Eastern District of Texas

TEXARKANA, Texas – Three East Texans have been sentenced to prison for an international drug trafficking operation in the Eastern District of Texas pursuant to Operation Dirty Bird, announced Acting U.S. Attorney Nicholas J. Ganjei today.

“Mexican drug cartels are not welcome in East Texas,” said Acting U.S. Attorney Nicholas J. Ganjei. “My office—in partnership with the phenomenal men and women of the Texas law enforcement community—will work tirelessly to dismantle any drug trafficking operations based in East Texas, or even those that happen to be passing through.”

Rodolfo Javier Falcon, a 36-year-old Camp County, Texas, man, was sentenced to thirty years in prison by U.S. District Judge Robert W. Schroeder III. Falcon pleaded guilty on August 20, 2020, to conspiring to distribute controlled substances before U.S. Magistrate Judge Caroline M. Craven.  Falcon agreed to forfeit $5 million in drug proceeds.

Eleazar Martinez Reyes, a 41-year-old Camp County, Texas, man, was sentenced to 87 months in prison by Judge Schroeder.  Reyes pleaded guilty on August 4, 2020, to conspiring to distribute controlled substances and to illegal re-entry following removal before Judge Craven. Reyes agreed to forfeit $150,000 in drug proceeds.

Gerardo Carbrera Ramirez, a 28-year-old Franklin County, Texas, man, was sentenced to 151 months in prison by Judge Schroeder.  Ramirez pleaded guilty on June 11, 2020, to conspiring to distribute controlled substances before Judge Craven. Ramirez agreed to forfeit $7500 in drug proceeds.

According to information presented in court, Falcon, Reyes, Ramirez, Jose Armando Rosales-Bernal, Julio Villarreal, Armando Moreno Jr., Claudia Claribel Gardea, Jose Geraldo Ornelas-Pineda, David Martinez, and others conspired to distribute more than 150 kilograms of cocaine, along with methamphetamine and heroin, from the Jalisco Nueva Generacion drug cartel in Mexico.  The group distributed drugs in Dallas, East Texas, Florida, North Carolina, Arkansas, Illinois, and Michigan.  On one occasion, Falcon, Gardea, and Ornelas-Pineda—and two young children—were stopped in Tennessee carrying nine kilograms of cocaine from Rosales-Bernal to North Carolina.  The organization was also responsible for shipping drug proceeds, in the form of bulk cash, back to Mexico. Law enforcement intercepted one bulk cash shipment of approximately $350,000.  Rosales-Bernal and Falcon both occupied leadership roles in the drug trafficking organization. During the conspiracy, Rosales-Bernal, Falcon, Martinez, and others possessed and carried firearms to safeguard their drugs and cash.  Rosales-Bernal and others spent their drug proceeds on lavish lifestyle items, including a Dodge Charger Hellcat, flashy watches, exotic weapons, a jewel encrusted rooster necklace, and numerous pairs of luxury shoes and boots.

Operation Dirty Bird is a long-term drug trafficking and money laundering investigation that has led to the seizure of more than $500,000 in U.S. Currency, almost 40 kilograms of cocaine, more than a quarter kilogram of methamphetamine, nine firearms, several vehicles, two houses in Dallas, and an array of fine jewelry.

Rosales-Bernal, Villarreal, Moreno, Falcon, Ramirez, Gardea, Ornelas-Pineda, Dalia Janet Campos Rosales, Reyes, and Martinez were previously charged and arrested as a result of this investigation. Ornelas-Pineda, Moreno, and Villarreal have pleaded guilty and have been sentenced. Rosales-Bernal, Gardea, and Campos Rosales have pleaded guilty and are awaiting sentencing. Martinez has pleaded not guilty and is awaiting trial. This case is pending in the Texarkana Division of the Eastern District of Texas.  If convicted, Martinez face a minimum of 15 years and as much as life in federal prison.

This case is being investigated by the Mount Pleasant office of the Texas Department of Public Safety, Criminal Investigation Division and the Dallas office of Homeland Security Investigations.  In addition, the following agencies have played critical roles in this investigation: the Mesquite, Texas, Police Department SWAT team; the Texas National Guard; the Texas Department of Public Safety, Highway Patrol Division and Aircraft Division; the George West, Texas, Police Department; the 23rd Judicial Drug Task Force in Dickson, Tennessee; and the Mount Pleasant, Texas, Police Department. The case is being prosecuted by Assistant U.S. Attorney Jonathan R. Hornok.

BEAUMONT, Texas – Two Texas men pleaded guilty this week to violent gang-related activities in the Eastern District of Texas, announced Acting U.S. Attorney Nicholas J. Ganjei and Nicholas L. McQuaid, Acting Assistant Attorney General of the Justice Department’s Criminal Division.

Michael Martin, aka Aryan Prodigy, aka AP, 38, of Austin, Texas, and Bobby Dayle Boney, 50, of Sulphur Springs, Texas, each pleaded guilty to assault resulting in serious bodily injury in aid of racketeering.  Martin entered his plea before U.S. Magistrate Judge Zack Hawthorn and Boney pleaded before U.S. Magistrate Judge Keith Giblin.  Martin and Boney committed the assault as part of their membership in the Aryan Circle (AC), a gang that operates in Texas and other states throughout the country.

“Fighting the scourge of organized criminal gangs is a team effort,” said Acting U.S. Attorney Nicholas Ganjei.  “It will take the full resources and resolve of federal, state, and local law enforcement to push back against these violent criminal organizations.”

According to information presented in court and contained in court filings, Martin and Boney both joined the AC in the early 2000s and have gang tattoos indicating their affiliation. Both served in leadership roles within the gang.  Martin had previously served as an upper board member of the gang, which meant that he was one of the five highest-ranking leaders in the AC. Also, for a period of time, Boney held the leadership rank of vice president, which meant that he gave orders to other AC members and disciplined members who were not following the gang’s directives, among other things.

The AC is a violent, white supremacist organization that operates inside federal prisons across the country and outside prisons in states including Texas, Arkansas, Louisiana, and Missouri.  The AC enforces its rules and promotes discipline among its members, prospects and associates through murder, attempted murder, assault, and threats against those who violate the rules or pose a threat to the organization.  Members, and oftentimes associates, are required to follow the orders of higher-ranking members without question.

Prior to Oct. 2, 2016, AC members learned that another AC member wanted to switch his gang affiliation, or “patch over,” from the AC to a different gang.  AC members were ordered to attack the former member in order to “X” him, or attack and remove him from the gang, because it violated the AC’s rules to join another organization.  A meeting was held at an AC member’s home in the Tyler, Texas area where AC members planned the logistics of the assault.

On Oct. 2, 2016, Martin, Boney, and other AC members met at a park near Tyler, Texas, where they had planned to attack the former member, who was also present. Multiple AC members violently beat the victim, including kicking the victim in the head while he was on the ground.  This attack resulted in the victim seeking medical care for serious injuries.

This case is part of a larger investigation into the AC, Operation Noble Virtue, which has targeted AC leadership and resulted in prosecutions and convictions in six different jurisdictions to date.  This is an Organized Crime Drug Enforcement Task Force (OCDETF) case and is being investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives; Drug Enforcement Administration; Federal Bureau of Prisons; Texas Department of Public Safety; Houston Police Department-Gang Division; Montgomery County (TX) Precinct One Constable’s Office; U.S. Immigration and Customs Enforcement’s Homeland Security Investigations; Texas Department of Criminal Justice; New Jersey Department of Corrections-Special Investigations Division; Indiana State Police; Fort Smith (AR) Police Department; Arkansas Department of Corrections; Arnold (MO) Police Department; Jefferson County (MO) Sheriff’s Department; St. Louis Metropolitan Police Department; St. Louis County (MO) Police Department; Indiana Department of Corrections; Carrollton (TX) Police Department; Montgomery County (TX) Sheriff’s Office; Travis County (TX) Sheriff’s Office; Tarrant County (TX) Sheriff’s Office; Evangeline Parish (LA) Sheriff’s Office; Smith County (TX) Sheriff’s Office; McCurtain County (OK) Sheriff’s Office; Montgomery County (TX) District Attorney’s Office; Liberty County (TX) District Attorney’s Office; Harris County (TX) District Attorney’s Office; Mercer County (NJ) District Attorney’s Office; Evangeline Parish (LA) District Attorney’s Office; and the Sebastian County (AR) District Attorney’s Office.  OCDETF is the largest anti-crime task force in the country and its mission is to disrupt and dismantle the most significant drug trafficking and transnational criminal organizations that threaten the United States. The prosecutor-led, intelligence-driven, multi-agency task forces leverage the authorities and expertise of federal, state, and local law enforcement.

The matter is being prosecuted by Assistant United States Attorney Christopher Rapp of the Eastern District of Texas and Trial Attorney Bethany Lipman of the Criminal Division’s Organized Crime and Gang Section.

MARSHALL, Texas – A Marshall, Texas woman has been sentenced to federal prison today for drug trafficking crimes in the Eastern District of Texas, announced Acting U.S. Attorney Nicholas J. Ganjei.

Rachel Naomi Hernandez, 32, pleaded guilty on September 23, 2020, to possession with intent to distribute methamphetamine and was sentenced to 135 months in federal prison today by U.S. District Judge Rodney Gilstrap.

“Drug trafficking organizations prey on vulnerable addicts for profit in an illegal marketplace that encourages violence and lawlessness,” said Acting U.S. Nicholas J. Ganjei.  “We are dedicated to dismantling these organizations and disrupting every link in their chain of supply.”      

According to information presented in court, on May 20, 2018, police stopped Hernandez for a traffic violation, during which she admitted to possessing a firearm.  The officer confirmed through dispatch that Hernandez was a convicted felon, and arrested her for being felon in possession of a firearm.  A subsequent search of Hernandez’s vehicle led to the discovery and seizure of 270 grams of methamphetamine, a pistol, various pills, vials containing suspected PCP, digital scales, and $4,762 in U.S. Currency.  Hernandez was indicted by a federal grand jury on December 18, 2019, and charged with violations of federal drug trafficking and firearms laws. 

This is an Organized Crime Drug Enforcement Task Force (OCDETF) case and was investigated by the Federal Bureau of Investigation; the Bureau of Alcohol, Tobacco, Firearms and Explosives; the Texas Department of Public Safety; the Harrison County Sheriff’s Office; and the Marshall Police Department.  OCDETF is the largest anti-crime task force in the country and its mission is to disrupt and dismantle the most significant drug trafficking and transnational criminal organizations that threaten the United States. The prosecutor-led, intelligence-driven, multi-agency task forces leverage the authorities and expertise of federal, state, and local law enforcement.  This case was prosecuted by Assistant U.S. Attorney Lucas Machicek.

SHERMAN, Texas – A federal grand jury in the Eastern District of Texas has returned an indictment charging eight individuals with various federal violations related to a complex international drug trafficking conspiracy, announced Acting U.S. Attorney Nicholas J. Ganjei today.

Debbie Mercer, 58, and Kayleigh Moffett, 33, both of Oklahoma City; Federico Machado, 53, of Florida; Carlos Villaurrutia, 40, of McAllen, Texas; and four others were named in an indictment charging them with conspiracy to manufacture and distribute cocaine, conspiracy to commit money laundering, conspiracy to commit wire fraud, conspiracy to commit export violations, and conspiracy to commit federal registration violations involving aircraft.  The indictment details approximately $350 million in alleged criminal activity since 2016.  The seven-count superseding indictment was returned by a federal grand jury earlier this week and unsealed today.  The defendants have already been arrested and will be arraigned in federal court next week.

“The threat posed by transnational crime cannot be overstated,” said Acting U.S. Attorney Nicholas J. Ganjei.  “The use of United States-registered aircraft by these criminal organizations and their networks of associates poses a clear and present danger to the security of our nation.  The American public can expect EDTX to be relentless in its fight against the sometimes invisible, but always dangerous, threat of transnational organized crime.”

“The indictments resulting from this highly complex investigation showcases HSI’s unique and far-reaching authorities, serving as an example of what the global law enforcement community can accomplish when we work together,” said Ryan L. Spradlin, Special Agent in Charge, HSI Dallas.  “We were able to deliver a significant blow to the transnational criminal organizations around the world by exposing a money laundering and drug trafficking scheme perpetuated by sophisticated drug cartels.”

“As this case demonstrates, we will aggressively investigate the illegal exportation of aircraft contrary to U.S. national security interests,” said Trey McClish, Special Agent in Charge of the U.S. Department of Commerce, Bureau of Industry and Security – Office of Export Enforcement’s Dallas Field Office.  “Alongside our Federal and State partners, OEE will leverage its unique criminal and administrative enforcement powers to detect and disrupt serious criminal schemes that violate U.S. export control law.”

“The indictment in this case demonstrate that individuals who choose to circumvent Federal regulations pertaining to aircraft registration and ownership will be pursued to the fullest extent of the law,” said Todd Damiani, Special Agent-In-Charge, Southern Region, U.S. Department of Transportation Office of Inspector General (DOT-OIG). “The collaborative nature of this investigation is representative of the ongoing investigative work DOT-OIG performs to ensure aviation safety and maintain national security interests in order to prevent the nefarious acts these defendants are being charged with from occurring.”

According to unsealed court documents, the defendants allegedly purchased and illegally registered aircraft under foreign corporations and other individuals for export to other countries.  The indictment specifically alleges that Mercer and Moffett, through their company Aircraft Guarantee Corporation (AGC), registered thousands of aircraft in Onalaska, Texas, an east Texas town without an airport.

According to the indictment, several of the illegally registered and exported aircraft were used by transnational criminal organizations in Colombia, Venezuela, Ecuador, Belize, Honduras, Guatemala, and Mexico to smuggle large quantities of cocaine destined for the United States.  The indictment further alleges that illicit proceeds from the subsequent drug sales were then transported as bulk cash from the United States to Mexico and used to buy more aircraft and cocaine. According to the indictment, aircraft purchases were typically completed by wiring funds from casa de cambios and/or banks in Mexico to shell corporations operating in the United States as aircraft sellers/brokers. 

The indictment describes that foreign governments seized United States-registered aircraft containing multi-ton shipments of cocaine.  According to the indictment, the aircraft were held in trust by AGC for the benefit of foreign corporations or individuals. The indictment identifies Federico Machado, through his company South Aviation, and Carlos Villaurrutia, who used his companies TEXTON, TWA International, and Ford Electric, as aircraft sellers/brokers operating in the United States.

The indictment separately charges Mercer, Moffett, and Machado with engaging in a fraud scheme related to the acquisition of aircraft. According to the indictment, Machado recruited investors to invest in aircraft purchase deposits for sales transactions that never took place. Investors allegedly placed their funds in an escrow account held by Wright Brothers Title Company, which was owned and managed by Mercer and Moffett.  Machado then allegedly used these funds for purposes other than the purchase of aircraft. 

If convicted, the defendants face a minimum of 10 years and up to life in federal prison for the drug conspiracy charges and up to 20 years for the money laundering, export and wire fraud violations. 

This is an Organized Crime Drug Enforcement Task Force (OCDETF) case and is being investigated by Homeland Security Investigations (Dallas, Brownsville and Laredo offices); Department of Commerce, Bureau of Industry and Security (Dallas and Houston offices);  Department of Transportation Office of Inspector General (DOT-OIG); Polk County Constable Precinct 1; Southeast Texas Export Investigations Group; Internal Revenue Service; and Federal Aviation Administration (FAA).  This case is being prosecuted by Assistant U.S. Attorneys Ernest Gonzalez, Colleen Bloss and Robert Wells.  OCDETF is the largest anti-crime task force in the country and its mission is to disrupt and dismantle the most significant drug trafficking and transnational criminal organizations that threaten the United States. The prosecutor-led, intelligence-driven, multi-agency task forces leverage the authorities and expertise of federal, state, and local law enforcement.

It is important to note that a complaint, arrest, or indictment should not be considered as evidence of guilt and that all persons charged with a crime are presumed innocent until proven guilty beyond a reasonable doubt.

BEAUMONT, Texas – The United States Attorney’s Office for the Eastern District of Texas is pleased to announce a new speaker series and welcomes as its first guest The Honorable Jason K. Pulliam, United States District Judge for the Western District of Texas. 

When Judge Pulliam took his oath of office on August 9, 2019, he became the first African American judge appointed to the district court in the Western District of Texas.  Judge Pulliam has previously served as Judge Advocate with the United States Marine Corps, a judge in Bexar County, and a Justice on the Texas Fourth Court of Appeals before his federal appointment.  He was invited to address the employees of the U.S. Attorney’s Office about his path to judgeship and to share his perspective from the bench.

“The Eastern District of Texas strives to have an outsized, positive impact in our community, and to recognize the contributions of thought leaders across the state,” said Acting United States Attorney Nicholas J. Ganjei. “We are thrilled that Judge Pulliam could speak with us today, particularly as we honor the contributions of African Americans to our country during this year’s Black History Month.”

The annual celebration of Black History Month was made law in 1986 when Congress passed Public Law 99-244, designating February as National Black History Month.  It is commemorated by the Association for the Study of African American Life and History, which establishes a national theme for each year.  The theme for 2021 is “The Black Family: Representation, Identity, and Diversity,” and acknowledges the rich tapestry of the African American family.

TYLER, Texas – A Tyler, Texas man has pleaded guilty to a federal firearms violation in the Eastern District of Texas, announced Acting United States Attorney Nicholas J. Ganjei today.

Eric Cadell Gipson, 56, pleaded guilty to being a felon in possession of a firearm today before United States Magistrate Judge K. Nicole Mitchell.

According to information presented in court, on June 2, 2020, Gipson, a convicted felon, arranged for the purchase of 9mm pistol.  Six days later, on June 8, 2020, Gipson took possession of the firearm.  Gipson, having been previously convicted of murder, robbery and theft, was prohibited by law from owning or possessing firearms or ammunition.

“Prohibiting the possession of firearms by convicted felons is a critical component of keeping our communities safe, said Acting United States Attorney Nicholas J. Ganjei.  “The Eastern District of Texas remains committed to keeping guns out of the hands of the most dangerous members of society.”

A federal grand jury returned an indictment charging Gipson with federal violations on Oct. 29, 2020.  Under federal statutes, Gipson faces up to 10 years in federal prison.  The maximum statutory sentence prescribed by Congress is provided here for information purposes, as the sentencing will be determined by the court based on the advisory sentencing guidelines and other statutory factors.  A sentencing hearing will be scheduled after the completion of a presentence investigation by the United States Probation Office.

This case was prosecuted as part of the Project Safe Neighborhoods Initiative.  Project Safe Neighborhoods is aimed at reducing gun and gang violence, deterring illegal possession of guns, ammunition and body armor, and improving the safety of residents in the Eastern District of Texas. Participants in the initiative include community members and organizations as well as federal, state and local law enforcement agencies.

This case was investigated by the Federal Bureau of Investigation, Smith County Sheriff’s Office and Homeland Security Investigations and is being prosecuted by Assistant United States Attorney Alan Jackson.

SHERMAN, Texas – A former bank president has been sentenced to federal prison for violations in the Eastern District of Texas, announced Acting United States Attorney Nicholas J. Ganjei today.

Anita Gail Moody, 57, of Cooper, Texas pleaded guilty on June 5, 2020, to conspiracy to commit bank fraud and arson and was sentenced to 96 months in federal prison today by U.S. District Judge Amos L. Mazzant, III.  Moody has additionally agreed to pay restitution in the amount of $11,136,241.82. 

According to information presented in court, on May 11, 2019, while Moody was President of Enloe State Bank in Cooper, Texas, the bank suffered a fire that investigators later determined to be arson.  The fire was contained to the bank’s boardroom, however the entire bank suffered smoke damage.  Investigation revealed that several files had been purposefully stacked on the boardroom table, all of which were burned in the fire.  Notably, the bank was scheduled for a review by the Texas Department of Banking the very next day.  Further investigation revealed Moody had created false nominee loans in the names of several people, including actual bank customers.  Moody eventually admitted to setting the fire in the boardroom to conceal her criminal activity concerning the false loans.  She also admitted to using the fraudulently obtained money to fund her boyfriend’s business, other businesses of friends, and her own lifestyle.  The fraudulent activity, which began in 2012, resulted in a loss to the bank of approximately 11 million dollars. 

“Criminal conduct that affects the financial health of a small, local lender can send a negative ripple effect throughout the entire community,” said Acting United States Attorney Nicholas J. Ganjei.  “The Eastern District of Texas will vigorously prosecute cases, such as the one here, that undermine public confidence in our local banks.  We are also deeply appreciative of the excellent investigative work of the FDIC Office of the Inspector General, and the Bureau of Alcohol, Tobacco, Firearms and Explosives in bringing this matter to a close.” 

Jeannie Swaim, who served as vice president of Enloe State Bank, and who was also involved in fraudulent conduct, was previously sentenced to 24 months’ imprisonment, and agreed to pay restitution in the amount of $410,675.18.

This case was investigated by the FDIC-OIG and the Bureau of Alcohol, Tobacco, Firearms, and Explosives and prosecuted by Assistant United States Attorneys Maureen Smith and Wes Wynne.

BEAUMONT, Texas – A 51-year-old Vidor, Texas, woman has been sentenced to federal prison for maintaining a drug-involved premises in the Eastern District of Texas, announced Acting U.S. Attorney Nicholas J. Ganjei today.

Michelle Lea Harrington pleaded guilty on Sep. 10, 2020.  Today, she was sentenced to 60 months in federal prison by U.S. District Judge Marcia A. Crone.

“Individuals who contribute to the unlawful trafficking of prescription opiates will be punished,” said Acting U.S. Attorney Nicholas J. Ganjei.  “This conviction of a landlord who permitted the distribution of opioid pills in her residence is a clear message that our community will not tolerate those perpetuating the opioid crisis in southeast Texas.”

According to information presented in court, Harrington rented out a residence in Vidor, Texas to three individuals, including Catherine Ardis.  Harrington lived there as well and knew that Ardis distributed hydromorphone pills, also known as Dilaudid, from the residence.  At least three persons died as a result of opiates purchased at the home.  Medical examination determined that the victims died from poly-drug toxicity resulting from the use of hydromorphone pills.

Catherine Ardis was previously sentenced to 15 years.

This case was investigated by the U.S. Drug Enforcement Administration, Vidor Police Department, Jefferson County Sheriff’s Office, Beaumont Police Department, Port Arthur Police Department, and was prosecuted by Assistant U.S. Attorney Michael A. Anderson.

BEAUMONT, Texas – The United States Attorney’s Office for the Eastern District of Texas reminds the public that fraudsters soon follow disaster. 

As Texas suffers from historic freezing and resulting property damage from ice and burst pipes, it is likely that individuals will seek to fraudulently profit from the attendant stress.

“Fraudsters often appear from nowhere to take advantage of natural disasters, which is what occurred in the early days of the pandemic.  Now, we are concerned that weary homeowners will fall prey to unsolicited calls regarding insurance claims, home warranties, or bogus government grants” says Acting U.S. Attorney Nicholas J. Ganjei.  “If you did not solicit the call, hang up.” 

Millions of people fall victim to scams every year.  If you think you have become a victim, contact your local law enforcement authority.  You can also submit a report to https://ReportFraud.ftc.gov.

For more tips on how to identify a scam, visit www.consumer.ftc.gov/features/scam-alerts.

 

BEAUMONT, Texas – Two Houston women have been sentenced for federal drug trafficking violations in the Eastern District of Texas, announced Acting U.S. Attorney Nicholas J. Ganjei today.

Cristal Lagunas, 26, and Iris Venture, 22, were indicted by a federal grand jury and charged with conspiracy to possess with intent to distribute cocaine and methamphetamine on March 18, 2020.  They pleaded guilty in September 2020.  Today, both defendants were sentenced to 135 months in federal prison by U.S. District Judge Marcia A. Crone.

“This case exemplifies how multiple federal law enforcement agencies can work together to take down those involved in the illegal drug trade,” said Acting U.S. Attorney Nicholas J. Ganjei.  “We will continue to bring all resources to the fight against unlawful narcotics and firearms trafficking.”

According to information presented in court, on March 10, 2020, Lagunas and Ventura met an undercover federal agent at a credit union in Beaumont, Texas, to exchange a kilogram of methamphetamine and $600 cash for three fully automatic AK-47 rifles.

This case was investigated by the Bureau of Alcohol, Tobacco, Firearms, and Explosives and the U.S. Drug Enforcement Administration and prosecuted by Assistant U.S. Attorney Michelle S. Englade.

TYLER, Texas – Two Texas men have been sentenced to federal prison for criminal violations in the Eastern District of Texas, announced Acting United States Attorney Nicholas J. Ganjei today.

Mario Eleuterio Garcia-Sevilla, 44, of Grand Saline, Texas, and Juan Valazquez Delgadillo, 50, of Garland, Texas, pleaded guilty in September 2020, to conspiracy to produce and transfer false identification documents.  Today, United States District Judge Jeremy D. Kernodle sentenced Garcia to 37 months in federal prison, and sentenced Delgadillo to a prison term of 30 months.

“Identification document fraud is a direct threat to the security of the United States and its citizens,” said Assistant United States Attorney Nicholas Ganjei.  “Disruption of criminal enterprises that aim to compromise document security is, and should be, a primary focus of federal law enforcement.” 

According to information presented in court, beginning in January 2019, Garcia and Delgadillo conspired to produce and transfer fictitious United States identification documents to others in the Eastern District of Texas.  The false documents included United States Social Security cards and Permanent Residence cards. Garcia obtained the documents from Delgadillo and then transferred them to individuals throughout the East Texas area.  Garcia and Delgadillo were indicted by a federal grand jury on Feb. 27, 2020.

This case was investigated by the Federal Bureau of Investigation, Smith County Sheriff’s Office, and Texas Department of Public Safety.  This case was prosecuted by Assistant United States Attorney Alan R. Jackson.

SHERMAN, Texas – A Sherman, Texas man has been indicted on charges involving the sexual exploitation of children in the Eastern District of Texas, announced Acting U.S. Attorney Nicholas J. Ganjei today.

Brian Christopher Welch, 43, was arrested on Feb. 3, 2021, pursuant to a federal criminal complaint charging him with production and distribution of child pornography.  Welch was indicted by a federal grand jury this week and formally charged with child pornography violations.

“This case shows that there is no one type of individual who preys on children.  Child sexual predators come from all backgrounds, genders, races, and ethnicities – and they are often active members of their community,” said Acting U.S. Attorney Nicholas J. Ganjei.  “Parents are urged to use caution in allowing any outsider, including friends and people in positions of trust, to have unsupervised access to their children.  The Eastern District is proud of its robust partnership with federal and state law enforcement agencies, and is committed to utilizing all available resources, both nationally and internationally, to locate those individuals who use internet-based technologies to exploit children.”

According to court documents, between December 2016 and August 2020, Welch is alleged to have used digital devices to record a minor engaged in sexually explicit conduct.  Additionally, Welch is charged with distributing child pornography to another person, and with transportation of child pornography, on Jan. 29, 2021.

If convicted, Welch faces a minimum of 15 years and up to 30 years in federal prison.

This case is being 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 is being investigated by Homeland Security Investigations and the Grayson County Sheriff’s Office and prosecuted by Assistant U.S. Attorney Marisa J. Miller.

It is important to note that a complaint, arrest, or indictment should not be considered as evidence of guilt and that all persons charged with a crime are presumed innocent until proven guilty beyond a reasonable doubt.

TEXARKANA, Texas – A Liberty County, Texas, man and woman have been indicted for filing hundreds of fraudulent Economic Injury Disaster Loan (EIDL) applications with the Small Business Administration (SBA) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act in the Eastern District of Texas, announced Acting U.S. Attorney Nicholas J. Ganjei today.

Clifton Pape, 45, and Sally Jung, 58, both of Cleveland, Texas, allegedly operated a COVID relief fraud scheme known as “My Buddy Loans,” that garnered them more than $700,000 in fraud proceeds and resulted in at least $1.3 million in loss to the United States. Pape and Jung are charged by way of a federal indictment that charges violations of 18 U.S.C. §§ 1349 and 2326, conspiracy to commit telemarketing wire fraud victimizing ten or more persons over the age of fifty-five; 18 U.S.C. § 1343, wire fraud; and 18 U.S.C. §§ 1028A and 2, aggravated identity theft and aiding and abetting.

“We believe this investigation—to date—involves the single largest number of individual fraudulent EIDL applications associated with the CARES Act,” said Acting U.S. Attorney Nicholas Ganjei. “We are asking those with information about the My Buddy Loan fraud scheme, including those who believe they may be victims, to call the Department of Justice’s National Center for Disaster Fraud Hotline at 866-720-5721 or file a complaint using the NCDF Web Complaint Form at https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.”

“This telemarketing scheme exploited those seeking assistance during the COVID pandemic, including many who were over the age of 55,” said SBA OIG’s Central Region Special Agent in Charge Sharon Johnson. “We are asking members of the press and the community to encourage those victimized by this fraud scheme—including hundreds of residents in Texas and across the country—to file a complaint with the NCDF.”

“This case demonstrates the investigative capabilities of the United State Secret Service and should service as a strong deterrent to anyone considering taking part in a similar scam,” said William Mack, Resident Special Agent in Charge of the Secret Service Tyler Texas Resident Office.  “This investigation highlights our outstanding partnership with the SBA OIG’s Central Region and we will continue to work with our law enforcement partners to disrupt criminal groups who target and victimize our communities.  We thank members of the public and the banking community who have been vigilant, and we encourage them to continue reporting any suspicious activity involving COVID relief.”

 

According to court documents filed in U.S. District Court in Texarkana, Pape and Jung operated the telemarketing scheme under the name My Buddy Loans. In exchange for a fee, My Buddy Loans took personal identifying information from victims and promised to file an application for an agricultural grant, which they said was available to those who owned a few acres of land. Instead, Pape and Jung actually filed fraudulent EIDL applications with the SBA that contained the victims’ personal identification information.

 

Pape and Jung used Square’s credit and debit card processing service to charge third parties the fee. Pape and Jung completed at least 700 successful charges, obtaining at least $700,000 in fees. Pape and Jung then transferred the proceeds of the fraud scheme into a bank account they controlled. On one occasion, Pape used the fraud proceeds to pay a traffic ticket. On another occasion, Pape and Jung used more than $3600 from the fraud scheme to pay for a stay at a resort in San Antonio, Texas. A picture from that stay shows Pape and Jung celebrating over sparkling wine. Pursuant to a seizure warrant, agents seized the $505,535.04 in fraud proceeds remaining in the account.

The CARES Act is a federal law enacted in March 2020, designed to provide emergency financial assistance to the millions of Americans who are suffering the economic effects caused by the COVID-19 pandemic.  One source of relief provided by the CARES Act was the authorization or EIDL advances and low-interest loans to small businesses to meet financial obligations and operating expenses that could have been met had the disaster not occurred. Under the EIDL program applicants were eligible for a forgivable advance of up to $10,000 if the applicant had ten or more employees.

A federal indictment is merely an accusation. A defendant is presumed innocent unless and until proven guilty.

Under federal statutes, Pape and Jung face up to 168 years in federal prison and a $6,000,000 fine at sentencing. The statutory sentence prescribed by Congress is provided here for information purposes, as the sentencing will be determined by the court based on the advisory sentencing guidelines and other statutory factors.

This case is being investigated by the U.S. Secret Service and the SBA Office of Inspector General. The case is being prosecuted by Assistant U.S. Attorney Jonathan R. Hornok.

BEAUMONT, Texas – A 30-year-old Beaumont, Texas engineer pleaded guilty today for filing fraudulent bank loan applications seeking more than $10 million dollars in forgivable loans guaranteed by the Small Business Administration (SBA) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. 

Acting U.S. Attorney Nicholas J. Ganjei for the Eastern District of Texas, Acting Assistant Attorney General Nicholas L. McQuaid of the Justice Department’s Criminal Division, Senior Executive Michael J. Mullaney for Law Enforcement Operations, Federal Housing Finance Agency – Office of Inspector General (FHFA-OIG), Inspector General Jay N. Lerner of the Federal Deposit Insurance Corporation – OIG (FDIC-OIG), Inspector General Hannibal “Mike” Ware of the SBA-OIG, and Inspector in Charge Delany De Leon-Colón of the U.S. Postal Inspection Service’s (USPIS) Criminal Investigations Group made the announcement.   

Shashank Rai pleaded guilty to one count of making false statements to a bank. He was charged on May 13, 2020, with violations of wire fraud, bank fraud, false statements to a financial institution, and false statements to the SBA.

“The Payroll Protection Program was designed to help struggling businesses and hardworking Americans, not individuals who concoct imaginary businesses and employees,” said Acting U.S. Attorney Nicholas J. Ganjei.  “We will continue to work diligently with our law enforcement partners to investigate and prosecute those who exploit this critical, taxpayer-funded program.”

As part of his guilty plea, Rai admitted that he sought millions of dollars in forgivable loans guaranteed by the SBA from two different banks by claiming to have 250 employees earning wages when, in fact, no employees worked for his purported business. Rai made two fraudulent claims to two different lenders for seek loans guaranteed by the SBA for COVID-19 relief through the Paycheck Protection Program (PPP). In the application submitted to the first lender, Rai sought $10 million in PPP loan proceeds by fraudulently claiming to have 250 employees with an average monthly payroll of $4 million.  In the second application, Rai sought approximately $3 million in PPP loan proceeds by fraudulently claiming to have 250 employees with an average monthly payroll of approximately $1.2 million.

According to court documents, the Texas Workforce Commission provided information to investigators of having no records of employee wages having been paid in 2020 by Rai or his purported business, Rai Family LLC. In addition, the Texas Comptroller’s Office of Public Accounts reported to investigators that Rai Family LLC reported no revenues for the fourth quarter of 2019 or the first quarter of 2020.

According to court documents, materials recovered from the trash outside of Rai’s residence included handwritten notes that appear to reflect an investment strategy for the $3 million, which is the amount of money that Rai allegedly sought from the second lender.

The CARES Act is a federal law enacted on March 29, 2020, designed to provide emergency financial assistance to the millions of Americans who are suffering the economic effects caused by the COVID-19 pandemic. One source of relief provided by the CARES Act was the authorization of up to $349 billion in forgivable loans to small businesses for job retention and certain other expenses, through the PPP. In April 2020, Congress authorized over $300 billion in additional PPP funding, and in December 2020, Congress authorized another $284 billion in additional funding.

The PPP allows qualifying small businesses and other organizations to receive loans with a maturity of two years and an interest rate of 1 percent. PPP loan proceeds must be used by businesses for payroll costs, interest on mortgages, rent and utilities. The PPP allows the interest and principal to be forgiven if businesses spend the proceeds on these expenses within a set time period and use at least a certain percentage of the loan towards payroll expenses.

This case was investigated by the FHFA-OIG, FDIC-OIG, SBA-OIG, and USPIS. Assistant Chief L. Rush Atkinson and Trial Attorney Lou Manzo of the Criminal Division’s Fraud Section, and Assistant U.S. Attorneys Nathaniel Kummerfeld and Frank Coan for the Eastern District of Texas are prosecuting the case.

The Fraud Section leads the department’s prosecution of fraud schemes that exploit the PPP. In the months since the PPP began, Fraud Section attorneys have prosecuted more than 100 defendants in more than 70 criminal cases. The Fraud Section has also seized more than $60 million in cash proceeds derived from fraudulently obtained PPP funds, as well as numerous real estate properties and luxury items purchased with such proceeds. More information can be found at:  https://www.justice.gov/criminal-fraud/ppp-fraud.

Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.

TEXARKANA, Texas – A Texarkana, Texas, doctor has pleaded guilty today to a federal fraud violation, announced Eastern District of Texas Acting U.S. Attorney Nicholas J. Ganjei.

Dr. Rafael Otero, 68, pleaded guilty to an information charging him with defrauding the U.S. Department of Housing and Urban Development (HUD) before U.S. Magistrate Judge Caroline M. Craven. In his plea agreement, Dr. Otero agreed to pay restitution to HUD.

“Dr. Otero, and his son Antonio Otero, exploited a HUD-insured mortgage program designed to provide affordable housing for those suffering from diseases like Alzheimer’s,” said Acting U.S. Attorney Nicholas Ganjei. “While they left the HUD-insured mortgage unpaid, the Oteros took hundreds of thousands of dollars. Because of their actions, the American taxpayers ultimately suffered a loss of over $3.6 million.”

According to information presented in court, Dr. Otero was the majority owner of the Magnolia Alzheimer’s Assisted Living facility in Texarkana, Texas, and his son, Antonio Otero, was the facility’s administrator. In order to secure millions of dollars in necessary funding, the Oteros obtained a loan that was insured by HUD. The HUD-insured loan provided a favorable interest rate and did not require the owners of Magnolia to take personal responsibility for the loan in the event of a default. Instead, HUD would suffer the financial loss in the event that Magnolia defaulted on the loan. As a condition of this federal benefit, Magnolia agreed to be bound by a regulatory agreement with HUD that prohibited the owners from receiving money from Magnolia, unless the loan was being paid and Magnolia had surplus cash.

But instead of paying the HUD-insured loan, and in violation of the regulatory agreement they signed with HUD, the Oteros took hundreds of thousands of dollars from Magnolia. Dr. Otero received more than $150,000 from Magnolia in unauthorized compensation and other payments. Antonio Otero took even more money from Magnolia, using it to pay for $3,952 of camera equipment, a $3,247 watch, $2,520 in landscaping for his personal residence, a $27,408 personal mortgage payment, a $12,750 down payment on a personal vehicle, and $1,540 tickets to the Dallas Cowboys. Additionally, he took money from Magnolia and gave it to other individuals, including $13,000 for cosmetic surgery. When Dr. Otero learned that his son had been stealing money from Magnolia, Dr. Otero did not report him to authorities or remove him from his position. After Dr. Otero learned of his son’s theft, Antonio Otero stole an additional $62,000 from Magnolia.

Under federal statutes, Dr. Otero faces up to one year in federal prison at sentencing.  The statutory sentence prescribed by Congress is provided here for information purposes, as the sentencing will be determined by the court based on the advisory sentencing guidelines and other statutory factors.  A sentencing hearing will be scheduled after the completion of a presentence investigation by the U.S. Probation Office.

Antonio Otero pleaded guilty to equity skimming on October 28, 2019, and was sentenced on June 2, 2020, to 46 months in prison by U.S. District Judge Robert W. Schroeder III. Judge Schroeder also ordered Antonio Otero to pay $2 million in restitution to HUD.

This case was investigated by the United States Department of Housing and Urban Development, Office of Inspector General. The case was prosecuted by Assistant U.S. Attorney Jonathan R. Hornok.

A Texas engineer pleaded guilty today for filing fraudulent bank loan applications seeking more than $10 million dollars in forgivable loans guaranteed by the Small Business Administration (SBA) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. 

Acting Assistant Attorney General Nicholas L. McQuaid of the Justice Department’s Criminal Division, Acting U.S. Attorney Nicholas J. Ganjei for the Eastern District of Texas, Inspector General Laura S. Wertheimer of the Federal Housing Finance Agency (FHFA) – Office of Inspector General (OIG), Inspector General Jay N. Lerner of the Federal Deposit Insurance Corporation (FDIC) – OIG, Inspector General Hannibal “Mike” Ware of the SBA-OIG and Inspector in Charge Delany De Leon-Colón of the U.S. Postal Inspection Service’s (USPIS) Criminal Investigations Group made the announcement.    

Shashank Rai, 30, of Beaumont, pleaded guilty to one count of making false statements to a bank. He was charged on May 13, 2020, with violations of wire fraud, bank fraud, false statements to a financial institution, and false statements to the SBA.

As part of his guilty plea, Rai admitted that he sought millions of dollars in forgivable loans guaranteed by the SBA from two different banks by claiming to have 250 employees earning wages when, in fact, no employees worked for his purported business. Rai made two fraudulent claims to two different lenders for loans guaranteed by the SBA for COVID-19 relief through the Paycheck Protection Program (PPP). In the application submitted to the first lender, Rai sought $10 million in PPP loan proceeds by fraudulently claiming to have 250 employees with an average monthly payroll of $4 million.  In the second application, Rai sought approximately $3 million in PPP loan proceeds by fraudulently claiming to have 250 employees with an average monthly payroll of approximately $1.2 million.

According to court documents, the Texas Workforce Commission provided information to investigators of having no records of employee wages having been paid in 2020 by Rai or his purported business, Rai Family LLC. In addition, the Texas Comptroller’s Office of Public Accounts reported to investigators that Rai Family LLC reported no revenues for the fourth quarter of 2019 or the first quarter of 2020.

According to court documents, materials recovered from the trash outside of Rai’s residence included handwritten notes that appear to reflect an investment strategy for the $3 million, which is the amount of money that Rai allegedly sought from the second lender.

The CARES Act is a federal law enacted on March 29, 2020, designed to provide emergency financial assistance to the millions of Americans who are suffering the economic effects caused by the COVID-19 pandemic. One source of relief provided by the CARES Act was the authorization of up to $349 billion in forgivable loans to small businesses for job retention and certain other expenses, through the PPP. In April 2020, Congress authorized over $300 billion in additional PPP funding, and in December 2020, Congress authorized another $284 billion in additional funding.

The PPP allows qualifying small businesses and other organizations to receive loans with a maturity of two years and an interest rate of 1 percent. PPP loan proceeds must be used by businesses for payroll costs, interest on mortgages, rent and utilities. The PPP allows the interest and principal to be forgiven if businesses spend the proceeds on these expenses within a set time period and use at least a certain percentage of the loan towards payroll expenses.

This case was investigated by the FHFA-OIG, FDIC-OIG, SBA-OIG, and USPIS. Assistant Chief L. Rush Atkinson and Trial Attorney Lou Manzo of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Frank Coan and Nathaniel Kummerfeld for the Eastern District of Texas are prosecuting the case.

The Fraud Section leads the department’s prosecution of fraud schemes that exploit the PPP. In the months since the PPP began, Fraud Section attorneys have prosecuted more than 100 defendants in more than 70 criminal cases. The Fraud Section has also seized more than $60 million in cash proceeds derived from fraudulently obtained PPP funds, as well as numerous real estate properties and luxury items purchased with such proceeds. More information can be found at:  https://www.justice.gov/criminal-fraud/ppp-fraud.

Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.

BEAUMONT, Texas – A Woodville, Texas, man has pleaded guilty to federal firearms and drug trafficking violations in the Eastern District of Texas, announced Acting United States Attorney Nicholas J. Ganjei today.

Christopher Dashawn Montoya, 26, pleaded guilty to possession with intent to distribute methamphetamine and possession of a firearm in furtherance of a drug trafficking crime today before U.S. District Judge Michael Truncale.

“The United States Attorney’s Office for the Eastern District of Texas remains committed to eliminating methamphetamine trafficking in our communities,” said Acting United States Attorney Nicholas Ganjei.  “Our resolve is even greater in cases, such as here, where a drug dealer possesses firearms to aid his drug trafficking efforts.”             

According to information presented in court, on December 1, 2019, Montoya was arrested at a Polk County residence on multiple outstanding warrants.  A search of the residence resulted in the seizure of approximately one kilogram of methamphetamine, marijuana, a large amount of cash, a digital scale, and a firearm.  A search of Montoya’s vehicle parked at the residence revealed a backpack containing another two firearms, and more illegal narcotics.

A federal grand jury returned an indictment charging Montoya with firearms and drug trafficking violations on July 1, 2020.  As a result of his guilty pleas, under federal statutes, Montoya faces up to life in federal prison.  The maximum statutory sentence prescribed by Congress is provided here for information purposes, as the sentencing will be determined by the court based on the advisory sentencing guidelines and other statutory factors.  A sentencing hearing will be scheduled after the completion of a presentence investigation by the U.S. Probation Office.

This case is being prosecuted as part of the Project Safe Neighborhoods Initiative.  Project Safe Neighborhoods is aimed at reducing gun and gang violence, deterring illegal possession of guns, ammunition and body armor, and improving the safety of residents in the Eastern District of Texas.  Participants in the initiative include community members and organizations as well as federal, state and local law enforcement agencies.

This case is being investigated by the Polk County Sheriff’s Office; the Woodville Police Department; the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF); and the Drug Enforcement Administration (DEA) and prosecuted by Special Assistant United States Attorney Tommy L. Coleman. 

TYLER, Texas –  A 53-year-old Rusk, Texas man has been sentenced to prison for a federal firearms violation in the Eastern District of Texas, announced Acting United States Attorney Nicholas J. Ganjei.

Larry Van Butcher, a.k.a. “Red,” pleaded guilty on Oct. 29, 2020, to being a prohibited person in possession of a firearm and was sentenced to 21 months in federal prison by United States District Judge Jeremy D. Kernodle today.  

“Domestic violence offenses represent a significant public safety concern in our communities, and, in the most tragic circumstances, result in a pattern of abuse and escalating violence,” said Acting United States Attorney Nicholas Ganjei.  “Restricting domestic violence offenders from possessing the tools to perpetrate similar or more severe crimes is a priority for the Department of Justice.”            

According to information presented in court, on Nov. 5, 2019, Butcher was interviewed by law enforcement about illegal drug and firearms activities occurring at his residence.  After confessing to using methamphetamine and marijuana as well as possessing numerous firearms, Butcher admitted that he had been previously convicted in Cherokee County, Texas, for the misdemeanor offense of Assault Family Violence, which is a crime of domestic violence resulting in a federal prohibition on possessing firearms.  Butcher advised that he knew he was prohibited from possessing firearms and could not purchase firearms for himself.  Law enforcement officers then traveled to Butcher’s residence and seized 20 firearms, including two that had been reported stolen.  Butcher was indicted by a federal grand jury on June 18, 2020, and charged with federal firearms violations. 

This case is a part of Project Guardian, the Department of Justice’s signature initiative to reduce gun violence and enforce federal firearms laws.  Initiated by the Attorney General in the fall of 2019, Project Guardian draws upon the Department’s past successful programs to reduce un violence; enhances coordination of federal, state, local, and tribal authorities in investigating and prosecuting gun crimes; improves information-sharing by the Bureau of Alcohol, Tobacco, Firearms and Explosives when a prohibited individual attempts to purchase a firearm and is denied by the National Instant Criminal Background Check System (NICS), to include taking appropriate actions when a prospective purchaser is denied by the NICS for mental health reasons; and ensures that federal resources are directed at the criminals posing the greatest threat to our communities.  The United States Attorney’s Office has prosecuted this case with support from the following Project Guardian partners: the Bureau of Alcohol, Tobacco, Firearms and Explosives; the Drug Enforcement Administration; the Texas Department of Public Safety; the Smith County Sheriff’s Office; and the Tyler Police Department.  This case was investigated by and is prosecuted by Assistant United States Attorney Lucas Machicek. 

TYLER, Texas – A Tyler, Texas attorney pleaded guilty today to federal employment tax violations announced Eastern District of Texas Acting United States Attorney Nicholas J. Ganjei.

John Bennett White IV, 60, pleaded guilty to an information charging him failure to pay employment taxes today before U.S. Magistrate Judge K. Nicole Mitchell.

“Mr. White withheld taxes from his employees’ paychecks but repeatedly failed to turn those funds over to the IRS,” said Acting United States Attorney Nicholas Ganjei.  “White instead chose to pocket his employees’ tax payments to fund his lifestyle.  This sort of conduct harms every taxpayer, not only because of the lost public revenue, but also because of the expense of recovering the lost funds from individuals such as White.” 

According to court documents and statements made in court, White was an attorney and firm manager for a Tyler law firm, J. Bennett White, P.C., where White had significant control over the finances of the firm and had a duty to account for and pay over the employment taxes on behalf of the firm’s employees to the IRS.

Between the second quarter of 2007 and the fourth quarter of 2015, White made sporadic and partial efforts to pay his firm’s employment tax liabilities.  For multiple quarters during the same period White caused employment taxes to be withheld from the law firm’s employees’ wages, but willfully failed to fully pay those trust fund taxes of to the IRS.  White filed Forms 941 reporting the law firm’s employment taxes for each of these quarters.  White paid the full amount owed the IRS for 24 of those 38 quarters.  White made partial payments on 10 occasions and no payment for seven quarters.  In total, White caused a tax loss of over $300,000. Instead of paying employment taxes, White paid other creditors and his own personal expenses.

Under federal statutes, White faces up to five years in federal prison at sentencing.  The statutory sentence prescribed by Congress is provided here for information purposes, as the sentencing will be determined by the court based on the advisory sentencing guidelines and other statutory factors.  A sentencing hearing will be scheduled after the completion of a presentence investigation by the U.S. Probation Office.

This case is being investigated by IRS Criminal Investigation and prosecuted by Assistant U.S. Attorney Ryan Locker.

TEXARKANA, Texas – Two more individuals have pleaded guilty to conspiring to pay and receive kickbacks in violation of the Anti-Kickback Statute, announced Acting United States Attorney Nicholas J. Ganjei.

Kimberly Willette, 59, of Friendswood, Texas, and Edwin Chad Isbell, 48, of McKinney, Texas, pleaded guilty to conspiracy to commit illegal remunerations on Jan. 25, 2021 before U.S. Magistrate Judge Caroline Craven.

Nicolas Arroyo of Newport Coast, California, previously pleaded guilty for his involvement in the conspiracy.

“Kickback schemes are anti-competitive, lead to overutilization and higher program costs, and prioritize profits over patient care,” said Acting United States Attorney Nicholas J. Ganjei.  “The payment and receipt of kickbacks related to federal health care programs will not be tolerated in the Eastern District of Texas.” 

According to information presented in court, the defendants conspired with others to pay and receive kickbacks in exchange for the referral of, and arranging for, health care business, specifically pharmacogenetic (PGx) tests.  Pharmacogenetic testing, also known as pharmacogenomic testing, is a type of genetic testing that identifies genetic variations that effect how an individual patient metabolizes certain drugs.  The illegal arrangement concerned the referral of PGx tests to clinical laboratories in Fountain Valley, California, Irvine, California, and San Diego, California.  More than $28 million in illegal kickback payments were exchanged by the defendants and others during the conspiracy.

In December 2019, Arroyo and eleven other individuals from three states were charged for their roles in the kickback conspiracy.  A federal grand jury in the Eastern District of Texas returned an indictment against Philip Lamb of Scottsdale, Arizona; Nicolas Arroyo of Newport Coast, California; Vincent Marchetti, Jr., of Coronado, California; William Flowers of Houston, Texas; Steven Donofrio of Temecula, California; James J. Walker, Jr. a/k/a Jimmy Walker of Frisco, Texas; Timothy Armstrong of Frisco, Texas; Virginia Blake Herrin of Frisco, Texas; Patrick Ridgeway of Jackson, Mississippi; Chismere Mallard of McAllen, Texas; Ray W. Ng of Dallas, Texas; and Ashley Kretzschmar of Aledo, Texas; for conspiring to commit illegal remunerations in violation of the Anti-Kickback Statute.

The Anti-Kickback Statute prohibits offering, paying, soliciting, or receiving remunerations in exchange for the referral of or arranging for items or services payable under federal health care programs.  Under federal statutes, violations of the Anti-Kickback statute are punishable by up to five years in federal prison.

This case was investigated by the U.S. Department of Health and Human Services, Office of Inspector General, the FBI Dallas – Frisco Resident Agency, and the U.S. Department of Homeland Security, Homeland Security Investigations.  It was prosecuted by Assistant U.S. Attorneys Nathaniel C. Kummerfeld and L. Frank Coan, Jr.

A Texas man pleaded guilty today to violent gang-related activities in the Eastern District of Texas.

According to information presented in court and contained in court filings, Glynnwood Derrick, 46, of Texarkana, joined the Aryan Circle (AC) while in state prison in Texas in 2000, and received his “patch,” or gang tattoo, in 2004 while serving a sentence in federal prison. Derrick held various ranks within the organization over the years, including the ranks of Captain and Major. Derrick attended “church,” or gang meetings, on numerous occasions at the homes of other AC members.

The AC is a violent, white supremacist organization that operates inside federal prisons across the country and outside prisons in states including Texas, Arkansas, Louisiana, and Missouri. The AC enforces its rules and promotes discipline among its members, prospects and associates through murder, attempted murder, assault, and threats against those who violate the rules or pose a threat to the organization. Members, and oftentimes associates, are required to follow the orders of higher-ranking members without question.

Prior to Oct. 2, 2016, AC members learned that an AC member wanted to switch his gang affiliation, or “patch over,” from the AC to a different gang. AC members were ordered to attack the former member in order to “X” him, or attack and remove him from the gang, because it violated the AC’s rules to join another organization. A meeting was held at an AC member’s home in the Tyler, Texas area where AC members planned the logistics of the assault.

On Oct. 2, 2016, Derrick and other AC members met at a park near Tyler, Texas, where they had planned to attack the former member, who was also present. Multiple AC members violently beat the victim, including kicking the victim in the head while he was on the ground.  This attack resulted in the victim seeking medical care.

Derrick will be sentenced at a date to be determined.

Nicholas L. McQuaid, Acting Assistant Attorney General of the Justice Department’s Criminal Division, and Nicholas J. Ganjei, Acting U.S. Attorney for the Eastern District of Texas, made the announcement.

This case is part of a larger investigation into the Aryan Circle by an Organized Crime Drug Enforcement Task Force (OCDETF) consisting of the Bureau of Alcohol, Tobacco, Firearms and Explosives; Drug Enforcement Administration; Federal Bureau of Prisons; Texas Department of Public Safety; Houston Police Department-Gang Division; Montgomery County (TX) Precinct One Constable’s Office; U.S. Immigration and Customs Enforcement’s Homeland Security Investigations; Texas Department of Criminal Justice; New Jersey Department of Corrections-Special Investigations Division; Indiana State Police; Fort Smith (AR) Police Department; Arkansas Department of Corrections; Arnold (MO) Police Department; Jefferson County (MO) Sheriff’s Department; St. Louis Metropolitan Police Department; St. Louis County (MO) Police Department; Indiana Department of Corrections; Carrollton (TX) Police Department; Waller (TX) Police Department; Montgomery County (TX) Sheriff’s Office; Travis County (TX) Sheriff’s Office; Tarrant County (TX) Sheriff’s Office; Evangeline Parish (LA) Sheriff’s Office; Smith County (TX) Sheriff’s Office; McCurtain County (OK) Sheriff’s Office; Montgomery County (TX) District Attorney’s Office; Liberty County (TX) District Attorney’s Office; Harris County (TX) District Attorney’s Office; Mercer County (NJ) District Attorney’s Office; Evangeline Parish (LA) District Attorney’s Office; and the Sebastian County (AR) District Attorney’s Office. It is being prosecuted by Trial Attorney Bethany Lipman of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorney Christopher Rapp of the Eastern District of Texas.

BEAUMONT, Texas – A Texas man has pleaded guilty to violent gang-related activities in the Eastern District of Texas, announced Acting United States Attorney Nicholas J. Ganjei and Nicholas L. McQuaid, Acting Assistant Attorney General of the Justice Department’s Criminal Division.

Glynnwood Derrick, 46, pleaded guilty to assault resulting in serious bodily injury in aid of racketeering today before U.S. Magistrate Judge Zack Hawthorn.

“Gang violence has no place in our community,” said Acting United States Attorney Nicholas Ganjei.   “The men and women of the Department of Justice, and our law enforcement partners, will do whatever it takes to safeguard our citizens from the predations of organized criminal gangs.”

According to information presented in court and contained in court filings, Derrick joined the Aryan Circle (AC) while in state prison in Texas in 2000, and received his “patch,” or gang tattoo, in 2004 while serving a sentence in federal prison. Derrick held various ranks within the organization over the years, including the ranks of Captain and Major. Derrick attended “church,” or gang meetings, on numerous occasions at the homes of other AC members.

The AC is a violent, white supremacist organization that operates inside federal prisons across the country and outside prisons in states including Texas, Arkansas, Louisiana, and Missouri.  The AC enforces its rules and promotes discipline among its members, prospects and associates through murder, attempted murder, assault, and threats against those who violate the rules or pose a threat to the organization.  Members, and oftentimes associates, are required to follow the orders of higher-ranking members without question.

Prior to Oct. 2, 2016, AC members learned that an AC member wanted to switch his gang affiliation, or “patch over,” from the AC to a different gang.  AC members were ordered to attack the former member in order to “X” him, or attack and remove him from the gang, because it violated the AC’s rules to join another organization.  A meeting was held at an AC member’s home in the Tyler, Texas area where AC members planned the logistics of the assault.

On Oct. 2, 2016, Derrick and other AC members met at a park near Tyler, Texas, where they had planned to attack the former member, who was also present. Multiple AC members violently beat the victim, including kicking the victim in the head while he was on the ground.  This attack resulted in the victim seeking medical care for serious injuries.

This case is part of a larger investigation into the Aryan Circle by an Organized Crime Drug Enforcement Task Force (OCDETF) consisting of the Bureau of Alcohol, Tobacco, Firearms and Explosives; Drug Enforcement Administration; Federal Bureau of Prisons; Texas Department of Public Safety; Houston Police Department-Gang Division; Montgomery County (TX) Precinct One Constable’s Office; U.S. Immigration and Customs Enforcement’s Homeland Security Investigations; Texas Department of Criminal Justice; New Jersey Department of Corrections-Special Investigations Division; Indiana State Police; Fort Smith (AR) Police Department; Arkansas Department of Corrections; Arnold (MO) Police Department; Jefferson County (MO) Sheriff’s Department; St. Louis Metropolitan Police Department; St. Louis County (MO) Police Department; Indiana Department of Corrections; Carrollton (TX) Police Department; Waller (TX) Police Department; Montgomery County (TX) Sheriff’s Office; Travis County (TX) Sheriff’s Office; Tarrant County (TX) Sheriff’s Office; Evangeline Parish (LA) Sheriff’s Office; Smith County (TX) Sheriff’s Office; McCurtain County (OK) Sheriff’s Office; Montgomery County (TX) District Attorney’s Office; Liberty County (TX) District Attorney’s Office; Harris County (TX) District Attorney’s Office; Mercer County (NJ) District Attorney’s Office; Evangeline Parish (LA) District Attorney’s Office; and the Sebastian County (AR) District Attorney’s Office. The matter is being prosecuted by Assistant United States Attorney Christopher Rapp of the Eastern District of Texas and Trial Attorney Bethany Lipman of the Criminal Division’s Organized Crime and Gang Section.

BEAUMONT, Texas – January is Human Trafficking Awareness month.  Each year, law enforcement and service providers reaffirm their commitment to eradicating human trafficking in all forms.  Acting United States Attorney Nicholas J. Ganjei is issuing a number of messages to educate the public about human trafficking and, importantly, to dispel many myths and misconceptions about trafficking. 

           “Human trafficking is modern-day slavery,” said Acting United States Attorney Ganjei.  “We proudly partner with federal, state, and local law enforcement, as well as the remarkable men and women who work with victims, to bring traffickers to justice.  Those who exploit other human beings for personal gain have no safe harbor in the Eastern District of Texas.”

           Often associated only with sex trafficking, “human trafficking” also includes labor trafficking and indentured servitude.  Moreover, trafficking offenses occur in every city and region.  It is also a common misconception that individuals are kidnapped or forced into trafficking by strangers.  Most victims of human trafficking actually know their trafficker and are enticed by promises of good jobs, easy money, a comfortable life, new opportunities, or even the affection of their trafficker.  Traffickers do not fit one particular profile.  They can be men or women and are from all races, ethnicities, and socio-economic backgrounds.

           Acting United States Attorney Ganjei urges the public to assist.  “Because these crimes are often unreported, the public plays a valuable role in helping law enforcement to combat human trafficking.  Each day, people unwittingly come into contact with victims of trafficking.  From ride share drivers, to beauty service providers, to grocery or convenience store workers, we see these hidden victims.”  Acting U.S. Attorney Ganjei added, “It us up to all of us to end this terrible practice.  If you see something, say something.  Please contact law enforcement or the National Human Trafficking Hotline if you suspect human trafficking.”

           If you are currently the victim of sex trafficking, labor trafficking, or indentured servitude, or if you suspect someone else is being victimized, please contact the National Human Trafficking Hotline at 888-373-7888 (voice), “BeFree” or 233733 (text), or https://polarisproject.org.

SHERMAN, Texas – A Sherman, Texas, man has been sentenced to federal prison for drug trafficking violations in the Eastern District of Texas, announced Acting U.S. Attorney Nicholas J. Ganjei today.

Anthony Wade Buford, 35, pleaded guilty on June 9, 2020, to conspiracy to distribute and possession with intent to distribute methamphetamine and was sentenced to 235 months in federal prison today by U.S. District Judge Amos L. Mazzant, III.

According to information presented in court, in the summer of 2019, Grayson County law enforcement agencies began investigating reports that a drug trafficking group operating in the area was receiving narcotics from a supplier in McKinney, Texas.  On August 22, 2019, a deputy with the Grayson County Sheriff’s Office initiated a traffic stop on a vehicle occupied by Buford and a search of the vehicle revealed 242.74 grams of pure methamphetamine and 13.1 grams of suspected black tar heroin. Officers were able to identify co-defendants Jeremy Wayne Helton, a resident of McKinney, as Buford’s source of supply. On August 28, 2019, task force investigators executed a search warrant at Helton’s residence, where they located co-defendant Kennen Depetris and seized 1.568 kilograms of pure methamphetamine, $12,000 cash; four handguns; 3.8 ounces of GHB, digital scales and assorted baggies for drug packaging, fake driver’s licenses; and a quantity of suspected heroin.

Investigators later identified co-defendant Benjamin Christopher Reyes, of Dallas, Texas, as Helton and Depetris’s source of supply. They immediately conducted a “buy-bust” operation on Reyes at Helton’s residence, where they seized an additional two kilograms of pure methamphetamine from him.  Further investigation led to the identification of the following additional members of the conspiracy, all of whom were indicted along with Reyes, Helton, Depetris and Buford, including:

• Mishay Gabriele McManigell of Sherman, Texas, who has pleaded guilty and was sentenced to 121 months in federal prison for her role in the conspiracy.
• Coty Allen Pipkin, of Sherman, Texas, who has pleaded guilty and was sentenced to 120 months in federal prison for his role in the conspiracy.
• Melysa Rae Sudderth, of Pottsboro, Texas, who has pleaded guilty and was sentenced to 70 months in federal prison for her role in the conspiracy.
• Stephen Keith Martin, of Sherman, Texas, who has pleaded guilty and was previously sentenced to 188 months in federal prison for his role in the conspiracy.
• Bridget Marie Dobrovolsky, of Durant, Oklahoma, who has pleaded guilty and was sentenced to 120 months in federal prison for her role in the conspiracy.

 

Two defendants, Reyes and Marlon Glenn Warren, II, of Denison, Texas have pleaded guilty and are awaiting sentencing. Helton previously pleaded guilty and received 210 months in federal prison for his role in the conspiracy. Depetris is currently awaiting trial.

This case was investigated by the Sherman, Denison, and Bells, Texas Police Departments; the Grayson County Sheriff’s Office; the Drug Enforcement Administration’s (DEA); and the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) and is being prosecuted by Assistant United States Attorney Matthew T. Johnson.

BEAUMONT, Texas – A 62-year-old Vidor, Texas woman has been sentenced to federal prison for drug trafficking violations in the Eastern District of Texas, announced Acting U.S. Attorney Nicholas J. Ganjei today.

Catherine Ardis pleaded guilty on Sep. 10, 2020, to conspiracy to possess with intent to distribute a controlled substance, namely hydromorphone, and was sentenced to 180 months in federal prison by U.S. District Judge Marcia A. Crone on Jan. 22, 2021.

            According to information presented in court, federal agents began an investigation of Ardis and others in June of 2019 after three persons died as a result of opiates purchased from Ardis at her residence on FM 105 North in Vidor, Texas.  Medical examination of the deceased persons determined that the victims died from poly-drug toxicity resulting from the use of hydromorphone pills, also referred to as Dilaudid.  As part of the factual basis for the plea, Ardis admitted to selling the hydromorphone pills that resulted in the death of the three victims.

            “Prescription opiates require a doctor’s consultation and care for a reason,” said Acting U.S. Attorney Nicholas J. Ganjei.  “Those that put the public at risk for a quick buck will be punished to the fullest extent of the law.”

            “This case is a tragic reminder that the abuse of opioids and other prescription pills is just as deadly as illicit narcotics, and those who traffic in diverted pharmaceuticals are held equally responsible under the law,” stated DEA Special Agent in Charge, Steven S. Whipple.  “We hope that this case serves as a warning to those who illegally distribute pharmaceuticals or those who may abuse them.”

            This case was investigated by the U.S. Drug Enforcement Administration, Vidor Police Department, Jefferson County Sheriff’s Office, Beaumont Police Department, Port Arthur Police Department, and prosecuted by Assistant U.S. Attorney Michael A. Anderson.

BEAUMONT, Texas – Acting U.S. Attorney Nicholas J. Ganjei announced today that the United States Attorney’s Office for the Eastern District of Texas (EDTX) collected $68,064,639.91 in criminal, civil, and asset forfeiture actions in 2020. 

              In criminal cases, EDTX collected $6,587,484.79 of restitution for crime victims, and recovered an additional $52,557,961.91 through civil enforcement actions for the American taxpayer.  Working with partner agencies and divisions, the Eastern District also collected $8,919,191.00 through asset forfeiture.  Forfeited assets deposited into the Department of Justice’s Asset Forfeiture Fund are used to restore funds to crime victims and for a variety of law enforcement purposes.

              “I am proud of the Eastern District’s aggressive approach to collecting debts for victims of crime and for the government,” said Acting U.S. Attorney Nicholas J. Ganjei. “Despite the challenges presented by the COVID pandemic, the Eastern District focused on working to ensure that crime victims receive what they are owed and that defendants pay for their crimes.”

              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 federal government 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.  Restitution is paid to the victim; criminal fines and felony assessments are paid to the department’s Crime Victims Fund, which then distributes the funds collected to federal and state victim compensation and assistance programs.

              The Justice Department, as a whole, collected more than $15.9 billion in civil and criminal actions in 2020.  This amount is more than five times the approximately $3.2 billion appropriated budget for all 94 U.S. Attorneys’ offices and the main litigating divisions of the Justice Department.  The total includes all monies collected through Justice Department-led enforcement actions and negotiated civil settlements.  It also includes more than $13.5 billion in payments made directly to the Justice Department and more than $2.4 billion in indirect payments made to other federal agencies, states, and other designated recipients.

BEAUMONT, Texas – A 34-year-old Beaumont, Texas man has been sentenced to federal prison for carjacking and firearms violations in the Eastern District of Texas announced Acting U.S. Attorney Nicholas J. Ganjei today.             

              Thaddiaus Joseph Thomas pleaded guilty on August 12, 2020 to discharging a firearm in furtherance of a crime of violence and carjacking and was sentenced to 198 months in federal prison today by U.S. District Judge Marcia A. Crone.

              “Everyone deserves to live in a safe community, free from the threat of violent crime,” said Acting U.S. Attorney Ganjei.  “The U.S. Attorney’s Office for the Eastern District of Texas, along with our federal and local law enforcement partners, will do whatever it takes to stem the tide of violent gun crime on our streets.”

               According to information presented in court, on Dec. 21, 2019, Thomas and Tremaurice Arthur Randall traveled to the Excellent Carwash located at 5010 Haden Road in Beaumont, Texas, wearing masks, where they approached a man who was sitting in the driver’s seat of his 2003 Dodge Ram pickup truck. Thomas pointed a pistol at the man and Randall ordered him to “give it up” before the two pulled the man out of his truck and threw him to the ground. Thomas then pistol whipped the man in the head and fired one shot toward his feet.  Randall and Thomas then entered the pickup truck and fled.  Thomas and Randall were indicted by a federal grand jury on March 4, 2020 and charged with conspiracy to commit carjacking, carjacking, possession of a firearm during a crime of violence, and possession of a firearm by a prohibited person.

              Randall, 24, of Beaumont, pleaded guilty on August 4, 2020 to brandishing a firearm in furtherance of a crime of violence and carjacking and was sentenced on Dec. 2, 2020 to 114 months in federal prison. 

              This case is a part of Project Guardian, the Department of Justice’s signature initiative to reduce gun violence and enforce federal firearms laws.  Initiated by the Attorney General in the fall of 2019, Project Guardian draws upon the Department’s past successful programs to reduce gun violence; enhances coordination of federal, state, local, and tribal authorities in investigating and prosecuting gun crimes; improves information-sharing by the Bureau of Alcohol, Tobacco, Firearms and Explosives when a prohibited individual attempts to purchase a firearm and is denied by the National Instant Criminal Background Check System (NICS), to include taking appropriate actions when a prospective purchaser is denied by the NICS for mental health reasons; and ensures that federal resources are directed at the criminals posing the greatest threat to our communities. 

              This case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives and the Beaumont Police Department and prosecuted by Assistant U.S. Attorney John B. Ross.

SHERMAN, Texas – A 47-year-old Arlington, Texas woman has been sentenced to federal prison for a bankruptcy fraud scheme in the Eastern District of Texas announced Acting U.S. Attorney Nicholas J. Ganjei today.           

           Cotriena Machelle Embers pleaded guilty on August 10, 2020 to bankruptcy fraud, wire fraud and aggravated identity theft and was sentenced to 42 months in federal prison today by U.S. District Judge Amos Mazzant.   The judge left open the possibility of ordering restitution to the identity theft victim in the case.

         According to evidence presented in court, beginning in August 2017, Embers engaged in a scheme to defraud an apartment complex where she resided by falsely filing a bankruptcy petition using the name and social security number of a third party, without that person’s knowledge or authorization.  The bankruptcy court ultimately discovered this fraudulent representation and ordered Embers to appear and explain her actions.  The United States Trustee’s Office, which is charged with overseeing the integrity of bankruptcy cases in the federal courts, offered evidence in the bankruptcy case about what Embers had done and referred the matter to the U.S. Attorney’s Office and the FBI for investigation.  After investigation by the FBI, a federal grand jury indicted Embers in 2019, charging her with bankruptcy fraud, wire fraud, and aggravated identity theft. 

            “It is crucial that proceedings in bankruptcy cases in federal court are carried out with integrity.  The United States Attorney’s Office is determined to prosecute individuals who undermine these cases by making false statements to the bankruptcy judge and parties” said Acting U.S. Attorney Nicholas Ganjei.  “We appreciate the work of the U.S. Trustee in investigating and referring these cases for prosecution to the U.S. Attorney and the FBI, and appreciate the valuable work done by the FBI in this investigation.”

            This case was investigated by the U.S. Trustee’s Office and the Federal Bureau of Investigation and prosecuted by the United States Attorney’s Office for the Eastern District of Texas.

MARSHALL, Texas – A 53-year-old Longview, Texas man has been sentenced to federal prison for drug trafficking violations in the Eastern District of Texas announced Acting U.S. Attorney Nicholas J. Ganjei today.           

          Tony Goss pleaded guilty on Sep. 30, 2020 to possession with the intent to distribute anabolic steroids and was sentenced to 19 months in federal prison today by U.S. District Judge Rodney Gilstrap.  

         According to evidence presented in court, On August 22, 2019, state and federal law enforcement agents executed a search warrant at an office located at 107 Community Blvd, in Longview.  Goss admitted that he possessed approximately 5,493 pills or tablets containing anabolic steroids, approximately 4,192 grams of anabolic steroid powder and, approximately 2,960 milliliters of liquid anabolic steroids at the location with the intent to distribute them for commercial profit.  Goss further admitted that he distributed anabolic steroids through mass-marketing by means of an interactive computer service.

         Goss also agreed to the forfeiture of seven firearms, a 2016 Ford F – 350 pickup, and $459,285.25 which he obtained by selling anabolic steroids online. 

            This case was investigated by the Drug Enforcement Administration Tyler Field Office, and the U.S. Postal Inspection Service – Ft. Worth Office and prosecuted by Assistant U.S. Attorney Jim Noble.

PLANO, Texas – A 35-year-old Wylie, Texas man has been sentenced for child exploitation violations in the Eastern District of Texas, announced U.S. Attorney Stephen J. Cox today.

Zachary Sean Layne pleaded guilty on Jan. 6, 2020, to distributing child pornography and was sentenced to 210 months in federal prison by U.S. District Judge Sean D. Jordan on Jan. 15, 2021.

According to information presented in court, in the spring of 2019, federal agents served a search warrant at Layne’s home in Wylie, Texas, following a report from a social media company about suspected child pornography being shared from a user at Layne’s residence.  Layne admitted that he used the social media applications and that he regularly chatted with other individuals on the platform.  He stated that he had been trading child pornography, via the social media application and cloud storage accounts, for more than a year.  In addition to trading child pornography, Layne admitted to chatting with individuals he believed to be minors.  He stated that he “catfished” some of the minors with the hopes that they would send him pornographic material.  Layne further admitted that he engaged in sexually graphic conversations with many purported minors, including about meeting up for sex.  There is no evidence that Layne followed through with plans to meet with minors to engage in sexual activity.

“Those who dare to prey on children will be prosecuted to the fullest extent of the law,” said U.S. Attorney Cox.  “Other would-be exploiters are on notice that EDTX and its law enforcement partners have zero tolerance for such despicable crimes.”

“Predators who exploit the innocence of children must not have any presence within our communities,” said Christopher Miller, Deputy Special Agent in Charge HSI Dallas. “We will work endlessly to ensure we remove these deviant criminals from our streets, using the full magnitude of our investigative resources to end the illegal business of sexual exploitation of minors.”

As part of his guilty plea, Layne admitted that he knowingly distributed child pornography, using cellular devices and the social media platform.  Layne also agreed that he had shared the files in order to receive valuable consideration, namely, other and new child pornography.  Moreover, Layne admitted that be distributed and possessed more than 600 images and videos of child pornography, and that the files depicted prepubescent minors and sadistic or masochistic abuse. 

This case was investigated by Homeland Security Investigations Safety with assistance of the Wylie Police Department, Dallas Police Department, and the U.S. Department of Justice—Office of the Inspector General, Investigations Division.  The case was prosecuted by Assistant U.S. Attorney Marisa Miller.

 

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BEAUMONT, Texas – United States Attorney Stephen J. Cox announced that he will step down from his post as U.S. Attorney for the Eastern District of Texas (EDTX) effective 11:59 p.m. today, January 19.

“The opportunity to serve as the U.S. Attorney for the Eastern District of Texas has been a distinct honor and privilege for which I will be forever grateful,” said Cox. “The opportunity to serve the people of the Great State of Texas, and to work alongside the fine men and women of our office, has been nothing short of humbling.”

During Cox’s tenure at EDTX, the District focused increased attention on complex fraud and white-collar enforcement, with a particular emphasis on healthcare, financial, and antitrust crimes; adopted new corporate enforcement policies that are important for transparency, good government, and fairness; launched a new transnational elder fraud initiative designed to target international crime rings targeting senior citizens; formed new partnerships and strike forces with law enforcement partners to leverage expertise and increase referrals; initiated a new violent crime enforcement blitz designed to thwart a rise in gun crimes in Port Arthur and the Golden Triangle; formed new public-private partnerships to facilitate increased information sharing; and developed a new leadership structure to implement specialized fields of practice and increase collaboration and co-counsel opportunities across the District.

Cox began his service at the Department of Justice in early 2017, when he served as Deputy Associate Attorney General in the Office of the Associate Attorney General (OASG), overseeing five large litigating components, three grant-making components, and a number of other offices relating to civil justice.  Cox spearheaded numerous policy reforms relating to corporate enforcement and regulatory reform, while overseeing several Department matters concerning financial fraud and healthcare fraud.  He also served as vice chair of the Deputy Attorney General’s working group on corporate enforcement and accountability, and as executive director of the Department’s regulatory reform task force.

In May 2020, after more than three years in OASG including as Chief of Staff, former Attorney General William Barr appointed Cox as U.S. Attorney for EDTX effective June 1st, and on September 28th was appointed by the Court as U.S. Attorney, having received the unanimous approval of the active and senior District Judges.

Cox focused a significant amount of attention developing new ways to leverage the talented personnel in the Office.  Since his arrival, EDTX made some sizeable changes to the structure of the office, moving personnel between divisions, adding new hires, and creating new roles to better accomplish our mission. In the Criminal Division, for example, Cox identified specialized fields of practice and named Deputy Chiefs to oversee these new sections across the District. The new structure now leverages the expertise of these Deputy Chiefs in some of our most specialized cases and creates a horizontal structure that allows for unprecedented collaboration amongst all our offices. 

Under Cox’s leadership, EDTX also increased its capacity and strengths in white collar enforcement through the new personnel structure, more targeted recruiting and staffing, new and improved partnerships with law enforcement, and new corporate enforcement policies.  For example, EDTX recruited two new White Collar AUSAs, partnered with the Criminal Division to embed three Healthcare Strike Force prosecutors within EDTX, and recruited new SAUSAs with white-collar experience.  EDTX signed an MOU with the Special Inspector General for Pandemic Recovery so that we could heighten the focus on COVID-related fraud; joined the Gulf Coast Strike Force to increase healthcare fraud capacity; and joined the Procurement Collusion Strike Force to bolster efforts to protect competition in the procurement marketplace.

Cox launched a new transnational elder fraud initiative and placed a senior white collar prosecutor from the leadership team in charge.  The initiative’s purpose is to reimagine the fight against elder fraud and use the same tactics and tools that EDTX uses to root out transnational drug cartels to decimate the criminal transnational syndicates preying on our seniors.  EDTX established three separate Financial Investigation Groups to partner with law enforcement in conducting an expansive review of Suspicious Activity Reports, which have identified financial transactions that might be related to elder fraud.  EDTX established an open, working dialogue with some of the world’s biggest banks to share information and foster better referrals.  EDTX participated in the Department of Justice’s Money Mule Initiative with great results.  Money mules are the lifeblood of these international fraud rings, and EDTX identified and disrupted at least 13 money mules through interviews, warning letters, and criminal charges.  EDTX is also working with Texas retailers and grocers on what to look for when they suspect a large gift card purchase is being used to facilitate money laundering.  Finally, EDTX grew its partnerships with the Consumer Protection Branch, the Criminal Division, and the Federal Trade Commission, yielding increased elder fraud referrals.

Borrowing a page from his work at Main Justice, Cox recently announced that EDTX has formally adopted the most recent corporate enforcement policies that the Department has introduced in the past four years, removing any doubt as to whether they applied in EDTX.  The policies address a wide spectrum of white-collar enforcement issues relating to corporate resolutions, prosecutorial discretion, third-party payments, voluntary disclosure, cooperation, guidance documents, piling-on credit, agency coordination, compliance programs and corporate monitors, and ability to pay. Cox spearheaded several of these policies while at OASG and assisted with others in his capacity as vice-chair of the Deputy Attorney General’s working group on corporate enforcement and accountability.

Cox supervised investigations into and secured charges or convictions in numerous significant cases, including, the bomber of a Beaumont church; Jefferson County residents allegedly engaged in the unlawful nationwide distribution of butanediol, commonly referred to as a “date rape drug;” a church pastor charged with production of child pornography; the seizure of phony tech support websites used to defraud Amazon customers; a Collin County man facing COVID-relief fraud charges related to the Paycheck Protection Program; Liberty County residents alleged to have operated a CARES Act fraud scheme involving Economic Injury Disaster Loans; individuals allegedly engaged in a multi-million dollar transnational money laundering operation involving elder fraud; the sentencing of an Al-Qaeda trained jihadist to 300 months for a plot to recruit terrorists to kill Americans on behalf of ISIS; Aryan Circle gang members and associates indicted on charges of racketeering conspiracy, which includes acts involving murder, and violent crimes in aid of racketeering, including assault resulting in serious bodily injury and kidnapping; a Collin County man convicted for cyber fraud and money laundering that victimized senior citizens, school districts, and charities; the conviction of a Jefferson County physician for health care fraud and kickback violations related to compounded scar creams; and the sentencing of a Dark Web cannibal to 40 years for child exploitation violations.

Under Cox’s leadership, the civil litigation practice in EDTX has achieved significant and numerous successes in all aspects of civil practice, including its efforts to enforce the Controlled Substances Act (CSA), False Claims Act (FCA), civil forfeiture, and well as in its defensive practice, defending federal employees and agencies sued in federal court. The United States sought and obtained a temporary restraining order (TRO) under the CSA barring defendants Jake’s Fireworks and Right Price Chemicals from continuing business operations on the grounds that Jake’s Fireworks was a drug-involved premises.  EDTX also played a primary role in negotiating a $48 million settlement in United States ex rel. Magee v. Texas Heart Hospital of the Southwest et al, 4:16-cv-00717 (E.D. Tex.) to resolve claims that Texas Heart Hospital of the Southwest and its wholly owned subsidiary violated the Physician Self-Referral Law and the Anti-Kickback Statute.  EDTX also continued its commitment to using the FCA to hold individuals, not just corporations, accountable for fraud on the United States, settling with Bibi Tasleyma Sattar, D.O. and her medical practice for $210,000 for violations of the Anti-Kickback Statute, as well as a similar $368,325.00 settlement with Joseph Rizzo, M.D. and a $281,524.07 settlement with Jason Bourque, also for Anti-Kickback violations.  EDTX also commenced civil forfeiture proceedings against Fahad Shah, who submitted fraudulent applications for over $3 million in forgivable loans pursuant to the Small Business Authority’s Paycheck Protection Program, but diverted the funds for his own personal use.

Upon Cox’s departure, Nicholas Ganjei, a career federal prosecutor and EDTX’s First Assistant U.S. Attorney, will serve as Acting U.S. Attorney. Ganjei will become the first Persian-American in the 174-year history of the District to serve as EDTX’s U.S. Attorney (acting or otherwise).

“I expect the transition to be seamless,” said Cox. “Nick and I worked hand-in-glove on setting these office priorities and putting our signature initiatives into motion.  Although I am passing the torch, I’m excited to see where Nick and the leadership team take the office next.”

Cox will return to the private sector and will announce his next role in the coming months, but in the meantime, Cox plans to spend time with the family ticking through some bucket-list items that include sightseeing, camping, and touring the country. 

Cox’s biography can be found here.

TEXARKANA, Texas – A 32-year-old Maud, Texas man has been charged with allegedly filing bank loan applications fraudulently seeking more than $5 million dollars in forgivable loans guaranteed by the Small Business Administration (SBA) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, announced Eastern District of Texas U.S. Attorney Stephen J. Cox today. 

           Samuel Yates was charged with two counts of wire fraud returned by a federal grand jury in Texarkana, Texas, on Jan. 14, 2021.  Yates allegedly sought millions of dollars in forgivable loans guaranteed by the SBA from two different banks by claiming to have over 400 employees earning wages when, in fact, no employees worked for his purported business.

           According to court documents unsealed today in U.S. District Court in Texarkana, Yates allegedly made two fraudulent applications to two different lenders for loans guaranteed by the SBA for COVID-19 relief through the PPP.  In the application submitted to the first lender, Yates allegedly sought $5 million in PPP loan proceeds by fraudulently claiming to have over 400 employees with an average monthly payroll of more than $2 million.  In the second application, Yates claimed to employ over 100 individuals and was able to obtain a loan over $500,000. With each application, Yates submitted a list of purported employees that he obtained from a publicly available random name generator on the internet. He also submitted forged tax documents with each application.

           The CARES Act is a federal law enacted on March 29, 2020, designed to provide emergency financial assistance to the millions of Americans who are suffering the economic effects caused by the COVID-19 pandemic.  One source of relief provided by the CARES Act was the authorization of up to $349 billion in forgivable loans to small businesses for job retention and certain other expenses, through the PPP.  In April 2020, Congress authorized over $300 billion in additional PPP funding.

           The PPP allows qualifying small-businesses and other organizations to receive loans with a maturity of two years and an interest rate of 1 percent.  PPP loan proceeds must be used by businesses on payroll costs, interest on mortgages, rent, and utilities.  The PPP allows the interest and principal to be forgiven if businesses spend the proceeds on these expenses within eight weeks of receipt and use at least 75 percent of the forgiven amount for payroll. 

           A federal criminal indictment is merely an accusation. A defendant is presumed innocent unless and until proven guilty.

           This case was investigated by the SBA Office of Inspector General, and U.S. Postal Inspection Service.  Trial Attorney Louis Manzo of the Criminal Division’s Fraud Section and Criminal Chief Frank Coan and Assistant U.S. Attorney Jonathan R. Hornok for the Eastern District of Texas are prosecuting the case.

BEAUMONT, Texas – The Eastern District of Texas has taken another significant step in promoting justice, fairness, and transparency in the areas of corporate and white-collar enforcement.

“For the past four years, the Department of Justice has introduced and formalized policies relating to corporate and white-collar enforcement actions. These policies are good for government, good for fairness, good for transparency, good for the public, and consistent with the Department’s pursuit of justice,” said U.S. Attorney Stephen J. Cox. “Today, the Eastern District of Texas makes clear that it has adopted these policies and fully commits the District to applying them in its civil and criminal white-collar and corporate investigations.”

In a new policy memorandum announced today, the Eastern District of Texas has formally adopted the Department’s recent enforcement policies concerning corporate resolutions, prosecutorial discretion, third-party payments, voluntary disclosure, cooperation, guidance documents, piling-on credit, agency coordination, compliance programs and corporate monitors, and ability to pay.  This EDTX Corporate Enforcement Memo is designed to balance the District’s aggressive enforcement of corporate and white-collar fraud against equally important considerations such as transparency, good government, and fairness. U.S. Attorney Cox added, “the Eastern District of Texas is continually innovating as part of our goal to be on the cutting edge of corporate and white-collar enforcement. Specifically adopting these Department’s policies solidifies the District’s leadership in these areas.” 

The EDTX Corporate Enforcement Memo removes any doubt regarding whether the Department’s policies apply to investigations by the United States Attorney’s Office in the Eastern District of Texas.  The policy applies to all current and future civil and criminal investigations and will be effective immediately.  The Eastern District of Texas policy is available here.

A Texas man has been charged in the Eastern District of Texas with allegedly filing bank loan applications fraudulently seeking more than $5 million dollars in forgivable loans guaranteed by the Small Business Administration (SBA) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. 

David P. Burns, Acting Assistant Attorney General for the Justice Department’s Criminal Division; Stephen J. Cox, U.S. Attorney of the Eastern District of Texas; Dale Forrester, Special Agent in Charge of the Treasury Inspector General for Tax Administration’s Cybercrime Investigations Division; Donald Abram, Special Agent in Charge of the SBA Office of Inspector General’s (OIG) Central Region; and Ryan L. Spradlin, Special Agent in Charge of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) Dallas made the announcement.

Samuel Yates, 32, of Maud, was charged in an indictment with two counts of wire fraud.  The indictment alleges that Yates sought millions of dollars in forgivable loans guaranteed by the SBA from two different banks by claiming to have over 400 employees earning wages when, in fact, no employees worked for his purported business.

According to court documents unsealed today in U.S. District Court in Texarkana, Yates allegedly made two fraudulent applications to two different lenders for loans guaranteed by the SBA for COVID-19 relief through the PPP.  In the application submitted to the first lender, Yates allegedly sought $5 million in PPP loan proceeds by fraudulently claiming to have over 400 employees with an average monthly payroll of more than $2 million. In the second application, Yates claimed to employ over 100 individuals and was able to obtain a loan over $500,000. With each application, Yates submitted a list of purported employees that he obtained from a publicly available random name generator on the internet. He also submitted forged tax documents with each application.

The CARES Act is a federal law enacted on March 29, 2020, designed to provide emergency financial assistance to the millions of Americans who are suffering the economic effects caused by the COVID-19 pandemic.  One source of relief provided by the CARES Act was the authorization of up to $349 billion in forgivable loans to small businesses for job retention and certain other expenses, through the PPP.  In April 2020, Congress authorized over $300 billion in additional PPP funding.

The PPP allows qualifying small-businesses and other organizations to receive loans with a maturity of two years and an interest rate of 1 percent.  PPP loan proceeds must be used by businesses on payroll costs, interest on mortgages, rent, and utilities.  The PPP allows the interest and principal to be forgiven if businesses spend the proceeds on these expenses within eight weeks of receipt and use at least 75 percent of the forgiven amount for payroll. 

A federal criminal indictment is merely an accusation. A defendant is presumed innocent unless and until proven guilty.

Trial Attorney Louis Manzo of the Criminal Division’s Fraud Section and Criminal Chief Frank Coan and Assistant U.S. Attorney Jonathan R. Hornok for the Eastern District of Texas are prosecuting the case.

The Justice Department acknowledges and thanks the SBA Office of Inspector General, and U.S. Postal Inspection Service for their efforts investigating this mater.

Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.

The U.S. Attorneys representing the four districts in Texas have announced their intent to prosecute any crimes committed at the state capitol or otherwise in violation of federal law ahead of upcoming presidential inauguration.
 

 “Last week’s attack on the U.S. Capitol in D.C. was reprehensible. We will not tolerate that type of behavior from protesters in Austin or anywhere in Texas,” said Acting U.S. Attorney Prerak Shah. “The Department of Justice will always support free speech, but we will never condone violence and destruction.”

Acting U.S. Attorney Shah joins his counterparts – U.S. Attorneys Ryan K. Patrick, Gregg N. Sofer, and Stephen J. Cox, of the Southern, Western, and  Eastern Districts of Texas, respectively – to warn those planning to cross state lines to commit crimes in Texas or at the state capitol.  

As the chief law enforcement officers in each of the federal districts, the U.S. Attorneys will be working with federal, state and local law enforcement throughout the state to aggressively identify acts that violate federal law. The plan is to ensure that anyone who is arrested for committing looting, violence or any other crime related to protests or similar events on or about inauguration day will be processed and held in federal custody pending further criminal proceedings.

The U.S. Attorney’s Office in the District of Columbia (DC) is prosecuting those that have been or will be identified as allegedly committing crimes during the riots at the U.S. Capitol last week. The Texas U.S. Attorneys are working with Department of Justice officials and law enforcement on those prosecutions.

BEAUMONT, Texas - The U.S. Attorneys representing the four districts in Texas have announced their intent to prosecute any crimes committed at the state capitol or otherwise in violation of federal law ahead of upcoming presidential inauguration.

“The First Amendment is a cherished right and bedrock principle of our great nation,” said United States Attorney Stephen J. Cox.  “Those who intend to commit crimes at the Texas State Capitol, rather than peacefully demonstrate, can expect to be met with a swift response by law enforcement and prosecution by our office.”

U.S. Attorney Cox joins his counterparts – U.S. Attorneys Gregg N. Sofer and Ryan K. Patrick and Acting U.S. Attorney Prerak Shah of the Western, Southern and Northern Districts of Texas, respectively – to warn those planning to cross state lines to commit crimes in Texas or at the state capitol.  

As the chief law enforcement officers in each of the federal districts, the U.S. Attorneys will be working with federal, state and local law enforcement throughout the state to aggressively identify crimes that violate federal law. The plan is to ensure that anyone who is arrested for committing looting, violence or any other crime related to protests or similar events on or about inauguration day will be processed and held in federal custody pending further criminal proceedings.

The U.S. Attorney’s Office (USAO) in the District of Columbia (DC) is prosecuting those that have been or will be identified as allegedly committing crimes during the riots last week. The Texas U.S. Attorneys will also be working with Department of Justice (DOJ) officials and necessary law enforcement in those prosecutions. Any questions regarding those matters should be directed to DOJ Office of Public Affairs or to the USAO in D.C.

TEXARKANA, Texas – A Liberty County, Texas, man and woman have been charged with filing hundreds of fraudulent Economic Injury Disaster Loan (EIDL) applications with the Small Business Administration (SBA) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act in the Eastern District of Texas, announced U.S. Attorney Stephen J. Cox today.

           Clifton Pape, 45, and Sally Jung, 58, both of Cleveland, Texas, allegedly operated a COVID relief fraud scheme known as My Buddy Loans, that garnered them more than $775,000 in fraud proceeds and resulted in at least $1.3 million in loss to the United States. Pape and Jung are charged by way of a federal criminal complaint that charges a violation of 18 U.S.C. § 1031, major fraud against the United States.

           “At a time when small businesses—the engines of our economy in East Texas—most needed the help that the Small Business Administration was rushing to provide, these individuals took advantage of members of the public, depleting the available resources for small businesses and lining their own pockets with fraudulent gain,” said U.S. Attorney Stephen J. Cox of the Eastern District of Texas. “We encourage members of the public and the banking community to stay vigilant, watching for fraud as another round of COVID relief begins. It is a priority of the Department of Justice to deter and prosecute this type of fraud.”

           “Those responsible for committing fraud against SBA for personal gain will be identified and brought to justice,” said SBA OIG’s Central Region Special Agent in Charge Sharon Johnson. “SBA’s Economic Injury Disaster Loan program provides advance grants and loans to eligible small businesses to mitigate the negative impacts of the pandemic. I want to thank the Department of Justice and our law enforcement partners for their dedication to justice.”

           “These charges represent the consequences of exploiting the COVID-19 pandemic by defrauding the EIDL program and thus taking money intended for legitimate businesses in need,” said William Mack, U.S. Secret Service Resident Agent in Charge of the Tyler Resident Office. “The success of this investigation was the direct result of investigative actions taken by the Secret Service and its law enforcement partners.  The Secret Service will continue to hold those accountable who seek to exploit CARES Act programs and seek justice for all those who seek to exploit U.S. citizens for their own illicit gain.”

           According to court documents filed today in U.S. District Court in Texarkana, Pape and Jung operated under the name My Buddy Loans. In exchange for $1082.50, My Buddy Loans took personal identifying information from third parties and promised to file a federal application for a $10,000 agricultural grant. Instead, Pape and Jung actually filed EIDL applications with the SBA that contained false information. For example, in June and July 2020, Pape and Jung filed 222 EIDL applications, all of which purported to be for businesses with exactly ten employees—the minimum number of employees required to obtain the maximum EIDL advance of $10,000. From those 222 applications, the SBA issued 130 EIDL advances in the amount of $10,000—$1.3 million total.

           Pape and Jung used Square’s credit and debit card processing service to charge third parties the fee of $1082.50. Pape and Jung completed 716 successful charges, obtaining at least $775,000 in fees from third parties. Pape and Jung then transferred the proceeds of the fraud scheme into a bank account they controlled. On one occasion, Pape used the fraud proceeds to pay a traffic ticket. On another occasion, Pape and Jung used more than $3600 from the fraud scheme to pay for a stay at La Cantera Resort in San Antonio, Texas. A picture from that stay shows Pape and Jung celebrating over sparkling wine and other beverages. Pursuant to a seizure warrant, agents seized the $505,535.04 in fraud proceeds remaining in the account.

           The CARES Act is a federal law enacted on March 29, 2020, designed to provide emergency financial assistance to the millions of Americans who are suffering the economic effects caused by the COVID-19 pandemic.  One source of relief provided by the CARES Act was the authorization or EIDL Advances and low-interest loans to small businesses to meet financial obligations and operating expenses that could have been met had the disaster not occurred. Under the EIDL Advance program loan applicants were eligible for an advance of up to $10,000 if the applicant had ten or more employees, which was forgivable. The advance amount was based on the number of employees reported by a business. An applicant could receive $1000 per employee up to $10,000. The SBA required an EIDL Advance applicant to provide specific information at the time the application was made, including the number of employees, revenue, and cost of goods. An EIDL applicant could apply through a third-party processor. Third-party processors were permitted to charge a reasonable fee for their services.

           Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.

           A federal criminal complaint is merely an accusation. A defendant is presumed innocent unless and until proven guilty.

           Under federal statutes, Pape and Jung face up to 10 years in federal prison and a $5,000,000 fine at sentencing. The statutory sentence prescribed by Congress is provided here for information purposes, as the sentencing will be determined by the court based on the advisory sentencing guidelines and other statutory factors.

           This case is being investigated by the U.S. Secret Service and the SBA Office of Inspector General. The case is being prosecuted by Assistant U.S. Attorney Jonathan R. Hornok.

LONGVIEW, TEXAS – The United States Attorney for the Eastern District of Texas, Stephen J. Cox announced that Spinal Decompression Clinic of Texas (“SDCT”) has agreed to pay $330,898.00 to resolve liability under the False Claims Act for the alleged improper billing of electro-acupuncture device neurostimulators.

           From August 21, 2018 through June 26, 2019, SDCT billed Medicare for the implantation of 41 neurostimulators – a surgical procedure which usually requires an operating room and is reimbursed by federal healthcare programs. SDCT received reimbursement from Medicare in the amount of $177,051.15 for these procedures.  SDCT, however, did not perform these surgeries, and instead applied P-Stim devices in an office setting, without surgery or anesthesia. P-Stim is an electric acupuncture device that, pursuant to manufacturer’s instructions, is affixed behind a patient’s ear using an adhesive. Needles are inserted into the patient’s ear and affixed using another adhesive. Once activated, the device then provides intermittent stimulation by electrical pulses. It is a single use, battery-powered device designed to be worn for approximately four days until its battery runs out, at which time the device is thrown away.

           Medicare does not reimburse for acupuncture or for acupuncture devices such as P-Stim, nor does Medicare reimburse for P-Stim as a neurostimulator or as implantation of neurostimulator electrodes.

“Falsely submitting claims for non-covered services robs from the Medicare program and thereby deprives those in need from vital resources,” said United States Attorney Stephen J. Cox.  “Recovery of improperly paid reimbursements is critical to the long-term sustainability of the Medicare program, and we will do everything we can to ensure that any false claim is quickly recovered.”

           “When services provided are excluded from Medicare reimbursement, some providers may be tempted to falsely claim payment for covered treatments.  Such schemes, however, can result in hefty fines and prosecution,” said Miranda L. Bennett, Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services.  “In coordination with our law enforcement partners, we will investigate and hold accountable entities that engage in these practices.” 

           The settled civil claims are allegations only. There has been no determination of civil liability. This case was investigated by the U.S. Department of Health and Human Services of the Inspector General. Assistant U.S. Attorney Aimee M. Cooper handled the matter.      

TYLER, Texas – A 36-year-old Tyler, Texas man has pleaded guilty to federal drug trafficking in the Eastern District of Texas, announced U.S. Attorney Stephen J. Cox today.

            Nasir Saleh-Saad Jabr, a.k.a. “Nemo,” appeared before U.S. Magistrate Judge K. Nicole Mitchell today to enter a plea of guilty to possession with intent to distribute methamphetamine.               

Jabr was arrested on Dec. 3, 2019, following an armed standoff with law enforcement in the parking lot of the Econo Lodge located at 2631 WNW Loop 323 in Tyler.  At the time of his arrest, Jabr was found to be in possession of 111.2 grams of methamphetamine and three firearms.  According to information presented in court, Jabr admitted he was responsible for possessing and distributing more than 50, but less than 150 grams of methamphetamine.  Jabr and three others were indicted by a federal grand jury on July 15, 2020, and charged with violations of federal drug trafficking laws.  Co-defendants Ralph Paul Pressley, III, 37, a.k.a. “Lil’ Paul,” and Tammy Lynn Dilbeck, 39, of Troup, Texas, have also recently plead guilty to violations of federal drug trafficking laws.

Under federal statutes, Jabr faces up to life in federal prison at sentencing.  The statutory sentence prescribed by Congress is provided here for information purposes, as the sentencing will be determined by the court based on the advisory sentencing guidelines and other statutory factors.  A sentencing hearing will be scheduled after the completion of a presentence investigation by the U.S. Probation Office.

            This case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives; the Drug Enforcement Administration; the Texas Department of Public Safety; the Smith County Sheriff’s Office; and the Tyler Police Department and is being prosecuted by Assistant U.S. Attorney Lucas Machicek.

BEAUMONT, Texas – A 34-year-old Beaumont, Texas man has pleaded guilty to federal drug trafficking and firearms violations in the Eastern District of Texas, announced U.S. Attorney Stephen J. Cox today.

              Rustin Chase McKinsey, also known as “Dollar Bill,” pleaded guilty to discharging a firearm in furtherance of a drug trafficking crime and being a felon in possession of a firearm.  McKinsey entered his guilty plea before U.S. Magistrate Judge Zack Hawthorn on Jan. 6, 2021.

              According to information presented in court, on Sep. 4, 2020, law enforcement officers responded to a residence on Taylor Street in Beaumont, Texas in reference to a shooting. Upon arrival at the residence, officers discovered the victim laying on the front porch with a towel wrapped around a gunshot wound to his leg.  The victim’s roommate told officers he was awoken by an argument between the victim and McKinsey, and he observed McKinsey fire two shots at the victim before fleeing the scene.  The victim stated he owed money to McKinsey for methamphetamine that McKinsey sold him. 

              On Oct. 9, 2020, law enforcement officers responded again to the same residence on Taylor Street in Beaumont, Texas in reference to another shooting. Upon arrival, officers discovered the same victim suffering from a gunshot wound to his back. A single spent .22 caliber shell casing was discovered at the scene. The victim stated that McKinsey shot him again over the same drug debt that was owed. 

              McKinsey was arrested and admitted to officers that he had shot the victim on both occasions over a drug debt.  McKinsey is a convicted felon having previously been convicted of possession of a controlled substance in Jefferson County, Texas, on Dec. 18, 2017.  As a convicted felon, McKinsey is prohibited by federal law of owning or possessing a firearm or ammunition. 

              Under federal statutes, McKinsey faces up to life in federal prison at sentencing. The statutory sentence prescribed by Congress is provided here for information purposes, as the sentencing will be determined by the court based on the advisory sentencing guidelines and other statutory factors.

              This case is being investigated by the Beaumont Police Department and the Federal Bureau of Investigation and prosecuted by Assistant U.S. Attorney Matthew Quinn.

TEXARKANA, Texas – A 47-year-old federal inmate pleaded guilty to a federal violation in the Eastern District of Texas, announced U.S. Attorney Stephen J. Cox today.

              Jason Josh Parmeley pleaded guilty to aiding and abetting attempt to obtain contraband in prison today before U.S. Magistrate Judge Caroline M. Craven. In his plea agreement, Parmeley agreed to be sentenced to 60 to 80 months of imprisonment following his current term of incarceration, which will elapse in 2028.

              According to information presented in court, Parmeley, while an inmate at FCI Texarkana, joined others in smuggling Buprenorphine into the institution. Parmeley facilitated communication between the participants, intending the drugs to be distributed to inmates at the institution. Parmeley was also participating in a scheme and conspiracy to commit wire fraud while he was incarcerated.

              Under federal statutes, Parmeley faces up to 20 years in federal prison at sentencing. The statutory sentence prescribed by Congress is provided here for information purposes, as the sentencing will be determined by the court based on the advisory sentencing guidelines and other statutory factors.

              This case is being investigated by the Dallas Field Office of the U.S. Department of Justice, Office of the Inspector General, the Fort Worth Division of the U.S. Postal Inspection Service, and the Bureau of Prisons, Special Investigation Service. The case is being prosecuted by Assistant U.S. Attorney Jonathan R. Hornok.

BEAUMONT, Texas – A 40-year-old federal inmate has been sentenced for his role in the murder of a fellow prisoner in the Eastern District of Texas announced U.S. Attorney Stephen J. Cox today.

              Michael Jason Shelton, of Henagar, Alabama, pleaded guilty on July 13, 2020, to accessory after the fact-murder, and was sentenced to 180 months in federal prison today by U.S. District Judge Marcia Crone.

              On June 13, 2018, Rickey Fackrell, 36, of Vernal, Utah, and Christopher Cramer, 38, of Ogden, Utah, were both sentenced to death after being convicted by a jury of first degree murder  following a six-week federal trial before Judge Crone.

              According to information presented in court, beginning in March 2014, Cramer and Fackrell, inmates of the U.S. Penitentiary in Beaumont, Texas,  murdered fellow inmate, Leo Johns.  On June 9, 2014, Cramer and Fackrell stabbed Leo Johns to death at the federal prison. Shelton pleaded guilty to being an accessory to the murder. All three inmates were members of the white supremacy group, Soldiers of the Aryan Culture.

              This case was investigated by the Federal Bureau of Investigation and the Bureau of Prisons-SIS.  This case was prosecuted by Assistant U.S. Attorneys John B. Ross and Rachel Grove.

BEAUMONT, Texas – U.S. Attorney Stephen J. Cox announced today his office is aggressively targeting gun crime violators in Jefferson County, Texas. 

The United States Attorney’s Office for the Eastern District of Texas has announced that it will take an aggressive and collaborative approach to prosecuting violent crime in Jefferson County.  This announcement comes after a steady increase in gun crime throughout Jefferson County, including armed robberies, carjackings, felons in possession of firearms, and individuals possessing firearms during crimes of violence.  To accomplish its goal of eradicating gun violence in Jefferson County, EDTX has recently designated one of its senior prosecutors to coordinate the efforts of local and federal law enforcement.  This senior attorney will also personally handle the resulting cases. 

This initiative has already produced results for the people of Southeast Texas.  Today, 23-year-old Derrick Gloude of Beaumont appeared before United States Magistrate Judge Keith Giblin on charges of Hobbs Act robbery and brandishing a firearm during a crime of violence.  Gloude is accused of robbing seven different stores in Beaumont at gunpoint with a purple-colored gun, doing so from November 9 through November 16, 2020.  He was ordered detained in federal custody pending trial.  Earlier this month, 24-year-old Tremaurice Arthur Randall of Beaumont, was sentenced to 114 months in federal prison for carjacking and brandishing a firearm during a crime of violence.

“An aggressive approach to violent crime is, and remains, a priority for both the Department of Justice and the Eastern District of Texas,” said U.S. Attorney Stephen Cox.  “If you are a felon in possession of a firearm, or if you use a firearm to commit a violent offense, our office will use all available resources to bring you to justice.”

This initiative is a part of Project Guardian, the Department of Justice’s signature initiative to reduce gun violence and enforce federal firearms laws.  Initiated by the Attorney General in the fall of 2019, Project Guardian draws upon the Department’s past successful programs to reduce gun violence; enhances coordination of federal, state, local, and tribal authorities in investigating and prosecuting gun crimes; improves information-sharing by the Bureau of Alcohol, Tobacco, Firearms and Explosives when a prohibited individual attempts to purchase a firearm and is denied by the National Instant Criminal Background Check System (NICS), to include taking appropriate actions when a prospective purchaser is denied by the NICS for mental health reasons; and ensures that federal resources are directed at the criminals posing the greatest threat to our communities. 

 

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BEAUMONT, Texas - With millions of people waiting for their turn to get the new COVID vaccine, it is expected that scammers will use that opportunity to prey on those willing to pay for it.

           “Since the beginning of the pandemic, we’ve seen fraudsters taking advantage of public programs and supply shortages – we expect the new vaccine to provide similar platforms for deceit, and we will be ready to prosecute those responsible for vaccine-related fraud to the fullest extent of the law,” said U.S. Attorney Stephen J. Cox. 

           States will determine how their own vaccination plans will be rolled out but there is not expected to be any out-of-pocket charges during the public health emergency.  Nevertheless, the FTC and FBI similarly warn that fraudsters may try to convince people to pay for early access to the vaccine, or to pay for the vaccine itself. 

           Always be suspicious of unsolicited phone calls, emails, or home visits that ask for payment information in order to receive a vaccine.  No one from a vaccine distribution site will ask for your credit card or banking information.  If you want to verify whether COVID-19 related solicitations or treatments are legitimate, call your health provider.

           Millions of people fall victim to scams every year.  If you think you have become a victim, contact the National Center for Disaster Fraud Hotline at 1-866-720-5721 or online at www.justice.gov/coronavirus.  You can also submit a report to https://ReportFraud.ftc.gov.

MARSHALL, Texas – A 32-year-old Marshall, Texas man was sentenced to federal prison for drug trafficking crimes in the Eastern District of Texas, announced U.S. Attorney Stephen J. Cox today.

              Ronald Charles Parker, a.k.a. “Big Ron,” pleaded guilty on Sep. 14, 2019, to possession with intent to distribute methamphetamine and was sentenced to 168 months in federal prison on Dec. 16, 2020 by U.S. District Judge Rodney Gilstrap.

              According to information presented in court, Parker was a member of a drug trafficking organization responsible for selling large quantities of methamphetamine in Marshall, Texas.  During the course of the investigation Parker conducted seven separate drug transactions with a confidential informant, selling a total of 1.24 kilograms of methamphetamine.  Parker and eight others were indicted by a federal grand jury on Feb. 19, 2020, and charged with violations of federal law.  Co-Defendant Danny Brian Hernandez was recently sentenced to 17 years in prison for his drug trafficking conduct.

              This is an Organized Crime Drug Enforcement Task Force (OCDETF) case and is being investigated by the Federal Bureau of Investigation; the Bureau of Alcohol, Tobacco, Firearms and Explosives; the Texas Department of Public Safety; the Harrison County Sheriff’s Office; and the Marshall Police Department.  This case is being prosecuted by Assistant U.S. Attorney Lucas Machicek.  OCDETF is the largest anti-crime task force in the country and its mission is to disrupt and dismantle the most significant drug trafficking and transnational criminal organizations that threaten the United States. The prosecutor-led, intelligence-driven, multi-agency task forces leverage the authorities and expertise of federal, state, and local law enforcement.

DALLAS, Texas – United States Attorney Stephen J. Cox addresses the North Texas Crime Commission (NTCC) today via a Zoom meeting for their regular monthly meeting.

              U.S. Attorney Cox was introduced by Assistant U.S. Attorney Camelia Lopez and  NTCC Chair David Dean:

              “Thank you, David, for that introduction, and thank you to the North Texas Crime Commission for hosting us. I’ve heard about your good work supporting law enforcement since I arrived in the Eastern District of Texas in June, so it is a privilege to speak with you today. 

              I am especially grateful that you are hosting this forum that allows us to focus on one of the significant challenges facing our nation’s law enforcement community and those we serve.  In particular, I’m glad to speak about what we can do to protect our senior citizens.

              Whether part of the “Greatest Generation,” or “Baby Boomers,” or the “Silent Generation” in between, our parents, grandparents, and great grandparents worked hard to ensure a better future for us. While the challenges we face individually or as a society may be great, we owe our elders a great debt and should be working to ensure their days are safe and secure.

              Safety and well-being have been a focus for all of us over the past few months. We have been home bound. Witnessed businesses large and small suffer to the point of collapse. Adapted our work, education, and social lives around obstacles we could not have imagined a year ago.

              Yet many of our challenges pale in comparison to what seniors have dealt with: enforced isolation …  even enforced or encouraged sheltering with Covid-19-positive patients in care facilities. At their most vulnerable moments many are unable to be with loved ones, friends, or even a minister due to lockdown restrictions.

              Due to the pandemic, we have learned a great deal about our society over the past few months. Some of it has been inspiring. Some of it disappointing, even troubling.

              One of the takeaways should be that our elders deserve far better than what our society provides them. To that end, I’d like to focus our attention today on what we as law enforcement authorities can do to address one particularly challenging problem: the very real and ongoing threat of transnational crime rings that prey on our nation’s seniors. 

              When you hear talk of elder fraud, it is all too easy to think about one-off scams or swindles, whether for credit card charges, identity theft, or some other form of financial fraud. 

              But I want to challenge all of you to think about this problem in a wholistic and deeper way. Think of elder fraud as a noxious weed in an otherwise well-tended garden. You can see the weed above the surface, but not the deep roots under the soil that are the real problem. Without addressing the root, the blight continues and spreads.

              The same can be said of elder fraud.  You see the phone scam, but not the Russian mafia, the Indian call center, the shadowy money laundering or cryptocurrency network that operates in the distant background. These crime networks are the root of the problem.

              As an example, let me tell you a story about an elderly widower; let’s call him Grandpa Larry. His children are grown and live out of state. It’s been years since he experienced true companionship. But as with so many like Larry, he is able to connect to his family – and others – via the Internet.  While on an online dating app for seniors, he meets a wonderful woman who is attentive to him and interested in what he shares of his daily life. 

              This relationship seemingly deepens over a number of weeks.  But then the woman online needs a favor. She wants to visit him, but she has to clear some debts and her family won’t help her. 

              Larry sends her money once, then again, and again in ever increasing amounts, and months later, he finds himself with little savings. Worse than losing his money, however, is the shame and embarrassment of being the victim of a romance scam and not telling his grown children he needs help. 

              Or, consider an elderly woman we’ll call Aunt Sally who is incredibly proud of her family, especially her youngest niece, who is the first in the family to attend college.  One day Aunt Sally receives an e-mail message from her niece who is studying abroad for a semester in Paris.  The message says that she’s been arrested during a trip to Spain. Aunt Sally didn’t know about the trip, but given that her niece is studying abroad, the trip isn’t unusual. The niece asks Aunt Sally to purchase gift cards from a local grocery store and to read those numbers from the back of the cards over the phone to the “police.”  Sally’s niece says time is of the essence so she can get back to school in Paris, and it’s the quickest way to have American dollars converted into the foreign currency. Of course, in reality, her niece isn’t in Spain, and there is no jail. But Aunt Sally goes to her local CVS, buys $500 in gift cards, and gives it all away over the phone.

              When we hear the phrase “elder fraud,” we tend to think of a single victim, Sally or Larry, who is taken advantage of by a single bad actor.  We see the victims. We see the fraud techniques. What we do not see … until we dig below the surface … are the true culprits. 

              Yes, there are a number of cases in which a caretaker steals a checkbook from a client and forges checks. But what I’m asking you to envision is a much larger, better funded, and much more organized, form of elder fraud.  These international fraud rings are the root systems of the weed; they are the great threat on the other end of the phone or that email. They are what is driving elder fraud in America today.

              Consider the broader picture. The Consumer Financial Protection Bureau recently released a report after reviewing 180,000 Suspicious Activity Reports – or SARs – of elder financial exploitation filed between 2013 and 2017. The total losses? $6 billion.  The FBI’s Internet Crime Complaint Center issued a report just a few months ago noting that, in 2019, 68,031 complaints from victims over 60 were filed with reported losses of $835 million. That’s a single year and only based on what’s reported to the IC3.

              But we need to go deeper. The CFPB estimates that 3.5 million elder financial crimes occur annually, and the average loss per crime is between $45,000 and $50,000. Tens of billions of dollars each year in theft are not penny-ante profits; it’s drug cartel-level profits.

              The Department of Justice under Attorney General Barr has taken strong action against these fraudsters and their despicable crimes. As the Attorney General has noted, “Fraud against the elderly is a massive problem, and one that is often perpetrated by transnational criminal organizations.  And due to the victims’ stage in life, the cost is especially high and the losses frequently catastrophic and irreversible.”

              We are doing our part in Texas.  Earlier this year the Eastern District of Texas took down a multi-defendant international fraud and money laundering ring that predominantly targeted the elderly. 

              This alleged scheme targeted more than four thousand victims, and ultimately siphoned off more than $3.2 million dollars in ill-gotten wire transfers that were laundered through India and the United Arab Emirates.  While this takedown was a big win for the Eastern District, it barely scratches the surface of what we must do to combat these crime networks.

              Last year the Justice Department conducted an international elder fraud sweep. It was the largest in our nation’s history, netting 260 defendants. This sweep included schemes of every stripe: technical support fraud, mass-mailing fraud, false loan fraud, sweepstakes fraud, even fraud involving psychics, affected more than two million Americans and accounted for approximately $750 million dollars in losses. 

              The size and scope of this takedown revealed several common attributes amongst these fraud rings.

              First, these schemes are what we like to call “commodity neutral” … meaning that these criminal enterprises seek ill-gotten gains any way they can, whether by garden-variety identify theft, stealing taxpayer money through COVID-19 stimulus fraud or unemployment insurance fraud. 

              While these criminal syndicates’ tactics are diverse, their targets are focused on seniors. Why?  Not to oversimplify, but the fraudsters know that what makes our elders great citizens also makes them ripe to be conned.  They tend to be more respectful of legitimate authority, more trusting and willing to listen, and less likely to immediately hang up on a stranger.  They also are perhaps less tech savvy than younger generations, making them susceptible to impostors who may appear to be helpful with a computer or mobile phone issue but are really steering them toward a scam.

              Second, the sheer breadth and depth of some of these criminal fraud schemes is remarkable. While a victim may interact with a single fraudster over the phone, the grifter is actually part of multi-layered fraud operations. In the background, there are call centers that flood land line and mobile phone accounts with spam calls to find those trusting individuals who won’t immediately hang up. There are other boots on the ground for these criminal conspiracies. These fraud rings also utilize domestic “money mules:” persons who receive ill-gotten proceeds directly from victims and forward funds to the conspiracy leaders.

              These mules – sometimes unwitting, sometimes eager participants – are integral of these fraud schemes, and their ranks are not insignificant. Over the past two months, U.S. law enforcement agencies took action in just about all 50 states against more than 2,300 individuals identified as money mules. 

              These multi-tiered organizations aren’t even the most complex when you also consider the fraudulent shell corporations, “prize promotion” companies, and phony websites, all launched for the sole purpose of ripping off our nation’s seniors.

              Third, beyond the scope and complexity is the global nature of these threats; most of the roots of these scammers stretch overseas. Large-scale call centers operate from India to Canada, while a constellation of smaller operations can be found running out of internet cafes in Lagos, Nigeria, or Tbilisi, Georgia. As a result, federal law enforcement teams with overseas partners, both public and private, to identify fraud and to share intelligence.

              I’ve told my office, the Eastern District of Texas, that they really are uniquely equipped to take these fraud syndicates on. Our district has long been the tip of the spear in fighting international drug cartels. We have identified and extradited the leadership classes of drug cartels from Colombia and Central America, on the premise that if we tear a weed’s roots out whole it is less likely to grow back.

              In response to the unique harm posed to our nation’s seniors, I have asked my team to reimagine our fight against elder fraud and to use the same tactics and tools we use to root out transnational drug cartels to decimate the criminal transnational syndicates preying on our seniors.  That means leveraging the same organizational strategies, borrowed from our OCDETF toolkit, to follow the money, identify the network, and build a case against those pulling the strings overseas. 

              I want us to find these foreign criminals, extradite them to meet our local judges and have them experience East Texas justice up close and personal.  In doing so, we will create a greater deterrence, and most importantly, get the money back for our victimized seniors.

              By the way, this is more than just talk.  Our District has taken concrete steps to target and prosecute these fraudsters.  We launched a dedicated Elder Fraud Initiative, and I have appointed Camelia Lopez, on my senior leadership team to head it up—you’ll hear from her shortly.  Although the Initiative is only a few months old, we have already made great strides and we’re starting to see our efforts bear fruit. 

              The District has established three separate Financial Investigation Groups (or “FIGs”) where we partner with law enforcement to conduct an expansive review of Suspicious Activity Reports, which have identified financial transactions that might be related to criminal activity. 

              Against that backdrop, we’ve established an open, working dialogue with some of the world’s biggest banks so that we can share information and foster better referrals.  Through these partnerships we can better recognize fraud in real time, cut it off at the source, and trace any ill-gotten funds to accounts overseas. 

              Our District also participated in the Department of Justice’s Money Mule Initiative with great results.  As I mentioned earlier, money mules are the lifeblood of these international fraud rings, and the Eastern District is punching back against these enablers.  In the past two months, with the assistance of the FBI and IRS, our District identified and disrupted at least 13 money mules through interviews, warning letters, and criminal charges.

              Enforcement, however, is but one facet of the money mule fight.  We’re also working with Texas retailers and grocers on what to look for when they suspect a large gift card purchase is being used to facilitate money laundering.

              Finally, we have established great partnerships in the public sphere, teaming with the Consumer Protection Branch and the Criminal Division at Main Justice, as well as the Federal Trade Commission.  Less than two months ago, based on referrals from one of these new partners, our District, along with the Secret Service, dismantled a phony Amazon Alexa tech support fraud ring, seizing six websites in the process.  In other cases, our District obtained four asset seizures leading to the recovery of nearly $150,000 in ill-gotten proceeds.  These are all shining examples of what we can accomplish through coordination and cooperation and there is more – a lot more – to come.

              At the risk of stating the obvious, this is not a battle we can fight alone, it is not a battle we can win alone.  It will take everyone.  And I don’t just mean cooperation between federal and state law enforcement – although that will, of course, be essential. I also mean cooperation between the public and private spheres.  Working with our nation’s financial institutions – as well as foreign banks, and the emerging money transfer businesses used for mobile banking – to identify suspicious transactions, identify accounts tainted with fraud proceeds, and to name the account holders, will allow us to take the fight to where these fraud syndicates operate, seize their ill-gotten gains, and bring closure and relief to our citizens.

              America owes its elders a great debt. In the past century they have defended our nation abroad and protected our streets at home. They have built businesses large and small, enduring and innovative. They have raised families and educated them. Today’s opportunities we take for granted are the result of our elders’ decades-long toil to create them for us.  It is fitting then, that we work to ensure a more secure present for those who endowed the life we lead.  We can and must come together – all of us – to protect our seniors from this unique threat. For in serving them, we will put in place protections for future generations, including ours.

              I thank you for your time today and invite you to join me in this worthy fight.”

The North Texas Crime Commission (formerly the Greater Dallas Crime Commission) was established in 1950.  Its belief is that proper enforcement and enlightened prevention can be achieved through a comprehensive and cooperative effort involving concerned citizens and law enforcement.  In addition to monthly membership breakfasts, the NTCC travels to Austin monthly during the Legislative Session to meet with key lawmakers and annually to Washington, D.C., to meet with law enforcement officials and lawmakers.

SHERMAN, Texas – A 48-year-old Zapata, Texas man has been sentenced to 30 years in federal prison for drug trafficking crimes in the Eastern District of Texas, announced U.S. Attorney Stephen J. Cox today.

            Jose Ernesto-Medrano pleaded guilty on Sep. 10, 2019, to conspiracy to possess with intent to distribute methamphetamine and was sentenced to 360 months in federal prison by U.S. District Judge Amos Mazzant on Dec. 9, 2020.           

            According to information presented in court, beginning in 2017, law enforcement officers received information that Medrano, a multi-convicted felon and member of the Texas Syndicate prison gang, was conducting drug trafficking transactions in the Plano, Texas area.  Law enforcement ultimately determined that Medrano was a leader in a large-scale drug trafficking conspiracy, which distributed methamphetamine throughout the Austin and Plano areas.  Medrano agreed he was responsible for distributing 4.5 kilograms of pure methamphetamine.

            Medrano and four co-defendants were indicted on Jan. 9, 2019.  Erik Brown was sentenced to 360 months in federal prison on Feb. 25, 2020.  Martin Ysassi and Priscilla Zamora were each sentenced to 180 months on March 3, 2020.  Sanjuanita Benavides is awaiting sentencing. 

            This is a Texas Anti-Gang (TAG) Center investigation involving the Bureau of Alcohol, Tobacco, Firearms, and Explosives and Texas Department of Public Safety.  This case was prosecuted by Assistant U.S. Attorney Tracey Batson.

BEAUMONT, Texas – Today the Eastern District of Texas and the Antitrust Division announced charges against a former healthcare staffing company for conspiring to fix prices to the detriment of the American labor market.  Additionally, the Eastern District of Texas has recently joined the Antitrust Division in the Department of Justice Procurement Collusion Strike Force (PCSF).  Together, the Eastern District of Texas and the Antitrust Division will continue to pursue enforcement actions to promote competition and protect the marketplace.

           “Our District has been eager to partner with the Antitrust Division in protecting the marketplace, and today’s announcements are just the beginning of what we hope will be a terrific relationship,” said U.S. Attorney Stephen J. Cox. When I was at Main Justice, the Department filed an important amicus brief in a case arising in the Eastern District of Texas—the brief advised the Fifth Circuit on the application of antitrust law and patent law to promote innovation and spur competition in connection with standard essential patents,” said U.S. Attorney Stephen J. Cox.  “Later, when I became U.S. Attorney, we began to look for opportunities where the District could work together with the Antitrust Division on these and other important antitrust matters.  I am proud to announce that we joined the PCSF and that we are now assisting the Antitrust Division in a wage-fixing prosecution.  Stay tuned.  There is more to come.”

           The Eastern District of Texas has partnered with the Antitrust Division to indict Neeraj Jindal, 48, of Flower Mound, Texas.  As announced today, a federal grand jury charged Jindal, the former owner of a therapist staffing company, with wage fixing for his role in a conspiracy to fix prices by lowering the rates paid to physical therapists and physical therapist assistants in the Dallas-Fort Worth metropolitan area.  The indictment also charges Jindal with obstruction of the Federal Trade Commission’s separate investigation into this conduct.

           Last month, the Antitrust Division announced that the Eastern District of Texas would join the PCSF, which leads a coordinated national response to combat collusion, antitrust crimes, and related fraudulent schemes that undermine competition in government procurement, grant, and program funding.  The Eastern District of Texas has designated two Assistant U.S. Attorneys, Nathaniel Kummerfeld and Jonathan Hornok, to assist with the PCSF. 

           The PCSF is comprised of the Antitrust Division of the Department of Justice, multiple U.S. Attorneys’ Offices around the country, and close to 30 member agencies.  These agencies include the Federal Bureau of Investigation; the Department of Justice, Office of Inspector General; the Department of Homeland Security, Office of Inspector General; the U.S. Postal Service, Office of Inspector General; the Department of Defense, Office of Inspector General, Defense Criminal Investigative Service (DCIS); the Air Force Office of Special Investigations; and the General Services Administration, Office of Inspector General.

           The PCSF has a publicly available website at www.Justice.gov/Procurement-Collusion-Strike-Force, where members of the public can review information about the federal antitrust laws and training programs, and report suspected criminal activity affecting public procurement. Individuals and companies are encouraged to contact the PCSF if they have information concerning anticompetitive conduct involving federal taxpayer dollars by emailing pcsf@usdoj.gov or filling out the PCSF anonymous complaint form, located on the PCSF website.

           Federal, state, and local agencies can also contact the PCSF at pcsf@usdoj.gov for any training needs or to report suspected antitrust violations.

SHERMAN, Texas – A couple who were charged with running a commercial sex operation in multiple locations in north Texas have been sentenced to federal prison, announced U.S. Attorney Stephen J. Cox today.

              Quan Tu (a/k/a Aaron Tu Chan), 48, pleaded guilty on July 6, 2020, to coercing and enticing individuals to travel in interstate commerce to engage in prostitution and was sentenced to 180 months in federal prison today by U.S. District Judge Amos L. Mazzant. 

              A co-defendant, Li Xin, 45, previously pleaded guilty to conspiring to travel or causing another to use interstate facilities to promote, manage, establish, or carry on an unlawful prostitution business.  On October 1, 2020, Judge Mazzant sentenced Xin to 57 months’ imprisonment.         

              According to information presented in court, beginning in December 2018, the Richardson, Texas Police Department received numerous complaints from the public that men were traveling to a condominium at all hours of the day and night, and that some of these men were knocking on neighbors’ doors, seeking sexual services.  Further investigation by a state and federal task force revealed that Tu and Xin were operating a prostitution enterprise from that location.  During the investigation, it was revealed that Tu and Xin operated similar commercial sex rings out of a single-family residence in Plano and the ABC Foot Spa in Garland.

              “Sex trafficking is amongst the most heinous crimes a person can commit,” said U.S. Attorney Stephen Cox.  “The Department of Justice is committed to battling this scourge by forging partnerships and leveraging federal resources to identify and prosecute those that would engage in such criminality.”

              “Those involved in the sexual exploitation of innocent victims through manipulation or force will face dire consequences for their actions,” said Ryan L. Spradlin, special agent in charge Homeland Security (HSI) Dallas. “With support from our law enforcement partners, NGO’s and the public, we will continue to prosecute anyone who participates or supports this illegal and heinous commercial trade for personal gain.”

              As part of their guilty pleas, Tu and Xin admitted that they maintained all three properties and that they had women engaged in commercial sex at these locations between December 2018 and August 2019.  The defendants admitted that they and other co-conspirators used Internet-based texting applications to communicate with women and entice them to travel to Texas to work as masseuses.  The women came from various locations, including New York City, China, and Australia.  Tu admitted to driving to Houston and other locations to bring women back to the properties.  Once in Tu and Xin’s employ, the women lived and serviced customers at the properties, with the conspirators soliciting clients through online advertisements for commercial sexual services.  Tu and Xin admitted to not only collecting all of the women’s earnings, but additionally charging the women $20 per day.  Tu and Xin only permitted the women to keep their tips, thus compelling the women to engage in commercial sex in order to earn enough money to purchase food and basic necessities.   The scheme resulted in proceeds which allowed Tu and Xin to maintain their lifestyle and to purchase vehicles, including a 2017 Toyota Tundra, all of which have been criminally forfeited. 

              This case was investigated by Homeland Security Investigations, Texas Department of Public Safety, and the Richardson Police Department, with assistance of the Plano Police Department, Garland Police Department, and Dallas County Sheriff’s Office and was prosecuted by Assistant U.S. Attorney Marisa Miller.

PLANO, Texas – A 41-year-old Highland Village, Texas man has been sentenced to federal prison for drug trafficking crimes in the Eastern District of Texas, announced U.S. Attorney Stephen J. Cox today.

              Bryan Thomas Smith pleaded guilty on August 14, 2020, to possession with intent to distribute methamphetamine and was sentenced to 70 months in federal prison today by U.S. District Judge Sean D. Jordan.             

              According to information presented in court, on Feb. 14, 2020, officers in Highland Village surveilled Smith’s residence in reference to previously-issued felony warrants for evading arrest in a motor vehicle.  Officers stopped a vehicle for a traffic violation as it left the house.  The driver was identified as an Uber driver, while the passenger falsely identified himself as “Fletcher Smith.”  Officers, however, recognized the passenger as Bryan Thomas Smith and detained him.  Although Smith continued to falsely maintain that he was “Fletcher Smith,” officers retrieved a wallet from the ground with Bryan Thomas Smith’s driver’s license inside.  This wallet also contained $104 dollars in genuine and counterfeit United States currency.  Officers also seized a glass smoking pipe from Smith’s person, and additionally found a bag in the backseat of the Uber vehicle.  A later inventory conducted at the police department revealed the bag to contain: 

 

              • Counterfeit currency and uncut sheets of counterfeit currency totaling $2,220

              • A journal with Smith’s name written inside the cover

              • Handwritten account numbers and passwords

              • A smaller bag containing four baggies of methamphetamine

              • A smaller bag containing multiple MDMA tablets

              • A tin case containing 16 amphetamine and dextroamphetamine pills

              • Three baggies containing 13 alprazolam pills

 

              On Feb. 18, 2020 officers executed a search warrant at Smith’s residence, locating and seizing additional amounts of methamphetamine and counterfeit United States currency.  Police also seized items related to the production of counterfeit U.S. currency, including computers and printers.

              Smith was indicted on March 12, 2020.  On April 7, 2020, police went to Smith’s residence to execute the arrest warrant for Smith.  Smith, who was standing outside near the home, once again falsely identified himself as Fletcher Smith.  In an attempt to deceive officers on behalf of her son, Smith’s mother also claimed that the defendant’s identity was Fletcher Smith.  Officers went into the residence to search for Smith before realizing Smith had provided a false name.  Smith, meanwhile, fled from police on foot into a wooded area towards Lake Lewisville.  Law enforcement pursued Smith, who jumped into the lake and tried to swim across.  After nearly drowning, Smith exited the lake and attempted to hide in the woods, before being taken into custody.

              This case was investigated by the U.S. Drug Enforcement Administration, U.S. Secret Service and Highland Village Police Department and prosecuted by Assistant U.S. Attorney Matthew T. Johnson.