 2012 co-defendant DESHAWN WHITE, age 27, pled guilty to the same offense. FIGUEROA and WHITE pled guilty before Chief United States District Court Judge Gary L. Sharpe in Albany, New York. WHITE is scheduled to be sentenced on March 21, 2013 in Albany, New York and FIGUEROA is scheduled to be sentenced on May 7, 2013, in Albany, New York. Both FIGUEROA and WHITE have prior drug felony convictions and, as a result, are subject to a mandatory minimum sentence of twenty (20) years imprisonment, a maximum sentence of life, and a fine up to $20,0000,000. Judge Sharpe has ordered that the defendants remain detained pending sentencing.

FIGUEROA, also known as “Mike,” and WHITE, also known as “Jay,” are both residents of Brooklyn, New York. Since approximately 2007 until January 2012, both FIGUEROA and WHITE were involved in a scheme to transport large quantities of cocaine base, “crack,” from Brooklyn, New York to Plattsburgh, New York and then distribute the crack in Plattsburgh. FIGUEROA and WHITE recruited local crack dealers and users to sell the drugs on their behalf.

The investigation was conducted by the Adirondack Drug Task Force, the Drug Enforcement Administration, the Plattsburgh Police Department, the New York State Police, and the Clinton County Sheriff’s Department. The case is being prosecuted by the United States Attorney’s Office for the Northern District of New York.

Any questions may be directed to Executive Assistant U.S. Attorney John G. Duncan in Syracuse, New York at (315) 448-0672 or Assistant U.S. Attorney Daniel C. Gardner in Plattsburgh, New York at 518-314-7800.