District of Oregon

Pilot Project Allows Tribal Prosecution of Non-Indian Abusers For the First Time in More Than Three Decades

MISSION, Ore. – The Confederated Tribes of the Umatilla Indian Reservation (“CTUIR”) will be one of three American Indian tribes to be the first in the nation to exercise special criminal jurisdiction over crimes of domestic and dating violence, regardless of the defendant’s Indian or non-Indian status, under a pilot project authorized by the Violence Against Women Reauthorization Act of 2013 (“VAWA 2013”).  Besides the CTUIR, two other tribes, the Pascua Yaqui Tribe of Arizona and the Tulalip Tribes of Washington, will also begin exercising special criminal jurisdiction under VAWA 2013.

“Umatilla has once again shown that it is a national leader in criminal justice reform,” said Amanda Marshall, United States Attorney for the District of Oregon.  “This expanded jurisdiction will give Umatilla tribal court the authority it needs to protect victims of domestic violence and hold offenders accountable.”

The Reauthorization of the Violence Against Women Act of 2013 expands the inherent jurisdiction of tribes that meet certain conditions to prosecute non-Indian domestic violence offenses perpetrated against Indian victims.  It also permits those tribes to prosecute non-Indian protection order violations when the protected person is an Indian.  Such authority is limited to non-Indians who reside, go to school, or work on a tribe’s reservation.  To exercise this enhanced authority, a tribe must guarantee certain rights to defendants similar to those guaranteed by the United States Constitution, such as the right to a public defender and effective assistance of counsel.  Tribes must also include non-Indians in jury pools.  The CTUIR meets these requirements.

From February 20, 2014 forward, any non-Indian who commits a qualifying crime in the Indian country of the CTUIR will be subject to prosecution in tribal court.  A copy of the Criminal Code is available on the CTUIR’s website.  Since this is an exercise of the CTUIR’s inherent sovereignty, any tribal prosecution would not preclude the United States Attorney’s Office from also prosecuting the non-Indian defendant in federal court for the same offense.

"This is important not only for the CTUIR in exercising and expanding our sovereignty, but for the sovereignty of all tribes,” said Umatilla Board of Trustees Chair Gary Burke.  “I am proud of the work and dedication of staff, the Court, the Law and Order Committee, and the General Counsel to support and push this effort forward.  Once again, CTUIR is blazing a path forward for the good of all tribes.”

For over thirty years, tribes have been prohibited from exercising criminal jurisdiction over non-Indian defendants.  Even a violent crime committed by a non-Indian husband against his Indian wife, in the presence of her Indian children, in their home on the Indian reservation, could not be prosecuted by the tribe.  In granting the pilot-project requests of the Umatilla, Pascua Yaqui, and Tulalip tribes today, the United States is recognizing and affirming the tribes’ inherent power to exercise “special domestic violence criminal jurisdiction” over all persons, regardless of their Indian or non-Indian status.

The Department of Justice is posting notices of the pilot-project designation on the Tribal Justice and Safety Web site (www.justice.gov/tribal/) and in the Federal Register. In addition, each tribe’s application questionnaire and related tribal laws, rules, and policies will be posted on the Web site. These materials will serve as a resource for those tribes that may also wish to participate in the pilot project or to commence exercising “special domestic violence criminal jurisdiction” in the future.

For more information on VAWA 2013, please visit www.justice.gov/tribal/vawa-tribal.html.

EUGENE, Ore. – On January 31, 2014, Scott Alan Gorman, 46 years old, was sentenced by U.S. District Chief Judge Ann Aiken to 41 months in federal prison for unlawful possession of a firearm.  Upon his release from prison, Gorman will be on supervised release for three years. 

On January 7, 2013, Gorman made threatening statements about having a firearm and an underground bomb shelter that scared employees at an adult care facility.  The next morning, law enforcement responded to Gorman’s home and found in his bedroom a loaded Bushmaster .223 semi-automatic rifle and four loaded 30-round magazines.  Gorman has a prior felony conviction for unlawful use of a weapon.

This case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives and the Eugene Police Department, and was prosecuted by Assistant U.S. Attorney Nathan J. Lichvarcik.  The Lane County District Attorney’s Office is also prosecuting Gorman based upon an unrelated alleged assault.

PORTLAND, Ore. – A previously-convicted sex offender who moved to Ecuador, sexually abused young boys there, and produced and distributed images of the abuse was sentenced in federal court this morning to 30 years in prison followed by a life term of supervised release.  U.S. District Judge Michael H. Simon imposed the sentence on Kenneth Robert McVicker III, 50, following McVicker’s plea of guilty to traveling in foreign commerce and engaging in illicit sexual conduct with minors.  While on supervised release, McVicker will be subject to stringent conditions of supervision, including prohibitions on associating with minors and frequenting places where children congregate, and restrictions on his use of computers.  McVicker will also be required to participate in sex offender treatment, and must register as a sex offender.

McVicker was convicted of a number of child molestation offenses in Maryland in the 1980s, for which he spent close to 15 years in prison.  After his release, and after completing a term of post-prison supervision, McVicker moved to a small coastal village in Ecuador, where he taught English and worked as an artist and soccer coach.  While in Ecuador, he sexually abused at least eight young boys between the ages of five and twelve, took photographs and made videos of the abuse, and distributed the images to child pornography traders and collectors in Canada, India, Thailand, and Mexico.  McVicker used the images he created as currency to obtain images of child sexual abuse from others.  Agents from the U.S. Department of Homeland Security, Homeland Security Investigations (HSI) learned of McVicker’s activities after one of those collectors, a convicted American child pornographer living in Mexico, sent hundreds of McVicker’s self-produced images to an undercover HSI agent in Oregon posing as a child pornography collector.  The collector in Mexico is presently serving a 15-year federal sentence following his conviction in Oregon for transportation of child pornography.

McVicker was indicted in Oregon and arrested in Belize after he travelled there to work on a commercial art project.  Acting on information provided by HSI, authorities in Ecuador served an Ecuadoran search warrant at McVicker’s residence and seized his computer equipment.  Forensic examinations of the equipment revealed a vast collection of over 360,000 images and more than 1,300 videos depicting the graphic sexual abuse of young children.

At the sentencing hearing, McVicker said that while he was born in the United States, he did not grow up here, and does not consider the United States his country.  He believes that he should be facing charges in Ecuador, not in the United States.  The government noted that McVicker’s conduct violated the laws of the United States, and was no less serious because his victims lived in Ecuador.

Judge Simon asked McVicker what “we, as a society” can do to prevent the sexual abuse of children in the future.  McVicker replied, “Nothing at all.”  He also apologized to “everyone who got hurt” by his conduct.  Judge Simon urged McVicker to consider participating in scientific research geared toward better understanding and preventing future instances of child sexual abuse “in part, to repay for harms you’ve already caused.”

U.S. Attorney Amanda Marshall praised the sentence imposed on McVicker.  “This sentence sends a strong message that there is no safe haven for predators who sexually abuse children – not in this country, and not abroad,” she said.  McVicker’s conduct was “particularly egregious” because “he created images of the abuse, distributed the images, and used them to amass a horrific library of sexual abuse images and videos.”  She also praised the “extraordinary efforts of the HSI agents, both here and abroad,” in identifying and locating McVicker.  Because of those efforts, Marshall said, “Kenneth McVicker will never again be able to sexually abuse a child.”

HSI officials echoed Marshall’s comments.  “Kenneth McVicker repeatedly abused young children to satisfy his sexual desires, and continued doing so even after moving to another country,” said Brad Bench, special agent in charge of HSI’s Seattle office, which oversees Oregon investigations. “Americans who travel overseas to abuse children are not beyond the reach of U.S. law. HSI special agents will go anywhere in the world to track down child predators and bring them to justice.”

This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse.  Launched in May 2006 by the Department of Justice and 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 via the Internet, as well as to identify and rescue victims.  For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.

This case was investigated by the Homeland Security Investigations and was prosecuted by Assistant U. S. Attorneys Gary Sussman, Project Safe Childhood Coordinator for the U.S. Attorney’s Office in Oregon, and Kelly Zusman, Appellate Chief for the District of Oregon.

PORTLAND, Ore. - Four Assistant United States Attorneys (AUSAs) in the District of Oregon have been selected as recipients of the 2014 Director’s Awards by the Executive Office for United States Attorneys in Washington, D.C.  The Director’s Awards are awarded for distinguished service to the mission of the Department of Justice through extraordinary professional achievements and excellence. 

AUSA Gary Sussman was awarded the Director’s Award for Superior Performance as a Criminal AUSA for his work as the Project Safe Childhood Coordinator (PSC).  He has served in this capacity for over seven years.  AUSA Sussman has worked with federal, state, and local law enforcement and prosecutors to investigate child sexual abuse and exploitation offenses with an eye towards federal prosecution for particularly serious offenders.  PSC prosecutions doubled between 2011 and 2012. As a result of his efforts, many sexual predators are serving substantial federal prison sentences.  

AUSAs Tim Simmons, Craig Gabriel, and Billy Williams received the Director’s Awards for Superior Performance in Indian Country.  All three AUSAs serve as Tribal Liaisons to the nine federally recognized tribes in Oregon. They received this award for their achievements in promoting the safety of Indian Tribal communities, establishing trusted government-to-government relationships, prosecuting Indian Country cases, and their work on jurisdictional complexities.  Their work has concentrated on fulfilling the United States’ trust responsibilities by helping to protect Indian treaty and ancestral rights, and facilitating partnerships between tribal officials and both federal and state law enforcement regulatory agencies.  They have instituted concrete changes in Indian country in promoting partnerships necessary for effective Indian Country law enforcement.  This has led to effective and aggressive prosecution strategies and a dramatic reduction in crimes and violence affecting tribal communities in Oregon.

“This recognition by the Executive Office of U.S. Attorneys is a huge honor for all of the employees of the United States Attorney’s Office in the District of Oregon.  Nationwide, many Department of Justice employees are nominated for these prestigious awards”, said U.S. Attorney Amanda Marshall.  “I am particularly proud to have our Indian Country and Project Safe Childhood prosecutors recognized in this way as it speaks to the hard work of our office, prioritization, and continued commitment in these areas.  Having four of our AUSAs recognized for their significant contributions to the mission of the Department of Justice, and the citizens of Oregon is a testament to the commitment, dedication, and hard work of all our employees.”

EUGENE, Ore. – On Tuesday, February 4, 2014, U.S. District Chief Judge Ann Aiken sentenced Michael Lee Fry, 38, of Douglas County, Oregon, to a prison term of 15 years for being a felon in possession of a firearm.  Following his release from prison, the defendant will be on supervised release for five years. 

On November 13, 2011, a Sutherlin Police Officer stopped the defendant’s vehicle for a traffic violation and for suspicion that the defendant was driving under the influence.  A female passenger ran away from the vehicle and the defendant was detained for not having a driver’s license.  A pat down of the defendant revealed a knife with crystal residue and he showed several signs of having used methamphetamine.  The defendant’s vehicle was searched and a pistol was located in his backpack.  The defendant’s felony convictions include unlawful use of a weapon, delivery of a controlled substance, attempt to elude and first degree burglary.

This case was investigated by the Sutherlin Police Department and the Bureau of Alcohol, Tobacco, Firearms and Explosives and was prosecuted by Assistant U.S. Attorney Jeffrey S. Sweet.

Allegedly Sought $400,000 in Fraudulent Refunds

Portland, Ore. – Latisha L. Simmons, 34, of Portland, Oregon, has been indicted on sixteen counts of wire fraud, sixteen counts of filing false claims for tax refunds, and one count of aggravated identity theft, the Justice Department announced. Simmons made her initial appearance in court today before U.S. Magistrate Steven P. Logan in Phoenix, Arizona.  The defendant was released on pre-trial conditions pending an initial appearance in U.S. District Court in Oregon on February 20, 2014.

According to the 33-count indictment, Simmons electronically filed at least 52 false tax returns, requesting at least $400,000 in fraudulent refunds. Simmons is alleged to have obtained the names and Social Security numbers of other individuals, including those of a deceased person, in order to file false tax returns in their names. According to the indictment, Simmons had the fraudulent refunds deposited onto stored-value debit cards and mailed to her own address, addresses she could access or control, or deposited into bank accounts that she could access or control.

An indictment merely alleges that crimes have been committed, and the defendant is presumed innocent until proven guilty beyond a reasonable doubt. If convicted, Simmons faces a maximum sentence of five years in prison for each false claims count, up to 20 years in prison for each wire fraud count, and a mandatory two-year sentence on the aggravated identity theft count. If convicted, she could be subject to fines, mandatory restitution, and a money judgment.

This case was investigated by the IRS Criminal Investigation Stolen Identity Refund Fraud Task Force. Trial Attorneys Leslie A. Goemaat and Todd P. Kostyshak of the Justice Department’s Tax Division are prosecuting the case.

Additional information about the Tax Division and its enforcement efforts may be found at www.justice.gov/tax.

Portland, Ore. — U.S. Attorney Amanda Marshall announced today that the U.S. Attorney’s Office for the District of Oregon prosecuted a record number of sex trafficking defendants in 2013.  In 2012, the U.S. Attorney’s Office created the “Gang and Sex Trafficking Unit” which included additional prosecutorial resources to fight sex trafficking in Oregon.  The following year, the office filed thirteen federal indictments, more than triple the number of sex trafficking indictments filed in any prior year.  The past year, 2013, fourteen defendants were charged with federal sex trafficking crimes in the District of Oregon.  In addition, thirteen defendants were convicted or sentenced in the district for sex trafficking crimes in 2013, also a record.

"Every day traffickers are recruiting our teenage girls in shopping malls, on public transportation, and on the street, and every night these children are being raped by johns in hotel rooms across Oregon,” said U.S. Attorney S. Amanda Marshall.  “This is modern day slavery, and we will not rest until every victim is rescued, and every trafficker sent to prison.”

Most of the new federal cases involved the sex trafficking of children, ranging in age from 13 to 17.  Others involved the sex trafficking of young adult women through force, fraud, or coercion.  Three of the charged sex traffickers were women.  For the first time in this district, the federal grand jury also charged a consumer of a sex trafficked child, commonly referred to as a “john,” under the federal sex trafficking laws.

All of the trafficked victims in these new cases were local girls or young women, living in Oregon or Washington at the time of recruitment.

Under federal law, the mandatory minimum sentence for a defendant convicted of sex trafficking a child (aged 14-17 years old) is ten years in prison, or fifteen years in prison if the child is less than 14 years old.  The mandatory minimum sentence for a defendant convicted of sex trafficking through force, fraud, or coercion, is also fifteen years in prison.  The statutory maximum sentence for these crimes is life imprisonment.

The United States Attorney’s Office works closely with the Federal Bureau of Investigation’s (FBI) Child Exploitation Task Force (CETF) to combat the commercial sexual exploitation of children in the district.  The CETF marshals federal, state, and local resources to better locate, apprehend, and prosecute individuals who exploit children through sex trafficking, as well as to identify and rescue victims.  The CETF partners with local law enforcement agencies, to include the Portland Police Bureau, Tigard Police Department, Beaverton Police Department, and Vancouver Police Department.

Armed Bank Robber Sentenced to 22 ½ Years in Federal Prison

PORTLAND, Ore. – Daniel Arthur Carter, who engaged in several takeover-style armed robberies in late 2012, was sentenced today by United States District Judge Marco A. Hernandez to serve 270 months in federal prison.  He was sentenced for armed robberies of a U.S. Bank branch on November 21, 2012, and a Chase Bank branch on October 22, 2012, and for using a firearm in those robberies.  Carter, 32, most recently resided in Portland, Oregon before his arrest in this case. 

In pleading guilty, Carter admitted that on October 22, 2012, he entered a Chase Bank branch located in Tigard, Oregon wearing a mask and a hooded sweatshirt, and wielding a semiautomatic handgun.  As he entered the bank he yelled demands to customers and employees, telling them to get down and to not activate any alarms.  At gun point, he demanded that the tellers stuff his backpack with money.  He then stole a car from one of the customers which he used to get away with $17,401 stolen in the robbery.

He also admitted that on November 21, 2012, he entered a U.S. Bank branch in SW Portland, Oregon wearing a mask and a hooded sweatshirt and wielding a semiautomatic handgun.  As he entered the bank he yelled demands to customers and employees, telling them to get down and to not activate any alarms.  At gun point, he demanded that the tellers stuff his backpack with money.  He then unsuccessfully attempted to steal cars from customers before running away with $11,800 stolen in the robbery.  He was apprehended by Portland Police Bureau officers as he was running from the bank. 

Carter was sentenced to serve 186 months in federal prison for the armed bank robberies, consecutive to an additional 84 months for using a firearm during the violent crime.  He was ordered to pay complete restitution of $29,401 for the robberies.  He was also ordered to forfeit the firearm and ammunition which were used in the robberies, and the $17,401 in unrecovered money from the Chase Bank robbery.  Carter’s sentence was enhanced because he stole property from a financial institution, used a firearm, physically restrained people, engaged in carjacking, and stole a considerable amount of money.  

Carter also agreed to plead guilty in Multnomah County Circuit Court to armed robberies of the following Southwest Portland businesses:

• 45th Street Pub and Grill on July 10, 2012 during which $4,557 was stolen;
• Hillsdale Liquor Store on July 26, 2012 during which $3,821.05 was stolen.;
• Old Market Pub on August 19, 2012 during which ,$2,500 was stolen; and,
• Comfort Suites on July 31, 2012, during which $287.00 was stolen. 

Upon release from custody, Carter will serve a five year period of supervised release.  During his supervised release he must abide by a number of conditions which include mental health counseling, education and employment. 

The case was investigated by the Portland Police Bureau.  The case was prosecuted by Assistant U. S. Attorney Sean B. Hoar.

PORTLAND, Ore. - U.S. Attorney Amanda Marshall announced today that the District of Oregon collected more than $32 million for U.S. taxpayers during Fiscal Year 2013.  This total included:

• $26,579,155.45 collected in criminal actions
• $371,698.67 collected in civil actions
• over $5,700,000 collected in forfeiture actions arising out of drug trafficking and fraud prosecutions

Additionally, Oregon worked with other U.S. Attorney’s Offices and components of the Department of Justice to collect an additional $794,100 in cases pursued jointly with these offices.  Of this amount, $26,745 was collected in criminal actions and $767,355 was collected in civil actions.

Attorney General Eric Holder announced on Thursday that the Justice Department collected approximately $8 billion in civil and criminal actions in the fiscal year ending Sept. 30, 2013.  The more than $8 billion in collections in FY 2013 represents nearly three times the appropriated $2.76 billion budget for the 94 U.S. Attorney’s offices and the main litigating divisions in that same period.

“The department’s enforcement actions help to not only ensure justice is served, but also deliver a valuable return to the American people,” said Attorney General Holder. “It is critical that Congress provide the resources necessary to match the department’s mounting caseload. As these figures show, supporting our federal prosecutors is a sound investment.”

“The U.S. Attorney’s Office in Oregon is critical in recovering funds for victims of crime,” said U.S. Attorney Amanda Marshall.  “My office places a high priority on recovering the proceeds of crime and returning those funds to the victims.”  This past year, the District of Oregon recovered $23 million in a single case in cooperation with the Bankruptcy court, arising out of the criminal fraud case against four former owners of Summit Accommodators, operating out of Bend, Oregon.  The entire amount was returned to the victims who were clients of the Summit group.

 Other cases involving significant collections during the past fiscal year include:

• U.S. v. David Gilbert, who pled guilty to conspiracy to commit bank fraud and was ordered to pay $2,177,603.31 restitution.  The Financial Litigation Unit issued numerous writs of execution on various bank accounts and has collected over $680,000 to date for victims.


• As part of her sentence, Judith Eubank was ordered to pay $333,903.25 in restitution to Social Security and Oregon Department of Human Services after her guilty plea to the crime of theft of government funds.  Her plea agreement included a payment of $100,000 toward restitution at sentencing.


• In the case of U.S. v. Geoffrey Montani , the defendant pled guilty to wire fraud and was ordered to pay $1,492,545.74 restitution.  As part of the plea agreement, defendant paid $50,000 towards restitution prior to sentencing and another $76,458.97 was collected through garnishment by the Financial Litigation Unit.

In addition to the highlighted cases above, which involved large lump sum payments, most of the funds collected in the District of Oregon were obtained through the focused process of reviewing every defendant’s case for assets.  The successful collection comes after pursuing those assets through filing of liens, issuing writs of garnishment on bank accounts, retirement accounts, pensions and wages, and issuing writs of execution on real and personal property.  Also, working with the Asset Forfeiture Unit, $31,867 was recovered from forfeited funds and applied to restitution for victims.

The U.S. Attorneys’ Offices, along with the department’s litigating divisions, are responsible for enforcing and collecting civil and criminal debts owed to the U.S. and criminal debts owed to federal crime victims.  The law requires defendants to pay restitution to victims of certain federal crimes who have suffered a physical injury or financial loss.  While restitution is paid to the victim, criminal fines and felony assessments are paid to the department’s Crime Victims’ Fund, which distributes the funds to state victim compensation and victim assistance programs.

The largest civil collections were from affirmative civil enforcement cases, in which the United States recovered government money lost to fraud or other misconduct or collected fines imposed on individuals and/or corporations for violations of federal health, safety, civil rights or environmental laws.  In addition, civil debts were collected on behalf of several federal agencies, including the U.S. Department of Housing and Urban Development, Health and Human Services, Internal Revenue Service, Small Business Administration and Department of Education.

Additionally, the U.S. Attorney’s office in Oregon working with partner agencies and divisions,collected $5,770,000 in asset forfeiture actions in FY 2013. Forfeited assets deposited into the Department of Justice Assets Forfeiture Fund are used to restore funds to crime victims and for a variety of law enforcement purposes.

More Than 2,000 Pieces Of Stolen Mail Recovered Belonging to Over 845 Mail Theft Victims

MEDFORD, Ore. – Robert Lee Powelson, 30, Medford, Oregon was sentenced Tuesday to 161 months in federal prison by Senior U.S. District Judge Owen M. Panner after his convictions for, and his leadership role in, conspiracy to commit mail theft, conspiracy to commit bank and mail fraud, and aggravated identity theft.  Dallas Lee Tedford, 32, and Kayla Ann Strange, 23, both of Medford, were sentenced to federal prison Monday by U.S. District Judge Michael J. McShane for their convictions for conspiracy to commit mail theft, conspiracy to commit bank fraud, and aggravated identity theft.  Tedford was sentenced to 44 months; Strange was sentenced to 50 months.  As part of each sentence, each defendant received a mandatory consecutive term of two years in prison required by federal statute where a victim’s identification was possessed or used in committing bank or mail fraud.  Each defendant was also ordered to pay $70,380.09 in restitution to victims of the fraud. 

Between September 2012 and March 2013, Powelson, Tedford, Strange, and other conspirators, repeatedly stole large quantities of U.S. mail from residents and businesses in the Medford, Oregon area.  After stealing the mail, they removed financial instruments, financial documents, and identity documents of victims, and collected personal identifiers from those documents to create profiles of victims to further their fraud schemes.  The fraud schemes included forging and cashing or depositing stolen personal checks into bank accounts defendants controlled; applying for and controlling credit card accounts in the names of victims; taking control of checking accounts of victims; and opening American Express Bluebird reloadable cards in the names of victims.  As part of the bank fraud scheme, victim identities from the stolen mail were used to obtain fraudulent credit cards which were mailed to residences where the defendants retrieved and used them. 

According to sentencing documents submitted by AUSA Byron Chatfield, a total of seven search warrants were executed at three motels, two vehicles, and two residences in the Medford area during the investigation.  One of the victims had just recently moved from the state of Alaska to Ashland, Oregon to be with family and friends because of terminal cancer, and died while unknowingly being victimized by the defendants and the other co-conspirators.  Another victim learned that their personal identifying information was being used in the fraud scheme while they were with their sick child at Doernbecher Children’s Hospital in Portland.  As a result, the victim’s family experienced financial problems with their bank accounts and credit cards during a required lengthy stay with their child at Doernbecher’s.

Powelson also eluded police in two separate high-speed vehicle pursuits while involved in stealing mail.  The subsequent search of the car Powelson and Strange used to elude police following one pursuit uncovered 12 financial account cards and 84 pieces of stolen mail including checks, check books, and financial and tax documents such as W-2’s and 1099 forms belonging to 81 Medford victims.  The identity documents and checks recovered from the vehicle were collected together by Strange after they had been stolen from the mail.  Also, Strange documented stolen victim identifying information in notebooks for future use.  Following the second high speed pursuit, police found Powelson along with other associates at a local motel and upon searching their room police seized approximately 1,000 pieces of stolen mail belonging to approximately 365 individuals and businesses from the Medford area.

During a search of a residence where Strange and Powelson received mail and credit cards in victim’s names, police recovered 300 pieces of stolen mail including financial and tax information and 128 stolen checks that belonged to 161 victims from the Medford area.  Police also discovered cell phone text messages between Tedford and another co-conspirator with instructions about how to activate a victim’s stolen credit card.  A later search of Tedford’s apartment by police recovered a large quantity of stolen mail, victim identity profiles, 138 stolen and altered checks, and American Express Bluebird cards. 

Numerous fraudulent checks seized from Tedford’s apartment had been loaded and reloaded on multiple Bluebird cards through smart phone imagery.  Often the checks were altered in between load attempts in an effort to deceive the check scanning software and/or manual review of the checks at the time the checks were uploaded.  Fraudulent Bluebird cards were also recovered during several of the other search warrants and intercepted from the mail stream destined for addresses used by Powelson, Strange, and Tedford for the fraud.  Many of the fraudulent Bluebird cards were determined to be related through shared account information, card-to-card transactions, the use of the same email addresses, and the loading of fraudulent checks through smart phone imagery.  Transaction analysis related to those cards disclosed a total attempted fraud of at least $214,697.

The other federally charged defendants, Eduardo Navarro, 24, and Lana Marshall, 29, both of Medford, Oregon, are scheduled to be sentenced within the next few weeks. 

This case was investigated by the Medford Police Department, Talent Police Department and the U.S. Postal Inspection Service and prosecuted by Assistant United States Attorney Byron Chatfield.

Defendant, an Armed Career Criminal, was Just Recently Released from Federal Custody

PORTLAND, Ore. – December 24, 2013, Sid Edward Willis Jr., 34, of Portland, Oregon, was sentenced to 20 years in prison after being convicted of being a felon in possession of a firearm after he threatened a couple with a loaded .357 caliber handgun.

On May 24, 2012, at approximately 10:00 p.m., a couple drove into the Plaid Pantry parking lot located at SE 162nd and SE Division, in Portland, Oregon, to pick up a couple of things on their way home.  After the male driver exited the car and went into the store the defendant walked up to the female passenger, who was still sitting in the car, and asked her "why is your man mugging me."  As he was talking to the passenger the defendant showed her a silver handgun that he had tucked into his waistband.  Alarmed, the passenger exited the car and went into the market to tell her boyfriend what had happened and that they needed to leave.  Immediately after leaving the store, the defendant called out to the male driver and stated why "you mugging me?"  The male driver turned to walk toward the defendant who then pulled out his gun and pointed it directly at the male driver’s face stating, "You can’t be mugging me...I'll kill you...I'm a gangsta.”  Part of the incident at the Plaid Pantry, including the defendant pointing a gun at the victim's face, was captured on the store security video tape.  

The couple immediately left the store and called 911.  Portland Police Officers responded and captured defendant Willis a short time later down the street.  After defendant Willis was taken into custody, officers located a loaded .357 caliber revolver hidden in some bushes where the defendant was trying to hide from the police.  When he was being booked into the Multnomah County Jail the defendant blurted out to the police that he had done everything and then said, "Just give me a deal, I want 15 years in the state, don't send me to the feds!" 

The defendant had been released from federal custody less than two months prior to this incident after serving a 10-year drug sentence.  The defendant was arrested on federal charges and initially charged on a federal criminal complaint on May 29, 2012.  On June 5, 2013, he was indicted by the federal grand jury for being a felon in possession of a firearm as an armed career criminal.  The defendant pled guilty on July 22, 2013.  At the time of the crime, the defendant had 10 prior felony convictions, including four felony drug trafficking offenses.

U. S. District Court Judge Anna J. Brown sentenced the defendant to 15 years in prison on the new felon in possession of a firearm charge.  The new crime was also a violation of the defendant’s federal supervised release.  Judge Brown also revoked the defendant’s federal supervision and imposed a consecutive five year sentence.  When he is released from prison the defendant will serve an additional three years of supervised release.

“When Congress enactedthe Armed Career Criminal Act it recognized that a very small percentage of repeat offenders commit a large percentage of violent or potentially violent crimes,” said U. S. Attorney Amanda Marshall.  “The law was designed to incapacitate criminals, like the defendant, through the imposition of very lengthy prison terms in an effort to keep our community safe from our most dangerous offenders.”

Tuesday, February 18, 2014, 9:00 a.m., Courtroom 13B

Overview of the Case

The U.S. Department of Justice has found reasonable cause to believe that the Portland Police Bureau has an unconstitutional “pattern or practice” of using excessive force against persons with actual or perceived mental illness. Based on that finding, the U.S. sued the City of Portland. The City of Portland reached a proposed Settlement Agreement with the U.S. to remedy the identified problems. The Settlement Agreement has been considered and deemed fair and reasonable by the Portland Police Association. The Albina Ministerial Alliance Coalition for Justice and Police Reform does not object to the acceptance of the Settlement Agreement by the Court and has agreed to advocate for the implementation of the Settlement Agreement reforms that the AMA Coalition supports. The Court will hold a Fairness Hearing to decide whether the proposed Settlement Agreement is fair, reasonable, and adequate. The Fairness Hearing will be held on Tuesday, February 18, 2014, beginning at 9:00 a.m., in Courtroom 13B. The Fairness Hearing will be open to the public.

The Complaint in this case, the proposed Settlement Agreement, the Court’s Order setting the Fairness Hearing and its governing procedures, and the Testimony Form for persons wanting to submit oral or written testimony regarding the Settlement Agreement are available free of charge at the District Court’s Civil Intake Counter and at http://ord.uscourts.gov/fh.

Procedures Before the Fairness Hearing

The Court invites members of the public to testify, in writing or orally, on the following topics:

Is the Agreement fair to everyone affected?
Is the Agreement reasonable?
Is the Agreement adequate to solve the problems identified in the Complaint?

To do so, persons are encouraged to submit the Testimony Form or a similar written submission no later than January 31, 2014. Submissions may be made to the Clerk of the Court in person or via first class mail, or via email to Mary_Austad@ord.uscourts.gov. If anyone is unable to attend the scheduled hearing and wishes to provide oral testimony, he or she may do so by video and submit a DVD. Submissions will be retained by the Court until the close of the case, but will not be part of the public record unless the Court orders otherwise.

Procedures at the February 18, 2014 Fairness Hearing
Upon arrival at the Courthouse, members of the public will sign-in at Courtroom 13B. Those who previously provided a written submission requesting oral testimony will be given priority. Those who did not provide advance notice of their intent to testify may testify, at the Court’s discretion and if time permits. The Court will determine the order of the individuals providing testimony. Each member of the public will be provided five (5) minutes to testify. Organizations will be limited to presenting three (3) representatives and each representative will have ten (10) minutes to testify. The Court may extend time for testimony for good cause. Only testimony that is relevant, as determined by the Court, will be allowed at the hearing.

The Testimony Form can be found Here

Jefferson County Man Pleads Guilty io Being an Armed Career Criminal and Admits to Possessing Firearms Stolen in Burglary

EUGENE, Ore. – Daniel Chase Kennedy, 27, a resident of Jefferson County, Oregon, appeared before U. S. District Court Chief Judge Ann Aiken in Eugene yesterday and was sentenced to 15 years in prison.  On July 10, 2013, Kennedy pled guilty to being an armed career criminal and admitted possessing shotguns and rifles he and two accomplices stole while burglarizing a Jefferson County home.    

Chief Judge Aiken sentenced Kennedy as an armed career criminal because he possessed the firearms after being previously convicted in Oregon courts of twelve felonies including robbery, coercion and deliveries of methamphetamine.

According to court documents and statements made in court, Kennedy and two accomplices used methamphetamine before breaking into the unoccupied home and stealing the guns and jewelry.  Oregon State Police officers recovered four of the stolen guns, stolen property, and methamphetamine at Kennedy’s Madras residence.  Kennedy was on Oregon post-prison supervision for four felonies when arrested by the Oregon State Police and the Jefferson County Sheriff.

Kennedy’s guilty plea, admissions and sentence of 180 months in prison were part of his plea agreement with the U. S. Attorney’s Office for the District of Oregon, Jefferson County District Attorney’s Office, and Deschutes County District Attorney’s Office.

This case was investigated by the U.S. Bureau of Alcohol, Tobacco and Firearms, Oregon State Police and the Jefferson County Sheriff’s Office.  Assistant U.S. Attorney Frank R. Papagni, Jr., with the assistance of Jefferson County Deputy District Attorney Laura Moszer and Deschutes County Deputy District Attorney Brigid Turner, prosecuted the case.

PORTLAND, Ore. – U.S. Attorney for the District of Oregon Amanda Marshall announced today that a federal indictment has been returned charging four individuals involved in a conspiracy to distribute methamphetamine over the Internet, conspiracy to export methamphetamine to other countries, and fifteen counts of international and domestic money laundering.

The Oregon indictment is an outgrowth of an investigation which began when, in September 2011, Homeland Security Investigations (HSI) special agents in Baltimore received information regarding an online illegal drug marketplace known as “Silk Road.” Subsequently, the Baltimore Silk Road Task Force, led by HSI, and including U.S. Secret Service, the Drug Enforcement Administration (DEA), the U.S. Postal Inspection Service (USPIS), and the Internal Revenue Service (IRS), was created.  The ensuing investigation revealed the Silk Road website had been in operation since approximately March 2011 and had more than 957,079 registered users who conducted over $1.2 billion in transactions.  Silk Road provided a forum for drug distributors and suppliers to offer their products via the Internet to buyers through an encrypted network known as The Onion Router (TOR) network.  Silk Road also facilitated the sale of weapons and fraudulent ID. This encrypted network used by suppliers and users masked their true IP addresses, thereby providing complete anonymity.

The indictment unsealed today alleges Jason Weld Hagen, 39, and Chelsea Leah Reder, 23, both residents of the Vancouver, Washington area, and Richard Egan Webster, 45, and Donald Ross Bechen, 39, both Washington County residents, conspired to distribute methamphetamine across the globe using the Silk Road website.  The indictment alleges the conspirators used internet anonymizing software, including Pretty Good Privacy and TOR, to distribute methamphetamine in exchange for the virtual currency known as BitCoins. The indictment alleges that the conspirators would then use commercial carriers to deliver the methamphetamine to various buyers throughout the United States and in Australia, Canada, the Czech Republic, Italy, and the United Kingdom. The Silk Road web site was seized in October, 2013, when FBI agents arrested the alleged administrator.

The indictment alleges that Hagen and his three Portland-area conspirators were responsible for the sale of over 17 pounds of methamphetamine to various buyers via Silk Road on approximately 3,169 occasions.  In addition, the indictment alleges that Hagen, using the Silk Road alias “hammertime,” would receive payment in Bitcoins and then convert them to U.S. currency using various electronic money transfer systems including Paypal and Western Union, along with various reloadable and stored value cards.

The matter is scheduled for a seven-day jury trial before Senior U.S. District Judge Robert E. Jones on February 18, 2014. All defendants appeared before U.S. Magistrate Judge John V. Acosta today for arraignment and detention hearings.  Judge Acosta ordered defendants Hagen, Webster, and Bechen held in federal custody pending trial, and released defendant Reder under conditions of pre-trial supervision.

Agencies cooperating in the Portland-area investigation include HSI, IRS—Criminal  Investigations Division, U.S. Postal Inspection Service,  U.S. Marshals Service, U.S. Secret Service, DEA, Portland Police Bureau, Washington County Sheriff’s Office, Westside Interagency Narcotics (WIN) Team, Clark-Vancouver Drug Task Force, the Beaverton Police Department and the Washington County District Attorney’s Office.

A criminal indictment is only an allegation and is not evidence of guilt. All defendants are presumed to be innocent unless and until proven guilty.

This case is being prosecuted by Assistant U.S. Attorney Johnathan S. Haub and Assistant U.S. Attorney AnneMarie Sgarlata.

PORTLAND, Ore. –Yesterday, U.S. District Court Judge Anna J. Brown imposed prison sentences on Mark Neuman (78 months), Tim Larkin (54 months), and Lane Lyons (54 months), for lying to and misleading clients about how they held and used millions in client funds while operating Summit Accommodators, Inc., previously headquartered in Bend, Oregon.  In addition to their prison sentences, the defendants must each serve three years of supervised release.

“Attorneys, certified public accountants and business executives who, motivated by greed, lie to clients to gain use of their money for personal purposes are especially deserving of prosecution and punishment,” said U.S. Attorney Amanda Marshall. “This office and our federal and state partners will do whatever it takes to bring dishonest professionals to justice.  Besides seeking tough sentences for white-collar fraudsters, we will continue to go after their ill-begotten assets to compensate victims of these schemes.”

On July 3, 2013, on the 17th day of trial, a jury in federal court in Portland convicted the three former owner/operators of Summit Accommodators, Inc., of Bend, of conspiracy to commit mail fraud and conspiracy to commit money laundering in connection with a 10-year fraud scheme.  About 10,000 clients entrusted them with almost $1 billion from 1999 to 2008, when the business closed and filed for bankruptcy.  The defendants used $75 million of client funds for undisclosed personal investments in real estate, investments in businesses in the Bend area, and loans to business associates and family members.

Neuman and his business partner Brian Stevens, both Certified Public Accountants, created Summit in 1991 to help customers take advantage of lawful federal income tax deferral transactions. In a typical transaction, a customer would sell income producing property, allow Summit to hold the proceeds of the sale, and then buy another income producing property within 180 days. Federal income tax laws then allowed the customer to defer paying taxes on the profits from sale of the first property. Summit eventually opened affiliate offices in Texas, Washington, Utah, Montana, Wyoming, Nevada, and Lake Oswego, Oregon.

In 2002, Neuman and Stevens hired Larkin as Summit’s Chief Operating Officer. In 2005, Neuman and Stevens hired Lyons as Summit’s in-house counsel. In 2006, Larkin and Lyons became equal partners in Summit with Neuman and Stevens.

The trial evidence showed that although Neuman and Stevens began using their clients’ exchange funds for personal investments before 1999, they promised their clients their exchange funds would remain in Summit bank accounts and would only be used to complete their tax deferral exchanges.   Neuman was responsible for language in Summit marketing brochures and Summit’s website.  Both falsely promised Summit would maintain client funds in bank accounts or in government securities.

From 2004 through October 2008, Summit held between $49 million and $109 million of its customers’ money in a typical month. The defendants routinely transferred large amounts of client money to Inland Capital Corp., another company they owned and controlled. Through Inland, the conspirators used client funds for over 100 real estate projects in Central Oregon in which one or more of them had direct personal interests.

In 2006, defendant Lyons warned his partners in a confidential memo that “the use of exchange funds by Inland constitutes … a misrepresentation to our clients under their exchange agreements” and further stated if the use of client funds came to light “fraud charges will be leveled” against each owner.  Despite this warning, the defendants continued to solicit and take in new client funds until days before shutting their doors.

The co-conspirators hid the fraud scheme by concealing from most of Summit’s employees and from most of the owner-operators of Summit’s branch offices that the conspirators were using Summit customer money to invest in real estate and for loans to themselves and others. In February 2007, when Summit’s clients and branch owner-operators began to express concern about the safety of Summit client money, the conspirators lied by saying that all Summit client money was deposited and maintained in financial institutions or invested in highly-secured short term notes.

“Summit clients lost millions while the owners of Summit Accommodators tried to make easy money,” said Kevin Rickett, Acting Special Agent in Charge of the FBI in Oregon. “While today’s sentencing brings about closure to this criminal investigation, we should remember the long-term toll that such scams can have on the victims.”

“Fraud, like many financial crimes, threatens the financial health of our communities,” stated Tamera Cantu, Assistant Special Agent in Charge of IRS Criminal Investigation. “IRS Criminal Investigation is committed to ensure that those who engage in these illegal activities are investigated and brought to justice.”

Summit co-owner Brian Stevens previously pleaded guilty to identical charges and testified against his former partners at trial.

This case was investigated by the Federal Bureau of Investigation; IRS, Criminal Investigation; the United States Postal Inspection Service; and the Oregon Division of Finance and Corporate Securities.  Assistant U.S. Attorneys Seth D. Uram and Donna Maddux handled the prosecution of the case.

91,000 Plants Found Encompassing a Stretch Over A Mile and a Half

PORTLAND, Ore. – A federal jury in Portland returned verdicts of guilty Monday, December 16, 2013, in the trial of Fredy Figueroa-Montes, age 34.  The counts of conviction included conspiracy to manufacture marijuana which carries a maximum penalty of 20 years in prison and a fine of $1,000,000; and depredation of government property  which carries a  maximum penalty of 10 years in prison, and a fine of $250,000.

Trial evidence showed that the defendant joined five co-defendants in growing more than 91,000 marijuana plants in the Wallowa Whitman National Forest, and that they used more than 500 pounds of illegal rodenticides, pesticides, herbicides and fertilizer to cultivate the marijuana, causing an estimated $97,000 in damage to the Wildcat Creek riparian area. Investigating officers found an Uzi long gun and two pistols in the campsite.  The five co-defendants previously pled guilty and were sentenced to periods of incarceration ranging from 30 months to 120 months.

“These convictions are the result of the effective collaboration between local, state and federal law enforcement partners,” said U.S. Attorney Amanda Marshall.  “Here in Oregon, federal prosecutors will remain aggressive when it comes to protecting federal enforcement interests that include preventing marijuana from growing on public lands, as well as preventing violence and the use of firearms in the cultivation and distribution of marijuana.”

Testimony presented by the government described the outdoor grow as “staggering”, encompassing a stretch over one mile and a half in the Wildcat Creek riparian zone, where the marijuana growers disrupted the natural terrain with extensive terracing.  The plants were concealed in several separate pods developed by removing trees and underbrush to camouflage the grow site, and miles of plastic irrigation tubing was found.  The Marijuana Enforcement Team, a trained group of state troopers who work with law enforcement agencies during the summer months to assist with marijuana eradication and investigations related to outdoor marijuana grows, called this the largest marijuana grow ever found in the State of Oregon saying many people would be outraged at the damage to public lands caused by illegal marijuana growers.  Evidence presented identified an extensive amount of trash including tubing, plastic planter containers, herbicide and other toxic chemicals that were dumped along a river’s edge.  

The five-day trial was held in the Federal District Court in Portland, Oregon, with Judge Michael W. Mosman presiding. 

The investigation of the marijuana grow site was led by the Wallowa County Sheriff's Office, the La Grande Police Department, and the Union/Wallowa County Drug Task Force, the Oregon State Police SWAT Team, the Blue Mountain Enforcement Narcotics Team (BENT), Wallowa County Search & Rescue, Enterprise Police Department, the Union County Sheriff’s Office, the United States Forest Service Law Enforcement and Investigations, Union County Sheriff's Office, the Baker County Narcotics Enforcement Team, the Oregon Army National Guard Counterdrug Program, and the Oregon State Police Marijuana Enforcement Team, as well as the Oregon Department of Justice, the Bureau of Alcohol, Tobacco, Firearms and Explosives, the United States Marshals Service, the Drug Enforcement Administration, Immigration and Customs Enforcement Homeland Security Investigations and the Wallowa County District Attorney’s Office.  

Assistant U. S. Attorney Jennifer J. Martin and Certified Law Clerk Courtney Peck prosecuted the case.

Defendants Include a Real Estate Developer, a Loan Officer, a Mortgage Broker, and an Escrow Officer in Cases Stemming From the Collapse of Desert Sun Development in Bend, Oregon

EUGENE, Ore. – Over the past two days, Chief U.S. District Judge Ann Aiken sentenced five defendants, including a real estate developer, a loan officer, a mortgage broker, and an escrow officer for a variety of mortgage and loan fraud charges arising out of the collapse of Desert Sun Development (DSD), a company previously headquartered in Bend, Oregon.  From 2004 through 2008, DSD built commercial buildings and residential housing throughout Central Oregon.  According to the court records, DSD principals and other defendants caused financial institutions to lose more than $20 million.

Tyler Fitzsimons, 35, of Gold Hill, Oregon, was sentenced to 90 months in prison for spearheading this mortgage-fraud scheme.  He was also ordered to pay more than $22 million in restitution.  Fitzsimons started DSD in 2004 and was its president.  Codefendant Shannon Egeland, 39, of Kuna, Idaho, was DSD’s vice president.  Fitzsimons and Egeland orchestrated a commercial and residential real estate scheme.  As part of the commercial real estate fraud, Fitzsimons and Egeland submitted fraudulent documents, including false financial statements, tax returns, and leases, to various banks in order to obtain financing to develop and construct many of DSD’s commercial projects.  Once the loans were approved, Fitzsimons, Egeland, and others submitted additional false documents, including fictitious contracts and invoices, to the banks to obtain loan proceeds for construction costs that were claimed to be associated with the fraudulent documents.  For five commercial construction projects, Fitzsimons, Egeland and others obtained more than $4.2 million in funded draw requests and performed no construction. 

Fitzsimons and Egeland committed fraud with DSD’s first commercial construction loan, using the money to buy themselves Dodge Vipers rather than to construct the building as promised.

Fitzsimons and Egeland also developed DSD’s employee house program, a real estate flipping scheme, and they recruited DSD employees, mortgage brokers, a loan officer, and a loan processor to help push through bad loans for participants of the scheme.  Under the scheme, Fitzsimons and Egeland promised to build or sell homes at cost, and the participants agreed to flip or sell the homes and split any profit with DSD.  Because most of the participants could not qualify for the loans, Fitzsimons and Egeland, among other things, undermined the loan approval process by “seasoning” or falsely inflating participants’ bank accounts through temporary deposits of DSD money.  They also provided participants with undisclosed, short-term loans and submitted other fictitious documents, including letters explaining employment, large or recent deposits, and bonuses, to the banks funding the loans.  As part of his guilty plea, Egeland admitted that he seasoned his own bank account with DSD money to obtain a $1.9 million construction loan to build a 22,000 square foot home in Powell Butte, Oregon.  In the end, most of the homes involved in the flipping scheme were either only partially constructed or not constructed at all.  Many of the properties were foreclosed upon or short sold.

Fitzsimons and Egeland used their ill-gotten gains to live an extravagant lifestyle. Among other things, they purchased large homes in Powell Butte, Oregon, Dodge Vipers, a Ferrari, a Hummer, BMWs, Mercedes, and a Malibu Wakesetter boat.

“The illegal actions of these defendants exemplify the conduct that wreaked havoc in the mortgage, financial, and real estate industries for the past several years,” said U.S. Attorney Amanda Marshall. “Banks were not the only losers in this case. Everyone lost. The effects of defendants’ large scale fraud were dramatic—the local housing market crashed, people lost their jobs, communities were littered with partially finished developments and homes, lending markets constricted, and banks suffered millions in losses. Real estate, bank, and financial insiders who commit fraud will be held accountable.” Marshall thanked the Federal Bureau of Investigation, the Internal Revenue Service, and the State of Oregon, Division of Finance and Corporate Securities, for their investigative efforts.

Egeland’s sentencing hearing is set for January 29, 2014, at 11:30 a.m.

Others sentenced for their role in the scheme include Jeremy Kendall, 36, of Camano Island, Washington, Jeffrey Sprague, 50, of Bend, Oregon, Shaun Little, 44, of Bend, Oregon, and  Teresa Ausbrooks, 51, of Farmington, New Mexico.

Kendall was sentenced to 18 months in prison and was ordered to pay more than $22 million in restitution for his role in the fraud.  Kendall, a DSD employee and officer manager, at Fitzsimons’s and Egeland’s direction, created and submitted fraudulent documents to various financial institutions to gain financing for various DSD projects.  Kendall was also involved in seasoning bank accounts, including his own, for individuals involved in DSD’s residential flipping scheme.

Sprague was sentenced to 46 months in prison and was ordered to pay $3.6 million in restitution.  Sprague, a former loan officer at West Coast Bank, falsified loan applications for individuals involved in DSD’s flipping scheme by fraudulently inflating their monthly income and falsely claiming that these homes were going to be the employees’ primary residence.  Sprague also knew the loan files contained forged or scanned signatures and other material misrepresentations and omissions.  West Coast Bank approved and funded the loans based on the loan applications that Sprague falsified and on the other documents that Sprague submitted to the bank that he knew were false.

Shaun Little, 44, of Bend, Oregon, was sentenced to five years of probation with eight months in a halfway house for assisting participants in DSD’s flipping scheme obtain bad loans.  He was also ordered to pay $191,171 in restitution.  Little, a former mortgage broker, knew DSD was seasoning participants’ bank accounts and submitted a false loan application and supporting documentation to obtain a loan for a participant of DSD’s flipping scheme.

Teresa Ausbrooks, 51, of Farmington, New Mexico, was sentenced to one year and one day in prison and was ordered to pay $184,839.66.  Ausbrooks, a former escrow officer, participated in DSD’s flipping scheme and executed a similar, separate scheme.  She lied on home loan applications about her income and omitted liabilities, including a side agreement with Fitzsimons. 

Several other defendants involved in the DSD investigation have already been sentenced.  Del Barber, Jr., 44, of Spokane, Washington, and a former mortgage broker, was sentenced to 15 months in prison for creating and submitting fraudulent loan applications for participants of DSD’s flipping scheme.  He was also ordered to pay $119,654 in restitution.  Robert Brink, 62, of Junction City, Oregon, a former bank building inspector for Umpqua Bank, was sentenced to 12 months and one day in prison and was ordered to pay $181,276 in restitution for submitting false inspection reports to Umpqua bank for two of DSD’s commercial projects.  Brink claimed construction had occurred, when, in reality no construction had occurred and Umpqua Bank had funded more than $700,000 in draw requests. 

Michael Wilson, 61, of Merrells Inlet, South Carolina, a former DSD employee, was sentenced to five years of supervised release and community service for participating in DSD’s flipping scheme.  He was also ordered to pay $303,114.95 in restitution.  Garret Towne, 34, of Eugene, Oregon, a former DSD employee, and Barbara Hotchkiss, 44, of Redmond, Oregon, a former loan processor at West Coast Bank, were sentenced to probation and community service in Deschutes County Court for their roles in the DSD residential flipping scheme.  They were ordered to pay $202,415 and $303,069 in restitution, respectively.  Kevin Mandlin, 50, of Bend, Oregon, was sentenced to one year of probation for submitting a false document to a bank on behalf of DSD for Egeland’s home in Powell Butte, Oregon.

John Partin, a building material supplier in Bend, Oregon, is scheduled to be sentenced for his role in the fraud on March 12, 2014.

“This bold fraud scheme was born out of the housing bubble long ago, but its effects will be felt by the construction and banking businesses in Central Oregon for many years to come,” said Kevin Rickett, Acting Special Agent in Charge of the FBI in Oregon. “It’s a scam that involved losses in the tens of millions of dollars as the defendants pursued lavish lifestyles. Major mortgage fraud cases such as this one are and will continue to be a high priority for the FBI.”

Mortgage fraud weakens the economic integrity of our communities and our nation, and more significantly, hurts a broad range of people,” said Teri L. Alexander, Acting Special Agent in Charge of IRS Criminal Investigation in the Pacific Northwest. “Criminals who try to line their own pockets through fraudulent schemes should see the prison sentences handed down in this case as proof that the harm mortgage fraud inflicts on our communities will not go unpunished. I am pleased that the IRS was part of the law-enforcement team that worked to dismantle this criminal enterprise and help bring fraudsters to justice.”

These cases were investigated by the FBI, the IRS, and the Oregon Division of Finance and Corporate Securities and are being prosecuted by Assistant U.S. Attorney Scott E. Bradford.

Postal Carrier is Sentenced to Federal Probation, Resigns from Job and Agrees to Pay Restitution

PORTLAND, Ore. - Bruce Douglas Menzies, 54 of Tigard, Oregon was sentenced today by U.S. District Judge Anna J. Brown to serve three years of probation, pay a $2,500 fine and pay a $100 fee assessment for theft of U.S. mail.  Menzies pled guilty on August 25, 2013; as a condition of his plea agreement, he resigned from the U.S. Postal Service and agreed to pay restitution in the amount of $300. 

This case came to the attention of the U.S. Postal Inspector General’s Office after they received a complaint from a postal customer in Portland, who reported that her grandmother had been sending birthday cards to her two young children that contained money.  However, the greeting cards were received torn open without money, or not received at all.  The victim suspected her mail carrier.  The Inspector General’s Office gathered evidence of defendant, Menzies, opening numerous items of mail on June 14, 2012, August 4, 2012, and August 29, 2012.  Postal carrier, Menzies, was arrested on March 25, 2013. 

“The majority of U.S. Postal Service employees are dedicated public servants who take great pride in ensuring the sanctity and security of U.S. Mail”, U.S. Postal Service Office of Inspector General (USPS OIG) Special Agent in Charge Pete Gately said. “Unfortunately, Bruce Menzies betrayed the trust placed in him by the Postal Service and the public he was sworn to serve. His actions resulted in deserved consequences for such behavior. Today’s sentencing of Mr. Menzies demonstrates the ongoing commitment of the USPS OIG and the U.S. Attorney’s Office to vigorously investigate and prosecute these types of violations of the law, as we did in this case. The public can remain confident that the USPS OIG will continue to ensure the security of their mail.”

This case was prosecuted by Assistant U.S. Attorney Geoffrey Barrow.

EUGENE, Ore. – Today, Bryan W. Gruetter, 55, of Bend, Oregon, pleaded guilty to one count of conspiracy to commit wire fraud before U.S. District Judge Michael McShane.  In court, Gruetter admitted to diverting more than $1.1 million of client funds.

According to court documents, Gruetter was a personal injury attorney with offices in Bend and Portland, Oregon.  As part of his guilty plea, Gruetter admitted that he and others illegally diverted more than $1.1 million in client settlement funds via interstate wire transfers.  He further admitted that he and others used his clients’ money to pay for personal and business expenses rather than to pay the clients or to pay the clients’ legal, medical, insurance, or other associated costs as promised.  On February 3, 2012, the Oregon State Bar took custody of defendant’s law practice, and on March 9, 2012, defendant resigned his law license, desiring not to contest allegations that he neglected clients’ legal matters, failed to communicate with clients, and failed to deliver funds to clients.

Sentencing is set for March 17, 2014, at 9 a.m.before Judge McShane.  The maximum penalty for conspiracy to commit wire fraud is 20 years in prison and a $250,000 fine.       

This case was investigated by the FBI and IRS-CI and is being prosecuted by Assistant U.S. Attorney Scott E. Bradford.

Portland, Ore. — Anthony Dennell Armstrong, 25, of Portland, Oregon, was sentenced to 200 months in prison today by United States District Judge Michael W. Mosman, for transporting a 14-year-old girl from Oregon to Arizona for the purpose of prostitution.  On August 15, 2013, Armstrong pleaded guilty to one count of transporting a minor across state lines for prostitution.  Upon release from custody, Armstrong will serve a 10-year period of supervised release.  During his supervised release, he must abide by a number of conditions, including registration as a sex offender.

“Sex trafficking of children is the same thing as sending a child into a hotel room to be raped, night after night,” said U.S. Attorney Amanda Marshall.  “We will continue to prosecute aggressively anyone who recruits our children into this dark world.”

In imposing the 200-month sentence, Judge Mosman noted that there is nothing to distinguish the crime of sex trafficking of children from the crime of rape.  He stated that sex trafficking of children is among the most serious of offenses, and added that the trafficking in this case was especially serious in light of the young age of the victim, the repeated acts of personal violence, the interstate travel, and the duration of the offense.

The government alleged that Armstrong recruited the victim into prostitution when she was just fourteen years old, and continued to traffic her until she was eighteen years old.  He transported the victim from Oregon to Phoenix, Arizona for the purpose of prostitution, as well as to Las Vegas and southern California.  The government alleged that Armstrong subjected the victim to regular beatings, including when she broke his rules, did not make enough money, or refused to work as a prostitute.

This case stemmed from a coordinated investigation by the Federal Bureau of Investigation’s (FBI) Child Exploitation Task Force.  The FBI’s Child Exploitation Task Force marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children through sex trafficking, as well as to identify and rescue victims.  The case was prosecuted by Assistant U.S. Attorney Stacie Beckerman.

PORTLAND, Ore. – A former resident of Pacific City was sentenced in federal court on December 3, 2013, for stealing more than $78,000 from the Social Security Administration (SSA), the Oregon Department of Human Services (DHS), and Medicaid.  Peter C. Byrne, 88, was sentenced to a three year term of probation and required to pay full restitution by the end of the week. Byrne pleaded guilty in August and admitted that between 1992 and 2012 he concealed from SSA and DHS his travels outside the United States and his compensation, while receiving Supplemental Security Income (SSI) and food stamps.  Byrne had previously deposited $25,000 with the court for restitution and indicated he was prepared to pay the full balance by the end of the day.

According to documents filed by the government and Byrne’s admissions, Byrne began receiving SSI, a need-based benefit, in 1990 and was required to report to SSA certain travel outside the United States as well as his income and compensation.  Between 1992 and 2012, Byrne traveled outside the U.S. for more than 30 days at least 15 times, on some occasions remaining outside the U.S. for more than four months.  Between 2009 and 2012, Byrne also maintained bank accounts with Barclays of England and Wells Fargo where he held more than $85,000 at one time, and failed to disclose these bank accounts to SSA and DHS.  When Byrne was questioned by SSA and investigators in 2012, he failed to disclose all of his travels and assets.  When SSA asked to see his passport, Byrne advised that he had accidentally destroyed his passport by running it through the washing machine.

Investigators subsequently served a search warrant at Byrne’s residence and located financial and travel records, and his Will.  Byrne urged that the Will be kept confidential because he feared the Social Security Administration would come after his estate for benefits he unlawfully received.  Agents also located a copy of a letter from Byrne to Safari Press directing that any future royalties for his published books be sent to his girlfriend.  Byrne had previously been questioned by investigators whether he was receiving royalties for the books he had written on topics such as his search for Bigfoot and game-hunting in Nepal.  Byrne denied receiving royalties. 

Prosecutors also noted that in the 1990s, Byrne had two previous overpayments of SSI because of unreported travel and assets.  Those prior overpayments had been handled administratively by SSA.

The Honorable Garr M. King stated that Byrne’s actions had been intentional and criminal, but agreed with the parties’ recommended sentence of probation primarily because of Byrne’s age.

The case was investigated by the Social Security Administration Office of Inspector General, Office of Investigations, the U.S. Department of Health and Human Services, the Oregon Department of Human Services, and the Tillamook County Sheriff’s Office, and was prosecuted by Special Assistant United States Attorney Helen L. Cooper, as part of a partnership venture between the Social Security Administration Office of General Counsel and the United States Attorney’s Office in Portland.

PORTLAND, Ore. – Two family members charged in a multi-family member conspiracy to defraud social service agencies have pleaded guilty to Social Security fraud.  Jason Boutros, 49, of Portland, admitted in federal court yesterday that he concealed a family member’s travel outside the United States while continuing to accept Supplemental Security Income benefits on her behalf.  He also admitted to submitting a voucher for payment for home-care services for his mother that he never provided because she also was outside the United States.  Sentencing is set for March 3, 2014, before the Honorable Michael H. Simon.

According to papers filed in court, Boutros has agreed to pay approximately $220,000 in restitution for Supplemental Security Income and medical benefits family members received that they were not entitled to.

Boutros’ sister, Killda Boutros, 46, of Portland, pleaded guilty to similar charges on November 14, 2013.

This case was investigated by agents for the Medicaid Fraud Unit, the Department of Health and Human Services, and the Social Security Administration, Office of Inspector General.  The case is being prosecuted by Special Assistant United States Attorney Helen L. Cooper as part of a partnership venture between the U.S. Attorney’s Office in Portland, Oregon, and the Seattle Region of the Social Security Administration, Office of the General Counsel.

For more information, please see the attached indictment Here

PORTLAND, Ore. – A federal judge in Portland has sentenced Hossein Lahiji, 50, and Najmeh Vahid Dasterjerdi a.k.a. Najmeh Lahiji, 33, both of McAllen, Texas, to prison following their June 2013 convictions by a jury in Portland for conspiracy to defraud the United States and to engage in money laundering.  Hossein Lahiji is a physician specializing in urology and Najmeh Vahid is an attorney, both practicing in Texas. 

On November 19, 2013, Judge Garr M. King sentenced both defendants to serve a year and a day in federal prison.  In addition, the defendants were each ordered to pay $200,000 in fines and jointly to pay restitution in the amount of $973,503.00 to the Internal Revenue Service for back taxes owed.  The court also confirmed the jury’s verdict forfeiting an additional $600,000 which was involved in the money laundering offense to the United States.

The indictment alleged that defendants conspired to impede and impair the functions of the Internal Revenue Service in the collection of income taxes and the Office of Foreign Assets Control of the Treasury Department in the enforcement of the Presidential Embargo against Iran.

Trial evidence showed that defendants provided funds to a Portland charity, the Child Foundation, between 1998 and 2006.  The Child Foundation, in turn, gave the defendants charitable donation receipts and transferred the funds to Iran.  Defendants claimed charitable deductions from their income taxes for these payments.  Some of the funds were used to purchase a building in Tehran in the name of Hossein Lahiji’s sister.  Additional funds were used to invest in an interest-bearing account in an Iranian bank.  Yet additional funds were committed to be spent at the discretion of an Iranian Ayatollah.  Some of the payments were backdated to facilitate claims of charitable donations for a year prior to the year of actual payment.  Many of the uses of the funds violated the Presidential embargo against Iran, instituted in 1995.  Co-conspirators Child Foundation and Mehrdad Yasrebi were separately prosecuted and sentenced in March 2012.  Child Foundation has since reorganized and continues to operate under the supervision of U.S. Probation officers.

The Presidential Embargo against financial transactions with Iran was first imposed by President Clinton in 1995.  Those sanctions have been renewed annually by both Presidents Bush and Obama.  U. S. Attorney Amanda Marshall stated that “The enforcement of the sanctions in place against financial transactions with Iran is an important priority of the Department of Justice.  Those who would evade those sanctions while cheating on their taxes should expect to be prosecuted.”

Defendants are charged in a separate federal indictment in the Houston Division of the Southern District of Texas with conspiracy to commit health care fraud, health care fraud, conspiracy to violate the Iranian Embargo, and failure to file a report of foreign bank and financial accounts.  Trial in the Houston case is currently scheduled for April 2014.

These cases were investigated by the FBI and the IRS - Criminal Investigations Division, and prosecuted by Assistant U.S. Attorneys David Atkinson and Charles Gorder.

EUGENE, Ore. – On Tuesday, November 26, 2013, Chief U.S. District Judge Ann Aiken sentenced Kenneth Nin Chin, 53, of Springfield, Oregon, to a prison term of ten years and one month for distributing child pornography.  Following an investigation by the Federal Bureau of Investigation and the Department of Homeland Security, a search warrant was executed at Chin’s residence.  On Chin’s computer, agents discovered thousands of images depicting child exploitation, including the sexual abuse of infants and toddlers, and it was determined that Chin was also involved in distributing these images online to others.  In addition, Chin engaged in online chats in which he wrote about his desire to engage in sexual activity with minor boys.

“Images of child exploitation cause tremendous harm to the victims-not just by the horrible abuse involved in creating the images but in the perpetuation of the abuse every time these images are shared,” stated U.S. Attorney Amanda Marshall. “Those involved in possessing and distributing these horrific images help fuel the market for such depravity, and my office is committed to doing everything we can to put a stop to it.”

This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by 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 via the Internet, as well as to identify and rescue victims.  For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.

This case was investigated by the Federal Bureau of Investigation and Department of Homeland Security, and was prosecuted by Assistant U.S. Attorney Jeffrey S. Sweet.

PORTLAND, Ore. – U.S. District Judge Michael H. Simon sentenced defendant Miles J. Julison to four years in federal prison and three years of post-release supervision for two counts of filing false claims against the United States.  The sentencing hearing on Wednesday, November 19th followed a five-day trial in August when a Portland jury convicted Julison of the charges. The evidence at trial established that Julison, a 41-year-old former real estate investor, had filed tax returns for the years 2007 and 2008 fraudulently claiming that he was due refunds for tax overpayments totaling nearly $2 million.  In fact, he had paid no federal income taxes at all in those years.  Julison had also helped another man file his own fraudulent claim for more than $480,000.

U.S. Attorney Amanda Marshall commended the sentence, “It is a serious sentence for a serious crime.  As Judge Simon noted, Miles Julison stole hundreds of thousands of dollars from his neighbors, honest and hardworking taxpayers.  He tried to steal even more and helped others do the same; the severity of the sentence properly reflects the extent of his criminal conduct.”

The evidence at trial established that Julison falsely reported on his 2007 tax return that he had earned more than half a million dollars that year and that almost all of it had been withheld for taxes.  He then fraudulently claimed he was due a tax refund of $411,773.00.  The IRS issued him a check for that amount two weeks later.  In January 2009, Julison falsely reported on his tax return that he had earned more than $2.3 million in 2008, and that all but $815 of that total had been withheld for taxes.  He fraudulently claimed a tax refund of more than $1.5 million.  By then, however, Julison was already under criminal investigation, and the refund was never issued.

Julison used the refund he obtained from his 2007 return to purchase, among other things, a $60,000 Mercedes-Benz sedan, to pay off his home mortgage, and to make payments on a 23-foot ski boat, a Toyota Sequoia SUV , two Kawasaki wave runners, and two Polaris snowmobiles.  Judge Simon ordered Julison to pay $411,773 in restitution to the IRS for that refund.

This case was investigated by IRS, Criminal Investigation.  Assistant U.S. Attorneys Seth D. Uram and Ryan W. Bounds prosecuted the case.

Under Title 18, United States Code, Section 1591

PORTLAND, Ore. – U.S. District Judge Anna J. Brown sentenced Christopher Cool Wilmer, 30, of Tacoma, to 25 years in prison, followed by 10 years of supervised release, for four counts of sex trafficking involving a 16-year-old and an 18-year-old.  In May 2013, just weeks before trial, Wilmer pled guilty to the indictment.

According to court documents filed for the sentencing hearing, the investigation began on February 22, 2012, when police responded to a call for help from the 18-year-old victim at a Motel 6.  She reported that her pimp “Cool” had locked her out of a room where he was also pimping another young woman.  Portland Police officers learned that the registered guest to that room was Christopher Cool Wilmer who had previous arrests for promoting prostitution.  Officers went to the room where they found the 16-year-old victim and a john.  Although the victim initially denied knowing Wilmer, Officers later observed pictures on her cell phone showing Wilmer, including pictures of him flexing under the caption “Daddy Cool,” and in a bubble bath. Wilmer manipulated the 16 year old victim into performing numerous commercial sex acts. Text messages sent to Wilmer described her pain and humiliation at having been manipulated and coerced by the defendant into performing these acts.

Further investigation uncovered records of Wilmer’s travel with the victims on Amtrak and Greyhound between Oregon and Washington.  Agents also located 30 postings to the escort section of Backpage.com advertising the services of the 16-year-old minor between January and February 2012.  Ads featured the minor in provocative poses and set prices for these “services” for $60 to $125 per hour.  Witness testimony established Wilmer placed new sex-trafficking recruits on 90-day probation periods to evaluate their performance.  He also established certain “rules” to gain compliance such as prohibiting the minor victim from eating food until she earned her daily quota from walking the “track” (Southeast 82nd) performing commercial sex acts.  Wilmer demanded that the minor always answer his phone calls, stay ready to work at all times, and never look another man in the eyes.

The defendant argued against labeling him as a “pimp,” and called witness Anthony Marcus, an anthropologist, who testified that a more accurate term for Wilmer’s role was “market facilitator.”  The government countered that Wilmer branded himself a pimp with arm tattoos that read: “Hoe Hard [or] Hoe Home.”  “Federal law prohibits buying or selling children for sex.  Safeguarding minors from commercial sexual exploitation is one of the top priorities of my office and the Department of Justice,” stated U.S. Attorney Amanda Marshall.  “Contrary to defendant’s assertions that this problem is merely mythical and exaggerated by ‘panicked’ social workers, a recent research study conducted by Portland State University identified at least 469 children who were victims of commercial sexual exploitation in the Portland Metro area between 2009 and 2013.  Such data reflects a serious and real problem that my office will continue to combat through aggressive prosecution.”

In crafting an appropriate sentence, Judge Brown noted the terrible nature of the offense and addressed the negative impact it has on victims and our community.  She also described as an aggravating factor defendant’s history of devaluing the women around him.

“No child deserves to endure the violence that these girls face every day. They don’t deserve the rape and drug abuse and control that these pimps exert. These kids are not throwaways… they are not somebody else’s problem,” said Greg Fowler, Special Agent in Charge of the FBI in Oregon. “The Child Exploitation Task Force is doing everything it can to recover these girls and get them connected with a support system. But, this is not just a law enforcement problem or a social service problem. This is a community-wide problem, and we need a whole community response to really be effective.”

This case was investigated by the FBI’s Child Exploitation Task Force (CETF), led by two task force detectives from the Tigard Police Department and Portland Police Bureau (PPB).  The FBI-sponsored CETF partners with local law enforcement agencies to combat the commercial sexual exploitation of children in the area.  Partners include the Portland Police Bureau, Tigard Police Department, Beaverton Police Department, Vancouver Police Department, who work closely with prosecutors from both the U.S. Attorney’s office and Multnomah County District Attorney’s Office.  This case was prosecuted by Assistant U.S. Attorney Leah K. Bolstad.

MEDFORD, Ore. – Kenneth Johnson, 62 and Diana Arredondo, 56 pled guilty to federal charges stemming from their work at the Super 8 Hotel in Central Point, Oregon.  Johnson pled guilty to wire fraud and filing a false tax return.  Arredondo pled guilty to filing a false tax return.  The maximum penalty for wire fraud is 20 years imprisonment and a $1,000,000 fine.  The maximum penalty for filing a false tax return is 3 years imprisonment and $100,000 fine.  Johnson is scheduled to be sentenced Febuary 10, 2014, and Arredondo is scheduled to be sentenced on February 24, 2014, both before the Honorable Owen M. Panner in Medford, Oregon.

Johnson was a partner in the Super 8 Hotel in Central Point Oregon since it opened in October 2005.  He was in charge of the hotel’s daily operations and reported the financial figures to his co-parters in Montana.  Johnson hired his girlfriend, Arredondo, as the hotel manager.  They worked at the hotel from October 2005 through 2011.

Johnson defrauded his partners by providing them false information regarding the cash collected by the hotel.  The scheme diverted approximately $500,000 in cash and checks from the Super 8 Hotel in Central Point for Johnson’s personal use. 

In addition, Johnson and Arredondo each filed fraudulent income tax returns, knowingly underreporting the cash they took from the hotel.

The case is being prosecuted by Assistant U.S. Attorney Judith Harper.  The case was investigated by the Internal Revenue Service and Federal Bureau of Investigation.

US Attorney Amanda Marshall with Grand Ronde Tribal Council Member Cheryle Kennedy

Defendant falsely represented himself as a naturopathic doctor

PORTLAND, Ore. – A civil jury unanimously concluded Wednesday afternoon that James Cole, 66, of Hood River, Oregon, operated schemes to defraud his customers in the operation of two separate but related businesses.  The first business, Maxam Neutraceutics, manufactures and sells so-called dietary supplements in the form of spray bottles, which were advertised as being effective in treating a variety of incurable medical conditions, including autism, which was Maxam’s primary target market.  The second business, TurboSonic USA, sold electronic vibration machines manufactured in Korea and designed to be used for easy exercise.  The Maxam products retailed for approximately $125 per bottle, and the TurboSonic machines retailed for between $12,000 and $16,000.

The jury deliberated for approximately four hours following the six-day trial.  Evidence at trial revealed that Cole’s scheme in relation to the sale of the Maxam sprays included:  falsely representing that the products were created and manufactured by a Harvard chemist, when in fact, they were made by a twice-convicted federal felon and self-taught chemist in the Boston area operating in unknown labs under unknown conditions; failing to disclose that the products contained rare bacteria not listed on the labels and believed by the government’s expert to have been intentionally put into the products by the felon manufacturer; and failing to reveal that Cole had never conducted clinical trials of the products, despite advertising them as “clinically proven” to improve conditions such as autism, Alzheimer’s, Parkinson’s, and multiple sclerosis.

In addition, the customer service representatives Cole hired to respond to customer inquiries – none of whom had any medical training, and all of whom were trained solely by reviewing Maxam’s own marketing literature and speaking to Cole and to the felon chemist – were instructed to provide medical-sounding advice to customers who called the office. 

Regarding the TurboSonic machines, the evidence revealed that Cole marketed the machines as FDA-Approved medical devices that were capable of treating over 100 medical conditions if the machine’s dials were turned to particular settings, including cancer and HIV.  Much of the company’s marketing efforts were devoted to placing the machines in the offices of chiropractors and physical therapists.  Cole’s office manager compiled an alphabetized list of diseases and their corresponding purported treatment settings into a list of “protocols” which Cole’s company distributed with the machines and instructed chiropractors to place on the walls of their offices for patients to use.  The machines were then advertised by Cole to have “researched and proven medical benefits” for the treatment of conditions ranging from anemia to vertigo, when in reality, the only research conducted on the machines confirmed that they were meant to be used as exercise machines.  In addition, the machines were not FDA-Approved, as the FDA considered the machines to be purely exercise machines and no different from a treadmill, and that the list of treatment protocols were unsupported by any medical research. 

The case was filed as a civil asset forfeiture case, and by returning a verdict in favor of the United States, the government is now entitled to keep over $700,000 in assets that were seized from Cole’s home and businesses in April of 2011.  The assets included the full balance of three bank accounts held by Cole’s businesses, Cole’s interest in a condominium located in California, and approximately 320 ounces worth of gold found in Cole’s safe.  The jury concluded that those assets were traceable to the proceeds of Cole’s frauds.  The evidence at trial revealed that Cole’s two businesses grossed almost $21 million between 2005 and mid-2011.   

Two additional cases are still pending against Cole.  In September of this year, a Portland grand jury indicted him on five counts of subscribing to false tax returns and other tax-related documents.  Also in September, the Consumer Protection Branch of the U.S. Department of Justice filed a complaint against Cole, his corporation, and his office manager seeking to permanently shut down the Maxam business for failing to comply with multiple provisions of the Federal Food, Drug, and Cosmetic Act.

This case was investigated by the U.S. Food and Drug Administration Office of Criminal Investigations, and the Internal Revenue Service, Criminal Investigation.  Assistant U.S. Attorneys Katie Lorenz and Allan Garten filed the civil action and represented the United States at trial.

EUGENE, Ore. – On November 12, 2013, Matthew Collins, 49 years old, was sentenced by U.S. District Judge Michael McShane to 140 months in federal prison for possessing with the intent to distribute methamphetamine.  Upon his release from prison, Collins will be on supervised release for five years. 

On May 6, 2013, deputies with the Deschutes County Sheriff’s Office stopped a vehicle driven by Collins in Redmond, Oregon.  Collins thereafter fled on foot and jumped into a nearby canal before he was taken into custody by Redmond Police officers.  A search of the vehicle unearthed a large amount of methamphetamine that Collins was transporting from Portland to distribute in the Bend area.

Collins has a lengthy and violent criminal history and has been the subject of several recent investigations by the Central Oregon Drug Enforcement Team (CODE), which also investigated and handled the May 6, 2013 case.  The CODE team is a multi-jurisdictional narcotics task force supported by the following Central Oregon law enforcement agencies:  Bend Police Department, Deschutes County Sheriff’s Office, Redmond Police Department,  Prineville Police Department, Crook County Sheriff’s Office, Jefferson County Sheriff’s Office, Madras Police Department, Oregon State Police, Sunriver Police Department, Black Butte Police Department, United States Drug Enforcement Administration (DEA), Warm Springs Tribal Police Department, Deschutes, Crook, and Jefferson County District Attorney’s Offices, and the Oregon National Guard.

U.S. Attorney Amanda Marshall praised the sentence imposed on Collins:  “Bend and Central Oregon are better places with Mr. Collins off the streets.  This case is the result of the excellent collaboration between the CODE team, the Deschutes County District Attorney’s Office, and my office.  Coordination between federal and state law enforcement is key to prosecuting the most dangerous criminals and keeping our communities safe.  My office is committed to working with our local and federal law enforcement partners to achieve results such as this one.”

This case was prosecuted by Assistant U.S. Attorney Nathan J. Lichvarcik.

Police Discover Felon in Possession of Five Firearms

PORTLAND, Ore. -- Daniel Gene Hoffman, 38, of Vancouver, Washington, was sentenced today by U.S. District Court Judge Michael W. Mosman to 92 months in prison for being a felon in possession of firearms.  Hoffman pled guilty to the charge in July and has been in custody since the time of his arrest on August 25, 2012.

Hoffman was operating a motor vehicle with a stolen license plate on property near the Portland Airport and patrolled by the Port of Portland Police.  Police made contact with the vehicle after it parked at a nearby hotel.  Hoffman was detained and after a partially concealed handgun was seen in the vehicle, it was searched and officers seized five firearms, 113 rounds of ammunition and approximately one ounce of methamphetamine.  Hoffman was prohibited under federal and state law from possessing firearms by virtue of the following felony convictions:  Intent to Deliver Methamphetamine While Armed with a Firearm (1997), Possession of Methamphetamine, Possession of Stolen Property and Attempting to Elude Pursuing Police Vehicle (2003), and Felon in Possession of a Firearm (2004).

This case was investigated by the Port of Portland Police and ATF and prosecuted by Assistant U. S. Attorney Fred Weinhouse.

EUGENE, Ore. – On November 5, 2013, Corey Nicholas Agard, 25 years old, was sentenced by U.S. District Chief Judge Ann Aiken to 67 months in federal prison for unlawful possession of a firearm and ammunition.  Upon his release from prison, Agard will be on supervised release for three years. 

On June 17, 2011, a Klamath County Sheriff’s Officer arrested Agard when he caught him with a sawed-off Mossberg shotgun and ammunition.  Defendant has multiple felony convictions including felon in possession of a firearm, robbery, menacing, second degree burglary, and attempted assault.

This case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives, and the Klamath County Sheriff’s Office, and was prosecuted by Assistant U.S. Attorney Nathan J. Lichvarcik.

Portland, Ore. — Eddie L. Bynum, Sr. (a/k/a “Fast Eddie”), 54, of Portland, Oregon, pled guilty to money laundering today in U.S. District Court.  The Internal Revenue Service’s (IRS) Criminal Investigations Division initiated a “sting” money laundering investigation of Bynum after learning from the Federal Bureau of Investigation’s Metro Gang Task Force that Bynum might be laundering money for local gang members through his Vancouver automobile dealerships.  Bynum is scheduled to be sentenced by U.S. District Court Judge Marco Hernandez on February 18, 2014.

Bynum pled guilty to one count of money laundering, and admitted that he accepted $34,000 in cash from an IRS undercover agent to purchase a 2005 Maserati, and that the agent told him that the cash came from dealing drugs.  Bynum also admitted that he conducted the Maserati sale to conceal the source and nature of the dirty money.  Bynum acknowledged he later accepted $50,000 cash from the undercover agent, pursuant to an agreement that Bynum would launder that money by returning the $50,000 to the agent in $5,000 monthly checks from one of his businesses.  The government alleged that Fountaine Motors, Manor Highway Auto, Inc., JT’s Barber Shop, and Seeznin’s Sports Bar were among the local businesses Bynum used to launder money.

This case stemmed from an investigation by the Internal Revenue Service, Criminal Investigations.  The case is being prosecuted by Assistant U.S. Attorney Stacie Beckerman.

Fermore Craig, Jr., had previously pled guilty to Abusive Sexual Contact and Making False Statements to the FBI

PORTLAND, Ore. – Fermore Joseph Craig, Jr., 44, of Pendleton, Oregon, was sentenced today to 30 months in federal prison by U.S. District Judge Michael W. Mosman.  In August, Craig pled guilty to one count of abusive sexual contact and one count of making false statements to the FBI.  Following today’s sentencing hearing, Craig turned himself in to the U.S. Marshals service to begin serving his prison term.

After Craig has completed his 30 months in prison, he was ordered to serve five years of federal supervised release.  While on supervised release, Craig will be required to participate in a sex offender assessment and treatment program, and he will be prohibited from having any contact with the victim in the case.  Craig’s conviction for abusive sexual contact will also require him to register as a sex offender.

“The victim in this case showed tremendous courage by speaking out against the police officer who sexually abused her,” stated U.S. Attorney Amanda Marshall.  “Fortunately, Mr. Craig is no longer in law enforcement and is now in prison.”

According to the prosecutor’s statements in court, on May 11, 2013, on the Umatilla Indian Reservation, Craig touched the intimate parts of an adult female.  Craig admitted that he intentionally touched the victim’s intimate parts to arouse and gratify his own sexual desire, and he did so without the victim’s permission.

When the victim subsequently disclosed the sexual abuse, the FBI and Oregon State Police initiated an investigation and interviewed Craig.  On May 13, 2013, during an interview with an FBI special agent and an Oregon State Police trooper, Craig made false statements to the investigators by lying about the sexual contact he had with the victim.

Craig had been employed as a Umatilla Tribal Police Officer for approximately 15 years, but he was not on duty as a police officer at the time the sexual abuse occurred.  After the abuse was reported by the victim, Craig was immediately placed on administrative leave.  Craig ultimately resigned from the Umatilla Tribal Police Department in June, while the investigation was ongoing.  At today’s sentencing hearing, Craig relinquished his certification from the Oregon Department of Public Safety Standards and Training, thereby terminating his right to be a police officer in the State of Oregon.

The case was investigated by the FBI’s Pendleton office and the Oregon State Police.  Assistant U.S. Attorney Craig Gabriel prosecuted the case.

PORTLAND, Ore. - Janelle Fuston, 25, of Aloha, Oregon, was sentenced yesterday by U.S. District Judge Marco A. Hernandez to five years of probation and 200 hours of community service for the crime of money laundering.  She was also ordered to pay $48,243 to the government in the form of a money judgment. Fuston pleaded guilty to the crime of money laundering in April of this year, and the money judgment represents a portion of the approximately $120,000 that Fuston admitted to laundering for her co-defendant and ex-boyfriend, Larry Fuentes. 

Between April 2011 and April 2012, Fuston, who was employed at the time by First Tech Federal Credit Union in Beaverton, agreed to launder over $120,000 in Fuentes’s drug proceeds.  Defendant Fuston admitted she knew that Fuentes had no legitimate income, that she knew the cash he was providing her constituted drug proceeds, and that she deposited the drug money into multiple accounts held in her name at First Tech Federal Credit Union.  She further admitted to establishing one of the accounts at First Tech in her name for the sole purpose of storing those drug proceeds, and to breaking up the drug proceeds into multiple deposits because ATMs could only accept a limited number of bills at a time.

Before their crime was discovered, Fuston and Fuentes spent all but approximately $11,000 of the laundered drug proceeds, enjoying the fruits of their illegal conduct in the form of vacations, tanning salons, and other luxuries. Fuston was fired from her job at First Tech once her conduct was discovered, and her plea agreement provides that she is prohibited from working in the financial industry for ten years following her conviction.

Fuston’s co-defendant, Larry Fuentes, has also pleaded guilty to the crime of money laundering, and is scheduled for sentencing on February 4, 2014.

The investigation of this case was conducted by the High Intensity Drug Trafficking Area Interdiction Task Force, including the Portland Police Bureau’s Drugs and Vice Division, the Department of Homeland Security, and the Internal Revenue Service Criminal Investigation.  The case was prosecuted by Assistant U.S. Attorney Katie Lorenz.

PORTLAND, Ore. - Stephen Francis Bukucs,  39, a resident of Northeast Portland, was arrested in Portland on Friday evening, October 18, 2013, on charges of aiming a laser pointer at two aircraft.  A federal indictment, unsealed this morning by the court, alleges Bukucs aimed a laser pointer at United Airlines Flight 1406 and JetBlue Flight 1205 in Portland on October 13, 2013.

Bukucs is being held in custody at the Multnomah County Detention Center and will have his first court appearance today at 1:30 p.m. before U.S. Magistrate Judge Dennis M. Hubel for arraignment on the indictment.

Knowingly aiming a laser pointer at an aircraft is a felony offense under federal law, carrying a maximum sentence of five years in prison and a $250,000 fine.

The arrest is the result of a joint investigation by the Federal Bureau of Investigation (FBI), the Federal Aviation Administration (FAA), the Port of Portland Police, and the Portland Police Bureau.  The Transportation Security Administration (TSA), the Washington County Sheriff’s Office and the Clackamas County Sheriff’s Office also provided substantial assistance.

An indictment is only an accusation of a crime, and a defendant should be presumed innocent unless and until proven guilty.

The case is being prosecuted by Assistant U. S. Attorney Stephen F. Peifer

For more information, please see the attached indictment Here

PORTLAND, Ore. – Amanda Marshall, U. S. Attorney for the District of Oregon, today announced the arrest of Beaverton resident, Brian J. Brown, 56, former president of National Relief Charities, and the unsealing of an indictment charging Brown with conspiring to defraud National Relief Charities of $4 million and conspiring to commit money laundering violations with the proceeds of the fraud scheme.  FBI and IRS agents arrested Brown Sunday morning, October 20th, at Portland International Airport as Brown returned to the United States from Thailand and Japan.

The indictment, returned under seal on October 9th, alleges that in late 2005, when Brown stepped down as the president of National Relief Charities, a national charity dedicated to improving the quality of life for Native Americans, he established a nonprofit company called Charity One, Inc., dba American Indian Education Endowment Fund.  Brown then allegedly induced National Relief Charities to fund Charity One, Inc. with $4 million from 2006 through 2009, which Brown represented would be used to fund educational scholarships for Native Americans.  Instead, Brown and unnamed coconspirators allegedly used the entire $4 million for their personal benefit.

The indictment further alleges that Brown established the principal office for Charity One, Inc. in Beaverton, Oregon and that National Relief Charities, which also maintained an office in Beaverton, mailed monthly checks for $100,000 or $200,000 from its offices in Beaverton, Oregon and in Sherman, Texas to Charity One, Inc.  To facilitate the fraud scheme, Brown allegedly gave National Relief Charities false financial statements showing Charity One, Inc. was properly using the money.

Brown appeared today before U.S. Magistrate Judge Dennis J. Hubel and entered not guilty pleas to the charges.  Magistrate Judge Hubel released Brown pending trial subject to release conditions including surrendering his passport to the federal Pretrial Services office and GPS monitoring.  Brown’s trial is scheduled to begin on December 17, 2013, before U.S. District Judge Michael H. Simon.

“Anyone who defrauds a charity for their own personal gain should expect to be found, caught and prosecuted.  This conduct harms the charity, its donors, and, most importantly, the intended recipients of the fraudulently diverted funds,” said U.S. Attorney Marshall. 

This case is being investigated by the Federal Bureau of Investigation and the Criminal Investigation Division of the Internal Revenue Service.  Assistant U.S. Attorney Seth D. Uram is handling the prosecution of the case.

PORTLAND, Ore. - U.S. Attorney Amanda Marshall, in conjunction with the U.S. Department of Justice Office of Community Oriented Policing Services (COPS), today announced funding awards for the District of Oregon.  The grantees and amount awarded include:          

$125,000         Junction City, Oregon                          1 Officer

$375,000         City of Medford, Oregon                    3 Officers

$125,000         Sutherlin Police Department           1 Officer

$157,320         City of Winston, Oregon                     1 Officer

“In the wake of past tragedies, it's clear that we need to be willing to take all possible steps to ensure that our kids are safe when they go to school,” said Attorney General Eric Holder. “These critical investments represent the Justice Department's latest effort to strengthen key law enforcement capabilities, and to provide communities with the resources they need to protect our young people. Especially in a time of increased challenges and limited budgets, our top priority must always be the safety and well-being of our children.”

Overall the COPS Office funded awards to 263 cities and counties, aimed at creating 937 law enforcement positions.  More than $125 million will be awarded nationally, including nearly $45 million to fund 356 new school resource officer positions.

“When I convened the "Call To Action Summit" on combatting gun violence, we identified school resource officers as a crucial piece of ensuring our children are safe when they go to school," said U.S. Attorney, Amanda Marshall.  "I am pleased to join the Attorney General and the COPS Office in announcing these grants which will help provide our communities with the resources needed to accomplish this vital mission,” 

“The COPS Office is pleased to assist local law enforcement agencies throughout the country address their most critical public safety issues,” said Joshua Ederheimer, Acting Director of the COPS Office.  “Funding from this year’s program will allow many cities and counties to apply new sworn personnel to issues related to violent crime, property crime, and school safety.”

The COPS Hiring Program offers grants to state, local and tribal law enforcement agencies to hire or rehire community policing officers.  The program provides the salary and benefits for officer and deputy hires for three years.

Grantees for the 2013 hiring program were selected based on their fiscal needs, local crime rates, and their community policing plans.  There was an additional focus this year on agencies requesting assistance in developing school safety programs that would include the hiring of a school resource officer.  School resource officer positions funded by the COPS Office are sworn law enforcement positions that work within a school district or facility, interacting directly with school administrators and students.   

The COPS Office is a federal agency responsible for advancing community policing nationwide.  Since 1995, COPS has awarded over $14 billion to advance community policing, including grants awarded to more than 13,000 state, local, and tribal law enforcement agencies to fund the hiring and redeployment of approximately 125,000 officers and provide a variety of knowledge resource products including publications, training, and technical assistance.

For the entire list of grantees and additional information about the 2013 COPS Hiring Program, visit the COPS website at www.cops.usdoj.gov.

EUGENE, Ore. – On September 24, 2013, Christopher Lyn Sparks, 48 years old, was sentenced by U.S. District Chief Judge Ann Aiken to 12 years in federal prison for possessing child pornography and violating the terms of his supervised release.  After serving his sentence, Sparks will be on lifetime supervised release. 

Defendant was first sentenced to 51 months in prison in Eugene federal court in 2007 for possession of child pornography.  In early 2013, after being released from custody and while on federal supervised release, FBI agents executed a search warrant at Defendant’s home and seized a number of items that contained additional child pornography.  As a recidivist, this time around Defendant faced an increased mandatory minimum and multiple supervised release violations, and eventually pled guilty on June 18, 2013.

U.S. Attorney Amanda Marshall praised the sentence imposed on Sparks:  “My office aggressively prosecutes child exploitation offenses.  This defendant did not get that message the first time.  The 12-year sentence imposed today is a clear reminder to those who seek gratification from the exploitation of children that their conduct will not be tolerated, especially when they are repeat offenders like Christopher Sparks.”

"Not once, but twice this defendant has been caught exploiting children through his possession of images and videos showing those children being violently abused," said Gregory Fowler, Special Agent in Charge of the FBI in Oregon. "The FBI, in concert with our law enforcement partners, will continue to pursue those who seek to abuse and exploit children."

This case was investigated by the FBI and was prosecuted by Assistant U.S. Attorney Nathan J. Lichvarcik.

PORTLAND, Ore. – Jade Carnahan, 35, of Scappoose, Oregon, was sentenced today by U.S. District Court Judge Marco A. Hernandez to 18 months in prison for the crime of bank larceny.  In addition to her prison term, the Court also ordered Carnahan to serve three years of supervised release following her release from prison and to repay $408,062.38 in restitution.

Carnahan was the Operations Officer at the Rivergate Federal Credit Union located on N. Ramsey Blvd in Portland, Oregon.  In that capacity, she had access to customer account information.  Between 2005 and 2012, she embezzled more than $400,000 from the bank vault and from customer accounts, including elderly customers, converting the money to her own use. At sentencing, Carnahan blamed an addiction on pain medication in accepting responsibility for her crime.

“Customers depend on the employees of their local credit unions to guard their money, not steal it,” said U.S. Attorney Amanda Marshall.  “Crimes like this are especially offensive when perpetrated against seniors and have a lasting effect on the trust we place in our financial institutions.”

“Drug abuse helps to drive crimes of opportunity,” said Gregory Fowler, Special Agent in Charge of the FBI in Oregon. “In this case, the defendant was in a position of trust to guard her bank’s funds and those of its customers.  She broke that trust, using her access as a bank employee to feed a drug habit.  Addiction to prescription pain killers can be just as devastating as street drugs, such as crack and heroin.”

 The investigation was initiated by the Portland office of the FBI.  The case was prosecuted by Assistant U.S. Attorney Scott Erik Asphaug.

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PORTLAND, Ore. - Honorable Ancer Haggerty, U.S.  District Judge for the District of Oregon, sentenced Yusaf Jawed, age 44, of Portland, to 78 months in prison, three years of supervised release, and ordered him to make restitution to the victims of his fraudulent investment program in the amount of $6.47 million.  Jawed had previously entered a guilty plea to five counts of mail fraud and 12 counts of wire fraud in connection with an investment fraud scheme he orchestrated in Oregon, Washington, California  and in other states.

The 17 count Information filed by the U. S. Attorney’s office, to which Jawed pled guilty,  alleges that from February 2008 through September 2009, Jawed raised approximately $6.47 million from over ten investors in a hedge fund he controlled called Alpha Qualified Fund. Very little of the money was actually invested and most of the money was diverted to other purposes including the repayment of money owed to prior investors.

 “In these uncertain economic times, it is vital that investors can seek advice from trusted advisors,” said U.S. Attorney Amanda Marshall.  “When that trust is violated, the government will take strong measures to punish the financial predators and restore confidence in the financial system.”

During the sentencing hearing today, the government stated that Jawed had fulfilled a part of the plea agreement which required him to cooperate with the Securities and Exchange Commission, which had filed a lawsuit against him and with investors who had sued him. The government pointed out that Jawed’s cooperation helped to facilitate a financial recovery against other parties who had assisted him in perpetuating the scheme to defraud.

“This defendant lied to his clients – over and over again. He promised high returns and strong investments. In the end, the clients lost millions,” said Gregory Fowler, Special Agent in Charge for the FBI in Oregon. “We have a responsibility to make sure he faces justice while working to help the victims recover what funds they can.”

The case was investigated by the FBI, with the assistance of the Securities and Exchange Commission. Senior Litigation Counsel and Assistant U. S. Attorney Allan M. Garten, prosecuted the case for the government.

SALEM, Ore. – For the 13th consecutive year, a unique financial crimes conference will be held in Oregon.  The Financial Crimes & Digital Evidence Conference has become international in scope, attracting participants from Europe and Asia.  It brings together in the same place at the same time, from multiple jurisdictions, law enforcement investigators and prosecutors, financial institution fraud investigators, and corporate fraud investigators to learn how, through teamwork, to apply the most recent technology to combat financial fraud.  Financial fraud results in billions of dollars of losses annually in the United States and law enforcement officers in Oregon are determined to reduce the harm to consumers and to hold more offenders accountable. 

On Tuesday, September 24, through Thursday, September 26, law enforcement investigators, prosecutors, financial institution fraud investigators, corporate fraud investigators and auditors will gather at the Salem Convention Center to learn how to better investigate and prosecute financial fraud.  The conference will provide investigators and prosecutors who handle financial crimes, and private-sector personnel who assist them in doing so, tools to assist in the detection, investigation and prosecution of financial fraud.  The conference is open to all city, county, state, and federal law enforcement officers and prosecutors; fraud investigators and security officers for financial institutions; internal auditors for public agencies; and private-sector personnel who assist law enforcement in the investigation of financial crimes. 

The seminar will address a variety of topics, including:  (1) digital forensic evidence; (2) the use of financial and digital evidence in solving violent crime; (3) gender based financial crime; (4) identity theft and tax fraud; (5) culturally transient criminals; (6) working with victims of fraud; (7) organized retail fraud; (8) Medicaid fraud and financial exploitation of elders; and (9) state and federal search and seizure legal updates.

“The value of the Financial Crimes & Digital Evidence Conference is reflected in its international audience,” said U.S. Attorney Amanda Marshall.  “It supports a continuous need for training in the increasingly sophisticated area of financial fraud and reflects our desire to hold accountable those who victimize our citizens.  The combined training of investigators and prosecutors fosters a team approach and provides immediate tools to better detect, investigate, and prosecute those who commit financial fraud.”

The 2013 Financial Crimes & Digital Evidence Conference is sponsored by the United States Attorney’s Office, the Oregon Department of Justice, the Oregon Department of Public Safety Standards and Training, and the Federal Bureau of Investigation.  For further information, please contact Sean Hoar at sean.hoar@usdoj.gov or visit www.financialcrimesconference.com.

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MEDFORD, Ore. – Gregory Brooks 49, and Michelle Lustig, 44, of Grants Pass, Oregon, were indicted by a federal grand jury.  Both were charged with conspiracy to commit mail theft and bank fraud and committing aggravated identity theft.  The charges involve the theft of mail from over 400 victims in communities located in Jackson and Josephine Counties during a four month period beginning in March 2013, and include a scheme in using the victim’s stolen personal identity to defraud banks and local merchants.  Brooks was arraigned on the charges before Federal Magistrate Judge Mark Clarke who set Brook’s trial for November 19, 2013.  Brooks remains in federal custody.  Arrest warrants have been issued for Lustig and anyone with information about her whereabouts is requested to contact the Grants Pass Department of Public Safety or their nearest law enforcement agency.

An indictment (see attached)  is only an accusation of a crime, and a defendant should be presumed innocent unless and until proven guilty.  If convicted, the sentences range from maximum sentences of 5 to 30 years in prison, with a mandatory minimum sentence of two years for an aggravated identity theft conviction.

The U.S. Attorney’s Office is working with the U.S. Postal Inspection Service, Grants Pass Department of Public Safety and the Jackson County Sheriff’s office in the investigation and prosecution of this case.

For more information, please see the attached indictment Here

VAWA 2013 Implementation, Offender Re-entry, White Collar Crime, Juvenile Justice among Agenda Items

PORTLAND, Ore. — U.S. Attorneys from the Attorney General’s Advisory Council (AGAC) Native American Issues Subcommittee (NAIS) will meet in Hood River, Oregon, next week, Sept. 17-19, 2013.  On the agenda are, among other items, efforts to strengthen offender reentry efforts in Indian country, to address juvenile justice and the effects of exposure to violence on American Indian and Alaska Native youth, to defend Indian hunting and fishing rights, to clarify jurisdictional issues on the Columbia River, and to support implementation of the Violence Against Women Reauthorization Act of 2013 (VAWA 2013).

On Sept. 18, U.S. Associate Attorney General Tony West and Assistant Attorney General for the Office of Justice Programs Karol Mason will join the U.S. Attorneys for a special joint session with tribal leaders from Oregon, Washington, and Idaho to be held in Celilo Village, Oregon.

“While we are mindful of the great progress that is being made by U.S. Attorneys and tribal justice systems across Indian country, I look forward to exploring with the NAIS and tribal leaders ways that we can strengthen our government-to-government relationships even more, work ever closer with tribal nations, and advance our shared goal of building safe, sustainable, and healthy communities,” said Associate Attorney General West.

“This meeting will be a significant and historic event in which leaders from the federal government, who have a trust relationship with Indian nations, will meet with tribal leaders from Oregon, Washington, and Idaho to discuss issues ranging from Public Safety to strengthening tribal sovereignty through implementation of the Tribal Law and Order Act and the Violence Against Women Act”, said Amanda Marshall, U.S. Attorney for the District of Oregon.  “It is especially fitting that these important discussions will take place at Celilo Village, once the location of Celilo Falls, where native settlements and trading villages existed there in various configurations for 15,000 years.  This is a unique and meaningful opportunity for federal officials and Northwest Tribal Leaders to engage with each other on a number of critical topics.”

Thirty U.S. Attorneys from districts with Indian country or one or more federally recognized tribes serve on the NAIS.  The NAIS focuses exclusively on Indian country issues, both criminal and civil, and is responsible for making policy recommendations to the Attorney General regarding public safety and legal issues.

VAWA 2013 was signed into law by President Obama on March 7, 2013.  This law contains provisions that significantly improve the safety of native women and allow federal and tribal law enforcement agencies to hold more perpetrators of domestic violence accountable for their crimes.  Many of these critical provisions were drawn from the U.S. Department of Justice’s July 2011 proposal for legislation to combat violence against native women.  The department is exploring with tribal leaders how the department can help support the new law’s implementation.  This law generally takes effect on March 7, 2015, but also authorizes a voluntary pilot project to allow certain tribes to begin prosecuting additional cases sooner.

In June 2009, Attorney General Eric Holder launched a department-wide initiative to enhance public safety in Indian country.  Significant progress has been made since then, and the U.S. Attorney’s Offices with Indian country jurisdiction have had a major role in this success.

In May 2013, the Justice Department released its first report to Congress, required under the Tribal Law and Order Act, entitled Indian Country Investigations and Prosecutions (ICIP).  The ICIP report, based on data compiled from the case management system used by U.S. Attorney’s Offices (USAOs) with Indian country jurisdiction, shows among other things a 54 percent increase in Indian country criminal prosecutions since 2009.

The information contained in the report shows, among other things, the following:

• The Justice Department’s prioritization of Indian country crime has resulted in a notable increase in commitment to overall law enforcement efforts in Indian country.  Caseloads have increased overall from 1,091 cases filed in fiscal year (FY) 2009 to 1,138 in FY 2010 to 1,547 in FY 2011 to 1,677 in FY 2012.  This represents a 54 percent increase in the Indian country crime caseload.

• The report shows a new era of partnership between the federal government and American Indian tribes, including an unprecedented level of collaboration with tribal law enforcement.  The increase in collaboration and communication strengthens the bond of trust between federal and tribal investigators, prosecutors and other personnel in both federal and tribal criminal justice systems.  As a result, tribal communities will be safer places to live, work, and raise families.

The number of Indian Country prosecutions in Oregon has increased significantly in the past two years due to partnerships between tribal and federal law enforcement officers.  For example, in Warm Springs, a Multi-Disciplinary Team of social workers, tribal prosecutors, tribal detectives, FBI agents, and federal prosecutors meet monthly to review and evaluate ongoing child abuse investigations.  Additionally, a lawyer from the Umatilla Indian Reservation was commissioned last year as a Special Assistant United States Attorney to prosecute federal crimes and help coordinate joint tribal-federal investigations of major crimes.  Additionally, U.S. Attorney Amanda Marshall travels annually to consult with leaders from all nine of Oregon’s Tribal Nations to listen to their concerns about public safety in their communities.  Ms. Marshall also serves on the Attorney General’s Native American Advisory Committee and chairs the Juvenile Justice in Indian Country Working Group. 

 Read more about the Justice Department’s efforts to support implementation of VAWA 2013:  www.justice.gov/tribal/vawa-tribal.html

Read the entire ICIP report: www.justice.gov/tribal/tloa-report-cy-2011-2012.pdf

ead about the Justice Department’s efforts to increase public safety in Indian country at www.justice.gov/tribal/accomplishments.html

EUGENE, Ore. –Mark Timothy Ellis, 38, of Bend, Oregon, pled guilty on September 11, 2013, to making a fraudulent claim to the United States and to filing a false lien against a federal employee.  As part of his plea agreement, Ellis admitted that he made a false claim to the United States when he filed a false federal tax return and obtained a $327,062 refund based on that false return.  Ellis also admitted that he filed a false lien against the federal law enforcement officer who was investigating the false tax return as a means of retaliation and intimidation.

Sentencing is set for January 7, 2014, at 9 a.m. before Chief U.S. District Judge Ann Aiken.  The maximum penalty for making a false claim is five years in prison and a $250,000 fine.  The maximum penalty for filing a false lien is 10 years in prison and a $250,000 fine.

This case was investigated by IRS Criminal Investigations and is being prosecuted by Assistant U.S. Attorney Scott E. Bradford.

EUGENE, Ore. – Christopher Franklin Weaver, 34, of Lane County, Oregon, was sentenced today by U.S. District Chief Judge Ann Aiken to 63 months in prison for three counts of bank robbery.  Upon his release from prison defendant will be on supervised release for three years.

On November 5, 2012, defendant robbed the Wells Fargo Bank on Polk Street in Eugene, Oregon.  Nine days later, on November 14th, defendant robbed the U.S. Bank on West 7th Street in Eugene.  On November 29th, defendant robbed the Pacific Continental Bank on High Street in Eugene.  He was arrested shortly after the robbery and the money he stole was recovered on his person.

This case was investigated by the Federal Bureau of Investigation and the Eugene Police Department and was prosecuted by Assistant U.S. Attorney Jeffrey Sweet.

PORTLAND, Ore. – Logan Storm, a former teacher at Stoller Middle School in Beaverton, Oregon, will spend eight years in prison for possessing child pornography and failing to appear in court the day after a federal jury convicted him of the child pornography offense in January.  At a sentencing hearing this morning, United States District Judge Michael H. Simon sentenced Storm, 37, to 84 months in prison in the child pornography case, and to a consecutive term of 12 months in prison for failing to appear for a detention hearing the day after the jury returned their guilty verdict in the pornography case.  Upon release from prison, Storm will be subject to a 10 year term of supervised release with stringent conditions, including prohibitions on associating with minors, and restrictions on his use of computers.  Storm will also be required to participate in sex offender treatment, and must register as a sex offender.

The investigation began in July 2010 when Storm’s then-girlfriend discovered images of child pornography on his laptop computer and on a thumb drive he had hidden in their bedroom, and reported it to the police.  The Multnomah County Child Abuse Team served a search warrant at Storm’s residence and seized the laptop and two thumb drives from Storm’s bedroom, while Storm’s minor son was sleeping across the hall.  Storm fled the country the following day, without saying good-bye to family or friends.  He drove to Canada then flew to Europe, where he remained for more than six months.

Meanwhile, forensic examinations revealed images of child sexual abuse on the computer and both thumb drives.  Many of the images were interspersed in Power Point presentations with graphic cartoons of child sexual abuse, child erotica, and non-pornographic, classroom photographs of his former students at Stoller Middle School.

Storm was originally charged with a number of offenses in the Multnomah County Circuit Court.  He eventually returned to the United States to face those charges.  The state charges were later dismissed in favor of this federal prosecution.

Storm was convicted in federal court on January 29, 2013, after a five day jury trial.  He was allowed to remain out of custody pending a detention hearing the following morning.  Later that evening, however, Storm cut off an electronic monitoring bracelet and fled once again, failing to appear as required at the detention hearing.  An international manhunt ensued – for the second time.

Approximately six weeks later, Storm was apprehended in Mexico City, Mexico.  He initially denied his identity.  Eventually, however, Storm was deported to the United States and returned to Oregon, where he was detained on a new indictment for failure to appear, and in the child pornography case.  He later pled guilty to the failure to appear charge.  He was sentenced this morning in both cases.

In imposing the sentences, Judge Simon said that while Storm had many positive characteristics and traits, it was “quite clear” that he “does not accept responsibility for his conduct.”  The judge had “no doubt” that the jury reached the “correct factual decision” when it found Storm guilty, yet Storm continues to blame others for his own unlawful conduct.  Judge Simon also discussed the serious nature of the offense: “All child pornography offenses, including possession, are extremely serious because they result in perpetual harm to the victims, and validate and normalize the sexual abuse of children.”  The victims, Judge Simon said, are “victimized over and over and over again” when offenders trade in and possess images of their sexual torture.

Judge Simon commended the U.S. Marshals Service for locating and apprehending Storm after he fled to Mexico:  “The U.S. Marshals Service consists of brave, dedicated, thorough public servants who ensure if someone flees, they will be caught.”  Judge Simon told Storm to think about the extra time he will be serving because he fled.  He also urged Storm to recognize that he has a problem, and to seek treatment for it while incarcerated.

U.S. Attorney Amanda Marshall praised the sentence imposed on Storm, noting that it reflected the serious and troubling nature of Storm’s criminal conduct.  “Logan Storm was a middle school teacher when he committed this offense,” she said.  “He intermingled classroom photos of the very children he was entrusted with teaching into slide shows containing images of child sexual abuse and exploitation.”  Storm’s offense was “particularly egregious,” she added, because “he twice fled the country, once shortly after officers served a search warrant at his house, and again only hours after the jury convicted him.”

Marshall praised the collaborative efforts of the local and federal law enforcement agencies responsible for the investigation and prosecution of the child pornography offense, and the efforts of the U.S. Marshals Service and authorities in Mexico in tracking and locating Storm after he fled the country.  “Justice was delayed,” she said, but “ultimately it prevailed.”  She hoped Storm’s sentence “sends a clear message to those who seek gratification in the sexual exploitation of children,” as well as those “who believe they can flee from justice.”

“The children of Oregon are safer with Logan Storm in prison,” said Brad Bench, special agent in charge of HSI Seattle, who oversees Oregon investigations. “HSI will continue to aggressively target those who prey upon and sexually exploit our children. We owe it to the young victims whose abuse is perpetuated by offenders around the world who collect and trade child pornography.”

This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse.  Launched in May 2006 by the U.S. Department of Justice and 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 via the Internet, as well as to identify and rescue victims.  For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.

The investigation involved the cooperation and participation of the Portland Police Bureau, the Multnomah County Child Abuse Team, the Northwest Regional Computer Forensics Laboratory, the U.S. Department of Homeland Security/Homeland Security Investigations, the Multnomah County District Attorney’s Office, and the United States Attorney’s Office.  The case was prosecuted by Assistant United States Attorneys Jane Shoemaker and Gary Sussman.

PORTLAND, Ore. – David Ovist, 45, of Lake Oswego, Oregon, was sentenced today for his role in a $2.5 million mortgage fraud scheme that involved four other investors who were also sentenced recently.  U.S. District Court Judge Anna J. Brown sentenced David Ovist to 57 months in prison and three years of supervised release. 

Ovist was a licensed mortgage loan broker and the owner of Oregon Mortgage Services, Inc., located in Beaverton, Oregon.  He was also a real estate investor.  On February 8, 2013, Ovist was convicted of bank fraud and wire fraud following a ten-day jury trial for preparing residential loan applications for 12 different properties that falsified the borrower’s financial qualifications.  The applications were then submitted by Ovist to seven different banks and mortgage lenders.  Ovist and the other investors manipulated the underwriting process in order to qualify borrowers for home loans they would not otherwise be qualified for so the investors could buy houses as an investment.

To convince lenders to approve the loans, Ovist or the other investors falsified information about borrowers who had been recruited to obtain loans in their names because they had good credit, even though they could not otherwise qualify for the loans.  They falsely inflated the monthly income stated on the home loan applications, omitted liabilities including other mortgages, falsely claimed that the borrower intended to live in the property as a primary residence rather than purchase it as an investment property, used straw buyers to obtain loans for some of the properties, forged rental agreements to make it appear as if a borrower received rental income when she did not, and falsified employment verifications about the existence, nature and length of a borrower’s employment.

“Mortgage fraud undermines our financial institutions and continues to be a burden on the economy,” said U.S. Attorney Amanda Marshall.  “Brokers who abuse their authority and lie in order to help greedy investors cheat our financial institutions will go to prison.”

Judge Brown recently sentenced four other investors for their roles in the scheme.  Don Kazlauskas, 46, of Portland, Oregon, was sentenced to six months in prison, followed by six months of home detention and three years of supervised release.  Jacob Shoop, 30, of Portland, Oregon, was sentenced to six months of home detention, and three years of supervised release.  Shoop’s father, Ricki Shoop, 58, of Portland, Oregon, was sentenced to two months of home detention, and three years of supervised release, and his mother, Sherrie Inouye, 58, of Portland, Oregon, was sentenced to three years of supervised release.  The Court scheduled a restitution hearing for October 10, 2013 to determine how much restitution each of the defendants owes to the victims.

At the sentencing of Ovist, Judge Brown stated, “The criminal conduct here is so repetitious and so serious that it requires a prison sentence.”  The Court rejected the notion that a white-collar defendant with no criminal record should be sentenced to probation saying, “Somehow the notion is that prison isn’t going to happen.  But it does.”

“We will relentlessly pursue those who engage in mortgage fraud and others who seek to undermine the integrity of our economy,” said Greg Fowler, Special Agent in Charge of the FBI in Oregon.

The case was investigated by the Portland office of the Federal Bureau of Investigation, and was prosecuted by Assistant U.S. Attorneys Scott Erik Asphaug and Hannah Horsley.

EUGENE, Ore. – This week U.S. District Court Judge Ann Aiken sentenced Peter Wilkinson and six others for their roles in a $7 million mortgage fraud scheme.  Wilkinson, 43, of Eugene, Oregon, received the largest sentence: 57 months in prison and five years of supervised release.  The court has not yet ruled on restitution.

According to court records, Wilkinson was a former state-licensed mortgage broker and owned and operated Deschutes Mortgage Group in Bend, Oregon, during the housing boom.  As part of his scheme, Wilkinson knowingly submitted almost 60 bad loans for more than 30 properties, causing lenders to lose between $2.5 million and $7 million.  Wilkinson pocketed more than $500,000 from these loans.  He also involved six of his client-borrowers in his scheme: Cary Martinez, Barry Seaton, Kurtis Israel, Sean Bart, Jason Hoby, David McNulty, and Amy Ridley.

To convince lenders to approve the loans, Wilkinson and his client-borrowers falsely inflated their monthly incomes on home loan applications, omitted their liabilities from home loan applications, falsely claimed on home loan applications that the financing was for a primary residence rather than an investment property, or used straw borrowers to obtain financing for real estate.  Additionally, Wilkinson and his client-borrowers deposited large amounts of money, often $100,000 or more, into their checking accounts to falsely prove cash reserves needed for the loan approval process.

U. S. Attorney Amanda Marshall noted, “The defendants fraud was extensive, involving at least eight individuals, more than 30 properties, more than 50 loans, money laundering, numerous victims, countless financial transactions, straw borrowers, millions of dollars in losses, and potentially millions of dollars in restitution.  These defendants, members of the finance and real estate industries, and home buyers need to understand that fraud will not be tolerated.  Such selfish choices affect more than a few individuals.  They affect entire industries and communities.  The defendants’ conduct, when taken with similar fraudsters, contributed to the housing bubble that left our great state and nation reeling when it burst.”

Cary Martinez, 41, of Boulder, Colorado, was sentenced to 36 months of prison, 200 hours of community service, and three years of supervised release; Barry Seaton, 50, of Long Beach, California, was sentenced to 24 months in prison, and three years of supervised release.  Aside from their role in Wilkinson’s scheme, they were also sentenced for laundering drug proceeds through real estate and financial transactions.  Kurtis Israel, 40, of Portland, Oregon, Sean Bart, 43, of Bend, Oregon, Jason Hoby, 40, of Albany, Oregon, and David McNulty, 40, of Bend, Oregon, were each sentenced to five years of probation and 500 hours of community service.

Kenneth Hines, Special Agent in Charge of IRS-Criminal Investigation in the Pacific Northwest, stated, “Mortgage fraud continues to be a burden on our economy and affect our daily lives.  When so-called professionals lie and cheat to pay for an elaborate lifestyle that includes expensive cars and tickets on the 50-yard line, it may bring an illusion of success.  However, the ultimate outcome may be serving time in jail.”

“The main defendant put hundreds of thousands of dollars into his own pockets while defrauding more than 20 banks and businesses out of millions of dollars,” said Greg Fowler, Special Agent in Charge of the FBI in Oregon. “This case represents a systematic and deliberate attempt to undermine the ground on which the housing market in the Bend region is built. The fraud has a direct impact on the health of our economy and, therefore, on the financial well-being of all people in Central Oregon."

The last charged defendant in these cases, Amy Ridley, 54, of Kentucky, pled guilty on Wednesday, September 04, 2013, for her role in the scheme and is scheduled to be sentenced on January 22, 2014, at 9 a.m. before U.S. District Chief Judge Ann Aiken.  The maximum penalty for conspiracy to commit wire fraud is 20 years in prison and a $250,000 fine.

This case was investigated by the Internal Revenue Service - Criminal Investigation and the Federal Bureau of Investigation and is being prosecuted by Assistant U.S. Attorney Scott E. Bradford.

PORTLAND, Ore. – Marijuana poses a significant risk to public health and its cultivation, distribution, and possession remains illegal under federal law.  The Department of Justice is committed to enforcing the Controlled Substances Act, and will use its limited investigative and prosecutorial resources to address the most significant threats posed by illegal drug trafficking.

Today’s updated guidance memo from the Department reiterated eight priority areas related to enforcing federal marijuana laws:

• 1. Preventing the distribution of marijuana to minors;


• 2. Preventing revenue from the sale of marijuana from going to criminal organizations, gangs, and cartels;


• 3. Preventing the diversion of marijuana from states where it is legal under state law in some form to other states;


• 4. Preventing state-authorized marijuana activity from being used as a cover or pretext for the trafficking of other illegal drugs or other illegal activity;


• 5. Preventing violence and the use of firearms in the cultivation and distribution of marijuana;


• 6. Preventing drugged driving and the exacerbation of other adverse public health consequences associated with marijuana use;


• 7. Preventing the growing of marijuana on public lands and the attendant public safety and environmental dangers posed by marijuana production on public lands; and


• 8. Preventing marijuana possession or use on federal property.

Here in Oregon, federal prosecutors will remain aggressive when it comes to protecting these eight federal enforcement interests.  That means exercising their prosecutorial discretion to investigate and prosecute individuals who infringe against any of these stated federal interests, regardless of state law.  Outside of these stated priorities, we will continue what we have been doing since the passage of the Oregon Medical Marijuana Act, relying on state and local authorities to address lower-level or localized marijuana activity through enforcement of their own narcotics laws.

Having looked at the marijuana cases we have prosecuted in this district in the past two years, including all of our open cases involving marijuana cultivation, delivery or possession, we can certify that every case involves at least one, and in most cases more than one, of the eight federal priorities.  So, this really doesn’t change anything for the way we do business at the U.S. Attorney’s Office in Oregon.

The Department expects that states that have legalized the use of marijuana, whether for medical purposes or otherwise, will establish and enforce strict regulatory schemes that protect the eight federal interests identified in the Department’s guidance.  These schemes must be tough in practice, not just on paper.  They must include strong, state-based enforcement efforts, backed by adequate funding.  We will take a “trust, but verify” approach.  In other words, as long as the state follows through in imposing strict controls regulating marijuana-related conduct, it is less likely that any of the Department’s eight enforcement priorities will be threatened and federal action will be less necessary.  But if any of the stated harms do materialize—either in spite of a strict regulatory scheme, or because of the lack of one—federal prosecutors will act aggressively to bring individual prosecutions and may challenge the regulatory scheme themselves.