Southern District of Ohio

 

CONTACT: Fred Alverson
Public Affairs Officer

CINCINNATI – Michael E. Peppel, 46, former Chief Executive Officer of MCSi, Inc., a computer sales company formerly headquartered in Dayton, was sentenced in U.S. District Court here today to two years in prison followed by three years of court supervision for engaging in a deliberate scheme to defraud millions of dollars from company investors by improperly reporting company revenues. He was also fined $5 million.

Carter M. Stewart, United States Attorney for the Southern District of Ohio; Kevin R. Cornelius, Special Agent in Charge, Federal Bureau of Investigation, Cincinnati Field Division (FBI); Kathy Enstrom, Acting Special Agent in Charge, Internal Revenue Service Criminal Investigation (IRS) and Christopher T. White, Assistant Inspector in Charge, Cincinnati Field Office, U.S. Postal Inspection Service announced the sentence handed down today by Senior U.S. District Judge Sandra S. Beckwith.

Peppel pleaded guilty in August 2010 to one count each of conspiracy, securities fraud, and money laundering.

Peppel falsified company accounting records and financial statements to mislead investors about the company’s dire financial situation. “Through his calculated conduct, Mr. Peppel undermined the core principle upon which American equity markets and investors rely – the need for complete, accurate and truthful information,” Assistant U.S. Attorneys Dwight Keller and Brent Tabacchi wrote in a filing with the court prior to sentencing.

Peppel was ordered to forfeit three pieces of real property, the contents of bank and investment accounts, a$20,000 Italian oil painting and a $9,000 Italian bronze sculpture that represent the proceeds traceable to the crimes.

MCSi called itself North America’s premier reseller of advanced integrated computer technology and visual communications products for business, government and educational institutions. MCSi was formerly listed on the NASDAQ stock market, until it was delisted in April 2003. In 2001, the firm’s annual sales exceeded $810 million, it maintained offices at 160 locations, had 50,000 clients and had over 1,300 employees. In 2003 it filed for bankruptcy. 

Stewart commended the efforts of the agents and investigators of the IRS, U.S. Postal Inspection Service and FBI for their in-depth investigation into this matter, and Assistant U.S. Attorneys Dwight Keller and Brent Tabacchi, who represented the United States in the case.

 

CONTACT: Fred Alverson
Public Affairs Officer

COLUMBUS – Jeffrey G. Kelly, 45, formerly of Hilliard, Ohio, pleaded guilty in U.S. District Court to carrying out a $1.5 million investment fraud scheme between 2006 and 2011. The victims included family friends, relatives, fellow church members, parents of his children’s schoolmates, and a groomsman from his wedding. Kelly pleaded guilty to one count of wire fraud and one count of interstate transportation of a security taken by fraud.

Carter M. Stewart, United States Attorney for the Southern District of Ohio and Kevin R. Cornelius, Special Agent in Charge, Federal Bureau of Investigation (FBI) announced the pleas entered today before U.S. District Judge Edmund A. Sargus Jr.

During the plea hearing, an FBI agent testified that Kelly owned and operated several businesses in the Columbus area and promised clients and potential clients that their money would be deposited in investment funds that included stocks, real estate investment trusts, bonds and other investments. Kelly never invested the clients’ money, but used the funds to pay his personal and business expenses as well as to repay earlier investors.

A federal grand jury indicted Kelly on December 11. FBI agents arrested Kelly at his workplace near his current home in Orlando, Florida. He was placed on bond and he returned to Ohio for court appearances.

Kelly operated businesses named Superior Financial Resources, LLC, J.G. Kelly Financial Group, LLC, J.G. Kelly Equities Group, LLC, and JGK Group, LLC.

Kelly received approximately $1,523,710 from investor clients. The plea agreement calls for Kelly to make restitution to the victims of the crimes.

U.S. Attorney Stewart commended the FBI agents who investigated the case with the assistance of the Ohio Department of Commerce Division of Securities, and Assistant U.S. Attorney Dale E. Williams Jr., who is representing the United States.

Wire fraud is punishable by a sentence ranging from probation to 20 years in prison. Interstate transportation of a security taken by fraud is punishable by a sentence ranging from probation to ten years in prison. Judge Sargus will set a date for sentencing. 

CONTACT: Fred Alverson
Public Affairs Officer

CINCINNATI – Adam P. Moellers, 35, of Mason, Ohio was sentenced to 36 months in prison and Gary P. Dailey, aka Gary Klump, 33, of Covington, Kentucky was sentenced to 21 months in prison in U.S. District Court today for engaging in a foreclosure rescue scheme through a company called American Equity Group (AEG). A third defendant, Perry Bensick, 37, of Monroe, Ohio was sentenced on May 21 for his role in the scheme to a year and a day in prison. Each will be placed under court supervision for three years after their prison terms end.

Carter M. Stewart, United States Attorney for the Southern District of Ohio and Kevin Cornelius, Special Agent in Charge, Federal Bureau of Investigation, Cincinnati Field Division (FBI) announced the sentences imposed by U.S. District Judge Michael Barrett.

AEG approached homeowners in financial distress with promises to find a buyer for their property who would let them stay there as renters until they were ready to buy it back. AEG convinced individuals to become investors by promising them they could buy a property with no money down, collect rent for a year or two then sell it back to the renter for a profit. AEG inflated the sale price, put together fraudulent loan applications, and took out extra cash at closing. The renters never purchased the properties back and the investors couldn’t afford to keep them.

“As a result, the properties went into foreclosure with even larger loan balances and with investors/borrowers who did not appreciate the risk that they had undertaken,” Assistant U.S. Attorney Timothy Mangan wrote in a court filing before Dailey’s sentencing. 

The FBI calculated that in 2006 and 2007, the scheme caused losses of $6,849,460 to lenders. The defendants will be ordered to pay restitution in an amount to be determined by the court.

“The lenders were not the only victims,” Assistant U.S. Attorney Mangan told the court. “For the investors, they typically ended in bankruptcy or with ruined credit in exchange for a rescue plan by AEG that was doomed to fail.”

Moellers pleaded guilty on August 9, 2012 to one count of conspiracy.  Dailey pleaded guilty on June 4, 2012 to one count of wire fraud. Besnick pleaded guilty on August 6, 2012 to one count of conspiracy.

U.S. Attorney Stewart commended the investigation by the FBI and Assistant U.S. Attorney Mangan, who represented the United States in the case.

CONTACT: Fred Alverson
Public Affairs Officer

CINCINNATI – A federal grand jury has charged nine people from Portsmouth, Ohio and eight people from the Dayton, Ohio area with engaging in a two-year conspiracy to deliver heroin from Dayton to Portsmouth where they distributed it out of seven Portsmouth locations including two motels. The eighteenth defendant lives in Lancaster, Ohio.

All are charged with conspiracy to possess with intent to distribute more than one kilogram of heroin, a crime punishable by at least ten years and up to life in prison.

Carter M. Stewart, United States Attorney for the Southern District of Ohio, Kevin R. Cornelius, Special Agent in Charge, Federal Bureau of Investigation, Cincinnati Field Office (FBI), Ohio HIDTA Director Derek Siegel, Scioto County Sheriff Marty Donini, Montgomery County Sheriff Phil Plummer, Portsmouth Police Chief Robert Ware and Dayton Police Chief Richard Biehl announced the indictment which was unsealed today following arrests by federal and local law enforcement officers.

The 29-count indictment charges members of the conspiracy with other crimes including possession with intent to distribute heroin, distribution of heroin and maintaining a place for the purpose of distributing heroin. Each of those crimes is punishable by a sentence ranging from probation to 20 years in prison.

If convicted of any of the crimes alleged in the indictment, the defendants must also forfeit any proceeds or profits they received from the conspiracy, in addition to any prison sentence they may receive.

U.S. Attorney Stewart commended the cooperative investigation by members of the HIDTA Task Force, the Ohio State Highway Patrol and Scioto County Prosecutor Mark Kuhn.

The defendants will appear before a U.S. Magistrate Judge in Cincinnati who will determine whether or not they will be released on bond and schedule dates for future court appearances.

An indictment is only a charge and is not evidence of guilt. The defendants are entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.

A list of those charged is below.

United States v. Shawn Shank, et al.

PORTSMOUTH RESIDENTS CHARGED
Jackie Tupper, 20
Josh Walls, 33
Jerry Walls, 61
Conna Mounts, 55
Darryl Smith, aka “Slim”, “June”, 25
Brandon Jackson, 37
Robert Garmany, aka “Black Rob”, 35
Keith Goodwin, aka “Unc”, 58
Jeanette Jennings, 34

DAYTON AREA RESIDENTS CHARGED
Shawn Shank, aka “Red,” 37, Dayton
Michael Shank, aka “P.J.” “No-No”, 42, Moraine
Stevie Parson, aka “Will”, 44, Dayton
Aaron Knolton, aka “Lil No No”, “Youngin”, 24, Dayton
Kendall Mabry, aka “Tweety Bird”, 29, Dayton
Porsha Smith, 24, Dayton
Vita Williams, 34, Dayton
Stephone McGhee, 36, Dayton

OTHER
Tara Loehner, 24, Lancaster

CONTACT: Fred Alverson
Public Affairs Officer

COLUMBUS – Daniel L. Temple, 36, of Columbus pleaded guilty in United States District Court to one count of threatening the President of the United States.

Carter M. Stewart, U.S. Attorney for the Southern District of Ohio and Mark Porter, Special Agent in Charge, U.S. Secret Service, announced the plea entered today before U.S. Magistrate Judge Norah McCann King.

According to court documents, on March 24, 2013, the Columbus office of the U.S. Secret Service received a notification that an individual had posted messages on the internet site Twitter.com in which the individual had repeatedly indicated they intended to kill the President of the United States. The notification detailed that the threats were posted via two separate addresses.

Secret Service agents responded to one of the residential addresses which was in Westerville, Ohio and spoke with Temple’s parents. Secret Service agents also went to Temple’s residence in Columbus and spoke with him. Temple told them that he had posted all of the messages which threatened to kill the President out of a sense of frustration with the current political climate.

Temple’s crime is punishable by a sentence ranging from probation to five years in prison. The court will conduct a pre-sentence investigation before determining the sentence and schedule a date for sentencing. Temple will remain on bond until sentencing.

U.S. Attorney Stewart commended the investigation by Secret Service agents, and Assistant U.S. Attorney Michael Hunter, who is representing the United States in this case.

CONTACT: Fred Alverson
Public Affairs Officer

CINCINNATI –Curtis Boggs, 54, formerly of Harrison, Ohio, was sentenced in U.S. District Court to 27 months in prison, ordered to pay $352,745.21 in restitution and forfeit any assets that he received as proceeds of the crimes he committed as part of a fraudulent scheme he promoted to bring a Grand Prix race to Cincinnati in 2009.

Carter M. Stewart, United States Attorney for the Southern District of Ohio, Robert E. Hughes, Acting Special Agent in Charge, Federal Bureau of Investigation (FBI), and Kathy Enstrom, Acting Special Agent in Charge, Internal Revenue Service Criminal Investigation (IRS) announced the sentence handed down today by Chief U.S. District Court Judge Susan J. Dlott.

Boggs pleaded guilty on January 3, 2013 to one count each of wire fraud and money laundering. According to court documents Boggs was employed by an insurance company as an investment advisor from 2000 to 2009. Beginning in approximately October 2008 and continuing through approximately August 2009, Boggs solicited his customers and others to invest in silver and gold, or in a grand prix race, through a corporation called Cincinnati Grand Prix ("CGP"). Boggs admitted that, during that period, he fraudulently obtained investments of at least $352,745 for CGP in exchange for shares in the "stock" of CGP.

“Although some of the money was spent to developing the race, significant sums of money were also spent on the Defendant’s personal expenses,” Assistant U.S. Attorney Tim Mangan wrote in a memorandum filed with the court prior to sentencing.”

On or about October 21,2008, Boggs laundered money derived from the fraud scheme by using $27,232.63 to buy a Lincoln MKX vehicle for his personal use.

A federal grand jury indicted Boggs in June. He was arrested on October 8, 2012 when he was stopped trying to enter the U.S. from Mexico.

Stewart commended the cooperative investigation by FBI and IRS agents, as well as Assistant U.S. Attorney Mangan, who represented the United States in this case.

CONTACT: Fred Alverson
Public Affairs Officer

CINCINNATI – Kevin Huff, 36, of Portsmouth, Ohio was sentenced in U.S. District Court to serve 262 months in prison for his role in conspiring to distribute more than 200,000 dosage units (30mg tablets) of Oxycodone and money laundering.  In addition, Huff was ordered to forfeit six properties in Lucasville and Sciotoville, Ohio; three vehicles, three ATV’s, a boat,  $20,000 in currency, the contents of two bank accounts totaling approximately $118,875 and his latest income tax return as proceeds of the ill-gotten gains.

Carter M. Stewart, United States Attorney for the Southern District of Ohio; Ohio Attorney General Mike DeWine; Kathy A. Enstrom, Acting Special Agent in Charge, Internal Revenue Service, Criminal Investigation, Cincinnati Field Office (IRS); Kyle W. Parker, Executive Director of the Ohio Board of Pharmacy; and Kimberly C. Anderson, Interim Executive Director, State Medical Board of Ohio announced the sentence handed down by U.S. District Judge Michael R. Barrett.

“Between July 2009 and June 2011 Huff conspired to illegally distribute Oxycodone and concealed the proceeds gained from the clinic he owned by purchasing real property, vehicles, and boats, as well as concealing the proceeds in bank accounts,” U.S. Attorney Stewart said. “I want to commend the investigators in the agencies named above as well as special agents with the Ohio Bureau of Criminal Investigation in Attorney General DeWine’s Office, the Ohio Organized Crime Task Force, the Rt. 23 Pipeline Task Force, Ross County Sheriff George W. Lavender Jr., Ross County Prosecutor Matthew S. Schmidt, and Chillicothe Police Chief Roger Moore for their agencies’ role in the investigation.”

According to court documents, agencies began investigating Primary Health Care clinic owned by Huff early in 2011. Primary Health Care charged each “patient” $200 in cash in return for prescriptions for Oxycodone and other narcotics without the benefit of a legitimate medical examination by a physician.  The physician on staff saw approximately 25 patients per day.

"This case should serve as an example of just how serious we are about stopping those who are involved in overprescribing prescription medication," said Attorney General DeWine.  "People are regularly overdosing on prescriptions that they should never have access to in the first place, and if we have to put those responsible in prison for decades, that's what we'll do."

Huff received between $5,000 and $8,000 in U.S. currency three times a month for his share of the clinic's proceeds.  In 2009, Huff received approximately $245,000 in U.S. currency from the operation of the pain clinic.  Huff did not deposit this cash into a bank; instead he kept the currency at several locations including his basement and in the shed behind his mother-in-law's house.  Huff used the money to pay day-to-day expenses, purchase assets, and take vacations.
The proceeds generated from the operation of Primary Health Care pain clinic represented the proceeds of illegal narcotics trafficking.  Other drugs commonly prescribed also included Hydrocodone and Xanax.
Huff purchased a house in Lucasville, Ohio and concealed the purchase of the house by deeding the house in the name of another individual.  Huff used $40,000 in drug proceeds to pay for the house.
Huff pleaded guilty on June 27, 2012 to one count of unlawfully conspiring to distribute oxycodone and one count of money laundering. He was sentenced to 240 months for the conspiracy followed by 22 months for the money laundering. 

“Kevin Huff not only fueled the prescription drug problem in Southern Ohio, he supported addiction in several parts of the country”, said Acting Special Agent in Charge Kathy A. Enstrom, IRS, Criminal Investigation, Cincinnati Field Office.  “IRS Criminal Investigation is committed with taking the profit away from criminal enterprises and putting those individuals in jail.”

Stewart recognized District Criminal Chief Kenneth L. Parker and Special Assistant U.S. Attorney Aaron Haslam from Ohio Attorney General DeWine’s Office, who are representing the United States in this case.

CONTACT: Fred Alverson
Public Affairs Officer

DAYTON, OHIO -- A federal grand jury here has indicted Ebony F. Taste, 27, Trotwood, Saleen M. Nolan, 25, Dayton, and Jazmen Yates, 29, Galloway, with one count of conspiracy to file false claims for federal income tax refunds, totaling in excess of $150,000, with the Internal Revenue Service (IRS).  In addition, each was charged individually with filing false claims for federal income tax refunds with the IRS; Taste was charged with five counts, Nolan with four counts, and Yates with four counts.

Carter M. Stewart, United States Attorney for the Southern District of Ohio and Kathy A. Enstrom, Acting Special Agent in Charge, Internal Revenue Service, Criminal Investigation, Cincinnati Field Office and Gavin McClaren, Resident Agent in Charge, U.S. Department of Veterans Affairs, Office of Inspector General, Criminal Investigations Division, Cleveland, Ohio announced the indictment filed today.

The indictment accuses Taste, Nolan, and Yates with participating in a conspiracy between late 2008 and April 2011.  The indictment alleges that Taste, Nolan, and Yates obtained personal identifying information, including names, dates of birth, and Social Security numbers belonging to other individuals.  Yates is also accused with recruiting purported taxpayers and directing them to Taste.

Taste and Nolan allegedly prepared and filed false income tax returns in the names of the purported taxpayers. Each of the false income tax returns falsely claimed substantial income tax refunds.  It has been alleged that Taste and Nolan instructed the IRS to wire transfer the false income tax refunds to various bank accounts the two defendants controlled. Taste, Nolan, and Yates allegedly kept a portion of the fraudulently obtained income tax refunds for themselves and provided the remainder of the income tax refunds to the purported taxpayers.
"Law abiding citizens expect the government to hold accountable those who use deceit and fraud to line their pockets with money, especially when that money represents stolen federal taxes," said Kathy A. Enstrom, Acting Special Agent in Charge, IRS Criminal Investigation, Cincinnati Field Office.

An indictment is merely an accusation.  All defendants are presumed innocent until and unless proven guilty.  Conspiracy to file false claims for federal income tax refunds with the IRS is punishable by up to ten years in prison and a fine of up to $250,000.  Filing false claims for federal income tax refunds with the IRS is punishable by up to five years in prison and a fine of up to $250,000.

This case is being prosecuted by Assistant United States Attorney Brent Tabacchi and investigated by special agents of IRS-Criminal Investigation and the Veterans Administration Office of Inspector General.

CONTACT: Fred Alverson
Public Affairs Officer

DAYTON – A U.S. District Court jury here convicted Richard Trepanier, 40, of Gettysburg, Ohio of one count of receipt of child pornography and one count of possession of child pornography.

Carter M. Stewart, United States Attorney for the Southern District of Ohio, and Robert A. Hughes, Acting Special Agent in Charge, Federal Bureau of Investigation (FBI), announced the verdict returned today following a trial that began April 10.

Testimony during the trial showed that Trepanier using the name “Wingman66” contacted an Australian Federal Police undercover officer patrolling the internet in February 2008 and offered him images of child pornography. The Australian authorities tracked the user name to Trepanier and sent the information to the FBI’s office in Cincinnati.

FBI agents interviewed Trepanier who consented to a search of his computer by the Miami Valley Regional Computer Forensics Laboratory. Their analysis identified approximately 56 images of child pornography and evidence that Trepanier was trading child pornography.

“This case demonstrates the international cooperation that is necessary to protect children from exploitation,” U.S. Attorney Stewart said.

The penalty for receipt of child pornography is a prison sentence of at least five and up to 20 years in prison. Possession of child pornography is punishable by up to ten years in prison. Judge Thomas M. Rose presided over the trial and remanded Trepanier to the custody of the U.S. Marshals Service immediately after the jury returned their verdict. Judge Rose will schedule a date for sentencing following an investigation by the court.

This case was brought as part of Project Safe Childhood, a nationwide initiative designed to protect children from online exploitation and abuse.  Led by the U.S. Attorneys Offices, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children, as well as identify and rescue victims.  For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov/.

U.S. Attorney Stewart commended the cooperative investigation by the agencies involved, as well as Dayton Branch Chief Laura Clemmens and Assistant U.S. Attorney Christy Muncy, who are representing the United States in this case. 

CONTACT: Fred Alverson
Public Affairs Officer

COLUMBUS – A federal grand jury here has returned a 24-count indictment charging three Columbus-area men and a woman with providing and using firearms in illegal drug trafficking crimes.

Carter M. Stewart, United States Attorney for the Southern District of Ohio, Robin Shoemaker, Special Agent in Charge, Bureau of Alcohol, Tobacco, Firearms and Explosives, Columbus Field Division (ATF), and Gahanna Police Chief Dennis Murphy announced the indictment today.

The indictment charges Jack A. Morris, 37, of Columbus, Jeremy S. Baker, 25, of Blacklick, fugitive and Judy L. Kindle, 45, of Columbus with conspiracy and possession with intent to distribute oxycodone, which are each punishable by up to 20 years in prison, and possession with intent to distribute marijuana, punishable by up to five years in prison.

Morris is also charged with seven counts of possession of one or more firearms during and in relation to a drug trafficking crime. The first count is punishable by at least five years and the other counts are punishable by at least 25 years in prison. Baker and Kindle are also charged with one count of possession of a firearm in relation to a drug crime.

If convicted on all counts, Morris faces a mandatory minimum sentence of 155 years.

The indictment alleges that Morris and others supplied street level distributors of marijuana, cocaine and oxycodone with firearms and body armor as a way of protecting themselves from potential robberies. Morris also placed firearms in strategic locations throughout the house he shared with Kindle in order to intimidate potential robbers and protect the narcotics and proceeds kept at the house. 

The indictment charges Christopher W. Wilcox, 30, of Reynoldsburg with two counts of supplying the others with firearms including an AK-47 and an AR-15, knowing that the weapons were to be used in the drug trafficking. Each count is punishable by up to ten years in prison.

"ATF will continue to work with our law enforcement partners to aggressively pursue those individuals who possess and use firearms in furtherance of their illicit activities", stated ATF Special Agent in Charge Shoemaker.

U.S. Attorney Stewart commended the investigation conducted by ATF and the Gahanna Police officers, and Assistant U.S. Attorney David DeVillers and Special Assistant U.S. Attorney Steve Dunbar with Columbus City Attorney Rick Pfeiffer’s Office, who are representing the United States in the case.

An indictment merely contains allegations, and defendants are presumed innocent unless proven guilty in a court of law.

CONTACT: Fred Alverson
Public Affairs Officer

COLUMBUS -- Terrence R. McLean, 38, of Westerville was sentenced in U.S .District Court to 18 months in prison for stealing cash and gift cards from mail he was responsible for processing at the U.S. Postal Service’s Processing and Distribution Center in Columbus, and for assaulting the officers who arrested him..

Carter M. Stewart, United States Attorney for the Southern District of Ohio, and Robert LaPina, Special Agent in Charge, U.S. Postal Service Office of the Inspector General, (USPS OIG) announced the sentence handed down today by U.S. District Judge Algenon L. Marbley.

McLean operated a mail sorting machine at the distribution center. On June 29, 2012 USPS OIG special agents watched him separate, cut and tear open colored envelopes while he was at the machine. The USPS OIG special agents saw him remove the contents of the envelopes and place mail in his sock and down the front of his pants.

“McLean targeted greeting cards for his theft scheme since they often contained money or gift cards,” Assistant U.S. Attorney Doug Squires wrote in a memorandum filed with the court prior to sentencing.

USPS OIG special agents approached him as he was leaving the building, identified themselves and told McLean he was under arrest. McLean punched, bit and struck the agents with a coffee mug and cooler. The agents were taken to a nearby hospital and treated for their injuries.

Agents searched McLean and recovered 71 first class letters including 65 that he had stuffed down the front of his pants in his underwear. They found gift cards in his wallet and his work apron and $341 in cash.

“There are two sets of victims in this case,” U.S. Attorney Stewart said. “The USPS OIG Special Agents who were injured during the arrest and the people who mailed greeting cards and entrusted money and property to the U.S. Mail. The Postal Service Inspector General is to be commended for a quick response after detecting indicators of the theft and thorough investigation.”

McLean pleaded guilty on December 20, 2012 to 71 counts of mail theft by an employee, 12 counts of receipt of stolen mail and two counts of assault on a federal officer.

“The majority of postal employees are hard-working public servants dedicated to moving mail to its proper destination,” U.S. Postal Service Office of Inspector General Special Agent in Charge LaPina said. “Unfortunately, McLean decided to betray the public’s trust and steal from postal customers, and also violently assault USPS OIG special agents when they attempted to stop him. Today’s sentence demonstrates that USPS OIG special agents take these cases seriously, and that postal employees who steal mail are throwing away their careers and could end up in jail.”

McLean was also ordered to pay restitution of $2,640.02 to the victims including payback of worker compensation of $2,286.92 for medical bills.  

U.S. Attorney Stewart commended the investigation by USPS OIG special agents, and Assistant U.S. Attorney Doug Squires, who represented the United States in the case.

CONTACT: Fred Alverson
Public Affairs Officer

COLUMBUS – Audrey Costar, 46, of Whitehall, Ohio pleaded guilty in U.S. District Court to using 50 stolen identities to file for unemployment benefits in eight states over three years, netting her almost $80,000.

Carter M. Stewart, U.S. Attorney for the Southern District of Ohio, James Vanderberg, Special Agent-in-Charge of the U.S. Department of Labor Office of Labor Racketeering and Fraud Investigations, Mark Porter, Special Agent in Charge, U.S. Secret Service and Elias Papoulias, Resident Agent in Charge, Social Security Administration Office of Inspector General announced the pleas entered today before U.S. Magistrate Judge Mark Abel.

According to court documents, Costar used 50 stolen identities to electronically file false unemployment insurance claims in Alaska, Minnesota, Montana, Arizona, Utah, Ohio, Colorado and Pennsylvania between February 2009 and December 2012. She collected approximately $78,674 using the scheme.

Costar was also collecting Social Security benefits in her own name at the time. Earnings made through the identity theft scheme were not reported to the Social Security Administration which resulted in her receiving approximately $7,906.78 in benefits to which she was not entitled.

Costar pleaded guilty to two counts of theft of government funds, each punishable by up to ten years in prison, and two counts of aggravated identity theft. Each count of aggravated identity theft is punishable by a mandatory two-year sentence to be served consecutive to any other time served.

The court will conduct a pre-sentence investigation before determining the sentence and schedule a date for sentencing.

U.S. Attorney Stewart commended the investigation by Department of Labor, Secret Service agents and Social Security Administration inspectors general, and Financial Crimes Chief Brenda S. Shoemaker, who is representing the United States in this case.

CONTACT: Fred Alverson
Public Affairs Officer

CINCINNATI – Brian P. Gilfedder, 65, of Lexington, Kentucky was sentenced in the Eastern District of Kentucky to serve 41 months in federal prison for stealing $639,618.43 in VA and Social Security benefits from a disabled veteran over a 20-year period. 

Carter M. Stewart, U.S. Attorney for the Southern District of Ohio, and Quentin G. Aucoin, Special Agent in Charge, Department of Veterans Affairs Office of Inspector General Southeast Field Office (VA-OIG), announced the sentence handed down yesterday by U.S. District Judge Danny C. Reeves in the Eastern District of Kentucky.

According to court documents, Gilfedder pleaded guilty to a one-count bill of information charging him with devising a scheme to defraud, embezzle, steal, and knowingly convert $639,618.43 in VA and Social Security benefits paid out to an incompetent veteran.  Gilfedder, licensed to practice law at the time he was appointed fiduciary by the VA in 1990, was responsible for managing the disabled veteran’s financial affairs.  Gilfedder admitted that he stole the veteran’s money between January 1991 and August 2011, putting it to his own use and taking it with the intent to deprive the owner of the use or benefit of the money.  He was charged with submitting altered VA documents along with fraudulent accountings to VA in order to conceal the theft.

Gilfedder agreed to forfeit his license to practice law in the State of Kentucky as part of his plea agreement.  He was also sentenced to serve 3 years of supervised release upon his release from prison and was ordered pay restitution to the VA and Social Security Administration totaling $639,618.43.

The VA fiduciary program was established to protect Veterans and other beneficiaries who, due to injury, disease, or age, are unable to manage their financial affairs. Upon determining a veteran is unable to manage his or her financial affairs, VA will appoint a fiduciary. The fiduciary, normally chosen by the veteran, must undergo an investigation of their suitability to serve. Only after a complete investigation is a fiduciary appointed to manage a veteran’s VA benefits. The fiduciary is responsible to the veteran and oversees the financial management of VA benefit payments. Generally, family members or friends serve as fiduciaries for beneficiaries; however, when friends and family are not able to serve, VA looks for other qualified individuals such as attorneys to serve as a veteran’s fiduciary.

Special Agent in Charge Quentin G. Aucoin stated, “The VA Office of Inspector General is dedicated to aggressively investigating individuals who misuse their fiduciary authority to embezzle VA funds from the incompetent veterans placed under their care.” 

“Protecting our nation’s veterans must remain a high priority endeavor,” Stewart said.  “Especially disturbing is the act of inflicting intentional harm of any kind upon a disabled or otherwise vulnerable veteran.”

Stewart commended the investigative efforts of the VA-OIG Nashville Resident Agency, along with the assistance of the Social Security Administration Office of Inspector General and the Louisville, Kentucky VA Fiduciary Hub, and Special Assistant U.S. Attorney Kenneth L. Parker, who prosecuted the case.

CONTACT: Fred Alverson
Public Affairs Officer

COLUMBUS – Eric M. Rader, 36, of Johnstown, Ohio pleaded guilty in U.S. District Court to one count of conspiracy to commit fraud for submitting fraudulent bills in connection with a federally funded job training program.

Carter M. Stewart, U.S. Attorney for the Southern District of Ohio, Robert Hughes, Acting Special Agent in Charge, Federal Bureau of Investigation (FBI), and James Vanderberg, Special Agent-in-Charge of the U.S. Department of Labor Office of Labor Racketeering and Fraud Investigations announced the plea entered today before U.S. District Judge Michael H. Watson.

According to court documents, Rader was a recruiter and apprenticeship manager for Building Trades Institute (BTI) in Delaware, Ohio from February 2009 to December 2010. BTI receives funding through the American Recovery and Reinvestment Act for Project HIRE, an initiative to help connect and incentivize employers in targeted growth industries who had current job openings to hire dislocated workers who had or were close to having the necessary skills to fill those positions.

Rader forged the signature of an officer of a job leasing company official on a letter claiming jobs existed for people who were to receive solar panel installation training through BTI knowing that such jobs did not exist.

Rader sent an invoice for $66,000 to the program. The invoice had the names of students who had received training prior to Project HIRE starting, making them ineligible for Project HIRE funds. The students never received solar panel installation training which would have resulted in an Industry Recognized Certificate (IRC), which was a requirement of Project HIRE.

Rader pleaded guilty to one count of conspiracy to commit mail fraud, which is punishable by up to five years in prison, a fine of up to $250,000 and three years of supervised release. The plea agreement also calls for Rader to make restitution.

The court will conduct a pre-sentence investigation before determining the sentence and schedule a date for sentencing.

U.S. Attorney Stewart said the investigation is continuing and commended the investigation by Department of Labor and FBI agents, and Financial Crimes Chief Brenda S. Shoemaker, who is representing the United States in this case.

CONTACT: Fred Alverson
Public Affairs Officer

COLUMBUS, OHIO – Antwane J. Rhodes, aka “Rho”, 34, formerly of Springfield, Ohio was sentenced in U.S. District Court today to 120 months in prison, fined $5,000 and ordered to forfeit cash, vehicles and jewelry for his leadership role in a major marijuana trafficking organization in the Columbus area.

Carter M. Stewart, United States Attorney for the Southern District of Ohio, Denise Rocawich, Acting Special Agent in Charge, Internal Revenue Service Criminal Investigation (IRS), Franklin County Sheriff Zach Scott and Columbus Police Chief Kimberley Jacobs announced the sentence imposed today by U.S. District Judge Michael H. Watson.

Rhodes pleaded guilty on September 25, 2012 to one count of conspiracy to possess with intent to distribute more than 1,000 kilograms of marijuana and one count of money laundering.

According to court documents, the investigation into the organization began in 2007. Sources identified Rhodes as one of the leaders of a drug trafficking organization that included Springfield. Loads of marijuana were received from a variety of sources, sometimes via shipment to a warehouse on the west side of Columbus. Rhodes also received shipments of 100 – 200 pounds of marijuana delivered on a motorcycle trailer to his house.

“At its peak, the organization was receiving between 1,200 and 1,800 pounds of marijuana in a month,” U.S. Attorney Stewart said. “The organization was generating hundreds of thousands of dollars a year through the sale of illegal drugs.”

Evidence shows Rhodes laundered the money he was receiving from the sale of the marijuana by buying vehicles and custom jewelry, making deposits into bank accounts of a small company called T & J Investments of Ohio LTD and other means.  Rhodes made trips to Las Vegas with his co-conspirators and gave each of them just under $10,000 cash to carry with them.

Rhodes was ordered to forfeit his interests in three vehicles, more than $27,000 in cash seized during execution of a search warrant and ten pieces of jewelry.

Four Springfield men and one other defendant from Columbus have already been sentenced for their roles in the conspiracy.

Marc Clark, 32, was sentenced on January 7, 2013 to 100 months in prison. Steve Blackmon, 33, was sentenced November 29, 2012 to 15 months in prison. Jayson Reed, 31, was sentenced on February 27, 2013 to 12 months and a day, Shawnte M. Lynn, 35, was sentenced on January 25, 2013 to 15 months in prison. Erik Neely, 34, of Columbus, was sentenced on January 25, 2013 to 18 months in prison.

Rhodes has been in custody since June 2012.

U.S. Attorney Stewart commended the cooperative long-term investigation by Columbus Police officers, Franklin County deputies and IRS agents, as well as Assistant U.S. Attorney Kevin Kelley, who represented the United States in this case.

CONTACT: Fred Alverson
Public Affairs Officer

CINCINNATI – The owner and president of Sigma Capital, Inc. in Cincinnati, Samuel P. Mays, 62, was sentenced in U.S. District Court today to 51 months in prison followed by three years of supervised release for bribing a government official and stealing from his employees’ 401k funds.

Carter M. Stewart, United States Attorney for the Southern District of Ohio, Robert Hughes, Acting Special Agent in Charge, Federal Bureau of Investigation, Cincinnati Field Office (FBI), Elton Malone, Special Agent in Charge, Department of Health and Human Services, Office of the Inspector General (HHS-OIG), Office of Investigations, Special Investigations Branch, and L. Joe Rivers, Regional Director, U.S. Department of Labor, Employee Benefits Security Administration announced the sentence handed down today by Senior U.S. District Judge Sandra S. Beckwith.

A jury convicted Mays in September 2012 of one count each of bribery of a public official, conspiracy, theft or embezzlement from an employee pension plan, and making false statements. 

The scheme involved Mays and another construction contractor, Paul McDonald, 70, of Pleasant Hill, California, and David Mersch, 61, the former Operations Officer for the Cincinnati offices of the U.S. Centers for Disease Control in Cincinnati.

According to trial testimony, Mersch, who lived in Florence, Kentucky accepted bribes from Mays and McDonald in the form of cash and home improvements with a value of at least $175,000 between 2005 and 2011. The jury also convicted Mays of deducting approximately $125,000 from his employees’ paychecks for contribution to their 401k plans, but never depositing the money.

“The nature of a bribery offense is difficult to quantify, because the victim is the public at large and the damage extends beyond the dollars exchanged,” Assistant U.S. Attorney Tim Mangan wrote in a memorandum filed with the court prior to sentencing. “This pattern of bribery undermines the government contracting process and destroys the presumed impartiality of federal contracting officers.”

McDonald pleaded guilty on November 9, 2011 to one count of bribery. He was sentenced on October 31, 2012 to serve five years of probation including 21 months of home confinement and pay a $5,000 fine. He was also disqualified from holding any office of honor, trust or profit and ordered to resign his employment with Entek Mechanical Corporation and to cooperate with the United States in seeking the surrender of Entek’s certification as a government contractor. Mersch pleaded guilty on July 19, 2011 to bribery and is serving 42 months in federal prison. Both testified against Mays during the trial.

“Mays victimized taxpayers and jeopardized his hard-working employees’ futures,” said Elton Malone, Special Agent in Charge of the Special Investigations Branch within the U.S. Department of Health and Human Services’ Office of Inspector General. “We will not tolerate conspiracy schemes and will continue to work tireless to punish such corruption.”

“Employer sponsored retirement plans serve a vital role in providing a financially secure retirement for America’s workers,” said L. Joe Rivers, Regional Director for the Cincinnati Regional Office of the Labor Department’s Employee Benefits Security Administration. “This case underscores EBSA’s commitment to protecting the assets of 401(k) and other employee benefit plans and punishing those who would divert these funds for their own enrichment.”

Stewart commended the cooperative investigation by FBI, HHS inspector general, and Department of Labor investigators, as well as Assistant U.S. Attorneys Timothy Mangan and Christy Muncy, who represented the United States in this case.

Mays will surrender to begin serving his prison sentence on a date to be set by the U.S. Marshals Service and the Bureau of Prisons.

CONTACT: Fred Alverson
Public Affairs Officer

COLUMBUS – Darnell J. Harris, 25 and his sister Mariah Harris, 19, both of Canal Winchester, Ohio have been arrested based on charges in a federal indictment alleging that they robbed a Reynoldsburg jewelry store in May 2012.

Carter M. Stewart, United States Attorney for the Southern District of Ohio, Robin Shoemaker, Special Agent in Charge, Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), and Reynoldsburg Police Chief Jim O’Neill announced the arrests which occurred yesterday.

The indictment charges each defendant with one count of obstructing interstate commerce (Hobbs Act) by robbing Heins Jewelers in Reynoldsburg on May 21, 2012. The crime is punishable by up to 20 years in prison and a fine of up to $250,000.

“The indictment alleges that they used actual and threatened physical violence in furtherance of the robbery,” U.S. Attorney Stewart said.

The indictment charges Darnell Harris with one count of brandishing a firearm during a crime of violence. That crime carries a sentence of seven years in prison to be served consecutive to any other sentence.

Reynoldsburg and Pickerington police officers arrested Darnell Harris following a traffic stop in Pickerington. Mariah Harris surrendered to the Reynoldsburg Police and was arrested there. Both have initial appearances before a U.S. Magistrate today.

“Pursuing offenders who commit firearms violence and disrupt the safety of our communities remains our top priority,” stated ATF Special Agent in Charge Shoemaker.

“Detective Mike Binder did an outstanding job on this case,” Reynoldsburg Chief O’Neill said. “I appreciate the partnership with Pickerington Police in making the arrest.”

U.S. Attorney Stewart commended the investigation conducted by the ATF and Reynoldsburg Police. Assistant U.S. Attorney David J. Bosley is representing the United States in the case.

An indictment merely contains allegations, and defendants are presumed innocent unless proven guilty in a court of law.

CONTACT: Fred Alverson
Public Affairs Officer

CINCINNATI – Jerry Smith, 50, of Brookville, Indiana, was sentenced to 65 months in prison, ordered to pay $5,406,950.65 in restitution to victims and $72,412.70 in restitution to the IRS for his role in an investment scheme that ensnared approximately 72 investors in Ohio, Indiana and Kentucky.

Carter M. Stewart, United States Attorney for the Southern District of Ohio, Dugan Wong, Inspector in Charge, U.S. Postal Inspection Service, and Denise Rocawich, Acting Special Agent in Charge, Internal Revenue Service Criminal Investigation, Cincinnati Field Office (IRS), announced the sentence imposed yesterday by Senior U.S. District Judge Herman J. Weber.

On June 12, 2012, Smith pleaded guilty to three counts of a four-count bill of information charging him and his co-conspirator, Jason Snelling, 48, Cincinnati, with crimes arising out of their operation of a multi-million dollar Ponzi scheme. Smith admitted that he engaged in a mail and wire fraud conspiracy in connection with a scheme to defraud investors in CityFund and Dunhill, two bogus “day trading” entities which were nothing more than bank accounts where investors’ funds were deposited and then spent by Snelling and Smith.

Smith also admitted that he engaged in obstruction by creating fictitious trading statements and providing them to federal agents to impede the investigation and cover up the fraud. Finally, Smith admitted that he committed tax evasion by failing to report the embezzled investor funds as income on his tax returns for the tax year 2008 and additional tax years.

“Consistent with a classic Ponzi scheme, early investors were paid interest or return of capital payments, which were not generated by investment earnings, but rather by monies solicited from later investors,” Stewart said. “These payments served to lull the victims into a false sense of security and to prevent or delay the discovery of the fraudulent investment scheme.”

During the course of this fraudulent scheme, Smith used investors’ money to pay for his expensive rural Indiana home, to buy a boat and jet skis, and to operate his insurance business.

Smith issued himself a monthly payment from CityFund Advisory, LLC. He made checks payable to his corporation, Smith’s Realty and Insurance. All of the monthly checks were, in fact, income to Smith and were not reported on his personal federal income tax returns. For the 2006 through 2009 income tax years, Smith willfully and knowingly omitted a total of $345,735.62 in income on his personal income tax returns, resulting in a total tax loss to the IRS of $72,412.70.

On October 23, 2012 Snelling was sentenced to 131 months in prison, ordered to pay $5,336,177.78 in restitution to the victims and $596,928.69 in restitution to the IRS.  Smith was also ordered to pay $5,000,000 in a forfeiture money judgment.

 “The Postal Inspection Service is committed to investigating investment schemes like the one run by Smith and Snelling that target Postal customers every day,” Inspector in Charge Wong said. “Postal Inspectors have a long history of investigating mail fraud dating back to Charles Ponzi himself. It is part of our mission to protect the customers of the Postal Service.”

“Investment fraud is like a 'house of cards.' Because Ponzi schemes have no legitimate business purpose, they can collapse when the money runs out, leaving many investors in financial ruin," said IRS Acting Special Agent in Charge Rocawich. “Investors should watch for red flags, such as guaranteed above-market interest earnings. Investors should thoroughly investigate the nature of any investment before investing their retirement savings.”

This case was prosecuted by Senior Litigation Counsel Anne L. Porter and was investigated by U.S. Postal Inspectors and special agents of IRS-Criminal Investigation.

CONTACT: Fred Alverson
Public Affairs Officer

COLUMBUS – Ryan D. Kasler, 31, of Mt. Pleasant, Ohio pleaded guilty in U.S. District Court today to one count of illegal receipt of child pornography. The plea agreement provides for a sentence of 180 months in prison.

Carter M. Stewart, United States Attorney for the Southern District of Ohio, Dugan T. Wong, Inspector in Charge, U.S. Postal Inspection Service and William Hayes, acting special agent in charge of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) in Ohio and Michigan, announced the plea entered today before U.S. Magistrate Judge Norah McCann King.  

According to testimony presented during the plea hearing, Kasler was identified during an investigation by Postal Inspectors into subjects who received child pornography through the U.S. Mail. Records indicated Kasler bought 17 separate videos or photo collections through the mail.

Investigators executed a search warrant at Kasler’s home in December 2012 and seized videos, a computer and storage media containing child pornography. Agents arrested Kasler, who has been in custody since his arrest.

The court will conduct a pre-sentence investigation prior to deciding whether or not to accept the terms of the plea agreement. If, after viewing the presentence investigation report, the Court is unwilling to accept this plea agreement due to this binding recommendation on the appropriate sentence, either party may withdraw from the provisions of this plea agreement, the defendant may withdraw his plea of guilty, and the case will proceed to trial. If the court accepts the terms of the plea agreement, a date for sentencing will be set.

This case was brought as part of Project Safe Childhood, a nationwide initiative designed to protect children from online exploitation and abuse.  Led by the U.S. Attorneys Offices, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children, as well as identify and rescue victims.  For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov/.

Stewart commended the cooperative investigation by Postal Inspectors and HSI agents, as well as Assistant U.S. Attorney Heather Hill, who is representing the United States in this case.

CONTACT: Fred Alverson
Public Affairs Officer

COLUMBUS – A federal grand jury has indicted Ashkir Ali, 45, of Columbus alleging that he defrauded the U.S. Department of Education’s Supplemental Education Services Program by billing the program for tutoring sessions that were never provided.

Carter M. Stewart, United States Attorney for the Southern District of Ohio, Thomas D. Utz, Jr., Special Agent in Charge for the North Central Region of the U.S. Department of Education, Office of Inspector General and Ohio Auditor of State Dave Yost announced the indictment which was unsealed today following Ali’s arrest yesterday at his place of business by an agent with the U.S. Department of Education.

“We must protect the integrity of all federally funded programs, especially those established to provide low-income families with educational services that help improve their lives,” U.S. Attorney Stewart said.

“By stealing from the SES Program, these ‘phantom tutors’ are stealing opportunities from the children who need them most,” Auditor Yost said.  “Once again, I’m proud of the work we’ve done with our partners on the federal side to ensure that these education dollars go to children.”

Ali owned WAISS Network Technologies and in 2007 signed the first of four annual contracts with Columbus City Schools to provide tutoring for eligible students through the Supplemental Education Services program funded by the U.S. Department of Education. The contract required WAISS to submit student attendance forms with the names of the students, the hours of tutoring services they received, the dates the services were provided and the names of the tutors providing services. Student attendance forms had to be signed by tutors and the student’s parents.

Allegations surfaced of possible misconduct by providers of the Supplemental Education Services Program in 2011.  A special audit of the Columbus City School District began in June 2011 after a request was made by Superintendent Gene Harris.  The Ali case is the first prosecution to result from the Auditor of State’s special audit, which is ongoing.

The indictment alleges that Ali submitted more than $50,000 in fraudulent claims.  The indictment alleges that Ali submitted forms with forged tutor and parent signatures and submitted written claims for payments which falsely represented the number of tutoring hours WAISS provided.

Ali is charged with two counts of making false statements, each punishable by up to five years in prison, and two counts of aggravated identity theft, each of which is punishable by two years to be served consecutive to any other sentence.

Ali appeared before U.S. Magistrate Judge Norah McCann King on March 12 and was released on his own recognizance. Future court appearances will be scheduled by U.S. District Judge Edmund A. Sargus Jr., who is presiding over the case.

U.S. Attorney Stewart commended the investigation by the U.S. Department of Education Office of Inspector General and State Auditor Yost’s Office, as well as Assistant U.S. Attorney Kenneth Affeldt who is representing the United States in this case.

An indictment merely contains allegations, and the defendant is presumed innocent unless proven guilty in a court of law.

CONTACT: Fred Alverson
Public Affairs Officer

CINCINNATI – Landon Price, 36, of Cincinnati was sentenced in U.S .District Court to 180 months in prison for illegal possession of a firearm and after the court designated him an armed career criminal due to his criminal history.

Carter M. Stewart, United States Attorney for the Southern District of Ohio, Edward J. Hanko, Special Agent in Charge, Federal Bureau of Investigation Cincinnati Field Office (FBI), and Chillicothe, Ohio Police Chief Roger Moore announced the sentence imposed today by Senior U.S. District Judge Sandra S. Beckwith.

According to court documents, Chillicothe Police officers were looking for Price for outstanding South Carolina state warrants, found him hiding in the attic of a residence on December 13, 2011 and arrested him. Officers searched him and found nine rounds of ammunition. A search of the residence led to the recovery of a .22-caliber pistol and approximately 65 more rounds of ammunition.

A federal grand jury indicted Price on February 12, 2012 charging him with being a felon in possession of a firearm. Price pleaded guilty on July 24, 2012.

The court determined that Price qualified as an Armed Career Criminal because of a history of crimes including assault and burglary dating back to 1996.

U.S. Attorney Stewart commended the cooperative investigation by the FBI and Chillicothe Police as well as Cincinnati Branch Chief Anthony Springer and Special Assistant U.S. Attorney Gregory Stephens with Butler County Prosecutor Michael T. Gmoser’s office who represented the United States in the case.

CONTACT: Fred Alverson
Public Affairs Officer

DAYTON – Kevin D. Todd, 41, of Ludlow Falls, Ohio pleaded guilty in U.S. District Court to one count of sexual exploitation of children for producing sexually explicit videos of pre-pubescent children he babysat and offering online to trade the videos.

Carter M. Stewart, United States Attorney for the Southern District of Ohio, Edward J. Hanko, Special Agent in Charge, Federal Bureau of Investigation (FBI), William Hayes, acting special agent in charge of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) in Ohio and Michigan, Franklin County Sheriff Zach Scott, Miami County Sheriff Charles A. Cox, and Darke County Sheriff Toby L. Spencer announced the plea entered yesterday before U.S. District Judge Timothy S. Black.  

Terms of the plea agreement call for Todd to spend at least 20 years and up to 25 years in prison. Judge Black will review the plea agreement and has scheduled sentencing for Todd for July 11.

“Sexual exploitation of children by someone who has the responsibility of caring for them is a crime that merits swift, sure punishment,” U.S. Attorney Stewart said. “I want to encourage anyone with any information involving any other possible victims of exploitation to call local law enforcement.”

According to court documents, an undercover investigator with the Franklin County Internet Crimes Against Children Task Force (ICAC) responded to an ad Todd posted on the internet in November 2012 seeking people looking for “taboo.” Through a series of emails, Todd asked the undercover investigator to meet and trade videos and pictures of child pornography. They arranged a meeting and officers arrested Todd on November 24, 2012 when he showed up for the meeting. Investigators found DVDs and other storage media containing pornographic videos and photos in Todd’s car.

Forensic examination found that Todd had produced the videos of the minor females between August 2010 and November 2012 in the bathroom of his residence.

Todd has been held without bond since his arrest.

This case was brought as part of Project Safe Childhood, a nationwide initiative designed to protect children from online exploitation and abuse.  Led by the U.S. Attorneys Offices, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children, as well as identify and rescue victims.  For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov/.

U.S. Attorney Stewart commended the cooperative investigation by the agencies involved, as well as Assistant U.S. Attorney Sheila Lafferty, who is representing the United States in this case. 

CONTACT: Fred Alverson
Public Affairs Officer

CINCINNATI – A federal grand jury has charged Harold J. “Bucky” Shafer, 66, of Pedro, Ohio with ten counts of aiding and assisting in the preparation of false and fraudulent income tax returns and two counts of filing false income tax returns.

Carter M. Stewart, United States Attorney for the Southern District of Ohio, and Thomas J. Kelly, Special Agent in Charge, IRS Criminal Investigation, Washington DC Field Office (IRS) announced the indictment returned March 6.

The indictment alleges that Shafer prepared returns for customers of his tax preparation service that falsely represented that the taxpayers were entitled to claim expenses and deductions he knew they were not entitled to claim.  The indictment also alleges that Shafer filed fraudulent tax returns on his own behalf for two tax years reporting that his business earned income of $426 one year and $1,101 the following year, knowing that he earned more than he reported.

Each count of the indictment is punishable by up to three years in prison and a fine of up to $250,000.

Shafer will appear in U.S. District Court in Cincinnati for an initial hearing on March 14, 2013. 

Assistant United States Attorney Deborah Grimes is representing the United States in this case. 

U.S. Attorney Stewart commended the agents of IRS Criminal Investigation in Charleston, West Virginia, which is part of the Washington, D.C. Field Office, who conducted the investigation.

An indictment merely contains allegations, and the defendant is presumed innocent unless proven guilty in a court of law.

CONTACT: Fred Alverson
Public Affairs Officer

CINCINNATI – Tawanda Marimbire, 25, of Cincinnati was sentenced in U.S. District Court to 70 months in prison for his role in a scheme to use stolen identities to obtain at least $5 million in fraudulent tax refunds. Co-conspirator Kudzaishe Robert Bungu, 28, was sentenced to 27 months in prison.

Carter M. Stewart, United States Attorney for the Southern District of Ohio, Mark Porter, Special Agent in Charge, U.S. Secret Service, and Kathy Enstrom, Special Agent in Charge, Internal Revenue Service Criminal Investigation, Cincinnati Field Office (IRS), announced the sentences handed down yesterday by Chief U.S. District Judge Susan Dlott.

In early 2012, the Secret Service and IRS began investigating a large ring of individuals around the Cincinnati community who were using stolen identities to file fraudulent income tax returns and then steal the fraudulent tax refunds. Members of the ring purchased stolen identities for thousands of actual taxpayers through illicit online forums and from accomplices. The undisputed head of the scheme was Kudzaiishe Marimbire, the brother of Tawanda Marimbire. Most of the stolen funds were laundered and sent to Zimbabwe.

On April 11, 2012, government agents executed a search at several locations. They seized numerous luxury cars, computers, and tax documents. They also found more than $1 million in cash and money orders in a storage locker used by the Marimbire ring. Several members of the group immediately fled the Cincinnati area. Kudzaiishe Marimbire, Hlomera Mabhande, Andrew Bere, and Julius Marimbire fled to Zimbabwe and are fugitives. Tawanda Marimbire was arrested days after the search as he attempted to cross the Canadian border with about $76,000 in cash. Johanes Tagarisa was eventually arrested in Atlanta months after the seven were indicted in September 2012. He pleaded guilty on December 10, 2013 to one count of conspiracy and is awaiting sentencing.

Tawanda Marimbire pleaded guilty on January 15, 2013 to one count of wire fraud. Bungu pleaded guilty on December 17, 2012 to one count of engaging in illegal monetary transactions.

“This case is a perfect example of the emerging problem with tax refunds obtained through the use of stolen identities,” U.S. Attorney Stewart said. “In 2012, around the same time that this case was investigated and indicted, the Department of Justice announced a new directive to fight this exact scheme, which was named ‘stolen identity refund fraud’ or ‘SIRF.’”

IRS Criminal Investigation Special Agent in Charge Kathy A. Enstrom said, “Individuals who commit refund fraud and identity theft of this magnitude and with this degree of trickery, dishonesty and deceit, deserve to be punished to the fullest extent of the law. IRS Criminal Investigation remains committed to the pursuit of refund fraud and identity theft, and together with our partners at the U.S. Attorney’s Office, we will hold those who engage in similar conduct accountable.”

Others charged as a result of the ongoing investigation include: *          Tinotende Madyira, 25, sold a list of stolen identities to Kudzaishe Marimbire.  He pleaded guilty to identity theft and was sentenced to 12 months and 1 day of imprisonment.
•           Liberty Matonhodze, 25, working for Bungu, he was involved in withdrawing the refunds from the debit cards at ATMs.  He was sentenced to 12 months and 1 day of imprisonment, plus restitution of $120,000.
•           Fitzgerald Chibamu, 36, was involved with Kudzaiishe Marimbire in the transfer of the stolen funds through his bank accounts to Zimbabwe.  He has pleaded guilty and is awaiting sentencing.
•           Charges are pending against Lameigo Mutongwiza and Zla Holder, indicted on November 6, 2013.

U.S. Attorney Stewart commended the cooperative investigation by the Secret Service and IRS, as well as Assistant United States Attorney Timothy Mangan, who is representing the United States in this case. 

###

CONTACT: Fred Alverson
Public Affairs Officer

CINCINNATI – Marnay Love, 33, of Cincinnati pleaded guilty in U.S. District Court to one count of conspiracy for her role in a scheme to file fraudulent income tax returns in order to claim tax refunds. Love admitted to assisting in the cashing of at least 43 refund checks worth $84,090.

Carter M. Stewart, United States Attorney for the Southern District of Ohio, and Denise Rocawich, Acting Special Agent in Charge, Internal Revenue Service Criminal Investigation, Cincinnati Field Office (IRS), announced the plea entered today before Senior U.S. District Judge Sandra S. Beckwith.

According to court documents, Love worked as manager at ACE Cash Express. Love admitted that she sometimes cashed the checks under account names that did not match the individual on the check. Once cashed, Love took a portion of the refund as a fee and gave the remaining money to co-conspirators.

Conspiracy to defraud the IRS is punishable by up to ten years in prison, a fine of up to $250,000 or twice the gain to the defendant or loss to the victim, and a mandatory term of supervised release of up to three years.

Love and four others were indicted in January 2013. Charges against the other three are pending.

“The plea agreement attributes the loss to the IRS at $84,090 and the loss to her employer at $17,850,” U.S. Attorney Stewart said. Judge Beckwith will set a date for sentencing.

Assistant United States Attorney Jessica Knight is representing the United States in this case.

CONTACT: Fred Alverson
Public Affairs Officer

CINCINNATI – Bennie Overton, 34, of Cincinnati was sentenced in U.S .District Court to 115 months in prison for carjacking and illegal possession of a handgun and an additional 84 months for using a firearm in a crime of violence for a total sentence of 199 months.

Carter M. Stewart, United States Attorney for the Southern District of Ohio, Stephanie R. Shoemaker, Special Agent in Charge, Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), Cincinnati Police Chief James Craig and Silverton Police Chief Bruce M. Molett announced the sentence imposed today by U.S. District Judge Michael Barrett.

According to court documents, Overton approached a man in a parked car on April 29, 2012 and distracted the man by asking to borrow the car’s cigarette lighter. While the man’s head was turned, Overton pulled a firearm, placed it next to the victim’s head and forced the victim to move over into the passenger seat. The victim jumped out of the car and Overton sped away.

On May 4, 2012, Cincinnati Police found Overton passed out in the victim’s car. A firearm was found on the seat between Overton’s legs. A search of Overton’s apartment recovered a large quantity of ammunition, two revolvers, a loaded assault rifle, a shotgun and another long rifle. Overton had prior convictions as a felon and under federal law, felons are prohibited from owning or possessing firearms.

Overton pleaded guilty on August 13, 2012 to being a felon in possession. Two days later, a  jury convicted Overton on the other two counts. He has been in custody since he was convicted.

“Overton, a convicted felon, knew that he was prohibited from possessing firearms and/or ammunition yet did so anyway, showing a blatant disregard for the law,” Cincinnati Branch Chief Anthony Springer wrote in a sentencing memorandum filed with the court.

U.S. Attorney Stewart commended the cooperative investigation by the ATF, CPD and Silverton Police, as well as Cincinnati Branch Chief Springer and Special Assistant U.S. Attorney Jennifer Deering with Hamilton County Prosecutor Joseph T. Deters’ office who represented the United States in the case.

CONTACT: Fred Alverson
Public Affairs Officer

COLUMBUS, OHIO – Jose Eduardo Islas, 41, of Tucson, Arizona, was sentenced in U.S. District Court today to 120 months in prison followed by five years of supervised release for supplying thousands of pounds of marijuana for distribution in the Columbus area.

Carter M. Stewart, United States Attorney for the Southern District of Ohio, Kathy Enstrom, Special Agent in Charge, Internal Revenue Service Criminal Investigation (IRS), Kevin Cornelius, Special Agent in Charge, Federal Bureau of Investigation (FBI), Franklin County Sheriff Zach Scott and Columbus Police Chief Kim Jacobs announced the sentence imposed today by Senior U.S. District Judge James L. Graham.

According to court documents, investigators identified Islas as the source of supply for significant quantities of marijuana and cocaine coming into Columbus. Islas is one of seven people charged in March 2013 with conspiring to distribute more than 1,000 kilograms of marijuana. Islas pleaded guilty on August 7, 2013 to one count of conspiracy to distribute more than 1000 kilograms of marijuana and one count of conspiracy to commit money laundering.

Other defendants convicted as a result of the investigation include: Jesus Galindo Corrales, 36, Tucson, Arizona, who was sentenced on April 11, 2014 to 72 months in prison.
Quentin Jefferson, 34, of Columbus, Ohio, was sentenced on April 10, 2014 to 60 months in prison on one count of conspiracy to distribute over 100 kilograms of marijuana and one count of money laundering.
Bryan T. Jones, 34, of Columbus, was sentenced on October 25, 2013 to 18 months in prison.
Adrian Raul Islas, 33, of Tucson, Arizona was sentenced on April 11, 2014 to 27 months in prison.
Chad A. Goggans, 41, of Canal Winchester, Ohio was sentenced on April 11, 2014 to 27 months in prison on one count of conspiracy to distribute over 1,000 kilograms of marijuana and one count of conspiracy to commit money laundering.
Carlton E. Jones, 41, of Columbus pleaded guilty on July 22, 2013 to conspiracy to distribute more than 1,000 kilograms of marijuana and conspiracy to commit money laundering. He is scheduled for sentencing on June 26, 2014.
Patrick Stinson Edwards, 49, of Columbus pleaded guilty on February 7, 2014 to one count of conspiracy. His sentencing is scheduled for June 13, 2014.
Kenyatta Meadows, 50, of Columbus pleaded guilty on February 7, 2014 to one count of conspiracy. He is awaiting sentencing.

Investigators found that Jones operated a used car lot in Columbus, Unlimited Auto Group. Islas generated loads of marijuana that were delivered to a warehouse at the car lot. Specifically, on February 2012, a load of approximately 4,800 pounds of marijuana and in June 2012, a shipment of 3,000 pounds were delivered by a semi-truck. On October 20, 2012, investigators apprehended them with a load of 1,600 pounds of marijuana.

Jones deposited large sums of currency into the bank accounts of Unlimited Auto Group. Some of this currency came directly from Islas and was derived from the sale of narcotics.

Islas purchased a 2008 BMW 750 Alpina with a check from Unlimited Auto Group and also titled it in the name of Unlimited Auto Group. Also, Jones used the drug proceeds from Islas to purchase a 2007 Volvo semi-truck and a 2004 Wabash Reefer trailer that were registered by Goggans in the name of his business, Goggans, Inc. and eventually titled them in the name of a legitimate trucking company. The semi-truck and trailer were used to transport both marijuana and the proceeds from the sale of marijuana.

During the investigation, agents executed numerous search warrants and recovered hundreds of pounds more of marijuana, firearms, vehicles and cash. 

U.S. Attorney Stewart commended the cooperative long-term investigation by the FBI, IRS agents, Columbus Police officers and Franklin County deputies, as well as Assistant U.S. Attorneys Kevin Kelley and David DeVillers, who represented the United States in this case.

CONTACT: Fred Alverson
Public Affairs Officer

COLUMBUS, OHIO – Carlton E. Jones, 41, of Columbus was sentenced in U.S. District Court to 120 months in prison for conspiring to distribute more than 2,000 pounds of marijuana in central Ohio between 2010 and 2012 and laundering the proceeds through his used car business, Unlimited Auto Group.

Carter M. Stewart, United States Attorney for the Southern District of Ohio, Kathy Enstrom, Special Agent in Charge, Internal Revenue Service Criminal Investigation (IRS), Kevin Cornelius, Special Agent in Charge, Federal Bureau of Investigation (FBI), Franklin County Sheriff Zach Scott and Columbus Police Chief Kim Jacobs announced the sentence imposed today by Senior U.S. District Judge James L. Graham.

Jones is one of seven people charged in March 2013 following an investigation by the FBI, IRS, Franklin County Sheriff Zach Scott’s Office and Columbus Police. Jones pleaded guilty on July 22, 2013 to one count of conspiracy to distribute more than 1,000 kilograms of marijuana and one count of conspiracy to commit money laundering.

Other defendants convicted as a result of the investigation include: Jesus Galindo Corrales, 36, Tucson, Arizona, who was sentenced on April 11, 2014 to 72 months in prison.
Quentin Jefferson, 34, of Columbus, Ohio, was sentenced on April 10, 2014 to 60 months in prison on one count of conspiracy to distribute over 100 kilograms of marijuana and one count of money laundering.
Bryan T. Jones, 34, of Columbus, was sentenced on October 25, 2013 to 18 months in prison.
Adrian Raul Islas, 33, of Tucson, Arizona was sentenced on April 11, 2014 to 27 months in prison.
Chad A. Goggans, 41, of Canal Winchester, Ohio was sentenced on April 11, 2014 to 27 months in prison on one count of conspiracy to distribute over 1,000 kilograms of marijuana and one count of conspiracy to commit money laundering.
Jose Eduardo Islas, 41, of Tucson, Arizona, was sentenced May 16, 2014 to 120 months in prison.          
Patrick Stinson Edwards, 49, of Columbus pleaded guilty on February 7, 2014 to one count of conspiracy. He was sentenced on June 13, 2014 to 24 months in prison.
Kenyatta Meadows, 50, of Columbus pleaded guilty on February 7, 2014 to one count of conspiracy. He is awaiting sentencing.

U.S. Attorney Stewart commended the cooperative long-term investigation by the FBI, IRS agents, Columbus Police officers and Franklin County deputies, as well as Assistant U.S. Attorneys Kevin Kelley and David DeVillers, who represented the United States in this case.

#   #   #

CONTACT: Fred Alverson
Public Affairs Officer

CINCINNATI – A 13-month investigation by the FBI Cincinnati Safe Streets Task Force has resulted in charges against 20 people alleged to be members of a drug trafficking organization in Cincinnati’s East Clifton Avenue area of Over-the-Rhine. FBI tactical teams, Special Agents and task force officers began arresting the defendants this morning.

Carter M. Stewart, United States Attorney for the Southern District of Ohio and Edward J. Hanko, Special Agent in Charge, Federal Bureau of Investigation Cincinnati Field Office (FBI) announced the charges in an indictment and two complaints which were unsealed following the arrests.

The indictment alleges that the individuals conspired to “corner the market” for distribution of heroin in Over-the-Rhine. All are charged with conspiracy to possess with intent to distribute heroin and crack cocaine, a crime punishable by at least ten years and up to life in prison.

Eighteen defendants, all from Cincinnati, are named in an indictment returned on February 20, 2013 and unsealed today are:

Shantez Rembert, aka “Tez, 21,                   Demico Higgins, aka “Freak””Mico” “Meco”, 32
Frederick Benton III, aka “Red”, 35             Brien Champion, aka “Wienerhead” “B”, 29
David McPherson, aka “Dae Dae”, 38          Eric Brock, aka “E” “Big Head E”, 31
Casey Brock, 28                                          Antonio Montgomery, aka “Slice”, 27
Eric Gunn, aka “Rambo” “Bo”, 21               Frederick Baskin, aka “Freddy”, 50
Ralph Evans, 21                                          Damian Finnerson, aka “Dane”, 23
Dwayne Finnerson, aka “Weezy”, 30                      Yolanda Rembert, 42
Sholanda Rembert, 25                                 Shawniece Grant-Cavins, aka “Nae Nae”, 21
Martha Clark, 19                                         McKinley Barnwell, aka “Kenny”, 60

Criminal complaints have been filed against two others, Mario Harris, 27 and Tonya M. Jackson, 31.

U.S. Attorney Stewart commended the cooperative investigation by task force officers which includes FBI agents, Cincinnati Police officers and members of the Ohio State Highway Patrol. Assistant U.S. Attorney Karl Kadon is representing the United States in the case.

The indictment also alleges that Higgins distributed a large amount of crack cocaine on a single occasion. The indictment charges some of the individuals with running “stash houses” for the drug trafficking organization, including operations near playgrounds and schools.

The defendants will appear before U.S. Magistrate Judge Stephanie Bowman on Monday, March 4, who will determine whether or not they will be released on bond and schedule dates for future court appearances.

An indictment is only a charge and is not evidence of guilt. The defendants are entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.

CONTACT: Fred Alverson
Public Affairs Officer

COLUMBUS – Adriann Brierley, 37, of Buckeye Lake, Ohio was sentenced in U.S. District Court today to four months in prison for illegally accessing the personal email accounts of her supervisor at the hospital where she worked, copying personal information and distributing it.

Carter M. Stewart, U.S. Attorney for the Southern District of Ohio and Edward J. Hanko, Special Agent in Charge, Federal Bureau of Investigation (FBI) announced the sentence imposed today by U.S. District Judge Gregory L. Frost.

Brierley, a registered nurse, pleaded guilty on October 31, 2012 to one count of computer intrusion which is a felony.

According to court documents, in 2008, Brierley broke into her supervisor’s password protected accounts for her personal email, a social network and a private dating service, copied all the information stored at the accounts and reset the passwords for the accounts. Brierley created a lengthy document composed of the personal emails, photographs and dating site conversations of her victim. The document contained Brierley’s derogatory comments about the victim’s job performance, sex life and personal photographs. Brierley sent the document to the victim’s email contacts, employer and co-workers.

“The victim’s workplace became difficult due to the embarrassment and the false allegations in the widely circulated document the defendant created,” Assistant U.S. Attorney Deborah A. Solove wrote in a memorandum filed with the court before today’s sentencing hearing. “Computer intrusion to steal business secrets or to damage a critical computer system may be dealt with harshly because a financial motive for financial loss helps to peg the damage and thus pick the guideline range,” Solove wrote. “Because the loss of one’s reputation and the entire social fabric of one’s life is not so easily measured, the court should not ignore the seriousness of the damage.”

Brierley will also be under court supervision for two years following completion of her prison sentence.

U.S. Attorney Stewart commended the investigation by FBI agents, as well as Assistant U.S. Attorney Solove who represented the government in this case.

CONTACT: Fred Alverson
Public Affairs Officer

COLUMBUS – Patricia Hodges, 65, of Marietta, Ohio pleaded guilty in U.S. District Court to one count of theft of government money for concealing her mother’s death in order to continue receiving her mother’s Social Security benefits.

Carter M. Stewart, U.S. Attorney for the Southern District of Ohio, and Elias Papoulias, Resident Agent in Charge, Social Security Administration Office of Inspector General, announced the plea entered today before Senior U.S. District Judge George C. Smith.

According to testimony in today’s hearing by an agent with the Social Security Inspector General, a Social Security Administration official interviewed Hodges at her Marietta home in November 2011. Hodges claimed her mother was on a cruise and planned to live with a niece in New York after the cruise.

Further investigation by the Social Security Administration and Marietta Police concluded that Hodges’ mother had died in 1997 and that Hodges had buried her mother’s body in the back yard of a house in Lake Worth, Florida where they had lived. Florida law enforcement investigators recovered the skeletal remains of Hodges’ mother.

Hodges admitted that she concealed her mother’s death in order to collect $141,962 in Social Security benefits she was not entitled to receive between 1997 and October 2011.

Theft of government money is punishable by up to ten years in prison, a $250,000 fine and three years of supervised release. Restitution can also be ordered as part of the sentence.

Judge Smith will schedule a date for sentencing. Hodges remains free on bond.

Individuals who want to report suspected cases of can contact the Social Security Office of Inspector General’s Fraud Hotline, 1-800-269-0271, or complete an online fraud reporting form at www.socialsecurity.gov under the “Useful Links” tab.

Stewart commended the investigation by the Social Security Administration’s Office of Inspector General and the Marietta Police, and Assistant U.S. Attorney Dale E. Williams Jr., who is representing the United States in the case.

CONTACT: Fred Alverson
Public Affairs Officer

CINCINNATI – Todd William Klein, 49, of Cincinnati was sentenced in U.S .District Court to 36 months in prison for obstruction of justice for using bogus checks to pay the trustee in his bankruptcy case.

Carter M. Stewart, United States Attorney for the Southern District of Ohio, and Edward J. Hanko, Special Agent in Charge, Federal Bureau of Investigation (FBI) announced the sentence imposed today by Chief U.S. District Judge Susan J. Dlott.

According to court documents, Klein filed for bankruptcy in May 2011. A trustee was responsible for collecting payments from Klein and distributing the money to creditors. In September, Klein paid the trustee two checks, each in the amount of $3,275. He later admitted to an investigator with the Springdale Police Department that he created the checks on his computer using an account number from a closed account and paper he purchased at an office supply store.

Klein pleaded guilty on June 15, 2012. Judge Dlott ordered the sentence for obstruction to be served concurrently with his sentence for violating his supervised release in connection with his conviction in 2004 on charges of transportation of stolen vehicles and bank fraud.

U.S. Attorney Stewart commended the investigation by the FBI and Senior Litigation Counsel Anne L. Porter, who represented the United States in the case.

CONTACT: Fred Alverson
Public Affairs Officer

COLUMBUS – Justin S. Mote, 33, of Marysville pleaded guilty in U.S. District Court today to one count of using the internet to coerce a minor to engage in unlawful sexual activity. The plea agreement provides for a sentence between 240 and 300 months in prison.

Carter M. Stewart, United States Attorney for the Southern District of Ohio, William Hayes, acting special agent in charge of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) in Ohio and Michigan, and members of the Franklin County Internet Crimes Against Children Task Force (ICAC), announced the plea entered today before U.S. District Judge Edmund A. Sargus, Jr.  

According to testimony presented during the plea hearing, Mote met a 12-year old girl online and went to Connecticut and Pennsylvania to visit her in 2012. Franklin County ICAC investigators received information from a Newtown, Connecticut police officer on October 16, 2012 after the girl’s father found letters, text messages and gifts from Mote. Investigators executed a search warrant at Mote’s residence on October 19 and found fully nude photographs of the victim on various media devices including a tablet computer belonging to Mote. 

Mote, who was under indictment on state charges of attempted unlawful sexual contact with a minor and importuning in connection with a separate incident that occurred in August 2011, was arrested. He has been in custody since his arrest.

This case was brought as part of Project Safe Childhood, a nationwide initiative designed to protect children from online exploitation and abuse.  Led by the U.S. Attorneys Offices, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children, as well as identify and rescue victims.  For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov/.

Stewart commended the investigation by HSI agents and ICAC task force officers, as well as Assistant U.S. Attorney Heather Hill, who is prosecuting the case.

The court will conduct a pre-sentence investigation before accepting the terms of the plea agreement and schedule a date for sentencing.

CONTACT: Fred Alverson
Public Affairs Officer

Omar Yahya, 56, formerly known as Darnell Bernard Watts, was sentenced to 12 months one day in prison followed by three years of supervised release for his role in a conspiracy to use a Dayton grocery store to launder money and defraud the Supplemental Nutrition Assistance Program (SNAP). Yahya pleaded guilty to one count of conspiracy and one count of conspiracy to launder money.

Yahya and three co-defendants were also sentenced to repay $3.8 million, which represents a portion of the money involved in the scheme, and forfeit their interests in approximately $80,209 in bank accounts and cash, and four firearms seized during execution of a search warrant in May, 2011.

Carter M. Stewart, United States Attorney for the Southern District of Ohio, Ohio Attorney General Mike DeWine, Joe Smith, Special Agent in Charge, U.S. Department of Agriculture, Office of Inspector General (USDA), Darryl Williams, Special Agent in Charge, Internal Revenue Service (IRS) Criminal Investigation, Robert Booker, Executive Director, Ohio Investigative Unit and other members of the Ohio Organized Crime Investigations Commission Task Force announced the sentence handed down today by U.S. District Judge Timothy S. Black.

A federal grand jury indicted Yahya, along with Al-Idu al-Gaheem, 62, formerly known as Lawrence Phillips, Abdul R. Qadir, 64, formerly known as Frank Appleberry, Jr., and Abdul H. Yamini Sr, 71, formerly known as Larry Shipp, in March 2012 following a multi-agency investigation into illegal activities at the Five Pillars Market and Restaurant.

Between 2009 and 2011, the four conspired to traffic in electronic benefit cards in order to defraud the USDA’s Supplemental Nutrition Assistance Program (SNAP). The conspiracy caused more than $3.8 million in criminal proceeds in the form of USDA SNAP wire transfers to be deposited into various bank accounts and more than $1.2 million in criminal proceeds in the form of currency withdrawals to be made from the store’s accounts.

The other three defendants were also sentenced to twelve months and one day in prison by Judge Black on charges of conspiracy and conspiracy to launder money. Al-Gaheem was sentenced on December 13, 2012. Qadir was sentenced on October 25, 2012. Yamini was sentenced on December 20, 2012.

The investigation was conducted by a task force operating under the Ohio Organized Crime Investigation Commission. In addition to the agencies named above, other agencies participating in the task force and in this investigation include the Bureau of Alcohol, Firearms, Tobacco and Explosives (ATF), the Ohio Bureau of Criminal Investigation, and police departments in Centerville, Kettering, Miamisburg, Moraine, Oakwood and West Carrollton.

Stewart commended the cooperative investigation by the task force members, and recognized Assistant U.S. Attorney Dwight Keller, who represented the United States in this case.

CONTACT: Fred Alverson
Public Affairs Officer

DAYTON – Carter M. Stewart, United States Attorney for the Southern District of Ohio issued the following statement today in response to the ruling by the U.S. Court of Appeals for the Sixth Circuit that former President, CEO and Chairman of the Board of Directors of MCSi, Michael Peppel, should be resentenced for his role in a stock price manipulation scheme.

 “We argued that the court’s sentence which was well under the sentencing guidelines of 97 to 121 months did not reflect the seriousness of the crime, avoid national sentencing disparities or create any measure of deterrence.

The court accepted every one of our arguments that a seven-day sentence was unreasonably low for a crime that caused hundreds of shareholders to lose a total of $18 million.

We will now prepare to go before the court for a re-sentencing in this case.”

MCSi was a Dayton-based computer company that filed for bankruptcy in 2003. Peppel conspired with the company’s chief financial officer to falsify company accounting records and financial statements in order to conceal the company’s actual earnings from shareholders while at the same time laundering proceeds from the sale of his own shares of stock. He pleaded guilty in August 2010 to conspiracy to commit securities, mail and wire fraud, money laundering and willful false certification of a financial report by a corporate officer. He was sentenced on October 24, 2011 to seven days’ imprisonment, serve three years of supervised release and pay a $5 million fine.

No date has been set for the re-sentencing.

CONTACT: Fred Alverson
Public Affairs Officer

COLUMBUS – Cameron Green, 36, of Pickerington, Ohio was sentenced to 12 months and one day in prison, three years of supervised release, and ordered to pay $6,115,965 in restitution, jointly and severally with Jason Simcox and Kevin Simcox, to the victim mortgage lenders for fraudulently obtaining approximately $15,037,421 in mortgage loans to finance the purchase of 26 real estate properties in Maricopa County, Arizona.

Carter M. Stewart, United States Attorney for the Southern District of Ohio, Edward J. Hanko, Special Agent in Charge, Federal Bureau of Investigation (FBI), and Darryl Williams, Special Agent in Charge, Internal Revenue Service Criminal Investigation (IRS) announced  the sentence handed down today by U.S. District Judge Michael Watson.

On January 9, 2013 Jason Simcox, 39, of Pickerington, Ohio was sentenced by Senior U.S. District Judge George C. Smith to 12 months and one day in prison, three years of supervised release, and ordered to pay $6,115,965 in restitution, jointly and severally with Cameron Green and Kevin Simcox, to the victim mortgage lenders.

According to court documents, between August 2006 and May 2007, the two men applied for loans using false income, assets, and occupancy statements on the loan applications. The mortgage loans were inflated to allow Simcox and Green to use the excess mortgage proceeds to generate cash kickbacks payable to co-conspirators that were undisclosed to the mortgage lenders. The co-conspirators then provided the money to Simcox and Green via interstate wire transfers.

The men used a mortgage brokerage company they co-owned, Vanguard Mortgage, located in Westerville, Ohio, to finance the purchases of the properties. Each man inflated his income, minimized his assets, failed to disclose his ownership of several other properties on which he held mortgage loans, and concealed the fact that he intended to receive substantial cash kickbacks after the closing of three properties. Simcox and Green received approximately $1,469,263.00 in seller kickbacks, real estate agent commissions, real estate agent commission kickbacks, and fees.

All 26 of the Arizona properties were subsequently sold short or foreclosed upon due to the borrowers being unable to pay the monthly mortgage payments.

Stewart commended Assistant United States Attorney Laura Fulton who prosecuted these cases and the cooperative investigation conducted by FBI and IRS agents as part of the Southern Ohio Mortgage Fraud Task Force.

CONTACT: Fred Alverson
Public Affairs Officer

COLUMBUS – Robert D. Armstrong, 54, of New Matamoras, Ohio, pleaded guilty to violating the Clean Water Act by causing wastewater from oil and gas wells to flow into a tributary of the Little Muskingum River in 2010.  Mr. Armstrong also pled guilty on behalf of his company, RCA Oil and Gas LLC (“RCA Oil and Gas”), which was charged with the same offense.

Carter M. Stewart, U.S. Attorney for the Southern District of Ohio, Ohio Attorney General Mike DeWine, Randall K. Ashe, Special Agent in Charge of the U.S. Environmental Protection Agency (U.S. EPA), Scott J. Nally, Director of the Ohio Environmental Protection Agency (Ohio EPA) and James Zehringer, Director of the Ohio Department of Natural Resources (ODNR) announced the guilty pleas entered yesterday before U.S. District Court Judge Michael Watson.

Mr. Armstrong is the owner and operator of RCA Oil and Gas which provides services for oil and gas wells in southeast Ohio, including the services related to the hydrofracturing or “fracking” of oil and gas wells.

During June 2010, Armstrong built a reservoir with an earthen wall to hold water he intended to use in the fracking process of a nearby well. The reservoir contained approximately 2.2 million gallons of fresh water.  Armstrong added thousands of gallons of brine or wastewater from the fracking process at two other oil and gas wells to the reservoir.  As a result of the addition, all of the liquid in the reservoir was classified as oil field wastewater.

On June 19, 2010, Armstrong used a backhoe to breach a wall of the reservoir, releasing the wastewater into Rockcamp Run.  The reservoir contained about 800,000 gallons of wastewater at the time.  Most of the water flowed into Rockcamp Run. Analysis of a sample of the wastewater from the reservoir showed significant concentrations of barium and sodium.

"As the nation increases its use of natural gas, exploration companies must ensure that the waste water resulting from the fracking process is treated and disposed of safely and legally," said Randall Ashe, Special Agent in Charge of EPA’s criminal enforcement program in Ohio.  “The defendant knowingly released hundreds of thousands of gallons of contaminated wastewater into a tributary of the Little Muskingum River, damaging critical habitat for fish and wildlife.  Companies and their contractors who try to skirt the law to save money undermine our efforts to protect the public and the environment and will be vigorously prosecuted.”

Stewart commended the cooperative investigation by the U.S. EPA, the Ohio EPA, the ODNR and the Bureau of Criminal Investigation’s Environmental Enforcement Unit in Ohio Attorney General DeWine’s Office. Assistant U.S. Attorney Michael Marous is representing the government in this case.

Judge Watson will schedule a date for sentencing.

CONTACT: Fred Alverson
Public Affairs Officer

DAYTON – A U.S. District Court jury here today convicted Paul David Musgrave, 57, of Warhaw, North Carolina of conspiring to defraud the Mutual Federal Savings Bank of Troy, Ohio, and the Small Business Administration out of $1,715,600 in connection with a business loan he sought to establish a tire recycling plant in Troy.

Carter M. Stewart, United States Attorney for the Southern District of Ohio,  Edward J. Hanko, Special Agent in Charge, Federal Bureau of Investigations (FBI) and Scott Dennis, Special Agent in Charge, U.S. Small Business Administration Office of Inspector General announced the verdict returned on February 7 following a trial that began January 28 before U.S. District Judge Timothy S. Black. 

Testimony presented during the seven-day trial showed that in November 2008, Musgrave and others organized Dayton International Tire Recycling as a small business intending to construct and operate a tire recycling plant at 1400 Lytle Road in Troy. Musgrave owned 81 percent interest in the company. The rest was held by a Singapore-based corporation known as Intercontinental Trading of the British Virgin Islands.

In 2010, Musgrave applied for an SBA-backed loan for $1,715,650. In the loan application documents, he falsely certified that he would put money from his personal savings, home equity and from a home equity line of credit toward the project. The lender required proof that the tire shredding/recycling equipment and machinery they claimed to have purchased from an Australian company had actually been shipped before releasing the loan proceeds. The jury found that Musgrave provided the lender with fabricated financial documents, packing lists, commercial invoices and bills of lading.

After deliberating three days, the jury convicted Musgrave of one count of conspiracy, two counts of wire fraud, and one count of bank fraud.

Musgrave faces up to 30 years imprisonment, a $1 million fine, and five years of supervised release on each count. Judge Black will sentence Musgrave on June 13, 2013.

Stewart commended the cooperative investigation conducted by FBI and SBA-OIG agents, as well as Assistant U.S. Attorneys Dwight Keller and Alex Sistla, who are representing the United States in the case.

CONTACT: Fred Alverson
Public Affairs Officer

COLUMBUS – A U.S. District Court jury here today convicted Sontay T. Smotherman, 36, of Columbus of operating a drug house in east Columbus.

Carter M. Stewart, United States Attorney for the Southern District of Ohio, Robert Corso, Special Agent in Charge, Drug Enforcement Administration (DEA), Stephanie R. Shoemaker, Special Agent in Charge, Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), Columbus Police Chief Kimberley Jacobs and Franklin County Sheriff Zach Scott announced the verdict returned following a two-day trial before U.S. District Judge Gregory L. Frost.

Testimony presented during the trial included that of a Columbus Police narcotics detective who said they seized approximately $10,000 in cash and more than $10,000 worth of heroin when task force officers executed a search warrant at the house. Testimony presented also showed that over three months in 2011 the conspiracy involved more than $100,000 in heroin distributed in Columbus. Four firearms were seized during the investigation.

Smotherman was one of five Columbus men charged in the case with conspiring to distribute heroin out of Smotherman’s residence at 401 Taylor Avenue. The jury convicted him of possession with intent to distribute heroin and one count of conspiracy. Each crime is punishable by at least five years and up to 40 years in prison.

The others charged have pleaded guilty to conspiracy and firearms charges. Bryan N. Johnson, 27, Arnett C. Smotherman, 35, and Waymon Price, 40, pleaded guilty and are awaiting sentencing. Frederick L. Carter pleaded guilty in September 2012 to conspiracy and a firearms charge. He was sentenced on January 7, 2013 to ten years in prison.

Smotherman was remanded to the custody of the U.S. Marshals Service where he will be held until he is sentenced.

Stewart commended the cooperative investigation conducted by the agencies, as well as Assistant U.S. Attorneys Michael Hunter and Doug Squires, who are representing the United States in the case.

CONTACT: Fred Alverson
Public Affairs Officer

COLUMBUS – A federal grand jury here has returned an eleven-count indictment charging Terrance J. King, 46, of Columbus in a scheme to defraud homeowners and businesses, the Columbus Metropolitan Housing Authority (CMHA), the U.S. Department of Housing and Urban Development (HUD), and the Internal Revenue Service (IRS).

Carter M. Stewart, United States Attorney for the Southern District of Ohio, Darryl Williams, Special Agent in Charge, Internal Revenue Service Criminal Investigation (IRS), and Barry McLaughlin, Special Agent in Charge, U.S. Department of Housing and Urban Development Office of Inspector General announced the indictment today.

The indictment alleges that King started a roofing repair business, Home Improvement Terrance King, LLC, in 2008 and operated in Columbus, Dayton and Springfield. King allegedly devised a scheme to defraud insurance companies and his clients by obtaining money from insurance companies and his clients through false and fraudulent pretenses, representations, and promises. The indictment alleges that King told customers he was providing warrantied roofing materials, when in fact he provided discounted, second-hand shingles and failed to complete promised work for clients.

The indictment also charges King with filing fraudulent documents with CMHA in order to receive subsidized housing assistance. King allegedly represented that he had little or no income or assets in order to qualify for subsidized housing when in reality he had earned substantial income and purchased multiple assets in 2008.

King allegedly committed money laundering by withdrawing U.S. currency received from the scheme from his bank accounts, used the currency to purchase five cashier’s checks totaling approximately $153,627.34 and buying several vehicles and a home. King is accused of willfully filing false federal income tax returns with the IRS for the 2008-2010 income tax years that falsely reported the total income he earned in those income tax years.

The indictment also seeks forfeiture of approximately $153,627.34 in U.S. currency, of which $112,968.34 was directly traceable to the purchase of a property located at 3088 Legion Lane, Columbus, Ohio.

The indictment charges King with three counts of mail fraud, each of which is punishable by up to 20 years in prison; four counts of money laundering punishable by up to 10 years in prison; one count of filing a false claims which is punishable by up to five years in prison; and three counts of willfully filing false federal income tax returns with the IRS which is punishable by up to three years in prison.

“Law abiding citizens expect the government to hold accountable those who use deceit and fraud to line their pockets with money, especially when that money represents stolen federal tax dollars and government funds," said Darryl Williams, Special Agent in Charge, IRS, Criminal Investigation, Cincinnati Field Office.

Stewart commended the investigation conducted by the IRS and HUD Office of Inspector General, and Assistant U.S. Attorneys Laura Fulton and Jessica Knight, who are prosecuting the case.  King will be summoned to appear in federal court.

An indictment merely contains allegations, and defendants are presumed innocent unless proven guilty in a court of law.

CONTACT: Fred Alverson
Public Affairs Officer

CINCINNATI – A federal grand jury has charged James O. Napier, 38, of Cincinnati with 20 counts of producing child pornography which involve an 11-month old infant and an approximately nine-year old child, produced at different times.

Carter M. Stewart, United States Attorney for the Southern District of Ohio, Edward J. Hanko, Special Agent in Charge, Federal Bureau of Investigation (FBI), and agencies in the Greater Cincinnati Internet Crimes Against Children (ICAC) Task Force announced the indictment returned today. 

The indictment alleges that in November 2009 Napier used an 11-month old infant for sexual gratification, molested the infant and made a video recording of it before placing it on the internet. The indictment contains 19 counts alleging that as recently as November 2012 Napier sexually exploited a girl who was approximately nine years-old and produced videos of those acts. The indictment also charges Napier with one count each of transportation, distribution and receipt of child pornography.

FBI agents arrested Napier on January 18 based on a complaint filed in U.S. District Court. The complaint was based on information from the FBI office in Phoenix that Napier was advertising the sale of child pornography on a website. Napier is being held without bond.

“Production of child pornography is punishable by at least 15 years and up to 30 years in prison,” U.S. Attorney Stewart said. “Each of the other crimes is punishable by at least five and up to 20 years in prison.”

This case was brought as part of Project Safe Childhood, a nationwide initiative designed to protect children from online exploitation and abuse.  Led by the U.S. Attorneys Offices, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children, as well as identify and rescue victims.  For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov/.

Stewart commended the investigation by FBI agents and investigators with the Greater Cincinnati ICAC as well as Assistant U.S. Attorney Christy Muncy who is representing the United States in this case..

Agencies participating in the Greater Cincinnati ICAC, in addition to FBI and the U.S. Attorney’s Office include the U.S. Marshals Service, U.S. Secret Service, Hamilton County Prosecutor Joe Deters, Hamilton County Sheriff Jim Neil and the police departments in Amberley Village, Blue Ash, Cincinnati, and West Chester.

An indictment merely contains allegations, and the defendant is presumed innocent unless proven guilty in a court of law.

CONTACT: Fred Alverson
Public Affairs Officer

COLUMBUS – Internal Revenue Service agents arrested Roma L. Sims, 34, Westerville, Ohio and Samantha C. Towns, 30, Reynoldsburg, Ohio today based on criminal complaints that they filed 559 individual income tax returns for 2011 claiming total refunds of $1,312,513.89 using the stolen personal information of victims including many Kentucky residents who were receiving disability or other public assistance benefits.

Carter M. Stewart, United States Attorney for the Southern District of Ohio, and Darryl Williams, Special Agent in Charge, Internal Revenue Service Criminal Investigation (IRS) announced the arrests today.

According to an affidavit filed in support of the complaints, Sims established Express Tax and Accounting on Morse Road in Columbus in December 2011 and Towns organized X-Press Taxes and Accounting Services in Reynoldsburg, Ohio in January 2012. They allegedly filed the fraudulent returns and had the refunds deposited into five bank accounts they opened and controlled.

Sims and Towns appeared before U.S. Magistrate Judge Elizabeth Preston Deavers who scheduled a detention hearing for Friday, February 1 at 2 p.m.

The complaint charges each individual with aggravated identity theft, which carries a mandatory two-year sentence, conspiracy which is punishable by five years in prison and wire fraud, which is punishable by up to 30 years in prison. If convicted, mandatory restitution to victims would be part of any sentence.

“Identity theft is a serious crime that victimizes honest taxpayers and causes immense hardship,” said Richard Weber, Chief, IRS Criminal Investigation.  “Today’s actions should serve as a warning that we will continue to work with our law enforcement partners and the U.S. Attorney’s office to hold accountable those individuals who undermine our income tax system by filing false claims for refunds.”

U.S. Attorney Stewart commended the ongoing investigation by IRS agents, and Assistant U.S. Attorney Dan Brown, who is representing the United States in the case.

Allegations in a criminal complaint are accusations only. Defendants should be presumed innocent until and unless proven guilty in court.

CONTACT: Fred Alverson
Public Affairs Officer

DAYTON – A federal grand jury has charged Charles E. Suttles, 55, of Dayton with Fairfield with one count of possession of child pornography for allegedly viewing sexually explicit images of minor children while he was a patient at the Veterans Affairs Medical Center in Dayton in 2010.

Carter M. Stewart, United States Attorney for the Southern District of Ohio and Gavin McClaren, Resident Agent in Charge, Department of Veterans Affairs, Office of Inspector General, Criminal Investigation Division, announced the indictment today.

The indictment, which was returned on January 22, 2013, alleges that in July 2010 Suttles possessed one or more matters which contained visual depictions involving the use of a minor engaging in sexually explicit conduct. Suttles was an inpatient at the Dayton VAMC. Suttles allegedly had the material on a removable computer storage device and viewed it in a computer room available to patients at the center.

The crime of possession of child pornography is punishable by at least ten years and up to 20 years in prison when the defendant has been previously convicted of that crime, plus a period of supervised release and requirements to register as a sex offender anywhere he lives, works or raises a family. Suttles was convicted in 2003 of possessing child pornography.

U.S. Magistrate Judge Michael R. Merz ordered Suttles held without bond pending trial at a detention hearing yesterday. U.S. District Judge Timothy S. Black will schedule the trial.

This case was brought as part of Project Safe Childhood, a nationwide initiative designed to protect children from online exploitation and abuse.  Led by the U.S. Attorneys Offices, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children, as well as identify and rescue victims.  For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov/.

U.S. Attorney Stewart commended the investigation by the VA Inspector General’s Criminal Investigation Division, the Dayton VA Medical Center Police who assisted with the investigation and Assistant U.S. Attorney Benjamin Glassman, who is representing the United States in the case.

An indictment merely contains allegations, and the defendant is presumed innocent unless proven guilty in a court of law.

CONTACT: Fred Alverson
Public Affairs Officer

COLUMBUS – Zdenek Hrouda, 37, of Reynoldsburg, Ohio pleaded guilty in U.S. District Court to possessing child pornography after investigators found more than 10,000 still images and 300 video files stored on three computers and two external hard drives in his house.

Carter M. Stewart, United States Attorney for the Southern District of Ohio, Edward J. Hanko, Special Agent in Charge, Federal Bureau of Investigation (FBI), Reynoldsburg Police Chief James Oneill, and Franklin County Sheriff Zach Scott whose office includes the Franklin County Internet Crimes Against Children Task Force (ICAC) announced the plea entered today before U.S. District Judge Michael Watson.

According to court testimony today by a Reyoldsburg Police Officer on the ICAC task force, in June 2012 an ICAC investigator was patrolling the internet and identified an IP address that was a download candidate for suspected child pornography. Officers searched his home on July 5, 2012 and found the computers.

When Hrouda learned he was under investigation, he fled back to his home country, the Czech Republic. He returned to the United States voluntarily in October 2012.

Possession of child pornography is punishable by up to ten years in prison, a fine of up to $250,000 and at least five years of supervised release. While on supervised release, he will also have to register as a sex offender anywhere he lives, works or goes to school. 

Stewart commended the investigation by the ICAC Task Force, the FBI and Assistant U.S. Attorney Deborah A. Solove, who represented the United States in the case.

CONTACT: Fred Alverson
Public Affairs Officer

COLUMBUS – Donald Christopher Dailey, 37, of Delaware, Ohio pleaded guilty in U.S. District Court today to extortion for demanding money from the company where he was the information technology administrator in exchange for not disclosing internal financial and other information. Dailey also admitted to “hacking” into an ex-girlfriend’s email account.

Carter M. Stewart, United States Attorney for the Southern District of Ohio and Edward J. Hanko, Special Agent in Charge, Federal Bureau of Investigation (FBI) announced the guilty pleas entered today before U.S. District Judge Michael Watson.

According to court documents, Dailey abruptly resigned from the engineering company where he worked on October 1, 2012. Employees found a laptop connected to the company network and streaming live email of the company’s CEO. It was hidden in Dailey’s private and secure workroom. In a resignation letter he sent to the CEO, Dailey claimed he had knowledge of what he alleged was damaging financial and other information regarding internal company communications that he would disclose to authorities and certain customers unless the CEO and his business partner sat down and talked with him.

On October 13, Dailey called the CEO and made an opening demand of 75 percent of the $92,500 expected salary if he had stayed with the company. FBI agents arrested Dailey on October 16 and searched his residence. An analysis of Dailey’s computer revealed that he had gathered personal information about the company’s employees including everyone’s name and salary, and had stored the data on his personal computer. The alleged documents or information referenced by Dailey as part of the extortion were not found.

Dailey also admitted illegally accessing an ex-girlfriend’s email and bank accounts from a computer at the engineering company where he worked before he resigned.

Dailey remains on house arrest pending sentencing on a date to be set by Judge Watson. Extortion is punishable by up to two years in prison and a fine of $250,000. Intentionally accessing a computer without authorization is punishable by up to one year in prison.

U.S. Attorney Stewart commended the FBI agents who investigated the case and Assistant U.S. Attorney Deborah A. Solove, who represented the United States in the case.

CONTACT: Fred Alverson
Public Affairs Officer

DAYTON –Charles D. Warren, 38, of Dayton was sentenced today to 156 months in prison for crimes including assaulting an officer by running his car into a car driven by a federal task force officer, illegal possession of a firearm, possession of a firearm with an obliterated serial number, conspiracy to distribute marijuana, conspiracy to launder money, illegally structuring financial transactions, and interstate travel in furtherance of a drug conspiracy.

Carter M. Stewart, United States Attorney for the Southern District of Ohio, Edward J. Hanko, Special Agent in Charge, Federal Bureau of Investigation Cincinnati Division (FBI), Stephanie R. Shoemaker, Special Agent in Charge, Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), Darryl Williams, Special Agent in Charge, Internal Revenue Service Criminal Investigation (IRS) and Dayton Police Chief Richard Biehl announced the sentences handed down by U.S. District Judge Timothy S. Black.

According to court documents, Warren was wanted on an outstanding illegal gun possession warrant when DPD officers stopped him for a traffic violation on July 7, 2011. Warren fled in his car as members of the FBI Safe Streets Task Force approached the scene. Warren stopped several blocks away. As a task force officer was beginning to exit his vehicle, Warren put his car in reverse and rammed the officer’s vehicle.

Court documents also state that Warren and others trafficked more than 100 kilograms of marijuana from suppliers in California to the Dayton area between 2009 and 2011. IRS investigators determined that the conspirators used several different methods of laundering approximately $1,100,000 of drug proceeds including depositing the cash using other people’s names in order to avoid currency reporting requirements.

Warren pleaded guilty on February 23, 2012. Stewart commended the cooperative investigation by the federal and local agencies, along with Assistant U.S. Attorney Sheila Lafferty, who is prosecuting the case.

CONTACT: Fred Alverson
Public Affairs Officer

COLUMBUS – Deborah L. Kistner, 50, and her husband, Mark A. Kistner, 52, both of Hilliard, pleaded guilty three days after their trial started on a $7 million mortgage fraud scheme they carried out between June 2006 and July 2010.

Carter M. Stewart, United States Attorney for the Southern District of Ohio; Darryl Williams, Special Agent in Charge, Internal Revenue Service Criminal Investigation (IRS), Edward J. Hanko, Special Agent in Charge, Federal Bureau of Investigation (FBI) and other agencies participating in the mortgage fraud task force announced the guilty pleas entered before U.S. District Judge Gregory L. Frost.

Deborah Kistner pleaded guilty to three counts of conspiracy to commit bank fraud, three counts of conspiracy to commit money laundering, and one count of bank fraud. Mark Kistner pleaded guilty to one count of conspiracy to commit money laundering.

Deborah Kistner operated Premiere Title Company in Hilliard. She deceived lenders in connection with the purchases of real estate in Ohio and Florida. Evidence presented during the first three days of the trial showed that she conspired with others to secure inflated loans for real estate and kept the excess proceeds or used them to pay others involved in the conspiracy. Deborah Kistner intentionally failed to provide lenders with critical purchase contract language and accurate settlement statements.

Deborah and Mark Kistner also schemed to defraud lenders and launder the money they received through simultaneous “short sale” closings where the lenders would agree to absorb losses on existing mortgage loans while Deborah Kistner actually sold those properties on the same day for a profit and laundered the profits through bank accounts controlled by Mark Kistner. The government was prepared to show that they secured as much as $7 million in fraudulent loans through their schemes.

Deborah Kistner faces a maximum penalty of up to 30 years in prison and a fine of $1 million on each of the three counts of conspiracy to commit bank fraud, and the one count of bank fraud; and up to ten years in prison and a fine of $250,000 on the three counts of conspiracy to commit money laundering. Mark Kistner faces a maximum penalty of up to ten years in prison and a fine of $250,000 on the one count of conspiracy to commit money laundering. Lenders suffered losses of at least $3.3 million. The plea agreements they signed include forfeiture of investment accounts and restitution to victims.

They were released on bond pending sentencing. Judge Frost will schedule a date for sentencing.

Stewart commended the cooperative investigation of this case by IRS and FBI agents, and Assistant U.S. Attorney’s Laura Fulton and Dan Brown, who are prosecuting the case.

CONTACT: Fred Alverson
Public Affairs Officer

COLUMBUS – Jason L. Hutchinson, 42, of Athens, Ohio was sentenced in U.S. District Court to 300 months in prison and will be under court supervision for the rest of his life for using a webcam to create a video of himself engaged in various sex acts with a 13-year old and distributing the video out of state.

Carter M. Stewart, United States Attorney for the Southern District of Ohio, and Edward J. Hanko, Special Agent in Charge, Federal Bureau of Investigation (FBI), announced the sentence handed down today by U.S. District Judge Algenon L. Marbley.

“Recordings of child abuse are used as currency by those who exploit children,” U.S. Attorney Stewart said. “Law enforcement coordination between federal, state and local agencies is the only way to curtail such exploitation.”

Hutchinson pleaded guilty on August 24, 2012 to one count of using a minor to engage in sexually explicit conduct for the purpose of producing a visual depiction of such conduct.

Hutchinson created the video at his residence in November 2010 then sent that video and another similar video to an individual in the greater Boston, Massachusetts area. Law enforcement officers in the Boston area discovered the video and alerted law enforcement officials in Ohio. Supported by deputies from the Athens County Sheriff’s Office, FBI agents executed a search warrant and arrested Hutchinson on a criminal complaint on March 16, 2012. He has been in custody since his arrest.

Hutchinson also admitted to sexually abusing another young boy in Athens County several years ago and discussing that abuse with the individual, a sex offender in Massachusetts, to whom he sent the videos. Judge Marbley cited the prior abuse as one of the bases for the sentence. Judge Marbley also ordered Hutchinson to be placed under court supervision for the rest of his life after he serves his time in prison. Hutchinson must register as a sex offender anywhere he lives, works or goes to school.

Stewart commended the investigation by the FBI and Assistant U.S. Attorney Heather Hill, who prosecuted the case.

CONTACT: Fred Alverson
Public Affairs Officer

COLUMBUS – Mickell Close, 31, of Quincy, Ohio pleaded guilty in U.S. District Court to one count of using minors to engage in sexually explicit conduct for the purpose of producing a visual depiction of the conduct.

Carter M. Stewart, United States Attorney for the Southern District of Ohio, William A. Hayes, Acting Special Agent in Charge, U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) in Ohio and Michigan, Franklin County Sheriff Zach Scott who heads the Franklin County Internet Crimes Against Children (ICAC) Task Force, and Logan County Sheriff Andrew J. Smith announced the plea entered today before U.S. District Judge Edmund A. Sargus Jr.

According to a statement read by an HSI agent during the hearing, law enforcement officials patrolling the internet in June 2012 identified an email account connected to sharing child pornography. The account was traced to Close.

Further investigation found that Close used his cell phone to secretly record videos of three prepubescent female victims at his residence while the victims were using the bathroom or bathing. Portions of the videos showed close-up depictions focused on the nude genitalia of each of the victims. After recording the videos he made still images from the videos and traded the videos and images with other individuals on the internet in exchange for images and videos of child pornography.

Forensic examination of computers and storage media at Close’s residence revealed at least 34 images of mainly prepubescent females engaged in sexually explicit activity or posed in a sexually explicit manner while in bondage.

“Once images of exploitation are on the internet, they never go away,” U.S. Attorney Stewart said. “This adds to the indignity and humiliation the victim is already facing.”

Logan County Sheriff’s deputies working with HSI arrested Close on November 9. He has been in custody since his arrest.

“Today's conviction is the first step toward healing for the victims of the depraved acts perpetrated by the defendant in this case,” said William Hayes, acting special agent in charge of HSI Detroit, which covers Michigan and Ohio. “While we cannot restore the innocence stolen from the young victims in cases like these, we will continue to make the aggressive pursuit of their predators among our highest priorities.”

“Individuals who represent the worst of the worst are the reasons why we do what we do,” Franklin County Sheriff Scott said. “Close’s conviction can prevent other children from horrific and unimaginable abuse. It's because of the cooperative effort between all of the agencies that make up the Franklin County Internet Crimes Against Children Task Force and HSI, that predators like Close are identified and brought to justice.”

In the plea agreement, the parties have agreed that a term of incarceration between 252 months and 318 months followed by 20 years under court supervision is the appropriate sentencing range. The court will conduct a pre-sentence investigation before deciding whether or not to accept the terms of the plea agreement.

Close also agreed to forfeit all computer equipment and visual depictions of the child pornography that were seized from him at the time of the execution of the search warrant in this case. The plea agreement also allows the U.S. Probation Office to install monitoring software on any computer he owns, uses or has access to during his period of supervised release. He will also be required to register as a sex offender anywhere he lives, works or goes to school.

This case was brought as part of Project Safe Childhood, a nationwide initiative by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by United States 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 as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.

CONTACT: Fred Alverson
Public Affairs Officer

COLUMBUS –Todd L. Smith, 50, of Columbus pleaded guilty in U.S. District Court today to one count of coercion and enticement of minors for sexual activity.

Carter M. Stewart, United States Attorney for the Southern District of Ohio and Edward J. Hanko, Special Agent in Charge, Federal Bureau of Investigation (FBI) announced the plea entered today before U.S. District Judge Algenon L. Marbley.

“Today’s guilty plea underscores that inappropriate contact with minors using texts and the internet are federal crimes,” said U.S. Attorney Stewart. “Smith’s job as a police officer charged with safeguarding children highlights the seriousness of this offense.”

According to a statement read during the hearing, the FBI began investigating Smith on July 2, 2012. The investigation found that Smith,  a Columbus Police officer, who was assigned as a resource officer at a local high school was having an illicit relationship with a 15-year old female. He told the student that he had a sex addiction and that she could help him by having sex with him. Between July 24, 2012 and the morning hours of July 25, 2012, Smith exchanged approximately 113 text messages with an undercover FBI agent posing as the victim.

On July 27, 2012, the FBI became aware of another 15-year old victim who had been coerced through similar text messages into having a sexual relationship with Smith. The FBI found that this relationship began in early 2012 and that they exchanged more than 6,000 text messages during the course of the relationship. 

FBI agents arrested Smith on July 26, 2012 and he has been in custody since his arrest.  Coercion and enticement of minors is punishable by at least ten years and up to life in prison. Judge Marbley will determine the sentence and schedule a hearing following a pre-sentence investigation by the court.

“Police officers are the guardians of our community and to whom our children should be able to turn for safety,” said FBI Special Agent in Charge Hanko.  “The actions of one officer should not negatively reflect on the good work of other officers.  This investigation highlights the efforts of the U.S. Attorney’s Office, FBI, and Columbus Police Department to ensure those who sully their positions as police officers are held accountable.”

Stewart commended the FBI agents conducting the investigation, and Assistant U.S. Attorneys Doug Squires and Michael Hunter, who are prosecuting the case.