Northern District of Texas

DALLAS, Texas — Fifty-seven individuals, who are connected to various white supremacist gangs have been charged in a case led by the Texas Department of Public Safety Criminal Investigations Division and coordinated by the Texas Anti-Gang Center with participating partners such as the Dallas Police Department Criminal Intelligence Unit and the Drug Enforcement Administration. Erin Nealy Cox, U.S. Attorney for the Northern District of Texas made the announcement today at a press conference.

The 57 individuals were charged in conspiracy to commit kidnapping and drug trafficking conspiracies outlined in the Indictment. 42 of those defendants were arrested in last week’s takedown operation, 9 were already in custody at various locations on unrelated state charges, and 6 have not yet been arrested.

Each of those defendants arrested made their initial appearance last week or will do so today before a U.S. Magistrate Judge. 

“Not only do white supremacists gangs subscribe to a repugnant, hateful ideology, they also engage in significant, organized and violent criminal activity,” Attorney General Sessions said. “Under the Trump administration, the Department of Justice has targeted every violent criminal gang member in the United States. The quantities of drugs, guns, and money seized in this case are staggering. And so I want to thank U.S. Attorney Erin Nealy Cox, Assistant U.S. Attorney P.J. Meitl, DEA, the Marshals Service, ATF, as well as our fabulous state and local partners, Texas DPS and the Dallas Police Department, for their hard work. Today’s indictment, arrests, seizures make this country safer.”

According to the Indictment, the defendants were members of, associated with, or performed drug transactions with, various white supremacists organizations or individuals including the “Aryan Circle,” the “Aryan Brotherhood of Texas” (ABT), the “Aryan Brotherhood,” the “Peckerwoods,” the “Soldiers of Aryan Culture,” and the “Dirty White Boys,” and they engaged in a conspiracy to distribute methamphetamine and other illegal narcotics throughout North Texas and elsewhere.  Some defendants were also member of or associated with the criminal street or prison gang Tango Blast. Certain defendants used firearms to further their drug trafficking activities.

The Indictment alleges that from approximately October 2015 through April 2018, the defendants conspired together, and with others, to possess with intent to distribute 500 grams or more of methamphetamine.  According to the Indictment, the defendants arranged for the acquisition of methamphetamine and its distribution and delivery.  They used stash houses or other locations to store the methamphetamine and acted as intermediaries and brokers to negotiate the acquisition, price, delivery and payment for the quantities of methamphetamine.

In January 2018 and February 2018, according to the Indictment, four defendants kidnapped an individual and held the victim for several days to obtain stolen drug proceeds that the defendants believed belonged to them. The defendants pointed a pistol at the victims head, threatened to kill the victim, hit the victim with a large wooden object on the back of the head and used a hatchet to chop off a portion of the victim’s left index finger.

Throughout the investigation, agents stopped the flow or seized over 190 kilograms of methamphetamine, 31 firearms, and seized approximately $376,587 in cash.

“Drug trafficking is a dangerous and violent business—that is a reality.  It is clear that these hate-fueled gangs will do whatever they must do in order to carry on their drug trafficking business.  Firearms, body armor, illegal drugs, drug proceeds and unspeakable physical violence are the tools of their trade.  The collaborative law enforcement and prosecutorial effort that led to the Indictment and arrest of these defendants is the first step in closing down their drug dealing organizations for good.” 

This operation was coordinated through the Texas Anti-Gang Center.  The TAG serves as the unified headquarters for an estimated 75 - 100 of the region’s most knowledgeable and experienced federal, state and local anti-gang investigators, analysts and prosecutors.  The TAG is comprised of various law enforcement agencies, and has implemented innovative approaches to fighting violent criminal gangs and the transnational criminal organizations. Today violent criminal gangs and their allied networks are involved in virtually every type of felonious activity, including drug production and distribution; weapons-smuggling, extortion, kidnapping and murder for hire; home-invasion; metal and heavy equipment theft; major fraud, money laundering and bulk cash smuggling; gambling and dog-fighting; and prostitution and human-trafficking, including both adults and children for sexual exploitation.

A federal criminal Indictment is a written statement of the essential facts of the offense charged.  A defendant is entitled to the presumption of innocence until proven guilty. If convicted, the defendants’ sentence will be determined by the court after a review of the federal sentencing guidelines and factors unique to the case, including the defendant’s prior criminal record, the defendant’s role in the offense and the characteristics of the violation. 

The U.S. Marshal Service North Texas Fugitive Task Force, the Bureau of Alcohol, Tobacco, Firearms and Explosives, Irving Police Department, Garland Police Department, Rockwall Police Department, Mesquite Police Department, Fort Worth Police Department, Dallas County Sheriff’s Office and Rockwall County Sheriff’s Office assisted in the investigation. Assistant U.S. Attorney P.J. Meitl is prosecuting.

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AMARILLO, Texas — Weston Scott Langwell, 26, of Amarillo, Texas, appeared today in federal court before U.S. District Judge Sidney A. Fitzwater and pleaded guilty to one count of attempted enticement of a minor, announced Erin Nealy Cox, U.S. Attorney for the Northern District of Texas.

Langwell faces not less than 10 years and not more than life in federal prison, a $250,000 fine and five years to a lifetime of supervised release.  He will remain in custody pending sentencing, which is scheduled for August 8, 2018.

According to the plea agreement factual resume filed in the case, on November 13, 2017, Langwell responded to a craigslist advertisement placed by Texas Department of Public Safety agents by texting the number listed. An agent posing as a sixteen year old minor female was monitoring the phone number and engaged in conversation with Langwell via text messaging. The officer sent a text to Langwell that stated she was almost 17. After Langwell learned the alleged age, he almost immediately turned the conversation to a sexual nature.

On November 14, 2017, Langwell sent a nude photograph of himself along with a sexually explicit text message. Langwell continued to communicate with the officer in a sexually explicit nature via text messages and suggested they meet up.

On November 15, 2017, Langwell and the officer agreed to meet in person. Langwell traveled to the prearranged meeting site to meet with who he believed was a 16 year old female, for sex. Agents were conducting surveillance of the prearranged meeting site and saw Langwell in the parking lot. Law enforcement moved in and arrested Langwell. Agents located condoms and a bottle of lubricant in Langwell’s possession. Additionally, a test message was sent to Langwell’s phone, and agents confirmed it was the same phone used to communicate with the UC.

The case was brought as part of Project Safe Childhood, a nationwide initiative launched in 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse.  Led by U.S. Attorney’s Offices and the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood leverages federal, state and local resources to better investigate, apprehend and prosecute individuals who sexually exploit children.  Project Safe Childhood also prioritizes identifying and rescuing victims.  For more information about Project Safe Childhood, please visit http://www.justice.gov/psc/.  For more information about internet safety education, please visit http://www.justice.gov/psc/ and click on the tab “resources.”

The Texas Department of Public Safety and U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigation (HSI) investigated the case.  Assistant U.S. Attorney Joshua Frausto is in charge of the prosecution.

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AMARILLO, Texas — This afternoon, U.S. District Judge Sidney A. Fitzwater sentenced Noel Cuellar, 37, of Amarillo, Texas, for his role in a methamphetamine distribution conspiracy that operated in the Amarillo area, announced U.S. Attorney Erin Nealy Cox of the Northern District of Texas.

Cuellar pleaded guilty in January 2018 to one count of distribution and possession with intent to distribute methamphetamine. He has been in custody since the time of indictment in November 2017.

According to the plea agreement factual resume, on May 5, 2015, Texas Department of Public Safety (DPS) Criminal Investigations Division agents executed a search warrant on Jammie Lee Moore’s residence located in Amarillo, Texas. DPS agents located approximately nine pounds of methamphetamine and $10,000 in United States Currency in a Chevrolet pickup parked outside Moore’s residence and that agents had previously seen Moore driving.

Through further investigation, law enforcement learned that Cuellar had previously distributed this methamphetamine to Moore. Cuellar admitted to distributing pound quantities of methamphetamine for further distribution in the Amarillo area.

The Texas Department of Public Safety Criminal Investigations Division, Drug Administration Enforcement and Federal Bureau of Investigation investigated.  Assistant U.S. Attorney Joshua Frausto was in charge of the prosecution.

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SAN ANGELO, Texas — Lorenzo Hale, 52, of Coleman, Texas, appeared in federal court this afternoon and pleaded guilty before U.S. Magistrate Judge E. Scott Frost to one count of convicted felon in possession of a firearm, announced U.S. Attorney Erin Nealy Cox of the Northern District of Texas.

Hale faces a maximum statutory penalty of ten years in federal prison, and a $250,000 fine.  Hale will remain in custody pending a sentencing date to be set by the Honorable Sam R. Cummings, Senior United States District Court Judge. 

According to the plea agreement factual resume filed in the case, on February 15, 2018, law enforcement was dispatched to a residence in Coleman, Texas, to investigate a complaint about a threat being made. The officer went to that location and met with Hale. Hale stated that he had been threatened. Hale further stated that “If one hair on both my daughters’ head are harmed tomorrow, there will be a massacre. I want you to know I’m reporting it to you like that, there will be a massacre at that school.” Later in the conversation, Hale alluded to a firearm being in the residence.

The next day, a Texas Ranger and the Chief of the Coleman Police Department made contact with Hale’s girlfriend. They told her of Hale’s threat and asked if she would surrender any firearms to law enforcement. She agreed to surrender the firearm located at the residence.

Further investigation revealed that before Hale possessed the firearm, he had been convicted in a court of a crime punishable by imprisonment for a term in excess of one year. Specifically, on December 16, 2005, Hale was convicted of being a Convicted Felon in Possession of a Firearm, in the United States District Court for the Northern District of Texas, San Angelo Division, and sentenced to 51 months imprisonment.

The case was investigated by the Bureau of Alcohol, Tobacco, Firearms, and Explosives, the Coleman Police Department and the Texas Rangers, Texas Department of Public Safety. Assistant U.S. Attorney Jeffrey Haag is in charge of the prosecution.

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LUBBOCK, Texas — Seven defendants charged in an indictment returned in November 2017 were sentenced in recent weeks by Senior U.S. District Judge Sam R. Cummings for their roles in a large-scale methamphetamine trafficking organization operating in the Lubbock, Texas area, announced U.S. Attorney Erin Nealy Cox of the Northern District of Texas.

The court imposed the following sentences:

            Alejandro Garcia-Izazaga, aka “Flaco” and “Alex” – 365 months

            Anthony Wayne Reiley, aka “Tony” – 235 months

            Ivan Cruz-Martinez – 235 months

            Zacarias Blanco-Olea – 210 months

            Amanda Nicole Marney – 188 months

            Ernesto Martinez, Jr. – 108 months

            Patricia Ann Hernandez-Salas – 87 months

Garcia-Izazaga, Reiley, Cruz-Martinez, and Blanco-Olea have been in custody on related criminal complaints since their arrest in October 2017.  Marney, Martinez, and Hernandez-Salas have been in custody following their arrests in November 2017.

According to plea documents filed in the case, Garcia-Izazaga was facilitating the transportation of pound-quantities of methamphetamine in Lubbock and other major cities in the State of Texas.  On three separate occasions in the summer of 2017, Garcia-Izazaga offered to pay Reiley, Cruz-Martinez, and Blanco-Olea to transport large quantities of methamphetamine from other parts of the state to Lubbock, Texas.  On each occasion, the defendants were stopped by law enforcement for traffic violations.  Searches of the vehicles revealed large amounts of methamphetamine in hidden compartments.

Marney was arrested following a traffic stop in August 2017 where officers found her to be in possession of multiple ounces of methamphetamine and two firearms.   

Martinez, Jr. and Hernandez-Salas each purchased and distributed large quantities of methamphetamine in the Lubbock, Texas area.

In total, law enforcement agents were able to seize in excess of 15 pounds of methamphetamine and several firearms. 

The Drug Enforcement Administration is investigating with the assistance of Homeland Security Investigations, the Bureau of Alcohol, Tobacco, Firearms and Explosives, the United States Customs and Border Protection, the Lubbock County Sheriff’s Office, the Lubbock Police Department, and the Texas Department of Public Safety.  Assistant U.S. Attorney Sean Long is in charge of the prosecution.

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DALLAS — Tshombe Anderson, 55, of Grand Prairie, Texas, was sentenced today by Chief U.S. District Judge Barbara M.G. Lynn to 120 months in federal prison and ordered to pay $26,572,458.93 in restitution for his role in a scheme he ran along with his family members from July 2011 to September 2015 to fraudulently obtain more than $26 million from the Department of Labor (DOL) Office of Worker’s Compensation Program (OWCP), announced U.S. Attorney Erin Nealy Cox of the Northern District of Texas.

Anderson pleaded guilty in August 2017 to one count of conspiracy to commit health care fraud.  Anderson agreed to forfeit $375,000 seized from his residence, a 2015 Mercedes, and his share of the $8,383,075 that was seized from 25 bank accounts. Anderson has been in custody since the time of his arrest in August 2015.

In addition to Anderson, his sister Lydia Bankhead, 63, his wife Brenda Anderson, 47, and his niece Lydia Taylor, 30, were also charged in the indictment returned in September 2015 and pleaded guilty to their roles in the scheme.   

“Tshombe Anderson and others conspired to defraud the U.S. Department of Labor’s Office of Workers’ Compensation Programs (OWCP) of more than $26 million. Anderson stole patient information from over 200 injured federal workers and then used the information to fraudulently bill OWCP, enriching himself and others with taxpayer dollars intended for the treatment of injured federal workers. We will continue to work with our law enforcement partners to safeguard all Department of Labor programs,” said Steven Grell, Special Agent in-Charge of the Dallas Regional Office of the U.S. Department of Labor, Office of Inspector General.

“The sentence imposed today reaffirms the long-standing message that fraud committed against federal benefit programs is a serious crime and will not be tolerated,” said U.S. Postal Service Office of Inspector General Special Agent in Charge Christopher Cave, Southern Area Field Office. “The USPS-OIG, along with our law enforcement partners will continue to aggressively pursue anyone who engages in these criminal activities.”

According to plea documents in the case, Tshombe Anderson worked as an attorney for Union Treatment Centers (“UTC”).  Anderson and his wife, Brenda Anderson, opened a durable medical equipment company called Best First Administration (“BFA”).  BFA was formed, initially, to provide durable medical equipment to patients referred to BFA from UTC.  In July 2011, Tshombe Anderson and Brenda Anderson disassociated from UTC. 

In April 2013, Tshombe Anderson agreed with Bankhead to open Union Medical Supplies and Equipment (“UMSE”).  In August 2013, Tshombe Anderson opened Skycare Medical Supplies and Equipment (“SMSE”).  Both companies were created in order to submit claims that were inappropriate to OWCP.  The same medical information that BFA had received from UTC was used and billed to the same universe of claimants for duplicate, unwanted durable medical equipment that was not medically necessary, using outdated medical information.  Tshombe Anderson continued to do so despite knowing that they were billing OWCP for items that were not associated with the claimant’s injuries and that claimants were often refusing or rejecting the durable medical equipment for which their company had billed.  

Tshombe Anderson had access to the operating accounts for UMSE and routinely transferred large sums of cash from those accounts for his personal use or to launder through business accounts for a shell company called American Federal Union Claims Advocates, as well as accounts associated with his law office.

The total amount paid to OWCP for UMSE and SMSE was $26,572,458.93.

The DOL Office of Inspector General and the U.S. Postal Service Office of Inspector General investigated the case.  Assistant U.S. Attorneys Nicole Dana and P.J. Meitl prosecuted.

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DALLAS — Kevin Gerard Cauley, 51, of Rockwall, Texas, was sentenced yesterday by U.S. District Judge Sam A. Lindsay to 15 months in federal prison for his role in a bribery scheme involving the concealment of information to defraud the Texas Department of Public Safety (DPS), announced U.S. Attorney Erin Nealy Cox of the Northern District of Texas.

Cauley pleaded guilty in June 2017 to one count of honest services wire fraud.  Judge Lindsay ordered Cauley to surrender to the Bureau of Prison on June 19, 2018.

According to the information filed in the case, Cauley worked as a Highway Patrol - Commercial Vehicle Enforcement (“CVE”) Sergeant employed by DPS and assigned to Region I, that covered Dallas County. As a CVE Sergeant, Cauley was responsible for, among other things, enforcing traffic and criminal laws, instructing in training schools and academies, and performing safety inspections of commercial vehicles in order to provide Commercial Vehicle Safety Alliance Inspection (“CVSA”) decals to commercial vehicles.

Safety inspections were performed by DPS CVE Troopers to ensure their commercial vehicles were safe for highway travel. Safety Inspections were coded Levels 1 through 5. A level 1 inspection was the highest level which meant it involved the most areas of inspection. Once a Level 1 inspection was passed, the commercial vehicle received a CVSA decal.

Orlinte Cruz owned commercial trucking companies that operated in Dallas, Texas, Cruz and Sons Transportation and UGMA Logistics.

The CVSA decal served as a notice to any other CVE personnel in the United States, Canada, or Mexico that the vehicle had recently passed a Level 1 inspection and prevented the vehicle from being stopped at an inspection station or scale so that safety violations were not as readily detected. A commercial vehicle company's safety rating was directly related to the number of violations recorded. A good safety rating translated into lower insurance premiums and a higher volume of contracts.

According to the information filed in the case, in July 2014 Cruz approached Cauley about conducting safety meetings for employees of Cruz and Sons Transportation. Shortly thereafter, Cauley began conducting inspections of Cruz and Sons Transportation and UGMA Logistics’s commercial trucks. From July 2014 and continuing until September 2015, Cauley reported conducting thirty-nine Level 1 inspections on Cruz and Sons Transportation’s vehicles. Thirty-nine of these inspections resulted in a CVSA decal. Cruz paid Cauley in United States currency at least $4,000, to receive favorable treatment from Cauley concerning the performance, or non-performance of CVSA inspection procedures.

Cruz has also pled guilty to his role in this scheme and is awaiting sentencing.

The Texas Rangers, Department of Transportation- Office of Inspector General, and FBI, investigated the case.  Assistant U.S. Attorney Adrienne E. Frazior prosecuted.

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DALLAS — Ima Maria Isham, 22, of The Colony, Texas appeared this morning before U.S. Magistrate Judge Rebecca Rutherford and pleaded guilty to one count of conspiracy to commit bank fraud, announced U.S. Attorney Erin Nealy Cox of the Northern District of Texas.

Isham faces a maximum penalty of five years in federal prison and a $250,000 fine.  Restitution is mandatory.  Isham remains on bond; a sentencing date was not set.

According to documents filed in the case, beginning in March 2015 and continuing until March 2016, Isham, along with coconspirators Eddie Contreraz, Stephanie Loraine Contreraz, Bryce Carragan Armijo, Elizabeth Flint, Abraham Valdez, and Kwanghee (Kathy) Anh, conspired with each other, to commit bank fraud.

Isham and other conspirators were employed at Preferred Marketing Group (PMG), also known as PMG Business Solutions. PMG was a loan brokerage company that assisted clients obtain loans, lines of credit, and credit cards. Since the majority of clients had low credit scores, as well as insufficient or unverifiable income or employment, most lenders did not consider these clients to be good credit risks. To overcome these obstacles to obtaining funding, conspirator PMG employees were aware that conspirator Eddie Contreraz frequently created fake paystubs, tax forms and other fraudulent documents in order to falsely inflate clients’ income, as well as falsify a client’s employment position and length of employment. Isham and other conspirators caused many clients to fraudulently obtain funding by causing clients to submit to various lenders false financial and false employment information provided by co-defendant Eddie Contreraz.

The defendants fraudulently obtained loan proceeds from several federally insured banks in the Dallas and Fort Worth area by causing borrower loan applications to be submitted to banks which contained false information. False loan information submitted to financial institutions included, inflated false income figures; falsely list the loan applicant’s position as manager of a company (when the applicant actually owned the company or was employed in a lower salaried position); and falsely reported employment when a client was actually unemployed.

According to documents filed in the case, Isham and coconspirators caused borrowers with low credit scores to use “credit repair” services to raise the borrower’s credit score in order to qualify for loans later obtained through the use of false and fictitious documents created by defendant Eddie Contreraz.

From March 2015 through March 2016, Isham and coconspirators fraudulently obtained loans, credit lines, and credit cards from several banks in the total amount of at least $10 million.

The Fort Worth Federal Bureau of Investigation is investigating the case.  Assistant U.S. Attorney David Jarvis is in charge of the prosecution.

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DALLAS — Robert Joseph Marano, 53, of Dallas, Texas, appeared in federal court this morning before U.S. Magistrate Judge Rebecca Rutherford and pleaded guilty to one count of mail fraud, announced U.S. Attorney Erin Nealy Cox of the Northern District of Texas. 

In March 2018, both Marano and Paul Anthony Dominguez, 32, of Carrollton, Texas, were charged in a felony information with a one count of mail fraud scheme.  Dominguez pleaded guilty earlier this month to the same mail fraud scheme and is scheduled to be sentenced July 25, 2018. Marano is scheduled to be sentenced on August 1, 2018.

Both Dominguez and Marano face a maximum statutory penalty of twenty years in federal prison and a $250,000 fine.  Restitution could also be ordered.  Dominguez and Marano will remain on bond while awaiting their sentencing hearings.

According to filed plea documents, Dominguez and Marano contacted client contractors with a proposal to collect outstanding unpaid debts of former customers of the contractor client. During the period from about March 2015 through December 2016, Dominguez and Marano caused at least 200 client contractors to sign an agreement in which the client contractors authorized the defendants to release liens filed by the client contractor in exchange for the payment of unpaid debts by former customers. Dominguez and Marano also falsely represented to client contractors that defendants would collect funds from delinquent clients, retain a commission fee, and then send the balance of the collected funds to the contractor client.

Dominguez and Marano later contacted many former customers of the contractor client. These former customers were delinquent in payment of debts to the contractor clients. Dominguez and Marano fraudulently caused these former customers to send settlement checks to a business controlled by Dominguez and Marano. Dominguez and Marano also stole funds from their client contractors when they unlawfully cashed these former customer checks, but failed to pay their contractor clients the total settlement amount owed.

The defendants preyed on the financial desperation of these client contractors who were owed large sums of money from former customers. The defendants deceived these client contractors by falsely representing to the client contractors that the defendants would honestly collect and pass on funds collected from former customers.

Dominguez and Marano defrauded at least 200 client contractors across the United States and received over $2 million dollars in settlement funds from former customers of the client contractors.  The felony information alleged that Dominguez and Marano spent these stolen funds to support their lavish lifestyle, including trips to Las Vegas, Hawaii and Miami, as well as the purchase of two 2016 Harley Davidson motorcycles, a 2016 Kawasaki motorcycle, a 2015 Toyota Tundra, and a 2015 Corvette Stingray.

This case is one of many felony indictments of bankruptcy-related crimes prosecuted as part of the Bankruptcy Fraud Initiative, United States Attorney’s Office, Northern District of Texas.  These bankruptcy prosecutions were identified and investigated from a larger number of criminal referrals regularly made to this office by the United States Trustee’s Office, Dallas, Texas.  Since 2013, these focused bankruptcy prosecutions have resulted in 27 convictions of individuals engaged in various types of fraudulent conduct within the United States Bankruptcy Courts.

The United States Postal Inspection Service, Fort Worth, Texas investigated the case.  Assistant U.S. Attorney David Jarvis is in charge of the prosecution.

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FORT WORTH, Texas — Arnoldo Morfin-Arias, aka “Efrain Arias” and “Pollo,” 44, of Dallas, Texas, was sentenced today by U.S. District Judge John McBryde to Life in federal prison following his guilty plea in November 2017 to one count of conspiring to traffic in methamphetamine, announced U.S. Attorney Erin Nealy Cox of the Northern District of Texas.

Morfin-Arias was charged in a superseding indictment in October 2017 along with six others for their roles in a methamphetamine conspiracy.  Twenty-two others have also been charged in different indictments and informations in connection with Morfin-Arias for trafficking in methamphetamine, cocaine, heroin, and for money laundering.  Morfin-Arias operated in the Dallas/Fort Worth area, and elsewhere in the United States.  He has been in custody since the time of his arrest in California in August 2017.

Documents filed in the cases reveal that since at least early 2015, Morfin-Arias received large amounts of methamphetamine directly from a Mexico-based source of supply.  In turn, Arias distributed multi-kilogram quantities of methamphetamine through multiple Dallas based distributors who have all pled guilty to the conspiracy.  

The Federal Bureau of Investigation conducted the investigation with assistance from DEA, ATF, U.S. Marshals Service, Arlington Police Department, Fort Worth Police Department, Dallas Police Department, Dallas County Sherriff’s Clean Air Task Force, Grand Prairie Police Department, Denton County Sherriff’s Office, Texas Department of Criminal Justice Office of Inspector General, the Texas Department of Public Safety, ICE ERO, and Tarrant County Combined Narcotics Enforcement Team.

Assistant U.S. Attorney Shawn Smith prosecuted.

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DALLAS — Darius Fields, 27, of Dallas, Texas was found guilty Wednesday following a three-day trial before Chief U.S. District Judge Barbara M.G. Lynn for aiding and abetting the false statement to a federally licensed firearms dealer to acquire a firearm, commonly called “lying-and-buying” or making a “straw purchase,” announced U.S. Attorney Erin Nealy Cox of the Northern District of Texas.

Fields was convicted on one count of acquiring a firearm from a licensed firearms dealer by false or fictitious statement, one count of false statement with respect to information required to be kept in records of a licensed firearms dealer, and one count of convicted felon in possession of a firearm and ammunition.  Fields faces a maximum statutory penalty of 25 years in federal prison and a $250,000 fine.  He has been in custody since his arrest in July 2017.  A sentencing date will be set by the court in the near future.   

According to evidence presented at trial, Fields, a convicted felon who was being sought as a person of interests in a state kidnapping investigation, was found at a motel in Irving on the night of June 29, 2017.  When the police made contact with Fields at the motel, they smelled the odor of marijuana and entered the room for a protective sweep.  There, they found Fields’ girlfriend and co-defendant, LaPorshya Polley, emerging from the bathroom after attempting to flush marijuana down the toilet.  They also observed a box of ammunition in plain view on a desk.  Using flashlights, the police also observed a partially concealed AK-47 weapon in the back of a black Honda Accord parked directly in front of Fields’ motel room.  The police then secured a search warrant for the motel room and the Honda Accord.

Inside the motel room, according to evidence presented, the police seized the box of ammunition, a small amount of marijuana, two cell phones belonging to Fields, and approximately $5,000 in cash.  They also found a loaded FNH pistol—with a round in the chamber and the safety in the “fire” position—in Polley’s bag of clothing.  In the Honda Accord, the police seized a loaded AK-47 pistol.  Polley had purchased both weapons.  The police, in fact, discovered that Polley had recently purchased the FNH pistol from DFW Gun Range in Dallas.  The police obtained security video recordings of Polley’s purchase from the gun dealer.  The recording depicted a classic “straw purchase” of the firearm, as it showed Fields and Polley arriving together at the gun dealer, but walking in at different times to act as if they weren’t together.  The video also showed Fields and Polley ignoring one another and acting as if they were not together.  Finally, the video showed Fields monitoring Polley’s interaction with the gun salesman, and once Fields observed that Polley was wrapping up the purchase he walked back out to the car and waited for Polley.  Text messages found on one of Fields’ cell phones showed that after Polley purchased the pistol, but before she left the gun dealer, she texted Fields about the type of ammunition that he wanted for the weapon.  Lastly, when Polley walked out of the gun dealer with the FNH pistol and ammunition and got inside the car driven by Fields, Fields waited before driving off—reflecting that he was examining Polley’s purchase.  When Polley purchased the FNH pistol—which she paid approximately $1,400 in cash—she stated on the transaction record that she was buying the pistol for herself and not for anyone else. 

Fields contended that the firearms and ammunition found by the police were for Polley and that he did not knowingly possess them.  He also contended that Polley purchased the FNH pistol for herself and not for him and, therefore, she did not lie to DFW Gun Range or put false information in the gun dealer’s records.  On Fields’ cell phones, the police discovered numerous pictures of Fields displaying firearms and two videos of Fields shooting firearms at a gun range in February 2017.  The court permitted the government to introduce this evidence as it shed light on Fields’ knowledge and intent.  Fields, however, countered that the pictures of him displaying guns were “prop” guns, not real ones, and a defense witness even incredulously claimed that the videos of Fields shooting at the gun range depicted “blank guns”—even though the video showed bullets striking the dirt behind the targets. 

The case was investigated by the FBI and the Irving Police Department. Assistant U.S. Attorneys Gary Tromblay and Camille Sparks prosecuted.              

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DALLAS – Zhang Xiao Dong (a.k.a. Mark Zhang), of Shanghai, China, pleaded guilty today in Dallas to committing mail fraud in connection with a scheme to sell mislabeled dietary supplements, announced U.S. Attorney Erin Nealy Cox of the Northern District of Texas. 

Zhang was the sales manager for Genabolix USA Inc. and Shanghai Yongyi Biotechnology Co. Ltd., Chinese firms that sell raw ingredients for use in dietary supplements. In pleading guilty, Zhang admitted that he agreed to help sell synthetic stimulant ingredients, including the substance known as 1,4-DMAA, to a purported dietary supplement manufacturer in the United States. According to an indictment returned in October 2017, Zhang and two co-defendants agreed with a confidential government informant to either mislabel the synthetic ingredients or otherwise help to hide the true nature of a proposed dietary supplement from retailers. Zhang admitted that he knew major American dietary supplement retailers would refuse to carry supplements known to contain certain stimulants, such as DMAA. 

“Americans should be able to trust the products they consume are safe,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “We will continue to investigate and prosecute those who enable the sale of mislabeled and potentially unsafe dietary supplements.”

Zhang pleaded guilty before U.S. Magistrate Judge David Horan of the Northern District of Texas. He faces a statutory maximum sentence of 20 years of imprisonment. The Court set sentencing for Oct. 15.

“U.S. consumers trust that their dietary supplements are safe and contain appropriate labeling. When unscrupulous producers add undeclared or misidentified ingredients to dietary supplements, there is no assurance that the product is safe for consumption,” said Catherine A. Hermsen, Acting Director, FDA Office of Criminal Investigations. “The FDA will continue to pursue and bring to justice those who participate in fraudulently marketing dietary supplements to the detriment of public health.”

Zhang was arrested in September 2017 along with a co-defendant, Gao Mei Fang, while attending a dietary supplement trade show in Las Vegas. Gao pleaded guilty on April 3, 2018. A third defendant named in the case, Hu Chang Chun, is not believed to be in the United States.     

The case was investigated by FDA’s Office of Criminal Investigations. The case was prosecuted by Kate Rumsey, Assistant United States Attorney for the Northern District of Texas; and David Sullivan and Patrick R. Runkle, Trial Attorneys in the Department of Justice’s Consumer Protection Branch.

Additional information about the Consumer Protection Branch and its enforcement efforts may be found at http://www.justice.gov/civil/consumer-protection-branch. For more information about the U.S. Attorney’s Office for the Northern District of Texas, visit its website at https://www.justice.gov/usao-ndtx.

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Zhang Xiao Dong (a.k.a. Mark Zhang), of Shanghai, China, pleaded guilty in Dallas to committing mail fraud in connection with a scheme to sell mislabeled dietary supplements, the Department of Justice announced today. 

Zhang was the sales manager for Genabolix USA Inc. and Shanghai Yongyi Biotechnology Co. Ltd., Chinese firms that sell raw ingredients for use in dietary supplements. In pleading guilty, Zhang admitted that he agreed to help sell synthetic stimulant ingredients, including the substance known as 1,4-DMAA, to a purported dietary supplement manufacturer in the United States. According to an indictment returned in October 2017, Zhang and two co-defendants agreed with a confidential government informant to either mislabel the synthetic ingredients or otherwise help to hide the true nature of a proposed dietary supplement from retailers. Zhang admitted that he knew major American dietary supplement retailers would refuse to carry supplements known to contain certain stimulants, such as DMAA.  

“Americans should be able to trust the products they consume are safe,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “We will continue to investigate and prosecute those who enable the sale of mislabeled and potentially unsafe dietary supplements.”

Zhang pleaded guilty before U.S. Magistrate Judge David Horan of the Northern District of Texas. He faces a statutory maximum sentence of 20 years of imprisonment. The Court set sentencing for Oct. 15.

“U.S. consumers trust that their dietary supplements are safe and contain appropriate labeling. When unscrupulous producers add undeclared or misidentified ingredients to dietary supplements, there is no assurance that the product is safe for consumption,” said Catherine A. Hermsen, Acting Director, FDA Office of Criminal Investigations. “The FDA will continue to pursue and bring to justice those who participate in fraudulently marketing dietary supplements to the detriment of public health.”

Zhang was arrested in September 2017 along with a co-defendant, Gao Mei Fang, while attending a dietary supplement trade show in Las Vegas. Gao pleaded guilty on April 3, 2018. A third defendant named in the case, Hu Chang Chun, is not believed to be in the United States.          

The case was investigated by FDA’s Office of Criminal Investigations. The case was prosecuted by Kate Rumsey, Assistant United States Attorney for the Northern District of Texas; and David Sullivan and Patrick R. Runkle, Trial Attorneys in the Department of Justice’s Consumer Protection Branch.

Additional information about the Consumer Protection Branch and its enforcement efforts may be found at http://www.justice.gov/civil/consumer-protection-branch. For more information about the U.S. Attorney’s Office for the Northern District of Texas, visit its website at https://www.justice.gov/usao-ndtx.

DALLAS — “La Familia Michoacán” (LFM) Mexican drug cartel leader, Arnoldo Rueda-Medina, aka “La Minsa,” 48, was sentenced today by U.S. District Judge Ed Kinkeade to serve a total of 520 months in federal prison and a $5 million fine for offenses related to his leadership role within LFM.  LFM was responsible for trafficking thousands of kilograms of methamphetamine into the United States and delivered to stash locations in the Northern District of Texas and elsewhere. The announcement was made by U.S. Attorney Erin Nealy Cox of the Northern District of Texas.

Rueda-Medina pleaded guilty in September 2017 to one count of conspiracy to possess with the intent to distribute a Schedule II controlled substance and one count of conspiracy to launder monetary instruments.  Judge Kinkeade sentenced Rueda-Medina to 520 months in federal prison on the drug conviction and 240 months in federal prison on the money laundering conviction, to run concurrently.  Rueda-Medina was arrested in Michoacán, Mexico on July 11, 2009, and was extradited to the United States on January 27, 2017. 

“Thanks to the unrelenting efforts of our United States law enforcement team and the critical assistance and sacrifice of our Mexican counterparts, a notorious drug cartel leader is where he should be --behind bars,” said U.S. Attorney Nealy Cox. “My office will continue to devote our time, energy, focus and expertise to helping disrupt and dismantle transnational criminal organizations with our law enforcement partners in the United States and abroad to stem the flow of deadly drugs into our country and stop the violence inflicted by people like Rueda-Medina.”

“High ranking cartel figures operating in the North Texas area will not be tolerated,” said Drug Enforcement Administration (DEA) Special Agent in Charge, Clyde E. Shelley Jr.  “The DEA and the US Attorney’s Office are working around the clock to combat the massive amount of drugs brought into the United States as a result of the direct actions of Arnoldo Rueda-Medina, aka “La Minsa,” and the continuing threat posed to our communities by the remnants of the LFM.”

On February 25, 2010, the U.S. Department of the Treasury sanctioned Rueda-Medina under the Foreign Narcotics Kingpin Designation Act (Kingpin Act) for his involvement in drug trafficking.  The Kingpin Act blocks all property and interests in property, subject to U.S. jurisdiction, owned or controlled by significant foreign narcotics traffickers, as identified by the President.  The Act also prohibits U.S. citizens and companies from doing any kind of business activity with Rueda-Medina, and it virtually froze all of his assets in the United States.

According to plea documents, from September 2007 through October 21, 2009, Rueda-Medina held a leadership position within LFM, a Mexican drug cartel and organized crime syndicate based in the Mexican State of Michoacán. LFM was responsible for trafficking methamphetamine into the United States through border checkpoints near Laredo, Texas and Tijuana, Mexico. 

Rueda-Medina was arrested on July 11, 2009, by Mexican Law Enforcement.  After his arrest, members of LFM attempted to free him, and although unsuccessful, a shootout ensued through the streets of Morelia, Michoacan.  LFM operatives subsequently attacked several other locations and Federal Police Officers.  In response, law enforcement deployed personnel to various locations throughout the state of Michoacan.  On July 13, 2009, a group of 12 officers were kidnapped, tortured, and murdered.  A note found at the scene where the bodies were dumped stated “Vengan por otro, los estamos esperando” (“Come for another, we are waiting for you”).  At least four other officers and two Mexican Marines were killed by LFM operatives responding to the arrest of Arnoldo Rueda-Medina.   Several others were wounded.    

According to plea documents, LFM used a sophisticated network of individuals in Mexico and the United States to distribute the methamphetamine in the Dallas-Fort Worth area and to collect proceeds from the methamphetamine sales.  The drug proceeds that were collected were delivered to cartel members or associates in Mexico either by way of bulk cash smuggling in vehicles utilized by LFM couriers or through money remitters such as Western Union. 

The case was investigated by the Drug Enforcement Administration, Dallas Police Department, Garland Police Department and the Texas Department of Public Safety. The U.S. Marshals Service, U.S. Customs and Border Protection and U.S. Immigrations and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) provided special assistance.   The Department of Justice’s Office of International Affairs also assisted in the extradition of the defendant to the United States to face charges.  The Government of Mexico assisted in the investigation and in securing the extradition of Rueda-Medina to the United States.       

This case is the result of the ongoing efforts by the Organized Crime Drug Enforcement Task Force (OCDETF), a partnership that brings together the combined expertise and unique abilities of federal, state and local law enforcement agencies.  The principal mission of OCDETF program is to identify, disrupt, dismantle and prosecute high-level members of drug trafficking, weapons trafficking and money laundering organizations and enterprises.

OCDEFT and Narcotics Section Chief Assistant U.S. Attorney Rick Calvert and Assistant U.S. Attorney George Leal prosecuted the case. 

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SAN ANGELO, Texas — A San Angelo, Texas, man, Mateo Raymond Flores, III, aka “Lawrence Flores,” “Arturo Flores,” “Rogelio Cadena,” “Gordo,” “Mr. G,” 49, was sentenced last week to 360 months in federal prison by U.S. District Judge Sam R. Cummings, following his guilty plea in November 2017 to an indictment charging one count of conspiracy to distribute and possess with intent to distribute 500 grams or more of methamphetamine.  U.S. Attorney Erin Nealy Cox of the Northern District of Texas made the announcement today.

Flores, who was a fugitive on state charges and living in Mexico at the time of indictment, was charged in a July 2017 federal indictment along with codefendants, Romelia Flores, 47, Pablo Cantu Hernandez, 61, Mario Moreno, Jr., 39, and Shelly Brannon Fowler, 51. All defendants pleaded guilty to their roles. Judge Cummings previously sentenced Hernandez to 235 months in federal prison, Moreno to 151 months in federal prison and Fowler to 188 months in federal prison.  Romelia Flores is awaiting sentencing.

According to the plea agreement factual resume, Flores was identified as a source of supply of methamphetamine in the San Angelo area. Flores used the residence of Hernandez as a storage location for his methamphetamine.

On April 26, 2016, a state search warrant was executed at the San Angelo residence of Hernandez. Hernandez admitted that he was storing methamphetamine for Flores. Investigators seized approximately 2.89 pounds of methamphetamine. Hernandez stated that he had stored and distributed approximately 150 pounds of methamphetamine for Flores for the past three years at his residence, collected drug proceeds and sent them to Flores in Mexico.

U.S. Immigrations and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) investigated.  Assistant U.S. Attorney Juanita Fielden prosecuted the case.

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DALLAS — Kevin Scott Morris, 45, of Forney, Texas, was sentenced this morning by U.S. District Judge Ed Kinkeade to 480 months in federal prison and a lifetime of supervised release, following his guilty plea in December 2017 to one count of enticement of a minor, announced U.S. Attorney Erin Nealy Cox of the Northern District of Texas.    

According to the factual resume and criminal complaint filed in the case, from at least 2009 through the time of Morris’ arrest in this case in 2016, Morris held himself out to parents and children as a member of law enforcement, a photographer, and a film director.  In so doing, he convinced at least ten children and their parents to allow him to photograph the children, film the children, and even travel with Morris for the purpose of film and photography sessions that his victims thought would lead to modeling or acting careers.  During these “sessions,” Morris built up the trust of, and groomed, several boys who he then sexually abused and/or used to create child pornography.

Law enforcement learned of Morris’ abuse when one of his victims made an outcry that Morris had sexually abused him when he was thirteen years old.  When Morris was arrested, law enforcement uncovered numerous videos and images of Morris sexually abusing several other children.  In addition, Morris possessed child pornography that he did not produce, including videos of toddlers being sexually abused and a video of a prepubescent boy being raped with his hands tied behind his back.

Morris and the government entered into a plea agreement, in which both parties agreed to the term of imprisonment.  

The case was brought as part of Project Safe Childhood, a nationwide initiative launched in 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse.  Led by U.S. Attorney’s Offices and the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood leverages federal, state and local resources to better investigate, apprehend and prosecute individuals who sexually exploit children.  Project Safe Childhood also prioritizes identifying and rescuing victims.  For more information about Project Safe Childhood, please visit http://www.justice.gov/psc/.  For more information about internet safety education, please visit http://www.justice.gov/psc/ and click on the tab “resources.”

The FBI, the Kaufman County Sheriff’s Office, and the Cypress Police Department in California investigated the case.  Assistant U.S. Attorney Jamie L. Hoxie prosecuted. 

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FORT WORTH, Texas — Following a one-day trial, a federal jury has convicted Lamone Ivory, 46, of Fort Worth, Texas, of multiple drug and firearm offenses, announced U.S. Attorney Erin Nealy Cox of the Northern District of Texas.

Specifically, on Monday a federal jury convicted Ivory on one count of felon in possession of a firearm, one count of conspiracy to possess with intent to distribute a controlled substance, two counts of possession with intent to distribute a controlled substance and one count of possession of a firearm in relation to a drug trafficking crime.  Ivory is scheduled to be sentenced on August 31, 2018, by U.S. District Judge John McBryde.

According to evidence presented at trial, on March 30, 2017, law enforcement executed a search warrant at a Fort Worth residence. As officers approached the rear of the residence, they saw a black object being thrown from a rear window, into the backyard. The black object was seized and determined to be a stolen firearm.

When officers entered the residence they encountered Ivory and Michael Demon Nixon. A search of the home revealed a variety of illegal drugs, including, heroin, marijuana, cocaine, and crack cocaine. Officers also found and seized four firearms.

Ivory has at least two felony convictions, one of which is a 1994 Tarrant County conviction for murder, for which Ivory received eighteen years in prison.

The defendants’ sentence will be determined by the court after a review of the federal sentencing guidelines and factors unique to the case, including the defendant’s prior criminal record, the defendant’s role in the offense and the characteristics of the violation. 

The Fort Worth Police Department and Bureau of Alcohol, Tobacco, Firearms, and Explosives investigated.  Assistant U.S. Attorneys Megan Fahey and Shawn Smith are prosecuting the case.

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DALLAS – Gao Mei Fang (a.k.a. Amy Gao), of Shanghai, China, pleaded guilty in Dallas to mail fraud and smuggling charges in connection with a scheme to sell mislabeled dietary supplements, Erin Nealy Cox, U.S. Attorney for the Northern District of Texas made the announcement today. 

Gao was the supply chain manager for Genabolix USA, Inc. and Shanghai Yongyi Biotechnology Co., Ltd., Chinese firms that sell raw ingredients for use in dietary supplements. In pleading guilty, Gao admitted that she agreed to help sell synthetic stimulant ingredients, including the substance known as 1,4-DMAA, to a purported dietary supplement manufacturer in the United States. According to an indictment returned in October 2017, Gao and two co-defendants agreed with a confidential government informant to either mislabel the synthetic ingredients or otherwise help to hide the true nature of a proposed dietary supplement from retailers. Gao admitted that she knew major American dietary supplement retailers would refuse to carry supplements known to contain certain stimulants, such as DMAA.

Gao also admitted to making false statements to FDA’s import division regarding a shipment of synthetic stimulants entering the United States.

“Protecting Americans from fraud and ensuring the safety of the products they consume are top priorities of the Department of Justice,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “We will pursue those who attempt to import dangerous and illegal commodities into the United States.”     

Gao pleaded guilty before U.S. Magistrate Judge David Horan of the Northern District of Texas. She faces a statutory maximum sentence of 20 years of imprisonment on both the mail fraud and smuggling counts. The Court set sentencing for October 1, 2018.

“As evidenced by the global scope of this investigation and this plea of guilty, my office is fully committed to protecting our citizens,” said U.S. Attorney Nealy Cox.  “We will continue to vigorously investigate and prosecute those who fraudulently mislead and endanger the American public.”

“U.S. consumers trust that their dietary supplements are safe and contain appropriate labeling. When unscrupulous producers add undeclared or misidentified ingredients to dietary supplements, there is no assurance that the product is safe for consumption,” said Catherine A. Hermsen, Acting Director, FDA Office of Criminal Investigations. “The FDA will continue to pursue and bring to justice those who participate in fraudulently marketing dietary supplements to the detriment of public health.”

Gao was arrested in September 2017 along with a co-defendant, Zhang Xiao Dong, while attending a dietary supplement trade show in Las Vegas. A third defendant named in the case, Hu Chang Chun, is not believed to be in the United States.          

The case was investigated by FDA’s Office of Criminal Investigations. The case was prosecuted by Kate Rumsey, Assistant United States Attorney for the Northern District of Texas; and David Sullivan and Patrick R. Runkle, Trial Attorneys in the Department of Justice’s Consumer Protection Branch.

Additional information about the Consumer Protection Branch and its enforcement efforts may be found at http://www.justice.gov/civil/consumer-protection-branch. For more information about the U.S. Attorney’s Office for the Northern District of Texas, visit its website at https://www.justice.gov/usao-ndtx.

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DALLAS — Mark Demetri Stein, 38, of Carrollton, Texas, appeared in federal court this morning before U.S. Magistrate Judge Rebecca Rutherford and pleaded guilty to one count of mail fraud, announced U.S. Attorney Erin Nealy Cox of the Northern District of Texas.

Stein faces a maximum statutory penalty of twenty years in federal prison and a $250,000 fine.  Restitution could also be ordered.  Stein will remain on bond pending sentencing which will be set at a later date.

 A federal grand jury in Dallas returned an indictment in December 2016 charging Stein and three others with felony offenses stemming from a “foreclosure rescue scheme” they ran from approximately February 2012 through January 2013.  Bruce Kevin Hawkins, 52, of Desoto, Texas, Richard Bruce Stevens, 51, of San Antonio, Texas, and Christina Renee Caveny, 37, of Dallas, have pleaded guilty to their roles in the scheme. Hawkins and Caveny have been sentenced to 41 months and 15 months in federal prison, respectively. Stevens is scheduled to be sentenced before U.S. District Judge David C. Godbey on May 7, 2018. 

According to documents filed in the case, Stein operated Real Estate Solutions, Stevens used Texas Real Estate Services, and Hawkins formed ERealty Mortgage Group, LLC, as foreclosure rescue companies.  The conspirators used third parties to contact homeowners and offer them an opportunity to get out of their present home loans and receive a new home loan with a reduced interest payment and reduced monthly payment.  Hawkins and other conspirators falsely represented to homeowners that they had “investors” standing by who were ready to quickly purchase the homeowner’s present loan from the lender holding the current mortgage.  They also falsely represented that they would use investors to purchase the homeowner’s loan from the original lender at a greatly reduced price through a “short sale” process.  

Furthermore, Hawkins and other conspirators falsely represented to the homeowners that the homeowners had the legal authority to transfer their homeowner’s deed to the defendants.

As part of the scheme, the conspirators fraudulently required homeowners to start making all future loan payments to them based on fraudulent so-called “loans,” and they also told homeowners to ignore late payment notices sent by lenders.  As part of the scheme, the conspirators conducted a fraudulent “closing” for each homeowner where they caused the homeowner to pay them a large down payment on the new “loan,” and they also had the homeowner sign fraudulent documents, such as a promissory note, deed of trust, special warranty deed, and/or a so-called “land trust.”

Further, according to plea documents, the conspirators falsely represented to homeowners that the conspirators could “sell” their property back to the homeowner with a new loan, when the conspirators well knew they did not legally own the property.  The conspirators also told homeowners to ignore notices of nonpayment from their present lender as they continued to unlawfully collect monthly so called “mortgage payments” from homeowners.  In fact, conspirators instructed several homeowners to file for bankruptcy but to not follow up with the bankruptcy process as an additional means to delay foreclosure and conceal the conspirators’ criminal conduct.  Conspirators concealed that all down payment and monthly mortgage payments fraudulently collected from homeowners was spent for their own personal benefit.

The defendants recruited at least 70 distressed and vulnerable homeowners who were facing the imminent threat of foreclosure on their homes and fraudulently collected a total of at least $242,000 from them. 

This case is one of many felony indictments of bankruptcy-related crimes prosecuted as part of the Bankruptcy Fraud Initiative, United States Attorney’s Office, Northern District of Texas.  These bankruptcy prosecutions were a part of a larger number of criminal referrals regularly made to this office by the United States Trustee’s Office, Dallas, Texas.  Since 2013, these focused prosecutions have resulted in 25 convictions of individuals engaged in various types of fraudulent conduct within the United States Bankruptcy Courts.

The Dallas FBI investigated the case.  Assistant U.S. Attorney David Jarvis is in charge of the prosecution.

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FORT WORTH, Texas — Following a four-day trial before U.S. District Judge Reed C. O’Connor, a federal jury convicted three men, last week, for their roles in a conspiracy to commit sex trafficking of underage girls.  U.S. Attorney Erin Nealy Cox of the Northern District of Texas made the announcement.

The jury convicted Pierre Lagrone, aka “P” or “Pedro,” 33, on one count of conspiracy to engage in sex trafficking of children, four counts of sex trafficking of children and one count of possession of child pornography. Lagrone faces a minimum of 10 years and up to life in federal prison and a $1 million fine.

Herman Sanders, aka “Pooh,” 29, was convicted on one count of conspiracy to engage in sex trafficking of children, one count of production of child pornography and one count of possession of child pornography. Sanders faces a minimum of 15 years and up to 35 years in federal prison and a $1 million fine.

Demarcus Davis, aka “Zigg,” 25, was convicted on one count of sex trafficking of children. He faces a minimum of 10 years and up to 35 years in federal prison and a $1 million fine.

Lagrone and Davis are scheduled to be sentenced by Judge O’Connor on July 23, 2018. A sentencing date for Sanders has not been set.

According to evidence presented at trial, Lagrone and Davis were violent pimps who recruited, controlled, and profited off underage female victims through commercial sex acts. Lagrone and Davis recruited and advertised underage female victims for commercial sex acts. The defendants communicated with potential clients, collected proceeds, and paid for motels rooms and supplies. Lagrone and Davis kept almost all, if not all, of the proceeds of the commercial sex acts, providing only food, shelter, and occasional clothing to the underage female victims. Sanders conspired with and assisted Lagrone in this sex trafficking.

The U.S. Immigrations and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), Federal Bureau of Investigation and the Fort Worth, Tyler and Arlington Police Departments are investigating.  Assistant U.S. Attorneys P.J. Meitl and Nicole Dana are in charge of the prosecution.                     

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FORT WORTH — Micaha Paul Sneed, aka “Micaha “Mike” McGrath,” 40, of Fort Worth, Texas, was last week by U.S. District Judge John McBryde to serve 240 months in federal prison following his guilty plea in October 2017 to a felony offense related to elder abuse, announced U.S. Attorney Erin Nealy Cox of the Northern District of Texas. 

Specifically, Sneed pleaded guilty to one count of wire fraud. He has been in custody since the time of his arrest in August 2017.

According to the factual resume filed in the case, starting in 2008 and continuing until June 2017, Sneed devised and operated a scheme to defraud, and to obtain money by false and fraudulent pretenses, representations and promises. McGrath solicited and obtained large sums of money from multiple victims by making false representations that he needed help paying legal fees and other costs related to a lawsuit with the U.S. government over his biological father’s Florida estate and obtaining proceeds of a life insurance policy for which Sneed was the beneficiary. Neither the estate nor the life insurance policy existed.

Sneed, according to the factual resume, was given money by each of the victims in exchange for his promise to pay the victims from either the fictitious estate or fictitious life insurance policy. Between October 20, 2014, and June 29, 2017, McGrath provided approximately 18 counterfeit checks to the victims, falsely representing that the checks were payments of partial proceeds from the lawsuit and/or the life insurance policy.

The Federal Bureau of Investigation investigated the case.  Assistant U.S. Attorney Nancy Larson prosecuted.

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DALLAS — Rickey Dale Sorrells, 62, of Dallas, has been charged for his role in receiving more than $3 million in bribe and kickback payments to help secure over $70 million in contracts, agreements, and orders, announced U.S. Attorney Erin Nealy Cox of the Northern District of Texas.

The criminal felony Information filed today charges Sorrells with one count of conspiracy to commit honest services wire fraud.  Signed plea papers were also filed indicating Sorrells’ intent to plead guilty.  Sorrells faces a maximum penalty of imprisonment not to exceed twenty years and a $250,000 fine. Restitution could also be ordered.  An arraignment date has not yet been set.

According to the filed Information and plea papers, from 2011 through 2017, the president of a technology company (Person A) that put cameras on school buses, paid Sorrells, the superintendent of Dallas County Schools (DCS), in excess of $3 million in bribe and kickback payments in exchange for favorable official action, including Sorrells’ decision to enter into contracts and licensing agreements on behalf of DCS and to purchase school-bus-camera equipment.

Payments made to Sorrells were funneled through various pass-through companies created and operated by his business associate, Slater Washburn Swartwood, Sr., as well as through a law firm. An account in the name of a nonexistent company was created to conceal payments that were made toward Sorrells’ credit card debt. To further disguise the bribe and kickback payments, Sorrells received a portion of the payments through shell companies which, at the behest of Person A, he created in his and/or a family member’s name(s).

In an effort to obscure the illegal purpose of the payments, according to documents filed in the case, Sorrells and others created fake consulting agreements, fake invoices, a fake real estate business, fake loan documents, discussed tying all past payments from Person A to Sorrells to the “note,” conspired to have Sorrells begin making payments on the “loan,” after which Person A would “recycle” the money back to Sorrells, and created a document with a narrative to ensure that they all had their stories straight.

The investigation was conducted by the Federal Bureau of Investigation.

Assistant U.S. Attorney Andrew Wirmani is in charge of the prosecution.

# # #

Gao Mei Fang (a.k.a. Amy Gao), of Shanghai, China, pleaded guilty in Dallas to mail fraud and smuggling charges in connection with a scheme to sell mislabeled dietary supplements, the Department of Justice announced today. 

Gao was the supply chain manager for Genabolix USA Inc. and Shanghai Yongyi Biotechnology Co. Ltd., Chinese firms that sell raw ingredients for use in dietary supplements.  In pleading guilty, Gao admitted that she agreed to help sell synthetic stimulant ingredients, including the substance known as 1,4-DMAA, to a purported dietary supplement manufacturer in the United States.  According to an indictment returned in October 2017, Gao and two co-defendants agreed with a confidential government informant to either mislabel the synthetic ingredients or otherwise help to hide the true nature of a proposed dietary supplement from retailers.  Gao admitted that she knew major American dietary supplement retailers would refuse to carry supplements known to contain certain stimulants, such as DMAA.

Gao also admitted to making false statements to FDA’s import division regarding a shipment of synthetic stimulants entering the United States.

“Protecting Americans from fraud and ensuring the safety of the products they consume are top priorities of the Department of Justice,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division.  “We will pursue those who attempt to import dangerous and illegal commodities into the United States.”

Gao pleaded guilty before U.S. Magistrate Judge David Horan of the Northern District of Texas.  She faces a statutory maximum sentence of 20 years of imprisonment on both the mail fraud and smuggling counts. The Court set sentencing for Oct. 1.

“As evidenced by the global scope of this investigation and this plea of guilty, my office is fully committed to protecting our citizens,” said U.S. Attorney Erin Nealy Cox.  “We will continue to vigorously investigate and prosecute those who fraudulently mislead and endanger the American public.”

“U.S. consumers trust that their dietary supplements are safe and contain appropriate labeling. When unscrupulous producers add undeclared or misidentified ingredients to dietary supplements, there is no assurance that the product is safe for consumption,” said Catherine A. Hermsen, Acting Director, FDA Office of Criminal Investigations.  “The FDA will continue to pursue and bring to justice those who participate in fraudulently marketing dietary supplements to the detriment of public health.”

Gao was arrested in September 2017 along with a co-defendant, Zhang Xiao Dong, while attending a dietary supplement trade show in Las Vegas.  A third defendant named in the case, Hu Chang Chun, is not believed to be in the United States.   

The case was investigated by FDA’s Office of Criminal Investigations.  The case was prosecuted by Kate Rumsey, Assistant United States Attorney for the Northern District of Texas; and David Sullivan and Patrick R. Runkle, Trial Attorneys in the Department of Justice’s Consumer Protection Branch.

Additional information about the Consumer Protection Branch and its enforcement efforts may be found at http://www.justice.gov/civil/consumer-protection-branch.   For more information about the U.S. Attorney’s Office for the Northern District of Texas, visit its website at https://www.justice.gov/usao-ndtx.

LUBBOCK, Texas — A South Carolina resident, Travis Daron Pitts, 51, was sentenced this morning by Senior U.S. District Judge Sam R. Cummings to 120 months in federal prison, following his guilty plea in November 2017 to one count of enticement and attempted enticement of a minor, announced U.S. Attorney Erin Nealy Cox of the Northern District of Texas.

Pitts has been in federal custody since his arrest in September 2017.

According to the plea agreement factual resume filed in the case, on August 11, 2017, Pitts, who lived in South Carolina, began communicating with an 11-year old female who lived in the Lubbock, Texas. Pitts and the minor female, Jane Doe communicated over the Internet, using an application that provides a way for individuals to share photos, videos, text messages and make phone calls. The sexually explicit communications between Pitts and Jane Doe took place in the “preteenies” girls only chat room. Jane Doe’s step­mother learned of the communications and notified authorities.

The case was brought as part of Project Safe Childhood, a nationwide initiative launched in 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse.  Led by U.S. Attorney’s Offices and the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood leverages federal, state and local resources to better investigate, apprehend and prosecute individuals who sexually exploit children.  Project Safe Childhood also prioritizes identifying and rescuing victims.  For more information about Project Safe Childhood, please visit http://www.justice.gov/psc/.  For more information about internet safety education, please visit http://www.justice.gov/psc/ and click on the tab “resources.”

The Federal Bureau of Investigation, Texas Department of Public Safety and Texas Rangers investigated the case.  Assistant U.S. Attorney Jeffrey Haag was in charge of the prosecution.

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DALLAS — Diego Morales-Ramirez, 25, a citizen of Mexico and in the United States illegally, was sentenced Wednesday before U.S. District Judge Ed Kinkeade for his role in a methamphetamine distribution conspiracy, announced U.S. Attorney Erin Nealy Cox of the Northern District of Texas.

Morales-Ramirez was sentenced to 120 months in federal prison following his guilty plea in August 2017 to one count of possession with intent to distribute a schedule II controlled substance, said substance being 50 grams or more of methamphetamine.  Morales-Ramirez will be deported following completion of his prison term. He has been in custody since his arrest in March 2017. 

According to documents filed in the case, on February 3, 2017, Morales-Ramirez was stopped by a police officer for failing to signal while changing lanes. During the stop Morales-Ramirez was extremely nervous and a K-9 alerted to the presence of a controlled substance inside the vehicle. Also during the stop it was learned that Morales-Ramirez was inside the United States illegally and that he had been previously deported. Morales-Ramirez was advised he was going to be detained for being illegally present in the United States and officers offered to return his vehicle and some of his personal items to the apartment he just came from.

Upon arrival Morales-Ramirez gave officers consent to search his apartment. Before officers entered the apartment Morales-Ramirez said there was a gray bin on the right side with “stuff” in it. Upon opening the gray bin officers found several bags containing a crystal like substance that field tested positive for 10.97 kilograms of methamphetamine.

The offices of Homeland Security Investigations and Enforcement and Removal Operations, and Task Force Officers from the Rowlett and Fate Police Departments investigated and assisted in the case. Assistant U.S. Attorney George Leal prosecuted.  

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EL PASO, Texas — Following a four-day trial, a federal jury has convicted a woman on felony offenses for submitting false information when applying for a passport in June 2014, announced Erin Nealy Cox, U.S. Attorney for the Northern District of Texas.

Rhonda Lynn Chesser Lindstrom, 41, most recently from Washington, D.C., was convicted last week on three counts of false statement in application for passport. Each false statement count carries a statutory penalty of not more than 25 years in federal prison and a $250,000 fine.  Lindstrom is scheduled to be sentenced by U.S. District Judge David Briones on June 7, 2018.

Because Chesser Lindstrom worked as a Special Agent in the El Paso FBI office, and presented cases to the Western District of Texas U.S. Attorney’s office, the Western District of Texas Assistant U.S. Attorneys were recused and Northern District of Texas Assistant U.S. Attorney Paulina Jacobo was appointed as a Special Assistant to the Attorney General.

According to evidence presented at trial, on June 10, 2014, Chesser Lindstrom personally appeared at the United States Department of State, El Paso Passport Agency (EPPA), and submitted an Application for a U.S. Passport. As required by the application, Chesser Lindstrom provided as proof of citizenship a State of Louisiana Birth Certificate issued on August 22, 2011.  The date of birth on the birth certificate was August 26, 1977.  As proof of identity, Chesser Lindstrom provided a State of Maryland Driver’s License with a date of birth of August 26, 1977.

A Passport Specialist conducted a thorough and detailed review of Chesser Lindstrom’s Passport Application.  He noticed that the birth certificate appeared to have been altered.  Specifically, the birth certificate showed clear signs of handwritten alterations in three places, the Birth Number, the Birth Date, and the File Date.  The birth certificate had erasures and numbers rewritten in the three places.  Since it was obvious that the birth certificate was altered, the case was referred to the Fraud Prevention Manager (FPM).

On June 12, 2014, the Passport Application was further reviewed by the Fraud Prevention Office to verify all information submitted by Chesser Lindstrom.  The results of the review indicated that Lindstrom’s correct date of birth was August 26, 1976; no record was found of a Rhonda Chesser born on August 26, 1977, as indicated on the birth certificate she provided to the EPPA. 

The EPPA asked for additional information and Chesser Lindstrom provided additional false documents after enticing her older sister to participate in creating those documents.

The Department of Justice Office of Inspector General was the lead investigation agency, assisted by the U.S. Department of State, Diplomatic Security Service, Criminal Fraud Investigations, and the United States Department of State, El Paso Passport Agency Program Fraud Office investigated.  Assistant U.S. Attorneys Paulina Jacobo and Chris Wolfe prosecuted.

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AMARILLO, Texas — Neal Edmond Brown, 46, of Canyon, Texas, was sentenced this week by U.S. District Judge Sidney A. Fitzwater to 135 months in federal prison, following his guilty plea in November 2017 to possession of prepubescent child pornography, announced Erin Nealy Cox, United States Attorney for the Northern District of Texas.

Brown has been in custody since his arrest in October 2017.

According to the plea agreement factual resume filed in the case, the National Center for Missing and Exploited Children (NCMEC) received information that an image depicting child pornography had been uploaded using the Skype program. Law enforcement discovered that the IP address responsible for uploading the image belonged to the Region 16 Education Service Center (ESC) in Amarillo, Texas. With the assistance from Region 16 ESC personnel, agents were able to verify that Brown, the Director of School Finance Operations at Region 16 ESC, was uploading child pornography from his work computer. 

On June 21, 2017, a search warrant was executed at Region 16 ESC and agents seized several electronic devices located in Brown’s office. A forensic examination revealed that the electronic devices contained over 900 images of child pornography and over 200 videos of child pornography. 

The case was brought as part of Project Safe Childhood, a nationwide initiative launched in 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by U.S. Attorney’s Offices and the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood leverages federal, state and local resources to better investigate, apprehend and prosecute individuals who sexually exploit children. Project Safe Childhood also prioritizes identifying and rescuing victims. For more information about Project Safe Childhood, please visit http://www.justice.gov/psc/. For more information about internet safety education, please visit http://www.justice.gov/psc/ and click on the tab “resources.”

The Federal Bureau of Investigation and Amarillo Police Department are investigated the case. Assistant U.S. Attorney Joshua Frausto prosecuted.

# # #

AMARILO, Texas — Two men from California, Erasmo Ramirez-Romero and Jorge Ramirez, appeared yesterday afternoon before U.S. District Judge Sidney A. Fitzwater, and pleaded guilty to their roles in a fentanyl distribution conspiracy, announced U.S. Attorney Erin Nealy Cox of the Northern District of Texas.

Ramirez-Romero, 31, and Ramirez, 22, each pleaded guilty to one count of possession with intent to distribute fentanyl. The defendants face a maximum sentence of not more than 20 years in federal prison and a $1 million fine.  Judge Fitzwater set a sentencing date of July 11, 2018.

According to documents filed in the case, on January 14, 2018, law enforcement was working routine patrol in Carson County, Texas stopped a 2005 Nissan Altima for driving in the left lane when not passing. The officer made contact with the driver of the vehicle, who was later identified as Ramirez, and the passenger, who was later identified as Ramirez- Romero. The officer noticed indicators of possible criminal activity and inconsistencies with Ramirez’s and Romero’s stories about their trip.

Ramirez consented to a search of the vehicle. During the search of the vehicle, law enforcement located four bundles of Fentanyl, weighing approximately 10 pounds, in the passenger side quarter panel in the trunk.

The case is being investigated by the Texas Department of Public Safety and the Drug Enforcement Administration.  Assistant U.S. Attorney Joshua Frausto is in charge of the prosecution.

# # #

AMARILLO — U.S. District Judge Sidney A. Fitzwater sentenced Jose Santillan, 25, of Amarillo, Texas, earlier this week to 212 months’ in federal prison. Santillan was convicted in December 2017, following a three-day trial, on one count of conspiracy to distribute and possess with intent to distribute 50 grams or more of pure methamphetamine The announcement was made today by U.S. Attorney Erin Nealy Cox of the Northern District of Texas.

Santillan has been in custody since the time of his arrest in April 2017.

According to evidence presented at trial, on February 2, 2016, a Texas Department of Public Safety agent working in an undercover capacity arranged to purchase eight ounces of methamphetamine from Guadalupe Vargas-Mayorga.  Through surveillance and recorded telephone calls between the undercover agent and Vargas-Mayorga, law enforcement learned that Vargas-Mayorga obtained the eight ounces of methamphetamine from Jose Santillan and then delivered that methamphetamine to the undercover agent.  Laboratory results confirmed that Vargas-Mayorga and Santillan delivered 192 grams of pure methamphetamine to the undercover agent on February 2, 2016.  The evidence presented at trial also showed that Santillan had been supplying Vargas-Mayorga with methamphetamine for further distribution since approximately 2014.  Additionally, evidence presented at sentencing showed that Santillan was receiving large shipments of liquid methamphetamine from Mexico.

The Drug Enforcement Administration, Department of Homeland Security, Texas Department of Public Safety, Amarillo Police Department, Potter County Sheriff’s Office, and Randall County Sheriff’s Office investigated.  Assistant U.S. Attorneys Sean Taylor and Joshua Frausto and Deputy Criminal Chief Assistant U.S. Attorney Jeffrey Haag prosecuted the case.

# # #

DALLAS – Texas-based SightLine Health LLC (SightLine), which operates radiation therapy centers throughout the United States, has agreed to settle a False Claims Act lawsuit alleging that it knowingly submitted claims to the Medicare program that violated the Anti‑Kickback Statute, the Justice Department announced today.  Together with Integrated Oncology Network Holdings LLC (ION), which acquired SightLine in 2011, SightLine has agreed to pay the government up to $11.5 million. The announcement was made today by U.S. Attorney Erin Nealy Cox of the Northern District of Texas.

The Anti-Kickback Statute is intended to ensure that a physician’s medical judgment is not compromised by improper financial incentives and instead is based on the best interests of the patient.  It prohibits anyone from offering, paying, soliciting, or receiving remuneration to induce referrals of items or services covered by Medicare, Medicaid, and other federally funded programs.  Claims submitted in violation of the Anti-Kickback Statute may subject the claimant to liability under the False Claims Act.   

The settlement announced today resolves allegations that SightLine violated the Anti-Kickback Statute and the False Claims Act by targeting physicians that were able to refer patients to its cancer treatment centers, and paid those physicians a share of its profits pursuant to investment arrangements that were set up to allow physicians to profit from their referrals.  Specifically, the United States alleged that SightLine formed a series of leasing companies in which referring physicians were permitted to invest, and through which SightLine allegedly distributed the profits that its physician-investors generated by referring cancer patients for radiation therapy.

“As the professionals charged with recommending and referring medical procedures for our community, physicians’ primary motivation must remain the well-being of their patients,” said U.S. Attorney Erin Nealy Cox.  “Today’s settlement demonstrates our determination to eliminate complex business ventures that improperly interpose financial considerations into our physicians’ medical judgment.”

“Investment arrangements that are structured to improperly compensate physicians for referrals can encourage physicians to make decisions based on financial gain rather than the best interest of their patients,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division.  “The Department of Justice is committed to preventing illegal inducements, in whatever form, that undermine the integrity of our public health programs.”

In addition to resolving their alleged False Claims Act liability, ION, SightLine, and their related entities have entered into a five-year Corporate Integrity Agreement with the HHS-OIG.  This agreement is intended to increase accountability and transparency and to deter future misconduct.  The Corporate Integrity Agreement includes internal and external monitoring of the relationships between the ION and SightLine entities and referring physician investors.

“Companies seeking to boost profits by paying physicians kickbacks for patient referrals undermine impartial medical judgment and increase health care costs for everyone,” said Chief Counsel to the HHS Inspector General Gregory Demske.  “We will continue to investigate such illegal, wasteful business arrangements in order to protect government health programs and the patients served by them.”

The allegations resolved by the settlement were brought in a lawsuit filed under the qui tam, or whistleblower, provisions of the False Claims Act.  The act permits private parties to sue on behalf of the government when they believe that defendants submitted false claims for government funds and to share in any recovery.  The act also allows the Government to take over the case, as it did here in part.  The whistleblower will receive up to $1.725 million.   

This matter was handled by the Assistant U.S. Attorney Kenneth Coffin of the U.S. Attorney’s Office for the Northern District of Texas, the Justice Department’s Civil Division, and the HHS Office of the Inspector General.          

The case is captioned United States ex rel. IIRT, LLC v. Sightline Health LLC, et al.., Civil Action No. 3-15CV-3202N (N.D. Tex.).  The claims resolved by this settlement are allegations only and there has been no determination of liability.

# # #

Texas-based SightLine Health LLC (SightLine), which operates radiation therapy centers throughout the United States, has agreed to settle a False Claims Act lawsuit alleging that it knowingly submitted claims to the Medicare program that violated the Anti‑Kickback Statute, the Justice Department announced today.  Together with Integrated Oncology Network Holdings LLC (ION), which acquired SightLine in 2011, SightLine has agreed to pay the government up to $11.5 million.

The Anti-Kickback Statute is intended to ensure that a physician’s medical judgment is not compromised by improper financial incentives and instead is based on the best interests of the patient.  It prohibits anyone from offering, paying, soliciting, or receiving remuneration to induce referrals of items or services covered by Medicare, Medicaid, and other federally funded programs.  Claims submitted in violation of the Anti-Kickback Statute may subject the claimant to liability under the False Claims Act.    

The settlement announced today resolves allegations that SightLine violated the Anti-Kickback Statute and the False Claims Act by targeting physicians that were able to refer patients to its cancer treatment centers, and paid those physicians a share of its profits pursuant to investment arrangements that were set up to allow physicians to profit from their referrals.  Specifically, the United States alleged that SightLine formed a series of leasing companies in which referring physicians were permitted to invest, and through which SightLine allegedly distributed the profits that its physician-investors generated by referring cancer patients for radiation therapy.

“Investment arrangements that are structured to improperly compensate physicians for referrals can encourage physicians to make decisions based on financial gain rather than the best interest of their patients,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division.  “The Department of Justice is committed to preventing illegal inducements, in whatever form, that undermine the integrity of our public health programs.”

“As the professionals charged with recommending and referring medical procedures for our community, physicians’ primary motivation must remain the well-being of their patients,” said U.S. Attorney Erin Nealy Cox.  “Today’s settlement demonstrates our determination to eliminate complex business ventures that improperly interpose financial considerations into our physicians’ medical judgment.”

In addition to resolving their alleged False Claims Act liability, ION, SightLine, and their related entities have entered into a five-year Corporate Integrity Agreement with the HHS-OIG.  This agreement is intended to increase accountability and transparency and to deter future misconduct.  The Corporate Integrity Agreement includes internal and external monitoring of the relationships between the ION and SightLine entities and referring physician investors.

“Companies seeking to boost profits by paying physicians kickbacks for patient referrals undermine impartial medical judgment and increase health care costs for everyone,” said Chief Counsel to the HHS Inspector General Gregory Demske.  “We will continue to investigate such illegal, wasteful business arrangements in order to protect government health programs and the patients served by them.”

The allegations resolved by the settlement were brought in a lawsuit filed under the qui tam, or whistleblower, provisions of the False Claims Act.  The act permits private parties to sue on behalf of the government when they believe that defendants submitted false claims for government funds and to share in any recovery.  The act also allows the Government to take over the case, as it did here in part.  The whistleblower will receive up to $1.725 million.   

This matter was handled by the U.S. Attorney’s Office for the Northern District of Texas, the Justice Department’s Civil Division, and the HHS Office of the Inspector General. 

The case is captioned United States ex rel. IIRT, LLC v. Sightline Health LLC, et al.., Civil Action No. 3-15CV-3202N (N.D. Tex.).  The claims resolved by this settlement are allegations only and there has been no determination of liability.

LUBBOCK, Texas — Eugene Joseph Martinez, 20, of Lubbock, Texas, was sentenced yesterday by Senior U.S. District Judge Sam R. Cummings to 240 months in federal prison, following his guilty plea in December 2017 to one count of transportation of a visual depiction of a minor engaging in sexually explicit conduct, announced U.S. Attorney Erin Nealy Cox of the Northern District of Texas.

Martinez has been in custody since the time of his arrest in November 2017.

According to documents filed in the case, between June 22 and September 6, 2016, Martinez used various electronic devices to transport numerous images and videos depicting minors engaged in sexually explicit conduct. Martinez transported these images by way of the Internet, to a Dropbox account that he used to collect the images and videos.

The case was brought as part of Project Safe Childhood, a nationwide initiative launched in 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse.  Led by U.S. Attorney’s Offices and the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood leverages federal, state and local resources to better investigate, apprehend and prosecute individuals who sexually exploit children.  Project Safe Childhood also prioritizes identifying and rescuing victims.  For more information about Project Safe Childhood, please visit http://www.justice.gov/psc/.  For more information about internet safety education, please visit http://www.justice.gov/psc/ and click on the tab “resources.”

The Federal Bureau of Investigation and the Lubbock Police Department Internet Crimes Against Children Unit investigated the case. Assistant U.S. Attorney Jeffrey Haag and Assistant U.S. Attorney (retired) Steve Sucsy were in charge of the prosecution.

# # #

DALLAS — A federal grand jury in Dallas returned a three-count indictment this week charging Donnie Arlondo Ferrell, 25, and Bei-jing Tashawna Walker, aka “Channelle Walker,” 24, both of Hutchins, Texas, with felony offenses related to the February 19, 2018 murder of a United States Postal Service employee. The announcement was made today by U.S. Attorney Erin Nealy Cox of the Northern District of Texas.

Last month, Ferrell was charged in a related criminal complaint.  The indictment charges Ferrell with one count of murder of an officer or employee of the United States and one count of using, carrying, brandishing, and discharging a firearm during and in relation to a crime of violence.  Walker is charged with one count of accessory after the fact. Both defendants will remain in custody pending further court hearings.

According to the indictment filed in the case, on February 19, 2018, Ferrell shot and killed an United States Postal Employee while the employee was on duty.  Walker assisted Ferrell after the shooting to prevent Ferrell from being apprehended.

A federal indictment is an accusation by a grand jury.  A defendant is entitled to the presumption of innocence unless proven guilty.  If convicted, however, the defendants’ sentences will be determined by the court after a review of the federal sentencing guidelines and factors unique to the case, including the defendant’s prior criminal record (if any), the defendant’s role in the offense and the characteristics of the violation    

The Dallas Police Department and United States Postal Inspection Service, with assistance from the Federal Bureau of Investigation investigated the case. Assistant U.S. Attorneys P.J. Meitl, John Kull and Brian Portugal are prosecuting.

# # #

DALLAS — Timothy Thomas, 40, of Dallas, Texas, was sentenced this morning by U.S. District Judge Sidney A. Fitzwater to serve a total of 174 months in federal prison and ordered to pay $17,534.00 in restitution, following his guilty plea in October 2017 to five counts of bank robbery, announced U.S. Attorney Erin Nealy Cox of the Northern District of Texas. 

According to court documents filed in the case, Thomas, who was previously convicted for a bank robbery in Chicago, Illinois and on supervised release for that offense, committed the following bank robberies in the Dallas, Texas area:

     February 13, 2017                  Chase Bank                    2655 Arapaho Rd., Garland

     January 17, 2017                    Chase Bank                    11770 Marsh Ln., Dallas

     December 22, 2016                Chase Bank                    11611 Preston Rd., Dallas

     December 13, 2016                Chase Bank                    2655 Arapaho Rd., Garland

     December 9, 2016                  Chase Bank                    12875 Josey Ln., Farmers Branch

     December 3, 2016                  BBVA Compass Bank      2307 West Illinois Ave., Dallas

     November 21, 2016                BBVA Compass Bank      2307 West Illinois Ave., Dallas

     November 10, 2016                Chase Bank                    11770 Marsh Ln., Dallas

     October 27, 2016                    Wells Fargo Bank            13050 Coit Rd., Dallas

     October 13, 2016                    Bank of America             5610 Broadway Blvd., Garland

     October 7, 2016                      BBVA Compass Bank       2307 West Illinois Ave., Dallas

     October 4, 2016                      Chase Bank                     12900 Coit Rd., Dallas

All of these robberies were committed in essentially the same manner—upon entering the bank, Thomas would approach the teller and present a note stating that he had a gun, request a specific amount of money, and threaten harm if the police were called. 

Judge Fitzwater ordered that Thomas serve 150 months for the five counts he pleaded guilty to in this case and 24 months for the supervised release violation, which will run consecutive to the 150-month sentence.

The Federal Bureau of Investigation, with the assistance of the Dallas Police Department, Garland Police Department, and Farmers Branch Police Department, investigated the case. Assistant U.S. Attorney Keith Robinson prosecuted.

# # #

LUBBOCK, Texas — A federal grand jury in Lubbock, Texas, returned an indictment today charging Eddie Estuardo Galindo-Mendez, 43, a Guatemalan citizen, with one count of bank robbery for the November 20, 2017, robbery of Happy State Bank in Lubbock, Texas, announced U.S. Attorney Erin Nealy Cox of the Northern District of Texas.

Galindo-Mendez was charged last week in a related federal criminal complaint with one count of bank robbery. He was in federal custody on other charges at the time the complaint was filed.  

According to the affidavit filed with the criminal complaint and the indictment, on November 20, 2017, law enforcement responded to a call for two suspected Improvised Explosive Devices (IED). One IED was located on the campus of Texas Tech University and one was used in the robbery at Happy State Bank, located in Lubbock, Texas. The IEDs were described as pipe bombs. Law enforcement reviewed surveillance video captured from Texas Tech University and Happy State Bank’s interior video systems. The videos show that around 1:27 p.m. the suspected IED was placed on a student’s truck at Texas Tech University and at around 3:00 p.m. an individual robbed the Happy State Bank utilizing a note and a suspected IED.

Employees at the bank advised that Galindo-Mendez entered the bank, approached the teller, and handed the teller a note that stated he had a bomb and requested money. Galindo-Mendez also placed what appeared to be a pipe bomb on the counter. The employees provided Galindo-Mendez with approximately $2,553 and he left the bank on a bicycle and took the note, but left behind the IED. Bomb Technicians examined the IED and determined it to be inert.

“Prosecuting violent crimes is a top priority for my office and the Department of Justice,” said U.S. Attorney Nealy Cox.  “Prosecuting those violent crimes that touch upon the safety and security of our schools, universities and financial institutions is of paramount importance.  To those who commit violent crimes and threaten these institutions, know that law enforcement will relentlessly pursue bringing you to justice.”

ATF Dallas Field Division Special Agent in Charge Jeffrey C. Boshek stated “Today’s indictment is an example of ATF’s commitment to working with our law enforcement partners to pursue federal criminal charges against those that use firearms, explosives or arson to victimize businesses and endanger the public that patronizes them.”

“This is yet another example of the cooperative efforts that federal, state and local agencies do on a regular basis for the citizens in Lubbock and the surrounding communities,” said Assistant Chief Jerry Brewer, Lubbock Police Department Investigations Services Bureau.

An indictment is an accusation by a federal grand jury, and a defendant is entitled to the presumption of innocence unless proven guilty.  However, the maximum statutory penalty for the offenses charges is 20 years in federal prison and a $250,000 fine. 

The Bureau of Alcohol, Tobacco, Firearms, and Explosives, Lubbock Police Department, Federal Bureau of Investigation, United States Border Patrol, U.S. Immigrations and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), Texas Department of Public Safety, Texas Tech University Police Department, and the Lubbock County Sheriff’s Office investigated the case.  Assistant U.S. Attorney Jeffrey Haag is in charge of the prosecution.

# # #

DALLAS — Eskandar Molavi, 69, of Frisco, Texas, is in federal custody following his arrest Friday, March 16, 2018 on federal charges stemming from a murder-for-hire plot to have his former business partner kidnapped and possibly killed. The announcement was made this afternoon by Erin Nealy Cox, U.S. Attorney for the Northern District of Texas.

Molavi is charged with one count of solicitation of kidnapping and one count of attempted kidnapping. He made his initial appearance yesterday before U.S. Magistrate Renee Harris Toliver. A detention hearing was held today and Molavi was ordered detained pending trial.

According to the criminal complaint affidavit filed in the case, Molavi approached a man, whom Molavi believed to be a pilot for a Mexican Drug Trafficking Organization (DTO), about kidnapping his former business partner, later identified as H.M., and forcing him to sign over a gas station that Molavi lost to H.M. in civil court. Molavi told the man that if the business partner did not sign the business over, he wanted him flown to Mexico and murdered.  

On March 6, 2018, according to the affidavit, the individual Molavi contacted had an unplanned meeting with Molavi in Frisco, Texas. At the meeting, Molavi again asserted that he wanted H.M. kidnapped and forced to sign over the gas station. The man told Molavi that a man known as “D.J.,” also known as “Iceman,” would be in town, and would be the individual that would carry out the kidnapping/extortion scheme. The individual referred to as D.J. or Iceman was, in fact, an FBI agent.

On March 13, 2018, the FBI agent met with Molavi in Dallas, Texas. During the course of the meeting, Molavi told the agent about his dispute with H.M.; inquired about what services the agent could provide and the cost of such services. Molavi ultimately agreed to pay the agent $20,000 to kidnap H.M. and force him to sign over the business. Molavi provided the agent with H.M.’s true name, home address, business address, and information related to the location of the school that H.M.’s daughter attended. Molavi also told the agent that if H.M. did not sign over the business, that the agent should kill H.M. The agent told Molavi that the price for murder was $50,000.

After the meeting, Molavi asked the individual he originally contacted if he would be able to get him a gun and a silencer in the event that the agent was unsuccessful in getting H.M. to sign over the business. 

A federal complaint is a written statement of the essential facts of the offenses charged and must be made under oath before a U.S. magistrate judge. A defendant is entitled to the presumption of innocence until proven guilty. The government has 30 days to present the case to a federal grand jury for indictment. If convicted, however, the defendants’ sentences will be determined by the court after a review of the federal sentencing guidelines and factors unique to the case, including the defendant’s prior criminal record (if any), the defendant’s role in the offense and the characteristics of the violation.   

The investigation was conducted by the Federal Bureau of Investigation and the Drug Enforcement Administration. Assistant U.S. Attorney P.J. Meitl is in charge of the prosecution.

# # #

DALLAS — Ivan Reyes Perez, 27, of Dallas, Texas, was sentenced yesterday by U.S. District Judge David C. Godbey to 166 months in federal prison and ordered to forfeit $27,080 for his role in a methamphetamine distribution conspiracy, announced U.S. Attorney Erin Nealy Cox of the Northern District of Texas.

Perez has been in custody since his arrest in April 2017. He pleaded guilty in October 2017 to one count of conspiracy to possess with intent to distribute and to distribute and controlled substance.

Co-defendant Genesis Jaramillo, 24, was arrested in June 2017. Jaramillo pleaded guilty to her role and is awaiting sentencing.

According to the plea agreement factual resume, on March 25, 2017, law enforcement knocked on the door to room at a Hampton Inn Hotel in Mesquite, Texas. Jaramillo answered the door and Perez came up behind her. Officers were granted permission to search the room. Upon entering, officers observed a plastic bag containing a crystal like substance in plain view, a cooking pot and a pan that contained a crystal like substance. Officers also located a digital scale and plastic baggies, and a substance that is used to cut or supplement methamphetamine by those involved in the sale and distribution of methamphetamine.

The Drug Enforcement Administration and Mesquite Police Department investigated the case. Assistant U.S. Attorney George Leal prosecuted.

# # #

LUBBOCK, Texas — Following a four-day trial before Senior U.S. District Judge Sam R. Cummings, a federal jury convicted Frederick Allen, 44, of Baytown, Texas, for his role in a drug conspiracy that operated throughout West Texas.  U.S. Attorney Erin Nealy Cox of the Northern District of Texas made today’s announcement.

On March 19, 2018, a jury convicted Allen on one count of conspiracy to distribute controlled substances and one count of distribution and possession with intent to distribute cocaine.  Allen was remanded to custody following the verdict.

The penalties for the offenses is up to thirty years in federal prison and a $2,000,000 fine.  A sentencing date has not yet been set. 

The government presented evidence at trial that Allen would supply large quantities of cocaine to mid-level dealers, who in turn, would supply street dealers in Abilene, San Angelo, and the surrounding areas.  Law enforcement relied on undercover federal agents to infiltrate Allen’s drug trafficking operation.  On Sunday, October 22, 2017, federal agents conducted an undercover operation in Baytown, Texas.  Frederick Allen and Jesse James Scott drove to the San Jacinto Mall and met with a person they believed to be a high-level drug dealer.  In reality, the person they were meeting was an undercover federal agent.  After Allen and Scott arrived at the mall in Baytown, the undercover agent purchased a ¼ kilogram of cocaine and approximately 3,000 methamphetamine tablets.  The cocaine and methamphetamine tablets had a street value of at least $25,000.

Agents subsequently searched Allen’s residence and found approximately $7,000 in United States currency in various denominations.  At trial, Allen told the jury that the money found in his apartment was from an old vehicle that he sold to his mother for $6,000.  Allen later admitted that his sister had given him the vehicle for free and that the vehicle was only worth approximately $4,000.  Allen also testified that he was not in Baytown during critical times in the conspiracy.  However, after confronted with GPS data, phone records, and other evidence, Allen recanted his earlier testimony and admitted that he must have been in Baytown during the times alleged by the Government.

The Drug Enforcement Administration led the investigation and was assisted by the Baytown Police Department, the San Angelo Police Department, and the U.S. Marshals Service.  Assistant U.S. Attorneys Russell Lorfing and Sean Long are prosecuting the case.         

# # #

DALLAS — Yesterday, a federal jury convicted Chukwuma Jonas Osuagwu, 45, of Dallas, following a seven-day jury trial before U.S. District Judge Ed Kinkeade, of several counts related to a mortgage fraud scheme, announced U.S. Attorney Erin Nealy Cox of the Northern District of Texas.

Specifically, Osuagwu was convicted of five counts of bank fraud and one count of conspiracy to commit bank fraud. He faces a maximum statutory penalty of 30 years in federal prison and a $1 million fine for each count of bank fraud and conspiracy to commit bank fraud. Osuagwu will remain in custody pending sentencing.

Osuagwu was charged along with codefendant, James W. Mitchell, 36, of Boston, in a 12-count indictment in August 2016 with tax and mortgage fraud offenses.  Mitchell pleaded guilty in November 2016 to one count of conspiracy to commit bank fraud. Mitchell faces a maximum penalty of not more than five years and a $250,000 fine. He is scheduled to be sentenced on April 11, 2018.

The five counts of tax fraud and one count of tax obstruction Osuagwu was charged with in the August 2016 indictment are still pending.

According to evidence presented at trial, starting in September 2006 and continuing for more than a year, Osuagwu engaged in a series of fraudulent real estate transactions in which he either personally purchased or sold to one or more straw purchasers or co-conspirators three residential condominium units on Hood Street in Dallas.  Osuagwu was able to personally purchase, or assist others in purchasing multiple residential condominium units only by submitting, or causing to be submitted on behalf of others, false, fraudulent and fictitious statements, documents and representations. Fraudulent documents submitted included, false bank statements, employment letters, false IRS W-2 statements or false paystubs indicating the purchaser worked for Osuagwu’s company, Inforation, Inc. These documents caused one or more financial institutions, including Bank of America, J.P. Morgan Chase Bank and Wells Fargo Bank, to issue a mortgage loan they otherwise would not have issued. 

IRS Criminal Investigation and the Federal Housing Finance Agency Office of Inspector General led the investigation; Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI) assisted. 

Assistant U.S. Attorneys Adrienne Frazior and J. Nicholas Bunch are in charge of the prosecution.

# # #

Fort Worth, Texas – Yesterday, U.S. District Judge Reed O’Connor convicted Nygul Anderson, 19, and Albert Gonzalez, 18, of two additional counts for their role in an extortion and kidnapping scheme that occurred in Fort Worth in October 2017, announced Erin Nealy Cox, U.S. Attorney for the Northern District of Texas.

On March 2, 2018, following a one-day trial, Judge O’Connor convicted the two men of one count of conspiracy to use an interstate facility to commit a travel act violation. At that time, Judge O’Connor reserved ruling on the two remaining counts. Yesterday, Judge O’Connor convicted Anderson and Gonzalez of one count of conspiring to possess extortion proceeds and one count of attempted money laundering.

Sentencing for both defendants is scheduled for June 25, 2018. They face a maximum penalty of 30 years in prison and a fine of $750,000. 

According to the evidence presented at trial and the documents filed in this case, on September 22, 2017, a victim began receiving threatening calls from an unrecognizable Mexican telephone number.  The caller stated he had kidnapped the victim’s two brothers in Rioverde, San Luis Potosi, Mexico and demanded $300,000 or they would be killed.  The next day the ransom demand was lowered to $40,000 and then again to $20,000.  Instructions were given to deliver the money, once the money was delivered the caller disclosed the location of the brothers and they were found tied up in a motel room in Rioverde, San Luis Potosi, Mexico.

On September 29, 2017, the same victim received another call from the same Mexican telephone number demanding an additional $100,000 or else they would kidnap the brothers again and kill them.  The deadline for the second ransom drop was Friday, October 13, 2017. 

On October 13, 2017, the kidnappers in Mexico and the victim agreed to a location at a Home Depot in Fort Worth for the money drop.  At approximately 4:30 p.m., a controlled money drop was made at the agreed upon meeting location. 

Shortly thereafter, four individuals – Anderson, Gonzalez, Fernando Cabrera (who previously pled guilty), and a 17 year-old minor – were arrested as they attempted to collect the ransom money.

During trial, the government proved that these four individuals believed that they were collecting $20,000 in unlawful proceeds.  The four conspirators had met in McAllen, Texas, and then drove to Houston, then to Dallas, and then to Fort Worth in an attempt to collect the money.  These four conspirators communicated with other conspirators in Mexico during the trip about the location of the money pick, the amount of money to be retrieved, and precautions that should be taken to avoid detection.  

The FBI and the North Richland Hills Police Department investigated the case.  Assistant U.S. Attorneys P.J. Meitl and Chris Wolfe prosecuted.

# # #

LUBBOCK, Texas — Kevin Ismael Lopez, 25, of Lubbock, Texas, was sentenced Friday, March 9, 2018 by U.S. District Judge Sam R. Cummings to 327 months in federal prison and 20 years of supervised release, following his guilty plea in November 2017 to two counts of production of child pornography, announced U.S. Attorney Erin Nealy Cox of the Northern District of Texas.

Lopez has been in custody since his arrest in August 2017 on a related criminal complaint.

According to the plea agreement factual resume, on December 14, 2016, Lopez used his mother’s cellular telephone, to record a video of Lopez engaging in sexual conduct with a prepubescent minor female as she slept at his Lubbock, Texas residence.

On January 24, 2017, at the same residence, Lopez used another cellular phone, to record a video of Lopez engaging in sexual conduct with another prepubescent minor as she slept. Lopez also made a sexually explicit video recording of the girl. After creating this video recording, Lopez used the Internet to transport the video to his Dropbox account, which he used for online storage of some of his videos and images.

The case was brought as part of Project Safe Childhood, a nationwide initiative launched in 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse.  Led by U.S. Attorney’s Offices and the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood leverages federal, state and local resources to better investigate, apprehend and prosecute individuals who sexually exploit children.  Project Safe Childhood also prioritizes identifying and rescuing victims.  For more information about Project Safe Childhood, please visit http://www.justice.gov/psc/.  For more information about internet safety education, please visit http://www.justice.gov/psc/ and click on the tab “resources.”

The U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) and Lubbock County Sheriff’s Office investigated. Assistant U.S. Attorney Jeffrey Haag prosecuted.

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WASHINGTON - Attorney General Jeff Sessions announced the appointment of six new U.S. Attorneys to serve two-year terms on the Attorney General’s Advisory Committee of U.S. Attorneys (AGAC), joining the nine members announced on November 13, 2017. The AGAC was created in 1973 and reports to the Attorney General through the Deputy Attorney General. It represents the U.S. Attorneys and provides advice and counsel to the Attorney General on matters of policy, procedure, and management affecting the Offices of the U.S. Attorneys.

The new appointees are U.S. Attorney for the Northern District of Texas Erin Nealy Cox; U.S. Attorney for the Eastern District of New York Richard P. Donoghue; U.S. Attorney for the Middle District of Alabama Louis V. Franklin, Sr.; U.S. Attorney for the Northern District of Illinois John R. Lausch, Jr.; U.S. Attorney for the District of Massachusetts Andrew E. Lelling; and U.S. Attorney for the District of Delaware David C. Weiss.

“I am pleased to announce these new members of the Attorney General’s Advisory Committee. The Advisory Committee plays an important role in helping us achieve the Department of Justice’s goals, including to reduce violent crime, combat transnational criminal organizations, secure our southern border, end the devastating opioid crisis, and enforce the rule of law,” said Attorney General Sessions.

A brief biography of each new member is below: Erin Nealy Cox
The Senate confirmed Erin Nealy Cox’s appointment as United States Attorney for the Northern District of Texas in November 2017. Prior to this appointment, Ms. Nealy Cox was a Senior Advisor at McKinsey & Co in the cybersecurity and risk practice and on the Board of Directors of Sally Beauty Holdings, a large retailer on the NYSE. From 1999 to 2008, Ms. Nealy Cox served as an Assistant United States Attorney in the Northern District of Texas, where she prosecuted cyber crimes, white collar crimes, and general crimes. In 2004 and 2005, she served at Main Justice as Chief of Staff and Senior Counsel to the Assistant Attorney General in the Office of Legal Policy. Ms. Nealy Cox also previously worked at Stroz Friedberg, a cybersecurity and investigations consulting firm. Ms. Nealy Cox clerked for the Honorable Henry A. Politz, when he served as Chief Judge of the Fifth Circuit Court of Appeals, and the Honorable Barefoot Sanders, United States District Judge in the Northern District of Texas. She received a B.B.A in Finance from the McCombs School of Business at the University of Texas at Austin and her J.D., magna cum laude, from Southern Methodist University Dedman School of Law.

Richard P. Donoghue
On January 5, 2018, the Attorney General appointed Richard P. Donoghue to be interim United States Attorney for the Eastern District of New York. Prior to this appointment, Mr. Donoghue served as the Senior Vice President and Chief Counsel for CA Technologies based in New York. From 2000 to 2011, Mr. Donoghue worked in the United States Attorney’s Office for the Eastern District of New York in various roles, including Criminal Chief and Deputy Criminal Chief. Mr. Donoghue received his B.A., cum laude, from Hofstra University and his J.D., from St. John’s University School of Law.

Louis V. Franklin, Sr.
The Senate confirmed Louis V. Franklin, Sr. to be United States Attorney for the Middle District of Alabama in September 2017. Mr. Franklin has served in the United States Attorney’s Office for the Middle District of Alabama for nearly 27 years, including as Criminal Chief for almost 16 years. Mr. Franklin served as an Assistant United States Attorney from 1990 to 1996 and from 1998 to 2001. From 1996 to 1998, Mr. Franklin was an associate at Sirote and Permutt. Mr. Franklin began his career as a staff attorney at the Legal Services Corporation of Alabama from 1987 to 1990. Mr. Franklin received his B.A. from the University of Alabama, an M.S. from Auburn University at Montgomery, and his J.D. from Howard University School of Law.

John R. Lausch, Jr.
The Senate confirmed John R. Lausch, Jr.’s appointment as United States Attorney for the Northern District of Illinois in November 2017. Prior to his appointment, Mr. Lausch was a partner at Kirkland & Ellis LLP. Previously, he served as an Assistant United States Attorney in the Northern District of Illinois from 1999 to 2010. During his time in the U.S. Attorney’s Office, Mr. Lausch served as a Deputy Chief in the Narcotics and Gangs Section for several years, where he helped lead the District’s Anti-Gang and Project Safe Neighborhoods programs. Mr. Lausch clerked for the Honorable Michael S. Kanne of the United States Court of Appeals for the Seventh Circuit. He received his A.B., cum laude, from Harvard University and his J.D., cum laude, from Northwestern University School of Law.

Andrew E. Lelling
The Senate confirmed Andrew E. Lelling’s appointment as United States Attorney for the District of Massachusetts in December 2017. Prior to this appointment, Mr. Lelling was the senior litigation counsel for the United States Attorney’s Office for the District of Massachusetts and has worked in that office for 12 years, prosecuting white collar crime and international drug trafficking, among other offenses. Mr. Lelling also served as an Assistant United States Attorney in the Eastern District of Virginia. He previously served as counsel to the Assistant Attorney General at the Department of Justice Civil Rights Division. Mr. Lelling clerked for the Honorable B. Avant Edenfield of the United States District Court for the Southern District of Georgia. He received his B.A., magna cum laude, from the State University of New York at Binghamton and his J.D., cum laude, from the University of Pennsylvania Law School.

David C. Weiss
David C. Weiss’s nomination to be United States Attorney for the District of Delaware was confirmed in February. Mr. Weiss previously served as the Acting United States Attorney for the District of Delaware from 2009 to 2011 and 2017 to 2018, and as the First Assistant United States Attorney from 2007 to 2017. Prior to serving in these positions, Mr. Weiss was an Assistant United States Attorney from 1986 to 1989. Mr. Weiss clerked for the Honorable Andrew D. Christie of the Delaware Supreme Court. Mr. Weiss received his B.S. from Washington University and his J.D. from Widener University School of Law.

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DALLAS – Yesterday, following a 10-day trial before U.S. Chief District Judge Barbara M.G. Lynn, a jury convicted Terry Lynn Anderson, 67, and Rocky Freeland Anderson, 37, of Dallas, on multiple felony counts related to a health care fraud scheme they operated, announced Erin Nealy Cox, U.S. Attorney for the Northern District of Texas.

The jury convicted the father and son duo on one count of conspiracy to commit health care fraud, eight counts of health care fraud, and four counts of aggravated identity theft. The jury convicted Terry Anderson on two additional health care fraud counts.

The evidence at trial showed that the defendants defrauded Blue Cross and Blue Shield of Texas (Blue Cross) by submitting claims on behalf of employees of American Airlines, Inc. for hearing aids that were not needed and, in many cases, never dispensed to the patient. The fraudulent claims were submitted through Anderson Optical & Hearing Aids Center, the defendants’ family-owned business that had locations in Arlington and Bedford.

To increase the number of claims they could submit to Blue Cross, the defendants engaged in fraudulent marketing practices. For example, the defendants promised patients a free pair of high-end sunglasses or a free pair of prescription eyeglasses in exchange for taking a free hearing test. At the conclusion of these hearing tests, the defendants told patients that they had slight to mild hearing loss and required them to sign an order for hearing aids in order to receive the free glasses. The defendants promised patients that the hearing aids would be provided to them at no cost, and that Anderson Optical & Hearing would waive any applicable copayments, coinsurance, or deductibles. The defendants also offered patients $100 gift cards in exchange for referring family members and coworkers for free hearing tests.

In 2012, the pair brought their fraud scheme into American Airlines’ airport facilities and started offering free hearing tests to aircraft mechanics and fleet services clerks in maintenance hangars and employee breakrooms. Attracted by the offer of free sunglasses, the pair often had long lines of employees waiting to be tested. However, an expert witness who testified for the government explained that the cursory screening tests the defendants performed, which witnesses described as lasting 3-5 minutes, were incapable of producing results upon which one could make a legitimate decision to dispense hearing aids. Witnesses from Blue Cross testified that these cursory screening tests also failed to comply with Blue Cross’s medical policies related to the evaluation of hearing impairment.

The evidence also showed that, in November 2013, Blue Cross conducted an audit of Anderson Optical & Hearing and requested copies of patient records for certain American Airlines employees and their dependents. On January 6, 2014, the Texas Department of State Health Services-Professional Licensing Unit (Professional Licensing Unit) began an investigation regarding a complaint it had received concerning the Andersons. In February 2014, when given the opportunity to respond to the complaint, the defendants submitted several patient records to the Professional Licensing Unit, including some of the same patient records that had been collected by Blue Cross. The patient records submitted to the Professional Licensing Unit had altered test scores and additional notations that were not present when the same records were submitted to Blue Cross in November 2013.

During the period of the conspiracy, Anderson Optical & Hearing submitted claims to Blue Cross for hearing aids on behalf of American Airlines employees totaling more than $27 million.  As a result of these claims, Blue Cross paid Anderson Optical & Hearing more than $16.7 million.

At trial, Terry Anderson took the stand in his own defense. In an attempt to shift the blame on to patients who were more interested in his offer of free sunglasses than they were in hearing aids, he testified, “Well, unfortunately among us are people that will take advantage of perhaps any program, if they have an opportunity to.”

The defendants face a maximum statutory penalty of 10 years in federal prison and a $250,000 fine for the conspiracy count and for each of the substantive health care fraud counts. The aggravated identity theft counts carry a mandatory statutory penalty of two years in federal prison and a fine of up to $250,000.

The superseding indictment includes a forfeiture notice that requires the defendants to forfeit a 300 acre ranch in Bosque County, three vehicles, and more than $3.1 million that was seized from nine financial accounts in December 2015.

The Federal Bureau of Investigation investigated the case. Assistant U.S. Attorneys Douglas Brasher and Rachael Jones prosecuted.

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DALLAS — Kristopher Brian Anderson, 32, of Dallas, Texas, was sentenced today by U.S. District Judge Sidney A. Fitzwater to 41 months in federal prison and ordered to pay $1,412,424.06 in restitution, following his guilty plea in September 2017 to offenses related to a scheme to defraud Pivotal Petroleum Services LLC, announced U.S. Attorney Erin Nealy Cox of the Northern District of Texas.  The total restitution figure included the total amount of funds stolen, as well as additional funds spent to investigate Anderson’s theft of his employer’s funds.

Anderson pleaded guilty to one count mail fraud. Judge Fitzwater ordered Anderson to surrender to the Bureau of Prisons on April 24, 2018.

According to the plea agreement factual resume, Tailwater Capital LLC was a Texas corporation, based in Dallas, Texas that specialized in raising private equity capital for oil and gas investments. Pivotal Petroleum Partners LP and Pivotal Petroleum Partners II LP were privately held Texas corporations, based in Dallas, Texas that specialized in acquiring and leasing non-operating working interests of oil and gas properties. Tailwater Capital LLC owned Pivotal Petroleum Partners LP and Pivotal Petroleum Partners II LP.

P2 Energy Solutions was a privately held company, based in Denver Colorado, with Texas offices in Houston, San Antonio and Fort Worth. P2 Energy Solutions provided various administrative services to the oil, gas and energy industry including financial and accounting management software for revenue processing and check distribution. Pivotal Petroleum Services LLC handled the administrative and accounting services of Pivotal Petroleum Partners LP and Pivotal Petroleum Partners II, LP. Pivotal Petroleum Services LLC in tum used the services of P2 Energy Solutions to electronically process incoming vender invoices and to physically prepare hard copy checks payable to the companies listed on the invoice. P2 Energy Solutions then caused checks prepared by P2 Energy Solutions to be sent via the United States Postal Service to the addresses printed on the checks or delivered by a private courier services all at the direction of Anderson.

Empery Resource Consultants, LLC (Empery) was a Texas corporation which Anderson secretly set up and used as part of the scheme to embezzle Tailwater Capital Funds. Over a 33 month period, Anderson repeatedly submitted fraudulent invoices to Pivotal Petroleum Partners falsely claiming payment to Empery Resource Consultants for “landmen” services that were never provided to Pivotal Petroleum Partners.

On May 14, 2014, according to the factual resume, Anderson was hired by Pivotal Petroleum Services as the corporate controller.  As controller, Anderson was responsible for the accounting operations of Pivotal Petroleum Partners LP and Pivotal Petroleum Partners II LP. These duties involved the preparation of financial reports, maintaining records involving the receipt and disbursement of funds to ensure that the reported results comply with the generally accepted accounting principles. These duties included the review and approval of vender invoices for payment. As controller, Anderson was clearly responsible to monitor and protect the assets of the Pivotal Petroleum companies.  Instead, Anderson used his position of trust as corporate controller to betray his employer Tailwater Capital and ultimately caused total losses of over $1.4 million to Tailwater Capital.

On August 28, 2014, Anderson opened a business bank account in the name Empery Resource Consultants, LLC. Anderson used this account to deposit and later spend funds fraudulently obtained Pivotal Petroleum Partners LP and Pivotal Petroleum Partners II LP.

From August 2014 and continuing through May 2017, Anderson submitted 142 fraudulent invoices causing the fraudulent payment of $1,389,991.  Simply put, Anderson stole over $1.3 million from his employer.  During the approximately 33 month scheme, Anderson spent funds stolen from Pivotal Petroleum Partners LP and Pivotal Petroleum Partners II, LP to support a lavish lifestyle. Anderson fraudulently obtained an average of over $86,000 per month. Among other things, these expenses included $451,683 in total cash withdrawals and $958,091 in credit card and debit card charges.

The United States Postal Inspection Service, Fort Worth investigated the case.  Assistant U.S. Attorney David Jarvis prosecuted.

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DALLAS — Three defendants charged with offenses stemming from their roles in a six year bank fraud scheme that caused $29,000,000 in fraudulent funding of loans, credit lines, and/or credit cards, have pleaded guilty to their respective roles in the scheme, announced Erin Nealy Cox, U.S. Attorney for the Northern District of Texas.

Yesterday, the lead defendant, Eddie Contreraz, 48, of Frisco, Texas, pleaded guilty before U.S. Magistrate Judge Renee Harris Toliver to one count of bank fraud.  The maximum penalty for that offense is 30 years in federal prison, a $1 million fine and restitution.  Sentencing is set for June 11, 2018.

Last week, co-defendants Stephanie Loraine Contreraz, 27, of Frisco, Texas, and Abraham Valdez, 53, of Frisco, Texas, each pleaded guilty to one count of conspiracy to commit bank fraud.  The maximum penalty for that offense is 5 years in federal prison, a $250,000 fine and restitution.  

All three defendants will remain on bond pending sentencing. Later this month, three additional defendants charged in the same case are also scheduled to plead guilty to one count of conspiracy to commit bank fraud.  The seventh defendant, Kwanghee Anh, remains a fugitive with an outstanding arrest warrant.

According to the factual resume filed in the case, from January 2011 through March 2016, Contreraz was the owner and operator of Preferred Marketing Group, Inc. (PMG), also known as PMG Business Solutions. PMG assisted its clients with credit repair and obtaining funding from lenders in the form of loans, lines of credit, and credit cards. The majority of PMG’s clients were unable to obtain funding on their own due to insufficient income and/or employment; as well as the client’s inability to provide certain documents required by lenders.

Beginning in about 2011, according to the factual resume, Contreraz produced and used many fraudulent documents to obtain loan approvals. Contreraz created consistently high quality fraudulent documents that Contreraz knew banks and other lending institutions accepted as valid and genuine documents. Contreraz and his employees then electronically transmitted these fraudulent documents to lenders.

During the period from about January 2011 through March 2016, approximately 95 percent or more of PMG’s clients obtained funding while using false and fictitious documents. Contreraz normally met with the clients and reviewed the information in their loan applications. Some clients did not have jobs, some did not have the necessary documents that banks required in the loan applications, and some did not have high enough income levels to qualify for a loan. When a client had such issues that might prevent loan approval by the bank, Contreraz told these clients that their loan would not be approved unless the client/borrower was willing to submit false information to the bank. False information provided included, inflated false income figures; false representations that the loan applicant's position was the manager of a company; false and fraudulent corroborating pay stubs, W- 2 tax documents, and/or utility bills.

Contreraz caused PMG employees Stephanie Contreraz, Abraham Valdez, Bryce Armijo, and Elizabeth Flint to use false financial information when clients applied for loans and credit cards over the telephone and the internet. These four co­defendants worked with clients to insure that the clients reported the agreed-upon false information. These defendants also escorted clients to obtain the maximum number of loan approvals in a short period of time on the same day. The employees would take clients to meet with specific lender representatives that Contreraz already had established a relationship with and who agreed to help PMG clients.

Contreraz admitted that he caused all six of his co-defendant employees to assist borrowers fraudulently obtain at least 2,300 loans, credit lines, and/or credit cards from at least ten FDIC insured banks and at least another 140 loans, credit lines, and/or credit cards from three non-FDIC insured consumer lenders. During this period, all seven defendants participated in this bank fraud scheme that resulted in the fraudulent funding of loans, credit lines, and/or credit cards in the total amount of at least $29,000,000.

The Federal Bureau of Investigation, Fort Worth Division is investigating this fraud. Assistant U.S. Attorney David Jarvis is prosecuting.

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DALLAS — Luis Baeza Caro, 33, of Mesquite, Texas, was sentenced Monday by U.S. District Judge David C. Godbey to 96 months in federal prison for being a convicted felon in possession of a firearm, announced U.S. Attorney Erin Nealy Cox of the Northern District of Texas.

Caro pleaded guilty in November 2017 to one count of possession of a firearm by a convicted felon.  He has been in custody since his arrest in May 2017.

According to information provided at the sentencing hearing, on November 3, 2016, law enforcement were summoned to Caro’s residence after they received complaints of gunshots being fired in the backyard.  Caro, a multi-convicted felon and gang member, was arrested and the police recovered three firearms and marijuana from his residence.

The case was investigated by the Bureau of Alcohol, Tobacco, Firearms, and Explosives and Mesquite Police Department.  Assistant U.S. Attorneys Gary Tromblay and Mark Penley prosecuted.

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FORT WORTH, Texas — Timothy Paul Malone, 39, of River Oaks, Texas, was sentenced this morning by U.S. District Judge Reed C. O’Connor to 90 years in federal prison for child pornography offenses, announced Erin Nealy Cox, United States Attorney for the Northern District of Texas.

Malone pleaded guilty in November 2017 to two counts of sexual exploitation of children and one count of attempted sexual exploitation of children. Judge O’Connor sentenced Malone to 360 months for each of the three counts, to run consecutively. Malone has been in custody since the time of indictment in September 2017. 

According to documents filed in the case, Malone persuaded and enticed two minor children in Watauga and Haslet, Texas to engage in sexually explicit conduct for the purpose of producing a video. Malone also attempted to use another minor child to create a video of the minor engaged in sexually explicit conduct.

In January 2017, law enforcement conducted a search warrant, according to plea documents, at Malone’s residence and seized a number of electronic devices. An examination of the devices revealed a number of child pornography videos and images including those of the minors previously mentioned.

The case was brought as part of Project Safe Childhood, a nationwide initiative launched in 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse.  Led by U.S. Attorney’s Offices and the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood leverages federal, state and local resources to better investigate, apprehend and prosecute individuals who sexually exploit children.  Project Safe Childhood also prioritizes identifying and rescuing victims.  For more information about Project Safe Childhood, please visit http://www.justice.gov/psc/.  For more information about internet safety education, please visit http://www.justice.gov/psc/ and click on the tab “resources.”           

River Oaks Police Department, Tarrant County District Attorney’s Digital Forensics Unit, and U.S. Immigrations and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) investigated the case. Assistant U.S. Attorney A. Saleem prosecuted.

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Fort Worth, Texas – Following a trial before U.S. District Judge Reed O’Connor, two men have been convicted for their role in an extortion and kidnapping scheme that occurred in Fort Worth in October 2017, announced Erin Nealy Cox, U.S. Attorney for the Northern District of Texas.

Nygul Anderson, 19, and Albert Gonzalez, 18, were each convicted of one count of a conspiracy to use an interstate facility to commit a travel act violation.  Currently, they each face a maximum penalty of five years in prison and a fine of $250,000.  Judge O’Connor reserved ruling on the two remaining counts, following the one-day bench trial.

According to the evidence presented at trial and the documents filed in this case, on September 22, 2017, a victim began receiving threatening calls from an unrecognizable Mexican telephone number.  The caller stated he had kidnapped the victim’s two brothers in Rioverde, San Luis Potosi, Mexico and demanded $300,000 or they would be killed.  The next day the ransom demand was lowered to $40,000 and then again to $20,000.  Instructions were given to deliver the money, once the money was delivered the caller disclosed the location of the brothers and they were found tied up in a motel room in Rioverde, San Luis Potosi, Mexico.

On September 29, 2017, the same victim received another call from the same Mexican telephone number demanding an additional $100,000 or else they would kidnap the brothers again and kill them.  The deadline for the second ransom drop was Friday, October 13, 2017. 

On October 13, 2017, the kidnappers in Mexico and the victim agreed to a location at a Home Depot in Fort Worth for the money drop.  At approximately 4:30 p.m., a controlled money drop was made at the agreed upon meeting location. 

Shortly thereafter, four individuals – Anderson, Gonzalez, Fernando Cabrera (who previously pled guilty), and a 17 year-old minor – were arrested as they attempted to collect the ransom money.

During trial, the government proved that these four individuals believed that they were collecting $20,000 in unlawful proceeds.  The four conspirators had met in McAllen, Texas, and then drove to Houston, then to Dallas, and then to Fort Worth in an attempt to collect the money.  These four conspirators communicated with other conspirators in Mexico during the trip about the location of the money pick, the amount of money to be retrieved, and precautions that should be taken to avoid detection.  

The FBI and the North Richland Hills Police Department investigated the case.  Assistant U.S. Attorneys P.J. Meitl and Chris Wolfe prosecuted.

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WICHITA FALLS —Darrell Ellington, 58, and Craig Lain, 56, of Wichita Falls, Texas, were sentenced on February 26, 2018, before U.S. District Judge Reed O’Connor, following their guilty pleas to their roles in a conspiracy to distribute heroin and methamphetamine in the Wichita Falls, Texas, area, announced U.S. Attorney Erin Nealy Cox of the Northern District of Texas.

Ellington and Lain were sentenced to 100 months and 14 months in federal prison, respectively.  The following co-defendants previously pleaded guilty to their roles and were sentenced by Judge O’Connor in December 2017:

      Eric Lee Portier, 37, 188 months

      Michael Brooks, 50, 120 months

      Crystal Pond, 34, 107 months

      Jon Alan Brooks, 54, 105 months

      Mario Daniel Rodriguez, 26, 70 months

      David Standridge, 52, 51 months

      Bryan Tresenriter, 38, 46 months

      Jaci Lea Carter, 28, 24 months

According to plea documents filed in the case, the defendants conspired with each other and others to obtain heroin and/or methamphetamine in the Dallas, Texas, area, and transport it back to Wichita Falls for distribution.  Portier also pled guilty and was sentenced for being a felon in possession of a firearm during the time of the conspiracy. 

The Wichita County District Attorney’s Office Drug Enforcement Division, the Texas Department of Public Safety Criminal Investigation Division, and the Wichita County Sheriff’s Office investigated the case with assistance from the United States Marshal Service, Decatur Police Department, Bridgeport Police Department, and Wichita Falls Police Department.  Assistant U.S. Attorney Myria Boehm prosecuted.

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DALLAS — Marisol Carmona Arreola Avalos, 43, a citizen of Mexico, was sentenced this morning before U.S. District Judge David C. Godbey to 216 months in federal prison following her guilty plea in June 2017 to one count of conspiracy to launder monetary instruments, announced U.S. Attorney Erin Nealy Cox of the Northern District of Texas.

Avalos’ husband, Jose Apolinar Arreola Avalos, pleaded guilty in June 2017 to one count of conspiracy to possess with intent to distribute and to distribute a controlled substance, said substance being 500 grams or more of a mixture or substance containing a detectable amount of methamphetamine, a Schedule II controlled substance and was sentenced by Judge Godbey in October 2017 to 324 months in federal prison.   

According to the plea agreement factual resume, from September 25, 2015 and continuing through March 18, 2016, Marisol and Jose Avalos cooked and cleaned methamphetamine obtained from Mexico at a Post Oak Road residence in Wilmer, Texas. In order to maximize the amount of money that was being made through the sale of the methamphetamine they cooked and cleaned the methamphetamine so that it would look as white and clean as possible. Marisol and Jose Avalos were paid by co-defendant, Domingo Arreola Avalos, for their work.

Marisol Avalos was provided with drug proceeds to purchase acetone, strainers, and materials to store the methamphetamine so that, once it was cleaned, it could be sold to other people in Texas and other parts of the United States. Marisol Avalos used some of the drug proceeds to pay phone bills, propane gas bills, and electric bills. The gas and electric bills were paid to maintain the house and area where the methamphetamine was cooked. The phone bill was paid so that she and Jose Avalos could communicate with other codefendants and drug couriers who were dropping off the liquid methamphetamine to be cleaned.

On March 18, 2016, according to the plea agreement factual resume, the Dallas Police Department executed a search warrant at the residence of Marisol and Jose Avalos. As a result of the search, agents seized approximately 172 kilograms of a combination of crystal and liquid methamphetamine, firearms, and several thousand dollars in United States Currency.

Marisol Avalos agreed to forfeit 2 firearms, $20,055 in US Currency and $274,469 in U.S. Currency seized from Domingo Arreola Avalos.

The FBI investigated the case, with assistance from the Dallas Police Department and IRS Criminal Investigation. The case was prosecuted by Assistant U.S. Attorney George Leal.

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