Northern District of Texas

DALLAS — Two north Texas men have pleaded guilty in federal court in Dallas to their respective roles in a stolen refund identity fraud conspiracy, announced U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.

Reminico Zhangazha appeared before U.S Magistrate Judge David L. Horan on Tuesday and pleaded guilty to one count of theft of public funds.  Last month, co-defendant Tonderai Sakupwanya pleaded guilty to the same offense.  Each faces a maximum statutory penalty of 10 years in federal prison and a $250,000 fine.  Restitution could also be ordered.  Sakupwanya is scheduled to be sentenced on September 8, 2014, by U.S. District Judge David C. Godbey.  A sentencing date has not yet been set for Zhangazha.  Both are in federal custody.

The plea agreements with the government also note that the defendants will forfeit the following property seized by law enforcement in May 2012 during the investigation of this case:  $10,613 cash seized from Zhangazha’s vehicle; $93,513 cash from Villa Piana Luxury Apartments on Noel Road in Dallas; and $4,500 from a residence on Spring Mountain in Plano, Texas.

According to the factual resumes filed in the case, Zhangazha and Sakupwanya engaged in a scheme to defraud the Internal Revenue Service (IRS) by obtaining stolen tax refunds that were generated by e-filing false and fraudulent income tax returns.  They rented private mailboxes in the names of aliases by using forged United Kingdom passports.  They then established bank accounts using the alias names and mailing addresses acquired at the private mailboxes.  During the course of the scheme, Zhangazha used the aliases of “Martin V. Masters” and “Roy Daniel Black.”  Sakupwanya used the aliases of “Webster G. Rice,” “Floyd Robbins,” and “Floyd Roberts,” during the scheme, according to the factual resume.             

According to the factual resumes, the Forms 1040 directed the IRS to electronically deposit the refunds into bank accounts the defendants established.  Alternatively, the Forms 1040 directed refunds to be issued by a treasury check and mailed to an address under the control of the defendants.  The income tax returns also directed refunds to accounts established at a third-party financial services company, such as EPS Financial, that would enable them to issue a check containing the tax refund.  These third party checks and the treasury checks were deposited into bank accounts the defendants established.  After the checks were deposited, or the tax refunds had been electronically deposited, the defendants would withdraw the funds for their own use and benefit.  The factual resumes further note that the cash, mentioned above, which was seized from the defendants during the investigation, was obtained by them as a result of their scheme.

The case was investigated by IRS Criminal Investigation and U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI).  Assistant U.S. Attorney Chris Stokes is in charge of the prosecution.

DALLAS — At a sentencing hearing held this morning before Chief U.S. District Judge Sidney A. Fitzwater, Selemani Hakizimana was sentenced to 57 months in federal prison and ordered to pay approximately $362,000 in restitution, following his guilty plea in February 2014 to one count of conspiracy to commit theft of public money, announced U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.

Hakizimana has been in custody since his arrest in August 2013 at Hartsfield-Jackson Atlanta International Airport, according to information presented when he made his initial appearance in federal court in the Northern District of Georgia.  Hakizimana’s indicted co-conspirator, Dizzy Kisonga, remains a fugitive.

According to the factual resume filed in the case, Hakizimana and Kisonga made an agreement to steal, and convert for their own use, income tax refunds by submitting fraudulent tax returns.  In fact, according to information presented at today’s sentencing hearing, the scheme involved 154 victims.

The investigation began in March 2012 when Kisonga attempted to deposit five Refundo, Rush Tax Inc. checks at an Irving, Texas branch of Bank of America, according to the factual resume.  Refundo, however, had placed a stop payment on each of the checks.  Believing the checks were forged, bank officials notified the Irving Police Department.

An Irving Police Department officer arrived at the bank and met with Kisonga, who claimed to have prepared tax returns for the people named on the refund checks.  Kisonga advised, according to the factual resume, that he had loaned the customers money while their tax returns were processed, and once the refunds were issued, the customers endorsed the checks and gave them to Kisonga.  After depositing the refund checks, Kisonga advised he planned to give the customers the leftover funds, minus their initial loan amount.

Kisonga, according to the factual resume, admitted to having additional refund checks in his car.  The officer determined that each of the seven checks located in the vehicle was already endorsed and made payable to a different person.  The officer also found and seized a handwritten note from the car that contained the names of the five individuals listed on the Refundo tax return checks, and next to each name were the last four digits of the individual’s social security number.

Law enforcement executed a search at Kisonga’s house in April 2012 and learned that the five Refundo checks and the other checks found by the Irving Police Department belonged to an acquaintance named Selemani Hakizimana.  According to Kisonga, Hakizimana game him the refund checks, already endorsed, while at a nightclub in Addison, Texas.  According to their agreement, Kisonga kept a percentage of the checks’ value and gave the remainder to Hakizimana. 

Forensic evidence established, according to the factual resume, that Hakizimana and Kisonga communicated via text messaging.  These texts contained personal identifying information of several individuals as well as messages from Hakizimana instructing Kisonga to wire transfer money to domestic and foreign bank accounts.  A review of Kisonga’s bank statements revealed that in 2012, he sent $275,000 in wire transfers to Hakizimana’s bank account.

Internal Revenue Service Criminal Investigation and the Irving Police Department investigated.  Assistant U.S Attorney Aaron Wiley prosecuted. 

DALLAS — The local cell head of a major methamphetamine distribution conspiracy that operated in the Dallas-Fort Worth metroplex and elsewhere since October 2012, was sentenced this afternoon in federal court in Dallas, announced U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.

Gerardo Cisneros, aka “Tatuado,” “Gera,” and “Jerry,” was sentenced by U.S. District Judge Jorge A. Solis to serve a total of 20 years in federal prison.  Cisneros, 27, previously agreed to forfeit five vehicles and a firearm.

Cisneros pleaded guilty in October 2013 to one count of conspiracy to possess with intent to distribute and to distribute methamphetamine and one count of conspiracy to commit money laundering.  He has been in custody since his arrest in August 2013 when special agents with the Drug Enforcement Administration (DEA) and other law enforcement members executed numerous arrest warrants for defendants charged in the methamphetamine conspiracy as outlined in a federal indictment returned the previous month.  The conspiracy involved Cisneros’s mother, who has been arrested, and his sister, who is a fugitive.  The methamphetamine was imported into the U.S. from Mexico, and it was delivered to the Dallas area for distribution.

According to documents filed in the case, Cisneros acted as the local cell head of the conspiracy.  He worked with co-defendants to set up a receipt and distribution center for controlled substances, including methamphetamine and marijuana.  Cisneros admitted that he received and distributed methamphetamine in multi-kilo quantities, collected money from his customers and returned money to his supply source in Mexico.  Cisneros admitted sending money to Mexico via couriers to conceal the nature, location, source, ownership or control of the drug proceeds.

Cisneros also admitted conspiring to launder money by depositing drug proceeds into multiple bank accounts so that the money could ultimately be withdrawn by individuals in Mexico in order to conceal or disguise the nature, location, source, ownership or control of the drug proceeds. 

Cisneros further admitted he used drug proceeds to purchase a 2006 Chrysler 300, a 2009 Honda Accord, a 2007 Ford Edge, a 2010 Chevrolet Camaro, a 2009 Mercedes and his residence on Marilyn Lane in Arlington.  He also admitted that the automobiles, residence and property at this location were used to facilitate drug trafficking.

Twenty-four defendants were charged in the conspiracy.  The case against one defendant was dismissed and two defendants are awaiting trial.  All other captured defendants have pleaded guilty and are awaiting sentencing.

This Organized Crime and Drug Enforcement Task Force (OCDETF) case was investigated by the DEA, the Dallas Police Department, Grand Prairie Police Department, Garland Police Department, Rockwall Police Department and the Arlington Police Department.

Assistant U.S. Attorney George Leal is leading the prosecution with assistance from Assistant U.S. Attorneys Brian Poe and John DeLaGarza.

DALLAS — A former employee with the Dallas Independent School District (DISD) and her co-conspirator were arrested by U.S. Postal Inspectors this morning in Irving, Texas, on an indictment returned by a federal grand jury last month charging each of them with one count of conspiracy to commit mail fraud, announced U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.

Maricella Reed, 40, and Adrian Bevelle, 31, appeared this afternoon before U.S. Magistrate Judge Renée Harris Toliver for their initial appearances and both were released on bond.

Reed was employed by the DISD as a data specialist in the worker’s compensation section of the district’s Risk Management Department.  The indictment alleges that from May 7, 2009 to May 9, 2011, Reed used her position at DISD to cause approximately $160,000 in unauthorized payments to Bevelle.

Specifically, Reed altered information sent to Accounts Payable, substituting Bevelle’s name in place of legitimate claimants and adding Bevelle’s name and payment amounts to the list of legitimate claimants.  She also created and submitted payment voucher forms for Bevelle in various amounts.  Based on the information Reed provided, Accounts Payable issued checks to Bevelle and mailed the checks to him at addresses in Dallas and Irving.  Bevelle received, endorsed and cashed the checks at various locations.

An indictment is an accusation by a federal grand jury, and a defendant is entitled to the presumption of innocence unless proven guilty.  However, if convicted, conspiracy to commit mail fraud carries a maximum statutory penalty of 20 years in federal prison and a $250,000 fine.  Restitution could also be ordered.

The U.S. Postal Inspection Service is investigating.  Special Assistant U.S. Attorney Michelle Allen-McCoy is prosecuting.

(Download Factual Basis)

DALLAS — A Dallas man who met a 15-year-old female run-away at a bus station, took her, and made her engage in sex acts for money, pleaded guilty this afternoon in federal court before U.S. Magistrate Judge David L. Horan, announced U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.

Dereck Johnson, 33, pleaded guilty to one count of sex trafficking of children.  If the Court accepts the plea agreement executed between the defendant and the government, the parties agree the appropriate term of imprisonment in this case is 180 months in federal prison.  Sentencing is set for September 15, 2014, before U.S. District Judge David C. Godbey.

According to documents filed in the case, on June 1, 2012, a 15-year old female, “Jane Doe,” took $200 from her father before spending the night at a friend’s house.  While there, she asked a friend to drive her to a Greyhound station where she bought a ticket, with several transfers, to Arizona where a friend lived.  Her bus stopped at the Greyhound station in downtown Dallas, where Johnson approached her.  Jane Doe told Johnson she was 15 and that her parents did not know where she was.  Johnson told her to go with him, and he would help her find Wi-Fi for her phone.  Instead, he called a friend who picked them up and eventually took them to his home.

While at the house, Johnson used methamphetamine and provided it to Jane Doe.  When Johnson’s friend came home and discovered Jane Doe was underage, he made them leave.  He drove them back to the Greyhound bus station where Johnson and Jane Doe took a taxi to a Flying J Truck stop.  There, they got a ride from a truck driver to a Love’s truck stop near another Greyhound station in Dallas.  At that bus station, Jane Doe used a Greyhound employees’ cellphone to call her father to come pick her up, but she was unable to describe exactly where she was.  She rushed off the phone and Johnson was waiting for her.  He told her not to contact her father again, that she was staying with him, and she needed to come with him.  Jane Doe’s father called the number back and spoke to a Greyhound employee who told him Jane Doe had left with a man.

Johnson took Jane Doe back to the Love’s truck stop with him, where he begged for money.  Johnson found a truck driver who was willing to drive them to Houston.  Johnson told Jane Doe they needed to make money so she needed to go into a specific man’s truck cab.  After entering the man’s truck cab, the man repeatedly raped her and then provided compensation for the sex.

A few days later, on June 5, 2012, Johnson sent her to take a shower, and while she was in the bathroom at the truck stop, she plugged in her prepaid cellphone and was able to send out a text message for the first time since arriving at the truck stop.  She was rescued soon thereafter.

U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) investigated.  Assistant U.S. Attorney Cara Foos Pierce is prosecuting.

DALLAS — A Dallas man, who robbed a Garland, Texas branch of Bank of America last year, was sentenced this afternoon in federal court in Dallas, announced U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.

Jason Wayne Hulsebus, 34, was sentenced to 70 months in federal prison and ordered to pay $10,090 in restitution, following his guilty plea in February 2014 to one count of bank robbery. 

Hulsebus admitted that on October 25, 2013, he robbed the Bank of America, located at 5402 North President George Bush Highway in Garland.  When he entered the bank, he approached the teller and passed a piece of paper that stated, “Do not scream!  I will not hurt you!  Give me all the money in the drawer now!”  In fear of her life, the teller placed the cash inside a Wal-Mart bag supplied by Hulsebus.  While standing at the teller counter, Hulsebus held a BB pistol in his hand, but because of the counter’s height, the teller never saw the pistol.  Hulsebus fled the bank with the money.

Evidence recovered from the robbery indicated Hulsebus was the robber.  He was arrested on November 13, 2013, on a federal criminal complaint.

The Garland Police Department and the FBI investigated.  Assistant U.S. Attorney Keith Robinson prosecuted.

One Defendant Arrested at JFK International Airport Just Prior to
Boarding Flight to Ghana

DALLAS — Two individuals, who defrauded Dallas-area investors in a gold purchase scheme they were involved in during late 2010, have been sentenced, announced U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.

Annetta Lou Smith, aka “Annette Crawford,” 49, was sentenced today by U.S. District Judge Reed C. O’Connor to 30 months in federal prison.  Co-defendant Warren Michael Hills, 54, of New Orleans, Louisiana, was sentenced earlier this month to 13 months in federal prison.  Judge O’Connor ordered each defendant to pay $464,035 in restitution, jointly and severally.  Each pleaded guilty in January 2014 to one count of conspiracy to commit wire fraud.

According to documents filed in the case, on August 27, 2013, Smith was informed that an indictment charging her and Hills with fraud would be presented to a federal grand jury in Dallas the following week.  On Sunday evening, September 1, 2013, Smith was arrested on a criminal complaint by FBI agents at JFK International Airport, where she was awaiting a flight to Ghana, West Africa, scheduled to depart later that evening.  She has been in custody since that time.  Hills was arrested in New Orleans the following month, and Judge O’Connor remanded him into custody after his sentencing on May 15, 2014.

According to plea papers filed in the case, Smith and Hills worked together to recruit investors to purchase gold from the country of Ghana, West Africa.  Smith and Hills represented to two particular investors that if these investors wired their funds to a specific bank account in Ghana, then they would cause the promised (and paid for) gold to be shipped to the investors.  These two investors suffered substantial financial losses as a direct result of the failure of Smith and Hills to cause all of the promised gold to be delivered to them.

Although both Smith and Hills knew that the investors had fully paid for all of their promised gold, they also knew that all of the promised gold was ultimately never going to be shipped to them.  Rather than be truthful to the investors, Smith and Hills made false representations to them promising the remaining gold would be shipped. 

Smith and Hills caused substantial monetary losses to investors, including approximate total net losses of $113,483 to investor P.G. and approximately total net losses of $325,000 to investor M.W.

Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud.  Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations.  For more information on the task force, visit www.stopfraud.gov.

The FBI investigated the case and Assistant U.S. Attorney David Jarvis prosecuted.

LUBBOCK, Texas — Two executives of American Commercial Colleges, Inc. (ACC), James Michael Otto and Bruce Alan Reed, appeared this morning in federal court in Lubbock, Texas, before U.S. District Judge Sam R. Cummings, and pleaded guilty to federal charges.  U.S. Attorney Sarah R. Saldaña of the Northern District of Texas made the announcement this afternoon.

Otto, 61, of Lubbock, was the Chief Operating Officer and Campus Director for ACC’s Lubbock campus.  Reed, 64, of San Angelo, Texas, was the Campus Director for ACC’s San Angelo campus.  Otto and Reed each pleaded guilty to an Information, filed earlier this week, charging one count of misprision of a felony, admitting they knew about the criminal activity but failed to report it.  Each faces a maximum statutory penalty of three years in federal prison and a $250,000 fine.  Judge Cummings ordered presentence investigation reports with sentencing dates to be set following the completion of those reports.

Yesterday, the president of ACC, Doyle Brent Sheets, 58, of Lubbock, and ACC also pleaded guilty to federal charges.  ACC stole government funds by converting Federal Student Aid (FSA) program funds, and thus caused a loss to the government of approximately $972,794.  Sheets admitted that he knew about the theft but did not report it, and he agreed that he would be personally, individually, jointly and severally liable for the total loss amount.

According to their plea agreements with the government, both Otto, Reed and Sheets are excluded, directly and indirectly from participating in any FSA programs.  This voluntary exclusion is also a voluntary debarment, and they will not contest any actions taken to execute the debarment.  Each agreed they will not have any ownership or interest in, or serve as an officer, director or any legal entity acting as a post-secondary educational institution participating in any FSA program.

ACC is a proprietary institution with corporate office in Lubbock.  At one time, ACC operated five campuses in Texas — Lubbock, Abilene, Odessa, San Angelo and Wichita Falls — and one in Shreveport, Louisiana.  ACC admitted that it knowingly converted FSA program funds from its students solely for its benefit to represent falsely to the U.S. Department of Education that it complied with the requirement that a proprietary institution may not derive more than 90% of its revenue from the FSA program to remain eligible to participate in the FSA program.  The remaining 10% of revenue must come from other sources.  This is known as the 90/10 Rule, and if an institution did not satisfy it, it would lose its eligibility to participate in the FSA programs.

In 2007, 2008 and 2009, ACC failed to meet the requirements of the 90/10 Rule, however, as early as 2003, ACC had devised a scheme to represent falsely to the Department of Education that it had met the requirements.  From 2007-2009, ACC had students obtain private loans from a private bank in San Angelo, Texas, with whom ACC had made arrangements, of approximately $953,897.  ACC recorded the loan funds received from the private bank as “good cash,” thus falsely representing to the Department of Education that ACC complied with the 90/10 Rule.  By obtaining the loans from the private bank and delaying the students’ FSA program funds, ACC lowered their total FSA program funds revenue for the 90/10 Rule.  ACC repaid and intended to repay those loans with approximately $972,794 of FSA program funds to give the appearance of complying with the 90/10 Rule.  The private short-term loans were obtained entirely to benefit ACC so that it could falsely represent its compliance.  To further the scheme, ACC employees advised students that the school would close if they did not satisfy the 90/10 Rule, and this would jeopardize the students’ education at ACC.

Otto admitted participating in the scheme to falsely represent to the Department of Education that ACC met the 90/10 Rule requirements.  Otto and Reed identified ACC students who were already enrolled at ACC and eligible to receive FSA program funds, and used these students to obtain the short-term private loans from a private bank.  ACC and Reed induced that private bank in San Angelo to provide those short-term private loans, and in 2009, Otto and Reed had students from the San Angelo campus obtain loans from that bank for $65,276. 

ACC repaid those loans with approximately $66,606 of FSA program funds to give the appearance of complying with the 90/10 Rule.  Otto and Reed each admit knowing that ACC converted $66,606 in FSA program funds from it students to falsely represent it was in compliance.   

The United States Department of Education, Office of Inspector General, is conducting the investigation.  Assistant U.S. Attorney Paulina Jacobo is in charge of the prosecution.

LUBBOCK, Texas — Adrian Tino Guerrero, 28, of Slaton, Texas, was sentenced today by U.S. District Judge Sam R. Cummings to188 months in federal prison, to be followed by a 20-year term of supervised release.  Guerrero pleaded guilty in February 2014 to one count of receipt of child pornography and has been in custody since his arrest in November 2013 on a related charge.  U.S. Attorney Sarah R. Saldaña of the Northern District of Texas made the announcement today.

According to documents filed in the case, Guerrero used his computer to access various forms of pornography on the Internet, including numerous images and videos of child pornography.  He admitted that in November 2013, while searching the Internet for child pornography, he knowingly downloaded a video of a female child engaged in sexually explicit conduct.

The case was brought as part of Project Safe Childhood, a nationwide initiative, which was launched in May 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 marshals federal, state and local resources to better locate, apprehend and prosecute individuals, who sexually exploit children, and identify and rescue 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.”

U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) conducted the investigation.  Assistant U.S. Attorney Amy Burch prosecuted.

DALLAS — Two men who are charged with recently committing the armed robberies of four jewelry stores in Dallas and Lewisville, Texas, were arrested this morning on federal charges, announced U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.

Mark D. Whitfield, 35, of Mesquite, Texas, and Michael Demon Jackson, 37, of Dallas, are each charged in a federal criminal complaint with conspiracy to commit robbery and using, carrying and brandishing a firearm in relation to a crime of violence.  They each made their initial appearance before U.S. Magistrate Judge Irma C. Ramirez this afternoon in federal court in Dallas and were detained.

According to the complaint, Whitfield and Jackson committed the following armed robberies:

            October 18, 2013        Marquise Jewelers
                                                        13331 Preston Road, Dallas
            February 4, 2014        Marquise Jewelers
                                                         13331 Preston Road, Dallas
            February 24, 2014      Classic Jewelers
                                                         2401 S. I-35E (Vista Ridge Mall), Lewisville, Texas
            April 29, 2014             Gianni’s Jewelers                  
                                                         2401 S. I-35E (Vista Ridge Mall), Lewisville, Texas

Generally, during each robbery, the two men would enter the store and one would ask to see diamond rings.  The other man, armed with a pistol, would force the victim store employee to the floor while jewelry in display cases was taken at gunpoint.  In-store video surveillance recorded all robberies.  On two of these robberies, witnesses observed the robbers fleeing in a red car.

The investigation revealed that a 2010 Mitsubishi Galant, stopped for a traffic violation on February 15, 2014, matched the get-away vehicle’s description.  The citation report listed Whitfield as the driver, and Jackson as the passenger.  The vehicle was registered to Whitfield’s wife.

The investigation further revealed that Jackson was arrested on a state charge of unlawful possession of a firearm by a felon on March 13, 2014, when he was found with a loaded firearm during another traffic stop.  He was released on bond the following day.

A federal complaint is a written statement of the essential facts of the offenses charged and must be made under oath before a magistrate judge.  A defendant is entitled to the presumption of innocence until proven guilty.  The maximum statutory penalty for the conspiracy count is five years in federal prison and a $250,000 fine.  The maximum statutory penalty for the firearm offense is life in federal prison and a $250,000 fine.  The government has 30 days to present the matter to a federal grand jury for indictment.

The Dallas FBI Violent Crimes Task Force, the Dallas Police Department and the Lewisville Police Department are conducting the ongoing investigation.  Deputy Criminal Chief Assistant U.S. Attorney Gary Tromblay, Assistant U.S. Attorney Lisa Miller and Special Assistant U.S. Attorney Lara Burns are prosecuting.

(Download Factual Basis)

FORT WORTH, Texas — A federal grand jury returned an indictment yesterday charging Mark Anthony Pape, 23, of Fort Worth, Texas, with one count of production of child pornography and one count of committing this offense as a registered sex offender.  Pape has been in federal custody since his arrest last month in San Marcos, Texas, on a related charge outlined in a federal criminal complaint.  U.S. Attorney Sarah R. Saldaña of the Northern District of Texas made the announcement today.

According to the criminal complaint, in February 2014, Pape used a prepubescent minor to engage in sexually explicit conduct with him and made a video recording of that conduct with his cell phone.  During the execution of a state search warrant at a search of Pape’s residence, law enforcement seized that cell phone, and a forensic exam of the memory card revealed images and videos of Pape engaged in the sexual abuse of a prepubescent female.

The investigation was initiated when the National Center for Missing and Exploited Children (NCMEC) received a cyber-tip regarding an individual who had uploaded an image, containing suspected child pornography, to the Internet.  The investigation led to the identification of Pape, a registered sex offender.

A federal indictment is an accusation by a grand jury and a defendant is entitled to the presumption of innocence unless proven guilty.  If convicted, however, the statutory penalty for the production count is not less than 15 years or more than 30 years in prison and for the registered sex offender count, a mandatory 10-year consecutive sentence.  Both counts also carry a fine of up to $250,000 and a term of supervised release of up to life.  

The case was brought as part of Project Safe Childhood, a nationwide initiative, which was launched in May 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 marshals federal, state and local resources to better locate, apprehend and prosecute individuals, who sexually exploit children, and identify and rescue 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 Fort Worth Police Department and U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) are investigating.  Assistant U.S. Attorney Aisha Saleem is in charge of the prosecution.

(Download Factual Basis)

Responsible for Theft of Nearly $1 Million

LUBBOCK, Texas — The president of American Commercial Colleges, Inc. (ACC), Doyle Brent Sheets, appeared this morning in federal court in Lubbock, Texas, before U.S. District Judge Sam R. Cummings, and pleaded guilty personally, and on behalf of ACC, to federal charges.  U.S. Attorney Sarah R. Saldaña of the Northern District of Texas made the announcement this afternoon.

Sheets, 58, of Lubbock, Texas, pleaded guilty to an Information charging one count of misprision of a felony.  He faces a maximum statutory penalty of three years in federal prison and a $250,000 fine.  Authorized by corporate resolution, Sheets pleaded guilty to one count of theft of government funds and aiding and abetting, on behalf of ACC.  ACC faces a maximum statutory penalty of five years’ probation, a $500,000 fine, or up to twice the gross gain or loss resulting from the offense.  Judge Cummings ordered presentence investigation reports with sentencing dates to be set following the completion of those reports.

According to Sheets’ plea agreement with the government, ACC stole government funds by converting Federal Student Aid (FSA) program funds, and thus caused a loss to the government of approximately $972,794.  Sheets admitted that he knew about the theft but did not report it, and he agreed that he would be personally, individually, jointly and severally liable for the total loss amount.

According to ACC’s plea agreement with the government, ACC is excluded, directly and indirectly from participating in any FSA programs.  This voluntary exclusion is also a voluntary debarment, and ACC will not contest any actions taken to execute the debarment.  ACC agrees that it will not have any ownership or interest in, or serve as an officer, director or any legal entity acting as a post-secondary educational institution participating in any FSA program.

Two others associated with ACC have also been charged, in Informations filed on May 19, 2014, with federal offenses.  Michael James Otto, 61, of Lubbock, who served as the Chief Operating Officer and Campus Director for ACC’s Lubbock campus, is charged with one count of misprision of a felony.  Bruce Alan Reed, 64, of San Angelo, Texas, who served as the Campus Director for ACC’s San Angelo campus is charged with the same offense.

ACC is a proprietary institution with corporate office in Lubbock.  At one time, ACC operated five campuses in Texas — Lubbock, Abilene, Odessa, San Angelo and Wichita Falls — and one in Shreveport, Louisiana.  ACC admitted that it knowingly converted FSA program funds from its students solely for its benefit to represent falsely to the U.S. Department of Education that it was in compliance with the requirement that a proprietary institution may not derive more than 90% of its revenue from the FSA program to remain eligible to participate in the FSA program.  The remaining 10% of revenue must come from other sources.  This is known as the 90/10 Rule, and if an institution did not satisfy it, it would lose its eligibility to participate in the FSA programs.

In 2007, 2008 and 2009, ACC failed to meet the requirements of the 90/10 Rule, however, as early as 2003, ACC had devised a scheme to represent falsely to the Department of Education that it had met the requirements.  From 2007-2009, ACC had students obtain private loans from a private bank in San Angelo, Texas, with whom ACC had made arrangements, of approximately $953,897.  ACC recorded the loan funds received from the private bank as “good cash,” thus falsely representing to the Department of Education that ACC complied with the 90/10 Rule.  By obtaining the loans from the private bank and delaying the students’ FSA program funds, ACC lowered their total FSA program funds revenue for the 90/10 Rule.  ACC repaid and intended to repay those loans with approximately $972,794 of FSA program funds to give the appearance of complying with the 90/10 Rule.  The private short-term loans were obtained entirely to benefit ACC so that it could falsely represent its compliance.  To further the scheme, ACC employees advised students that the school would close if they did not satisfy the 90/10 Rule, and this would jeopardize the students’ education at ACC.

The investigation is being conducted by the United States Department of Education, Office of Inspector General.  Assistant U.S. Attorney Paulina Jacobo is in charge of the prosecution.

FORT WORTH, Texas — Following a hearing today in federal court in Fort Worth, Texas, a U.S. Magistrate Judge has ordered that Gregory Bogomol, 38, of Fort Worth, Texas, must remain in federal custody during the pendency of his case.  Bogomol was arrested last week by special agents with U.S. Immigration and Customs and Enforcement’s (ICE) Homeland Security Investigations (HSI) on a federal criminal complaint charging possession of child pornography.  U.S. Attorney Sarah R. Saldaña of the Northern District of Texas made the announcement this afternoon.

According to the complaint, Bogomol was employed by the Denton Independent School District as a teacher at Denton High School.  He resigned from that position the week prior to his arrest.

The investigation began when HSI was contacted by the parents of a 15-year-old male victim (MV) regarding an individual who solicited a nude photograph of the MV through a smartphone application.  The investigation revealed that an individual, later identified as Bogomol, posing as a young female, “Crystal Williams,” had contacted MV.  Their communication quickly turned sexual in nature.  Bogomol sent nude images of a young female to MV, and he requested nude images of MV in return.  MV sent one sexually explicit photograph of himself, but Bogomol requested another picture of MV’s nude body, including his face.  MV declined to send any additional photos.  Bogomol threatened to send the one photo that MV had sent to him to MV’s friends if he did not comply.  MV still refused to send another photo, and he ended all communication with Bogomol.  MV advised his parents, which led to the investigation.

On May 6, 2014, HSI special agents conducted a consensual interview with Bogomol at his residence.  Two days later, a search warrant was obtained to search Bogomol’s cell phone and several files containing images of minors engaged in sexually explicit conduct were located.

A federal complaint is a written statement of the essential facts of the offenses charged and must be made under oath before a magistrate judge.  A defendant is entitled to the presumption of innocence until proven guilty.  The maximum statutory penalty for the offense as charged is 10 years in federal prison, a $250,000 fine and a lifetime of supervised release.  The government has 30 days to present the case to a federal grand jury for indictment.

The case was brought as part of Project Safe Childhood, a nationwide initiative, which was launched in May 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 marshals federal, state and local resources to better locate, apprehend and prosecute individuals, who sexually exploit children, and identify and rescue 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.”

Anyone who may have been victimized in this case is asked to contact HSI at its toll-free number:  1-866-347-2423.

Assistant U.S. Attorney Aisha Saleem is in charge of the prosecution.

Defendant Sandy Jenkins Faces Up to 60 Years in Federal Prison

DALLAS — A former executive at the Collin Street Bakery (Bakery) in Corsicana, Texas, Sandy Jenkins, appeared yesterday before U.S. Magistrate Judge Renée Harris Toliver and pleaded guilty to several felony offenses stemming from his embezzlement of approximately $16 million from the Bakery.  U.S. Attorney Sarah R. Saldaña of the Northern District of Texas made the announcement today.

Jenkins served as the Corporate Controller for the Bakery from February 1998 to June 21, 2013.  He was terminated on June 21, 2013, after the Bakery discovered the fraud.

Specifically, Jenkins, 65, who remains in federal custody, pleaded guilty to one count of mail fraud, one count of conspiracy to commit money laundering and one count of making a false statement to a financial institution.  He faces the following maximum statutory penalties:  20 years in federal prison and a $250,000 fine on the mail fraud conviction; 10 years in federal prison and a $1 million fine on the conspiracy conviction; and 30 years in federal prison and $1.5 million fine on the false statements conviction.  Jenkins agreed to enter a forfeiture money judgment against him of at least $16,649,786, and he agreed to pay full restitution to the Bakery for the entire scope of his criminal conduct.  Sentencing is set for September 10, 2014, before U.S. District Judge Ed Kinkeade.

Jenkins’ wife, Kay Jenkins, 64, also of Corsicana, is charged in the same superseding indictment with one count of conspiracy to commit money laundering, six counts of money laundering and aiding and abetting, and two counts of making a false statement to a financial institution.  She remains on bond pending trial, which is set for August 25, 2014.

According to plea documents filed in the case, beginning at least as early as December 2004, and continuing until his termination from the Bakery, Sandy Jenkins engaged in a massive scheme to defraud the Bakery.  During that time, he embezzled more than $16 million from the Bakery, and he and his wife, Kay Jenkins, used that money to bank-roll a lavish lifestyle that included a vacation home in Santa Fe, New Mexico (purchased for approximately $658,000); hundreds of watches and pieces of jewelry worth millions of dollars; numerous luxury automobiles; and more than 200 trips on a private jet.  While this scheme was ongoing, both Sandy and Kay Jenkins were well aware that Sandy Jenkins earned approximately $50,000 per year at the Bakery, as reflected on their joint tax returns, and Kay Jenkins did not work outside the home.

Sandy and Kay Jenkins knowingly conspired to engage in monetary transactions over $10,000 with property derived from Sandy Jenkins’ embezzlement from the Bakery.  Sandy Jenkins admitted that between 2005 and 2013, he caused approximately 888 fraudulent checks to be drawn on the Bakery’s account and mailed to his personal creditors, resulting in approximately $16,649,786 in losses to the Bakery.

Sandy Jenkins further admitted that prior to this check-writing embezzlement scheme, he stole at least $114,342 from the Bakery’s petty-cash fund.  He also admitted that as he was embezzling from the Bakery, he and his wife Kay used the money to fund an incredibly lavish and opulent lifestyle.

Sandy Jenkins also admitted that on December 29, 2009, he made a false statement in connection with the application for a mortgage loan to purchase a residence in Santa Fe.  Sandy and Kay Jenkins listed a total monthly income of $25,000 when, in fact, as they well knew, their monthly income was far less than that.

The FBI has conducted the investigation.  Assistant U.S. Attorney J. Nicholas Bunch is in charge of the prosecution and Assistant U.S. Attorney Melissa Childs is handling the forfeiture.

Defendant Admitted Committing Perjury in Relation to a Bankruptcy Proceeding

DALLAS — Aaron Rene Ramirez, 43, of Plano, Texas, appeared this morning before U.S. Magistrate Judge Irma C. Ramirez and pleaded guilty to an indictment charging one count of making a false statement under penalty of perjury, announced U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.

According to documents filed in the case, in January 2009, Ramirez filed a voluntary petition under Chapter 13 of Title 11 in which he forged the signature of the listed debtor.  He also falsely represented to the Court that the listed debtor had signed and authorized the filing of the petition and other bankruptcy related documents when he well knew that the petition was completely fraudulent and that the listed debtor did not authorize, nor have any knowledge of, the petition’s filing.

Aaron Ramirez faces a maximum statutory penalty of five years in federal prison and a $250,000 fine.  He will remain on bond pending sentencing, for which a date has not yet been set.

The U.S. Postal Inspection Service is investigating, and Assistant U.S. Attorney David L. Jarvis is in charge of the prosecution.

DALLAS — Four Arlington, Texas, residents have been charged in a federal indictment, returned by a grand jury in Dallas earlier this month and unsealed yesterday, with conspiracy to defraud the United States, announced U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.

Lead defendant Carwin Shaw, 33, along with co-defendants Amanda Johnson, 35, and April Harvey, 36, were arrested on May 8, 2014, by special agents with the Social Security Administration – Office of Inspector General (SSA-OIG) and appeared before a U.S. Magistrate Judge.  Each defendant pleaded not guilty and was released on bond.  Deputy U.S. Marshals arrested the fourth defendant named in the indictment, Lanusha Lemmons, 25, on Friday.  She made her initial appearance in federal court yesterday afternoon and pleaded not guilty.  She was released on bond.

Specifically, each defendant is charged with one count of conspiracy to defraud the United States and one count of theft of government funds.  A trial date of July 28, 2014, before Chief U.S. District Judge Sidney A. Fitzwater, has been set.

The indictment alleges that Shaw, a Service Representative employed by SSA in the Mid-Cities Field Office in Grand Prairie, Texas, accessed the SSA’s system, cut additional checks to the co-conspirators by alleging their initial check had been lost or stolen, split the second check with the co-conspirator and then accessed the system and waived the overpayment so that it would not be recovered from any future benefits.  Each co-conspirator was the representative payee for one minor Social Security beneficiary.  Other co-conspirators not named in the indictment are expected to plead guilty in the near future.

“The SSA-OIG will vigorously investigate and bring to justice those SSA employees and other individuals who intentionally defraud the SSA programs,” said Robert Feldt, Special Agent in Charge, SSA-OIG, Dallas Field Division.

An indictment is an accusation by a federal grand jury, and a defendant is entitled to the presumption of innocence unless proven guilty.  However, if convicted, the conspiracy count carries a maximum statutory penalty of five years in federal prison and a $250,000 fine, and the theft of government funds count carries a maximum statutory penalty of 10 years in federal prison and a $250,000 fine.  Restitution could also be ordered.

The case is being prosecuted by Special Assistant U.S. Attorney Nicole Dana.

(Download Factual Basis)

DALLAS — Donald Record, 52, of Dallas, appeared in federal court today and pleaded guilty to an Information charging one count of possession of prepubescent child pornography, announced U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.

According to documents filed in the case, law enforcement received information from the Homeland Security Investigations (HSI) Cyber Center identifying an offender in the Dallas area.  The investigation led law enforcement to secure and execute a search warrant at Record’s residence on March 6, 2014.  Record admitted that he used his laptop computer to trade images of child pornography on the Internet, and that he looked at child pornography when he was at his home in Dallas and at work at SMU.  He admitted his age preference was 8 – 10 year olds.  He further admitted that he had approximately 100 images and one video of child pornography in his email account that he had received from others.

Record faces a maximum statutory penalty of 20 years in federal prison, a $250,000 fine and a lifetime of supervised release.  He will remain on bond pending sentencing, which is set for September 3, 2014, before U.S. District Judge Ed Kinkeade.

The case was brought as part of Project Safe Childhood, a nationwide initiative, which was launched in May 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 marshals federal, state and local resources to better locate, apprehend and prosecute individuals, who sexually exploit children, and identify and rescue 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.”

U.S. Immigration and Customs Enforcement’s (ICE) HSI conducted the investigation.  Assistant U.S. Attorney Camille Sparks is prosecuting.

DALLAS — Willie L. Loveless was sentenced today by U.S. District Judge Barbara M. G. Lynn to one year and one day in federal prison and ordered to pay $25,826 in restitution, following his guilty plea last year to felony offenses stemming from his operation as a “ten-percenter” at the Lone Star Park horseracing track in Grand Prairie, Texas.  Judge Lynn ordered Loveless to surrender to the Bureau of Prisons on July 1, 2014.  The announcement was made today by U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.

Loveless pleaded guilty in May 2013 to 20 of the 21 counts of the indictment — one count of corruptly endeavoring to obstruct and impede the due administration of the Internal Revenue laws and 19 counts of fraud and false statements on Forms W-2G.

According to the Internal Revenue Code, gambling winnings, including those from horseracing bets, are taxable and must be reported on a gambler’s income tax return.  A payer, such as Lone Star Park, is required to issue a Form W-2G, “Certain Gambling Winnings,” to a gambler if the gambler receives, among other types of winnings, $600 or more in gambling winnings, provided the payout is at least 300 times the amount of the wager.  A winning ticket that would trigger the issuance of a Form W-2G is informally referred to by gamblers as an “IRS ticket.”  The indictment also states that if an IRS ticket is for winnings greater than $5,000, a payer, such as Lone Star Park, is required to withhold and pay over to the IRS taxes in the amount of 25% of the winning ticket value.  At Lone Star Park, there are special windows, known as “IRS Windows,” where an individual must cash an IRS ticket and complete and sign a Form W-2G.

“Ten-percenting,” according to the indictment filed in the case, is a practice that occurs at some gambling establishments in which a gambler arranges for another individual to cash the gambler’s IRS ticket, so that the gambler can avoid paying taxes on the winnings.  The person cashing the ticket, often called a “ten-percenter,” completes the Form W2-G, falsely representing that he/she is the owner of the IRS ticket and the proper recipient of the winnings.  Usually, according to the indictment, the person who cashes the ticket charges approximately ten percent of the winnings for the service.

Loveless admitted, according to the factual resume filed in the case, that in calendar years 2008, 2009 and 2010, he signed approximately 1445 Forms W2-G at Lone Star Park representing more than $1.76 million in winnings.  On those forms, Loveless falsely attested that he was the only person entitled to any part of the winnings and each form signed by Loveless reflected his correct name, address and social security number.

The case was investigated by IRS Criminal Investigation and prosecuted by Assistant U.S. Attorney J. Nicholas Bunch.

LUBBOCK, Texas — Brandon Cory Boshears, 30, of San Angelo, Texas, was sentenced this morning by U.S. District Judge Sam R. Cummings to 57 months in federal prison, following his guilty plea in February 2014 to one count of possession of child pornography.  Boshears will surrender to federal custody on a date to be designated.  U.S. Attorney Sarah R. Saldaña of the Northern District of Texas made the announcement today.

According to documents filed in the case, Boshears admitted that in the course of using a file sharing program on his computer to search the Internet for depictions of minors engaged in sexually explicit conduct, he downloaded and viewed numerous images depicting minors engaged in sexually explicit conduct.

The case was brought as part of Project Safe Childhood, a nationwide initiative, which was launched in May 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 marshals federal, state and local resources to better locate, apprehend and prosecute individuals, who sexually exploit children, and identify and rescue 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 investigation was conducted by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), with assistance from San Angelo Police Department.  Assistant U.S. Attorney Steven M. Sucsy prosecuted. 

DALLAS — A Dallas man who was convicted at trial on multiple felony offenses related to his scheme to use stolen identity information to fraudulently obtain millions of dollars in tax refunds, was sentenced this afternoon in federal court in Dallas, announced U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.

Ogiesoba City Osula, 38, was sentenced by U.S. District Judge Barbara M. G. Lynn to 17 years and six months in federal prison and ordered to pay $15.9 in restitution.  Osula was convicted, following a nearly weeklong trial in October 2013, on one count of conspiracy to commit wire fraud, mail fraud and bank fraud; seven counts of presenting fraudulent claims upon the U.S.; two counts of fraud in connection with access devices and aiding and abetting; and six counts of aggravated identity theft and aiding and abetting. 

“The investigation and prosecution of individuals who engage in stolen identity refund fraud (SIRF) is a priority in this district,” said U.S. Attorney Saldaña.  “We are committed to working with IRS Criminal Investigation and the FBI, as well as other federal, state and local law enforcement partners, to combat all SIRF-related crimes.”

Last month, co-defendants George Ojonugwa, 32, of Garland, Texas, and Eseos Igiebor, 43, of Richardson, Texas, were sentenced.  Ojonugwa was sentenced to 174 months and ordered to pay $15,979,187 in restitution.  Igiebor was sentenced to 96 months and ordered to pay $9,660,658 in restitution.

Late last year, Ebenezer Legbedion, 42, of Lagos, Nigeria, was sentenced to 40 months and ordered to pay more than $1 million in restitution, and Evelyn Nyaboke Haley, 34, of Dallas, was sentenced to 60 months and ordered to pay approximately $5.7 million in restitution.

Ojonugwa, Igiebor and Legbedion each pleaded guilty to one count of conspiracy to commit wire fraud.  Igiebor also pleaded guilty to one count of aggravated identity theft.  Haley pleaded guilty to one count of conspiracy to defraud the government with respect to claims.

“The defendants who perpetrated this scheme systematically defrauded the government and the American taxpayer,” said Richard Weber, Chief IRS Criminal Investigation. “The successful take down of this cross-country identity theft ring and the lengthy sentences for the perpetrators sends a clear message that the Internal Revenue Service stands steadfast in the fight against identity theft.”

The defendants conspired to defraud the U.S. by using stolen identity information and false information to create and electronically file false tax returns to claim refunds.  The defendants had the refunds credited to stored value cards or bank accounts opened with stolen taxpayer identity information.  Even while the defendants fraudulently obtained millions of dollars in tax refunds, they filed additional fraudulent returns, attempting to obtain millions more in tax refunds for their own use and benefit.

 “The number of stolen identities and fraudulent tax refund monies in this case are staggering,” said Diego Rodriguez, Special Agent in Charge of FBI Dallas.  “We will continue to work with our federal, state and local partners to identify those who turn to computer crime and intrusions in order to profit at the public’s expense, and to hold them responsible for the ruinous impact they impose on the individuals they victimize.”

During Osula’s trial, the government presented evidence that Osula and his coconspirators were sending information to and trading information with, a group running a similar scheme in Cincinnati, Ohio.  On Nov. 8, 2011, police in a Cincinnati suburb questioned Osula and Ojonugwa, who were in a parked car after midnight with the leader of the Cincinnati ring.  A drug detection dog alerted on the vehicle, and when it was searched, police found more than $300,000 in cash and money orders and numerous debit cards.  During that incident, while Osula was in a police car and waiting to be questioned, he ate a debit card.

According to documents filed in this case and statements made in court:

SIRF is a common type of fraud committed against the United States government that results in more than $2 billion in losses annually to the United States Treasury. SIRF schemes generally share a number of hallmarks: 

• SIRF perpetrators obtain personal identifying information, including Social Security numbers and dates of birth, from unwitting individuals.
• SIRF perpetrators complete Individual Income Tax Return Form  using the fraudulently-obtained information and falsifying wages earned, taxes withheld and other data. Perpetrators use data to make it appear that the “taxpayers” listed on the fraudulent 1040 forms are entitled to tax refunds – when in fact, the various tax withholdings indicated on the fraudulent 1040s have not been paid by the listed “taxpayers,” and no refunds are due.  Perpetrators direct the U.S. Treasury Department to issue the refunds through checks (Tax Refund Treasury Checks) generated by the fraudulent 1040 forms to locations they control or can access, in various ways.
• With Tax Refund Treasury Checks now in hand, SIRF perpetrators generate cash proceeds. Certain SIRF perpetrators sell Tax Refund Treasury Checks at a discount to face value. In turn, the buyers then cash the Tax Refund Treasury Checks, either themselves or using straw account holders, by cashing checks at banks or check cashing businesses, or by depositing checks into bank accounts. When cashing or depositing Tax Refund Treasury Checks, SIRF perpetrators often present false or fraudulent identification documents in the names of the “taxpayers” to whom the checks are payable.

While this investigation was conducted by IRS Criminal Investigation and the FBI, the U.S. Secret Service Office in Cincinnati, Ohio, and the U.S. Attorney’s Office for the Southern District of Ohio, provided substantial assistance.

Assistant U.S. Attorneys Mark Penley, Christopher Stokes and P.J. Meitl prosecuted.  

FORT WORTH, Texas — A federal grand jury returned a two-count indictment against Brice Johnson, 19, of Springtown, Texas, charging him with willfully causing bodily injury to a person because of the actual or perceived sexual orientation of that person and with kidnapping, the Justice Department’s Civil Rights Division, the U.S. Attorney’s Office of the Northern District of Texas and the FBI Dallas Division announced today.

On Feb. 19, 2014, a federal criminal complaint was unsealed charging Johnson with a hate crime.  The indictment charges Johnson with the same hate crime offense and further charges that Johnson’s actions included kidnapping.

According to the affidavit filed with the criminal complaint, in the early morning hours of Sept. 2, 2013, the adult male victim, identified as A.K., connected with Johnson through the cell phone application for MeetMe.com.  A.K.’s MeetMe.com page indicated he was a gay man, while Johnson’s page indicated he was not gay.  During their chat communications, Johnson said that he was interested in engaging in sexual activity with A.K., and he invited A.K. to his home.   Johnson gave A.K. his cell phone number and address, and they exchanged text messages planning their sexual activity.

After A.K. showed up at the house, Johnson severely beat him, then put him into the trunk of A.K.’s car and drove him to a friend’s house.  Based on ligature marks on A.K.’s wrists, it appears that he was bound while he was in the trunk of the car.  Individuals at the home told Johnson to take A.K. to the hospital or they would call the police, and Johnson eventually drove A.K. to an Emergency Medical Services station in Springtown.

A.K. was hospitalized for 10 days in Fort Worth, and he was diagnosed and treated for multiple skull and facial fractures.  The investigation revealed that on the night of the incident, Johnson saved A.K.’s cell phone number using a gay slur as a contact name, and Johnson later stated that he was playing a prank on A.K. because of A.K.’s sexual orientation, again using a gay slur when referring to A.K.  According to the affidavit, A.K. said that he had no physical contact with Johnson prior to the attack.

An indictment merely establishes probable cause and Johnson is presumed innocent unless proven guilty.  Each count carries a maximum statutory sentence of life in prison and a $250,000 fine.

The investigation is being conducted by the FBI, the Springtown Police Department and the Parker County Sheriff’s Office.  The case is being prosecuted by Assistant U.S. Attorney Cara Foos Pierce and Trial Attorney Saeed Mody of the Civil Rights Division.

(Download Factual Basis)

Physician Was Also Convicted of Lying to Medicare about House Calls

DALLAS – Late yesterday, a federal jury in the Northern District of Texas convicted a physician and a home health agency manager for their participation in a $3 million Medicare fraud conspiracy.

Acting Assistant Attorney General David A. O’Neil of the Justice Department’s Criminal Division, U.S. Attorney Sarah R. Saldaña of the Northern District of Texas, Special Agent in Charge Diego Rodriguez of the FBI Dallas Division and Special Agent in Charge Mike Fields of the Dallas office of the Health and Human Services Office of Inspector General (HHS-OIG) made the announcement today.

Joseph Megwa, M.D., 60, of Arlington, Texas, and Ebolose Eghobor, R.N., 49, of Grand Prairie, Texas, were convicted of one count of conspiracy to commit health care fraud, and Megwa was convicted of three counts of health care fraud.  Eghobor was acquitted of the health care fraud counts brought against him.  The home health care charges related to a scheme involving PTM Healthcare Services Inc. (PTM), which was owned and operated by Ferguson Ikhile, R.N.  Ikhile, 56, of Irving, Texas, pleaded guilty in 2013 to conspiracy to commit health care fraud.

According to evidence presented at trial, from approximately 2006 to 2011, PTM recruited Medicare beneficiaries so that PTM could bill Medicare for unnecessary home health services.  Ikhile, Eghobor and others then prepared fraudulent medical records that made it appear that the beneficiaries needed home health services.  In exchange for cash payments, Megwa, who owned and operated Raphem Medical Practice P.A., falsely certified that the beneficiaries needed home health services and that the services otherwise qualified for payment under Medicare.

Megwa was also convicted of four counts of making false statements related to a health care benefit program based on his submission of false claims to Medicare for home visits or house calls to patients that he never actually made.

The conspiracy to commit health care fraud count and each of the substantive health care fraud counts carry a maximum statutory penalty of 10 years in federal prison and a $250,000 fine.   Each count of making false statements relating to health care matters carries a maximum statutory penalty of five years in federal prison and a $250,000 fine.  In addition, restitution could be ordered.  U.S. District Judge Ed Kinkeade is scheduled to sentence Megwa and Eghobor on September 10, 2014 and Ikhile on May 28, 2014.

The investigation was led by the FBI and HHS-OIG, and was brought by the Medicare Fraud Strike Force, a joint effort of the U.S. Attorney’s Office for the Northern District of Texas and the Criminal Division’s Fraud Section.  The case was prosecuted by Deputy Chief Jeffrey A. Goldberg and Trial Attorney Allan J. Medina of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Mindy Sauter and Michael Elliott of the Northern District of Texas. 

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,700 defendants who have collectively billed the Medicare program for more than $5.5 billion.  In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.

DALLAS — A couple from Dallas, Erin Patton and Keith Williams, aka “Chucky Blood,” both 24, have pleaded guilty to their respective roles in sex trafficking a child, announced U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.

Today, Patton pleaded guilty to a superseding information charging one count of conspiracy to commit sex trafficking of children.  Her boyfriend, Williams, pleaded guilty in February 2014 to one count of sex trafficking of children.  Both Patton and Williams face a maximum statutory penalty of life in prison and a $250,000 fine.  U.S. District Judge David C. Godbey will sentence the defendants this summer.

According to documents filed in the case, in September 2012, after she ran away from home, 14-year-old “Jane Doe” met Erin Patton.  Patton let Jane Doe stay with her, and Patton facilitated Jane Doe’s engaging in commercial sex acts by driving her to locations where the acts occurred and providing her a cell phone so she could post her services on “Mocospace” and Backpage.com.  Jane Doe gave Patton a portion of the money she earned from engaging in the sex acts.

Again, in November 2012, after she again ran away from home, Jane Doe contacted Patton.  This time, both Patton and Williams picked up Jane Doe and posted her availability to engage in commercial sex acts on Backpage.com.  While Williams went to serve a jail sentence shortly thereafter, Patton continued facilitating Jane Doe’s commercial sex acts.  Jane Doe eventually left.

In April 2013, Jane Doe again contacted Patton and told her she was still in school, but wanted to leave and wanted Patton to pick her up.  Patton and Williams agreed to let Jane Doe stay with them, but they told her she was going to have to engage in commercial sex acts, as she had done in the past, to pay for her expenses.  Williams and/or Patton drove Jane Doe to meet with customers and Jane Doe gave all the money she earned to Williams and Patton.

On May 4, 2013, officers with the Dallas Police Department (DPD) encountered now 15-year-old Jane Doe, in a car parked in an area known for prostitution.  Williams came by shortly thereafter.  He admitted knowing she was 15, driving her to meet with customers, and collecting proceeds from her “dates.”

DPD led the investigation, with assistance from the FBI.  Assistant U.S. Attorney Cara Foos Pierce is prosecuting.

LUBBOCK, Texas — Russell Eugene Heath, 45, of Lubbock, Texas, was sentenced today by U.S. District Judge Sam R. Cummings to serve a total of 295 months in federal prison, consecutive to his 24-month supervised release revocation, for his role in the takeover style robberies of two banks in May 2013.  The announcement was made today by U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.

Heath pleaded guilty in November 2013 to one count of aggravated bank robbery and one count of possessing a firearm in furtherance of a crime of violence.  Co-defendant Gabriel Tenorio, 31, also of Lubbock and the getaway driver in the robberies, pleaded guilty to one count of aggravated bank robbery and was sentenced in December 2013 to 140 months in in federal prison. 

Heath’s aggravated bank robbery conviction stems from the May 1, 2013, robbery of Lubbock National Bank, located at 4420 19th Street in Lubbock.  At approximately 12:45 p.m., Heath, wearing a mask and gloves and carrying a firearm, entered the bank and pointed the gun at tellers, yelling at them to give him money.  Heath jumped over a counter, opened a teller drawer and began stuffing money in his pockets.  He then ran from the bank to a waiting vehicle driven by Tenorio.

Heath’s conviction for possessing a firearm in furtherance of a violent crime stems from the May 20, 2013, robbery of FirstBank Southwest Bank, located at 5701 SW 34th Street in Amarillo, Texas.  In that robbery, Heath entered the bank carrying a short-barreled shotgun, vaulted over the teller counter and stole money.  He then ran from the bank into a waiting vehicle, driven by Tenorio. 

The FBI, Lubbock Police Department, Amarillo Police Department and the Lubbock County Sheriff’s Office investigated.  Deputy Criminal Chief Assistant U.S. Attorney Denise Williams prosecuted.

DALLAS — Convicted bank robbers, John Charles Applewhite and his daughter, Shelby Dawn Applewhite, have been sentenced for their roles in robbing three banks in Dallas in May 2013, announced U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.

John Applewhite, 50, who pleaded guilty in October 2013 to three counts of bank robbery, was sentenced yesterday by U.S. District Judge David C. Godbey to serve a total of 184 months in federal prison.  He was on supervised release for another bank robbery conviction at the time he reoffended.

Shelby Applewhite, 23, was sentenced in March 2014 to serve 60 months in federal prison.  She pleaded guilty in November 2013 to one count of conspiracy to commit those three bank robberies.

The defendants admitted that they committed the following bank robberies in Dallas:

5-01-2013       Citibank
                             14909 Coit Road

5-10-2103       Veritex Community Bank
                              14885 Preston Road

5-15-2013       ViewPoint Bank
                             5941 Forest Lane

According to documents filed in the case, for each of these robberies, John and Shelby Applewhite drove in separate vehicles to the vicinity of the respective banks with the specific intent to commit bank robbery.  They switched vehicles with each other and altered a license plate prior to each bank robbery to facilitate the bank robbery and avoid detection by law enforcement.  Prior to each robbery, Shelby Applewhite entered the bank to learn the layout of the bank’s interior and obtain information about bank personnel, to include whether or not there was a security guard on duty.  She reported all the information to John Applewhite who used it to commit the bank robbery.

In each bank robbery, John Applewhite disguised his identity by wearing a hoodie, scarf or mask, sunglasses and gloves.  He also used a dangerous weapon that he pointed at tellers, causing them to fear for their lives. 

The FBI and the Dallas Police Department conducted the investigation.  Assistant U.S. Attorney Keith Robinson prosecuted.

DALLAS — Psychologist Michael Ellis Wolf, 62, of Dallas, was sentenced today by U.S. District Judge Jorge A. Solis to 36 months in federal prison and ordered to pay approximately $1.8 million in restitution.  In January 2014, Wolf pleaded guilty to one count of health care fraud stemming from his treatment of disabled federal workers and was remanded into custody at that time.  U.S. Attorney Sarah R. Saldaña of the Northern District of Texas made today’s announcement.

According to documents filed in the case, Wolf provided psychotherapy to individuals, including civilian employees of the federal government who sustained on-the-job injuries or employment-related occupational illness.  The Federal Employees Compensation Act (FECA) provides disability compensation benefits and payment for medical and rehabilitation care for federal civilian employees who sustain on-the-job injuries or employment-related occupational illness.  The FECA is a health care benefit program administered by the U.S. Department of Labor (DOL), Office of Workers Compensation Program.

As part of his scheme to defraud a health care benefit program, Wolf filed claims for payment of services that were never rendered and for services that were rendered in far less quantities than billed.

For example, through his billings, Wolf claimed he provided therapy for one particular injured federal employee, from January 2008 through mid-2013, seven days a week, when he in truth and fact he would only provide it once or twice a week, for 60 minutes.  He also falsely claimed through billings that he provided therapy to this individual on holidays and on Sundays, and that on multiple days, he provided eight hours of therapy, per day, for this patient.  Wolf also falsely claimed, through billings, that he provided four-eight hours of explanations to this patient’s family and employers multiple times a week, when in fact, he only offered occasional phone or in-office consultation with the family.

During this time period, the total amount billed by Wolf, on behalf of this patient, was more than $1.9 million.  Of the amount billed, Wolf was paid more than $1 million.

The DOL Office of Inspector General and the U.S. Postal Service Office of Inspector General conducted the investigation.  Assistant U.S. Attorney P. J. Meitl prosecuted.

AMARILLO, Texas— An Amarillo, Texas, man remains in federal custody following his arrest on an indictment charging several felony drug and firearms offenses.  Michael Chad Kennedy, 30, appeared before U.S. Magistrate Judge Clinton E. Averitte on those charges yesterday and was ordered detained pending a detention hearing and arraignment set for tomorrow.  U.S. Attorney Sarah R. Saldaña of the Northern District of Texas made the announcement today.

Specifically, the 10-count indictment charges Kennedy with four counts of possession with intent to distribute methamphetamine; four counts of being a felon in possession of a firearm; one count of possession of an unregistered firearm; and one count of possessing a firearm in relation to a drug trafficking crime.  A forfeiture allegation is also included in the indictment that would require the defendant, upon conviction, to forfeit all firearms and ammunition involved in or used in the commission of the offenses.

The indictment alleges that Kennedy possessed various amounts of methamphetamine, with the intent to distribute it, on February 23, 2013, May 16, 2013, November 27, 2013, and January 25, 2014.  The indictment further alleges that Kennedy, a previously convicted felon, possessed firearms on May 16, 2013, June 1, 2013, and November 27, 2013, and that one the firearms he possessed on June 1, 2013 was an illegal sawed-off shotgun.  The indictment further alleges that on November 27, 2013, Kennedy possessed a firearm in furtherance of a drug trafficking crime.

A federal indictment is an accusation by a grand jury and a defendant is entitled to the presumption of innocence unless proven guilty.  If convicted, however, the offenses carry the following maximum statutory penalties, per count:  possession with intent to distribute methamphetamine – not less than five years or more than 40 years in federal prison and a $5,000,000 fine; felon in possession of a firearm – 10 years in federal prison and a $250,000 fine; possession of an unregistered firearm – 10 years in federal prison and a $250,000 fine; and possession of a firearm in furtherance of a drug trafficking crime – five years up to life in federal prison and a $250,000 fine.

The Bureau of Alcohol, Tobacco, Firearms and Explosives and the Amarillo Police Department are conducting the investigation.  Assistant U.S. Attorney Timothy Hammer is in charge of the prosecution.

Defendant Was a Fugitive for Six Years

DALLAS — A Dallas-area tax return preparer who was indicted in 2007 on federal felony charges stemming from the operation of that business and who remained a fugitive until November 2013, pleaded guilty in federal court in Dallas today, announced U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.

Ousmane Sow pleaded guilty to one count of aiding and assisting in the preparation of a fraudulent tax return.  He faces maximum statutory penalty of three years in federal prison, a $250,000 fine and restitution.  A sentencing date was not set.

According to the factual resume filed in the case, from 2003 to 2005, Sow and co-defendant Tichafara Mpariwa provided tax preparation services through a business they jointly owned and operated under the name of DSL Tax Services, LLC., located on Forest Lane in Dallas.  In 2004, Sow opened a second location of DSL on Airport Freeway in Irving, Texas.  Both Sow and Mpariwa were the Electronic Return Originators at the Dallas and Irving office locations of DSL.

From 2003 to 2005, according to the factual resume, Sow knowingly prepared and caused to be filed U.S. individual tax returns, along with supporting schedules and forms, which contained materially false credits and deductions to fraudulently increase the taxpayer clients’ refunds.  This included the use of false business expenses and the use of false education expenses to create a false education credit, thus increasing the taxpayer client’s refund.

Defendant Mpariwa remains a fugitive.

Internal Revenue Service – Criminal Investigation is leading the investigation.  The U.S. Department of State’s Bureau of Diplomatic Security assisted in securing the return of Sow to the U.S.  Assistant U.S. Attorney Chris Stokes is in charge of the prosecution.

Pleas Resolve All Criminal Cases Pending Against Defendant in Northern District of Texas

DALLAS — Barrett Lancaster Brown, who has been associated with the hacking group, Anonymous, appeared in federal court this morning before U.S. Magistrate Judge Paul D. Stickney and pleaded guilty to three separate offenses that essentially resolve all three criminal indictments pending against him in the Northern District of Texas (NDTX), announced U.S. Attorney Sarah R. Saldaña.

Plea negotiations between the United States Attorney’s Office in the NDTX and Brown resulted in filing of a plea agreement and factual resume on April 2, 2014.  In the documents unsealed last week and in open court this morning, Brown, 32, of Dallas, admitted his guilt and waived his right to a speedy and public trial.

Pursuant to the plea agreement, Brown pleaded guilty this morning to the felony offense of transmitting a threat to an FBI Special Agent in interstate commerce, as charged in an indictment returned by a federal grand jury in Dallas in October 2012.  He also pleaded guilty to both counts of a superseding information that was filed on March 31, 2014, charging the felony offense of being an accessory after the fact to the unauthorized access to a protected computer and with the misdemeanor offense of interfering with the execution of a search warrant and aiding and abetting another person’s interference with the execution of a search warrant.  In court this morning, Brown assured the Magistrate Judge that he was pleading guilty because he was guilty, and not for any other reason.

Brown faces a maximum statutory penalty of 60 months in federal prison and a $250,000 fine on the threat conviction; 30 months in federal prison and a $125,000 fine on the accessory after the fact conviction; and 12 months in federal prison and a $100,000 fine on the interference with the execution of a search warrant conviction.

According to the stipulations set forth in the factual resume, Brown understands that in determining the appropriate sentence, the District Court may consider all the facts underlying and relevant to the offenses of conviction.  The Court is not limited to those facts set out in Brown’s stipulated factual resume.  Sentencing is set for August 18, 2014, before U.S. District Judge Sam A. Lindsay.

The Dallas office of the FBI investigated, and the U.S. Attorney’s Office in the NDTX prosecuted.

(Download Plea Agreement)

(Download Factual Resume)

ABILENE, Texas — Following a three-day trial before U.S. District Judge Jorge A. Solis, in federal court in Abilene, Texas, a jury has convicted Ernest Martenez Melendez, 63, of Sweetwater, Texas, on an indictment charging one count of conspiracy to distribute and possess with intent to distribute one kilogram or more of heroin.  The announcement was made today by U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.

Melendez faces a maximum statutory penalty of not less than 10 years and up to life in federal prison and a $10 million fine.  A sentencing date has not yet been set before Judge Solis.

All of Melendez’s six co-defendants in the case have pleaded guilty to their roles in the conspiracy.

The government presented evidence at trial that for a period of several months in 2013, Melendez traveled to Fort Worth, Texas, and obtained ounce quantities of black tar heroin, which he then transported back to Sweetwater, re-packaged in smaller quantities and distributed to numerous individuals there.

The Texas Department of Public Safety – Criminal Investigations Division and the Bureau of Alcohol, Tobacco and Firearms investigated.  Assistant U.S. Attorneys Juanita Fielden and Justin Cunningham are prosecuting.

LUBBOCK, Texas — A San Angelo, Texas, woman, who worked for a water utility service company in unincorporated Tom Green County was sentenced for embezzling approximately $43,000 from her employer, announced U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.

Melissa Manda Herrera, 38, was sentenced yesterday by U.S. District Judge Sam R. Cummings to 21 months in federal prison and ordered to pay $85,790 in restitution, following her guilty plea in December 2013 to one count of theft concerning federally funded programs.  Judge Cummings remanded her into the custody of the U.S. Marshal.

Herrera worked as the Office Manager of the Red Creek Municipal Utility District from April 2003 through February 2012.  The District, which receives federal financial assistance from the U.S. Department of Agriculture, was established in 1992 to provide water utility services to its customers.  It is overseen by an elected, uncompensated board of directors and it contracts with Concho Rural Water Corporation to manage the District’s water distribution system, conduct monthly readings of customers’ meters and maintain the District’s customer billing records, which includes preparing and mailing monthly bills and posting customer payments based on information provided by the District’s Office Manager.  The District employs only one person – the part-time Office Manager. 

As part of her duties, Herrera was responsible for establishing customer accounts, handling customer payment issues and collecting all customer payments.  Herrera admitted that while she was Office Manager for the District, she did not include all customer payments in the daily deposits made at the bank, and in fact, kept customers’ cash payments for her own benefit.

The FBI, Tom Green County Sheriff’s Office and San Angelo Police Department investigated.  Assistant U.S. Attorney Ann Roberts led the prosecution.

Defendant Robbed Prosperity Bank on Kiest Boulevard in Dallas in October 2013

DALLAS — Ruling that the defendant was a career offender, today, U.S. District Judge Jane J. Boyle sentenced David Asher Agee, 26, of Dallas, to 188 months in federal prison, following his guilty plea in January 2014 to one count of bank robbery, announced U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.

Agee admitted that he robbed Prosperity Bank, located at 333 West Kiest Boulevard in Dallas, on October 9, 2013.  Early that afternoon, Agee entered the bank, approached a teller’s window and handed the teller a piece of paper.  Agee told the teller that he needed to make a deposit.  The teller unfolded the piece of paper that read, in part, “I have a gun give me the money.”  Agee took the box in which the teller had placed cash from the cash drawer and left the bank.  The ensuing investigation by the FBI and the Dallas Police Department identified Agee as the robber and he was arrested on a federal complaint in early November 2013.

Assistant U.S. Attorney Keith Robinson prosecuted the case.

DALLAS — A Dallas man who pleaded guilty in July 2013 to his role as a leader of a marijuana distribution conspiracy operating in north Texas was sentenced this morning in federal court in Dallas.  Sylvespa Eugene Adams, aka “Sylvesta Adams, Pa and Paw,” 31, was sentenced by U.S. District Judge Sam A. Lindsay to 210 months (17.5 years) in federal prison, announced U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.

Adams will also be required to forfeit the proceeds of his criminal activity, which includes four houses in Dallas and seven luxury vehicles including a Bentley, Porsche and Mercedes.

Adams and 21 codefendants were charged in the drug conspiracy that was outlined in a federal indictment returned by a grand jury in Dallas in December 2012.  More than half of the defendants were in custody following an operation in January 2013 conducted by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI); Internal Revenue Service Criminal Investigation (IRS-CI); the Dallas High Intensity Drug Trafficking Areas (HIDTA); the Desoto, Dallas, Balch Springs, Arlington and Midlothian Police Departments; Dallas County Sheriff’s Office, Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) and the Dallas County District Attorney’s Office.

During the course of this Organized Crime Drug Enforcement Task Force (OCDETF) operation, law enforcement executed federal and state search warrants that resulted in the seizure of approximately 25 pounds of hydroponic marijuana, more than 600 marijuana plants, 10 vehicles and five firearms.  To date, 17 defendants have pleaded guilty to their role in the conspiracy.  Fourteen of those defendants were sentenced to federal prison terms ranging from 7 months to 180 months.  The remainder will be sentenced in the next few months.

Adams admitted that on several occasions during the conspiracy, which began in January 2010, he conspired with others to possess with the intent to distribute and to distribute 100 kilograms or more of marijuana.  According to plea documents filed, couriers were sent to Tucson, Arizona, to pick up marijuana and transport it back to Dallas in checked suitcases on commercial airlines.  Adams admitted the marijuana was stashed at his house and another house on Red Wing Drive in Dallas.  One residence on Red Wing Drive was used to grow marijuana plants that would be harvested for distribution to customers.

Adams also admitted that during the conspiracy, he used Lions Entertainment L.L.C., Club Copa and various rental properties to conceal and disguise the nature, location, source, ownership and control of the drug proceeds by depositing them in a co-defendant’s bank account.

Assistant U.S. Attorney Phelesa Guy was in charge of the prosecution, and Assistant U.S. Attorney John de la Garza handled the forfeiture.

FBI Says Luis de la Garza was the “Mesh Mask Bandit”

DALLAS — Serial bank robber Luis de la Garza, 59, of Farmers Branch, Texas, dubbed the “Mesh Mask Bandit,” was sentenced this afternoon by U.S. District Judge Jane J. Boyle to serve a total of 240 months (20 years) in federal prison, announced U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.

According to plea papers filed, de la Garza not only admitted committing the five below-listed bank robberies, he stipulated he committed an additional 13 bank robberies and an additional two attempted bank robberies in the Dallas – Fort Worth metroplex between April 2010 and May 2013.

March 18, 2013          Chase Bank                             6300 Harry Hines Blvd.
                                                                                                Dallas, Texas
April 5, 2013              Grand Prairie State Bank       2317 South Belt Line Rd.
                                                                                                Grand Prairie, Texas
April 22, 2013            Wells Fargo Bank                   13297 Josey Lane
                                                                                                Farmers Branch, Texas
April 29, 2013            Capital One Bank                   200 North Mesquite Street, Suite 121
                                                                                                Arlington, Texas
May 15, 2013              Chase Bank                             111 South Garland Ave., Suite 150
                                                                                                Garland, Texas

In each of these five bank robberies, de la Garza wore long-sleeved clothing, a mesh mask, cap and gloves to disguise his identity, and in each robbery he brandished and used a BB pistol.  In each of the robberies, the tellers were in fear for their lives.  During the last robbery, on May 15, 2013, a bank customer grabbed de la Garza’s pistol and struck him in the head.  While a struggle then ensued between de la Garza and a bank employee, de la Garza broke free and fled the bank, leaving behind his pistol, which Garland Police Department determined was a CO2 BB gun.

The investigation was conducted by the FBI, Dallas Police Department, Grand Prairie Police Department, Farmers Branch Police Department, Arlington Police Department, Garland Police Department, Carrollton Police Department, Addison Police Department, Lewisville Police Department and Plano Police Department.  Assistant U.S. Attorney Keith Robinson prosecuted.

Ran Ponzi Scheme Involving Medical Insurance Investments

DALLAS — Gloria Ann Solomon, 71, of Dallas, was sentenced today by U.S. District Judge Jane J. Boyle to five years in federal prison, following her guilty plea in July 2013 to a felony information charging one count of wire fraud; restitution will be determined at a later date.  The announcement was made today by U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.

In a related case, Duncan MacDonald, 50, also of Dallas, was sentenced earlier this month to five years in federal prison.  He also pleaded guilty to an Information charging the same offense. 

According to documents filed, from at least 2006 and continuing into at least September 2012, MacDonald was President and Director of Global Corporate Alliance, Inc. (GCA).  MacDonald operated GCA out of offices in Addison and Euless, Texas.  He hired co-conspirator Solomon in January 2007 as GCA’s Chief Administrative Officer. 

GCA managed the North American Consumer Alliance (NACA), a not-for-profit member association that created and packaged insured benefit association healthcare programs and policies administered to corporations, organizations and other entities.  GCA sold the healthcare policies throughout the U.S. and maintained a conservative management fee.  It collected fees called “overages” that were in excess of the conservative management fee.

In 2008, MacDonald created GCA’s “Overage Program” to sell interests in the overages through “Overage Purchase Agreements.”  An investor’s potential return was directly related to the number of people who enrolled in a healthcare plan by purchasing a healthcare policy from CGA.  GCA would pay the investor for each new healthcare plan enrollee.  MacDonald installed Solomon as the program’s manager and she worked with MacDonald in conducting GCA’s activities regarding the Overage Program.

MacDonald initially planned to have only a single person invest in the Overage Program, but when one couldn’t be found, GCA fractionalized the program to make it available for multiple investors to provide smaller amounts of funds.  GCA contracted with a sales agent to solicit individuals to invest, and the sales agent used information regarding the Overage Program that was provided by MacDonald and Solomon.  That information included the number of current and projected healthcare plan enrollees that would drive investors’ potential returns.

MacDonald admits that he significantly inflated the current and projected enrollment figures by the thousands in an attempt to sell the Overage Program to investors.  He and Solomon knew that the figures were false and that the sales agent would relay the figures to investors he was soliciting.

MacDonald also personally acquired investors for the Overage Program.  In fact, MacDonald and Solomon provided false information to persuade one particular investor to invest $2 million in the Overage Program.  They then used this money to make payments to existing program investors.

When GCA had difficulty making timely payments to Overage Program investors, MacDonald authorized Solomon to respond to investor complaints and inquiries with excuses for the delayed payments.  Solomon sent these emails from accounts that were created for fictitious GCA employees.

The Overage Program did not generate any income or revenue.  Less than 50 people actually bought any healthcare policies during the lifetime of the program.  MacDonald and Solomon admit that any payments made to existing investors came from money that GCA received from new investors in the program.

In a parallel action, the U.S. Securities and Exchange Commission (SEC) charged both defendants with securities fraud and conducting an unregistered securities offering while acting as unregistered broker-dealers.  That complaint alleges that GCA had raised nearly $10 million from investors and returned about $2 million to investors in the form of Ponzi payments.  On August 8, 2013, the district court entered Agreed Partial Judgments against both defendants, enjoining them from future violations of federal securities laws.  The SEC continues to seek disgorgement plus prejudgment interest and civil penalties against both defendants. 

This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force, which was established in 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For more information on the task force, please visit www.StopFraud.gov.

The FBI conducted the investigation.  The SEC’s Fort Worth Regional Office also provided valuable assistance.  Assistant U.S. Attorney Chris Stokes led the prosecution.

AMARILLO, Texas — Aaron Robert Wells, 23, of Borger, Texas, appeared today in federal court, before U.S. District Judge Mary Lou Robinson, and pleaded guilty to one count of transportation of child pornography.  Wells, who is on bond, faces a maximum statutory penalty of not less than five years and up to 20 years in federal prison, a $250,000 fine and a lifetime of supervised release.  Sentencing will be set at a later date.  U.S. Attorney Sarah R. Saldaña of the Northern District of Texas made the announcement today.

According to documents filed in the case, in March 2012, Wells was contacted online by an undercover law enforcement officer through file sharing software.  Wells provided the undercover officer passwords necessary to download images of child pornography that Wells had saved his computer and had made available for online sharing.  Among other images, the undercover officer downloaded two images of minor males engaged in sexually explicit conduct.

The case was brought as part of Project Safe Childhood, a nationwide initiative, which was launched in May 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 marshals federal, state and local resources to better locate, apprehend and prosecute individuals, who sexually exploit children, and identify and rescue 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 is investigating the case.  Assistant U.S. Attorney Steven M. Sucsy of the U.S. Attorney’s Office in Lubbock, Texas, is in charge of the prosecution.

LUBBOCK, Texas — Tyrell Daniels, 20, of Abilene, Texas, was sentenced today by U.S. District Judge Sam R. Cummings, to 188 months in federal prison, following his guilty plea in December 2013 to one count of producing child pornography, announced U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.

Daniels has been in custody since his arrest in November 2013 on a related federal criminal complaint.  A federal grand jury indicted him later that month on one count of enticement of a child and one count of production of child pornography.  In accordance with the plea agreement, the enticement charge was dismissed.

According to plea papers filed, after meeting a 12-year-old female child, “Jane Doe,” online, in September 2013, Daniels communicated with her for several days using his cell phone.  During that time, Daniels often discussed his desire to engage in sexual intercourse with Jane Doe, even though she had informed him that she was only 12-years-old.

On September 12, 2013, Daniels used Internet messaging to ask Jane Doe to send a topless photo of herself to him.  She complied, and Daniels told her that he would not post her pictures on the Internet if she would send him a more sexually explicit photo of her genitals.  While Jane Doe sent Daniels a sexually explicit photo, he told her that it was not explicit enough.  Jane Doe did not send him any additional photos.

The case was brought as part of Project Safe Childhood, a nationwide initiative, which was launched in May 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 marshals federal, state and local resources to better locate, apprehend and prosecute individuals, who sexually exploit children, and identify and rescue 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 investigation was conducted by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), the Santa Anna Police Department and the Abilene Police Department.  Assistant U.S. Attorney Steven M. Sucsy prosecuted.

ABILENE, Texas — Steven Edward Robb, 59, of Abilene, Texas, appeared today before U.S. Magistrate Judge E. Scott Frost, in federal court in Abilene, and pleaded guilty to one count of receipt of child pornography.   Robb, who is on bond, faces a maximum statutory penalty of not less than five years or more than 20 years in federal prison, a $250,000 fine and a lifetime of supervised release.  A sentencing date was not set.  U.S. Attorney Sarah R. Saldaña of the Northern District of Texas made the announcement today.

According to documents filed in the case, in July 2013, Robb knowingly received two video files depicting minor females engaging in sexually explicit conduct. 

The case was brought as part of Project Safe Childhood, a nationwide initiative, which was launched in May 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 marshals federal, state and local resources to better locate, apprehend and prosecute individuals, who sexually exploit children, and identify and rescue 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.”

U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) and the Abilene Police Department are investigating.  Assistant U.S. Attorney Steven M. Sucsy of the U.S. Attorney’s Office in Lubbock, Texas, is in charge of the prosecution.

Jerry C. Bullard and Okey Nwagbara Submitted Nearly $600,000 in False and Fraudulent Claims to Medicare

DALLAS — Jerry C. Bullard, 57, of Mesquite, Texas, was sentenced this afternoon, by U.S. District Judge Sam A. Lindsay, to 33 months in federal prison and ordered to pay $317,779 in restitution, following his guilty plea in February 2012 to one count of conspiracy to commit health care fraud.  Bullard worked in the durable medical equipment department of Medistat Group Associates, Inc., an association of health care providers in Desoto, Texas.  Judge Lindsay ordered that Bullard surrender to the Bureau of Prisons on July 15, 2014.  The announcement was made today by U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.

A co-defendant in the case, Okey Nwagbara, formerly of Plano, Texas, pleaded guilty in January 2012 to three felony offenses related to his involvement in the health care fraud conspiracy as well as providing false information to obtain citizenship.  Nwagbara was the owner and operator of Advanced Medequip and Supplies, Ltd., (Advanced) a durable medical equipment company that was located in Richardson, Texas.  He is currently serving a 36-month federal prison sentence; after the completion of that sentence, he will be referred to U.S. Citizenship and Immigration Services (CIS) for deportation.

Bullard admitted that he entered into an agreement with Nwagbara to submit false and fraudulent claims to Medicare.  Bullard accepted kickbacks from Nwagbara to direct business to Advanced and to sign durable medical equipment orders for Advanced.  Upon receiving cash payments from Nwagbara, Bullard would sign “JRoy MD” on Medistat prescription pads, durable medical equipment information forms and certificates of medical necessity for enteral nutrition products falsely indicating, among other things, that the beneficiary required tube feeding, when in fact the beneficiary did not.  Bullard and Nwagbara admitted that they submitted and caused to be submitted $583,688 in these types of false and fraudulent claims.

The case was investigated by the Dallas Health Care Fraud Prevention and Enforcement Action Team (HEAT) Strike Force, which includes the U.S. Department of Health and Human Services - Office of Inspector General, the FBI and the Texas Attorney General’s Medicaid Fraud Control Unit.  To learn more about the HEAT Strike Force, please visit: http://stopmedicarefraud.gov.

Assistant U.S. Attorneys Michael Elliott and Mindy Sauter were in charge of the prosecution.   

DALLAS — Two defendants, who were convicted on felony offenses related to their roles in a scheme to use stolen identity information to fraudulently obtain millions of dollars in tax refunds, were sentenced this afternoon in federal court in Dallas.

George Ojonugwa, 32, of Garland, Texas, was sentenced to 174 months in federal prison and ordered to pay $15,979,187 in restitution.

Eseos Igiebor, 43, of Richardson, Texas, was sentenced to 96 months in federal prison and ordered to pay $9,660,658 in restitution.

Defendant Ogiesoba City Osula, 38, of Dallas, will be sentenced next month.  He was convicted, following a nearly one week-long trial in October 2013, on one count of conspiracy to commit wire fraud, mail fraud and bank fraud; seven counts of presenting fraudulent claims upon the U.S.; two counts of fraud in connection with access devices and aiding and abetting; and six counts of aggravated identity theft and aiding and abetting. 

Late last year, Ebenezer Legbedion, 42, of Lagos, Nigeria, was sentenced to 40 months in federal prison and ordered to pay more than $1 million in restitution, and Evelyn Nyaboke Haley, 34, of Dallas, was sentenced to 60 months in federal prison and ordered to pay approximately $5.7 million in restitution.

Ojonugwa, Igiebor and Legbedion each pleaded guilty to one count of conspiracy to commit wire fraud.  Igiebor also pleaded guilty to one count of aggravated identity theft.  Haley pleaded guilty to one count of conspiracy to defraud the government with respect to claims.

The defendants conspired to defraud the U.S. by using stolen identity information and false information to create and electronically file false tax returns to claim refunds.  The defendants had the refunds credited to stored value cards or bank accounts opened with stolen taxpayer identity information.  Even while the defendants fraudulently obtained millions of dollars in tax refunds, they filed additional fraudulent returns, attempting to obtain millions more in tax refunds for their own use and benefit.

During Osula’s trial, the government presented evidence that Osula and his coconspirators sent information to and traded information with, a group running a similar scheme in Cincinnati, Ohio.  On Nov. 8, 2011, police in a Cincinnati suburb questioned Osula and Ojonugwa, who were in a parked car after midnight with the leader of the Cincinnati ring.  A drug detection dog alerted on the vehicle, and when it was searched, police found more than $300,000 in cash and money orders and numerous debit cards.  During that incident, while Osula was in a police car and waiting to be questioned, he ate a debit card.

According to documents filed in this case and statements made in court:

SIRF is a common type of fraud committed against the United States government that results in more than $2 billion in losses annually to the United States Treasury. SIRF schemes generally share a number of hallmarks: 

• SIRF perpetrators obtain personal identifying information, including Social Security numbers and dates of birth, from unwitting individuals.
• SIRF perpetrators complete Individual Income Tax Return Form  using the fraudulently-obtained information and falsifying wages earned, taxes withheld and other data. Perpetrators use data to make it appear that the “taxpayers” listed on the fraudulent 1040 forms are entitled to tax refunds – when in fact, the various tax withholdings indicated on the fraudulent 1040s have not been paid by the listed “taxpayers,” and no refunds are due. 
• Perpetrators direct the U.S. Treasury Department to issue the refunds through checks (Tax Refund Treasury Checks) generated by the fraudulent 1040 forms to locations they control or can access, in various ways.
• With Tax Refund Treasury Checks now in hand, SIRF perpetrators generate cash proceeds. Certain SIRF perpetrators sell Tax Refund Treasury Checks at a discount to face value. In turn, the buyers then cash the Tax Refund Treasury Checks, either themselves or using straw account holders, by cashing checks at banks or check cashing businesses, or by depositing checks into bank accounts. When cashing or depositing Tax Refund Treasury Checks, SIRF perpetrators often present false or fraudulent identification documents in the names of the “taxpayers” to whom the checks are payable.

While this investigation was conducted by IRS Criminal Investigation and the FBI, the U.S. Secret Service Office in Cincinnati, Ohio, and the U.S. Attorney’s Office for the Southern District of Ohio, provided substantial assistance.

Assistant U.S. Attorneys Mark Penley, Christopher Stokes and P.J. Meitl prosecuted.  

DALLAS — Two Dallas men, who were stopped by officers with the Dallas Police Department (DPD) for a traffic violation in March 2013, and who subsequently pleaded guilty to federal firearms offenses, have been sentenced, announced U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.

U.S. District Judge Sam A. Lindsay sentenced Ivy Johnson, Jr., 26, to 40 months in federal prison.  In February 2014, Judge Lindsay sentenced Jose Enrique Castaneda, 21, to 39 months in federal prison.  Johnson, who is under indictment in Dallas County on a felony drug charge,  pleaded guilty to one count of illegal receipt of a firearm by a person under indictment; Castaneda, who is illegally in the U.S., pleaded guilty to one count of being an illegal alien in possession of a firearm.

According to documents filed in the case, on March 21, 2013, DPD officers were investigating a drug complaint at a house on Cowan Avenue in Dallas when they observed a white truck leave the residence.  Soon thereafter, the truck failed to come to a complete stop at the intersection of Marsha and Walnut Hill, and officers initiated a traffic stop.  Castaneda was driving the vehicle and Johnson was in the passenger seat.  There was a semi-automatic pistol in plain view on the driver’s seat, and what appeared to be a large rifle case between Johnson’s legs.  As Castaneda exited the truck, Johnson opened the passenger door and fled, but was apprehended soon thereafter.  Officers noticed a strong odor of marijuana in the truck.

In searching for the source of the marijuana odor, officers recovered a 9-millimeter pistol in the driver’s seat and a Romarm rifle in the rifle case.  Officers also found two additional rifles in the floorboard behind the driver’s seat and 72 individually packaged bags of marijuana in the glove compartment.

The Bureau of Alcohol, Tobacco, Firearms and Explosives and the DPD investigated the case.  Assistant U.S. Attorney Cara Pierce prosecuted.

DALLAS — Jennifer Tyson, 37, of Rockwall, Texas, the former Executive Director/Manager of the Rockwall Housing Development Corporation (RHDC), was sentenced this morning by U.S. District Judge Ed Kinkeade to 12 months and one day in federal prison and ordered to pay $195,421.00 in restitution for conspiring to steal federal funds from the U.S. Department of Housing and Urban Development (HUD).  Judge Kinkeade ordered Tyson to surrender to the Bureau of Prisons on May 6, 2013.  U.S. Attorney Sarah R. Saldaña of the Northern District of Texas announced today.

Specifically, Tyson pleaded guilty to an Information charging one count of conspiracy to commit theft concerning programs receiving federal funds.  The RDHC is a landlord to several authorized public housing agencies (PHAs) in Rockwall.  These PHAs, and, in turn, the RHDC, receive federal funds from HUD through the “Housing Choice Voucher Program.”  The RHDC owns and operates a 36-unit apartment complex in Rockwall, known as “the Meadows.” 

In her role as the RHDC’s Executive Director/Manager from June 2009 to November 2013, Tyson was an agent of the RHDC.  Her responsibilities included, among other things, reviewing and processing monthly housing assistance payments and had managerial discretion and responsibility for the day-to-day running of the Meadows. 

According to the factual resume filed in the case, beginning in March 2010 and continuing until June 2011, Tyson wrote approximately 128 RHDC checks, made out to Co-conspirator B, later identified as Trent George, 38, of Wright City, Oklahoma, totaling approximately $126,063.  While this co-conspirator did perform some work for the Meadows, such as watering plants and picking up trash, George did not earn, and was not owed, $126,063 over the course of less than 16 months.  George has pleaded guilty to his role in the conspiracy and scheduled to be sentenced on June 25, 2014.

Generally, George cashed the checks that Tyson gave to him.  Then, Tyson, along with George and his fiancé, Co-conspirator A, later identified as Rachel McKnight, 31, of Garland, Texas, used the cash to purchase illegal narcotics for their own personal use.  McKnight is scheduled to plead guilty next week to her role in the conspiracy.

From February 2011 until January 2012, Tyson wrote approximately 94 RHDC checks made out to “cash” and used the proceeds for her own personal use.

From October 2009 until October 2012, Tyson wrote approximately 55 RHDC checks made out to “reimbursement” and used the proceeds for her own personal use.

In January 2011, McKnight was evicted from the Meadows and began living with George in hotels in Rockwall.  Tyson would occasionally visit them and the three would often use illegal narcotics in these hotel rooms.  Tyson paid for these hotel stays using RHDC funds.

The investigation was conducted by HUD and the FBI.  Assistant U.S. Attorney P.J. Meitl prosecuted.

A DFW Lawyer Who Served as Escrow Officer in Scheme is Sentenced to Federal Prison for Covering up the Bank Fraud

DALLAS — Plano, Texas, residents, Vathany Teng, 43, and Lina Ma, 55, were sentenced yesterday for their role in a loan fraud scheme they ran from August 2007 to April 2008 that resulted in the total funding of more than $3 million in fraudulent loans, announced U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.

U.S. District Judge David C. Godbey sentenced Teng to 27 months in federal prison and ordered him to pay $4.2 million in restitution.  Ma was sentenced to 18 months in federal prison and ordered to pay $2.1 million in restitution.  Both must surrender to the Bureau of Prisons on July 7, 2014.

Both Teng and Ma pleaded guilty to one count of conspiracy to commit bank fraud.  The other defendant in the case, Jerry Goh, 51, a lawyer who had offices in the Dallas-Fort Worth metroplex, and who acted as the escrow officer for the Prosper Bank loan, pleaded guilty to one count of misprision of a felony.  He was sentenced in February 2014 to serve seven months in federal prison, and he must surrender to the Bureau of Prisons on May 26, 2014, to begin serving that sentence.  Judge Godbey also ordered that he serve the first seven months of a one-year term of supervised release on home confinement and he was ordered to pay more than $2.1 million in restitution.

According to documents filed in Teng and Ma’s case, Teng, Ma and Goh participated in a scheme to defraud and deceive Prosper Bank, United Central Bank (UCB) and the Small Business Administration (SBA).  The conspiracy involved one fraudulent SBA guaranteed loan from Prosper Bank and two fraudulent loans from UCB.

The scheme involved making false representations and deliberate omissions of material information when fraudulent loan applications were submitted to these banks in connection with the three loans.  According to Teng and Ma’s factual resumes, Teng, Ma and Goh falsely represented to Prosper Bank and UCB, and caused the HUD-1 Settlement Statement on all three loans to falsely represent, that Ma was the true source of loan down payments. 

Goh, acting in his capacity as the escrow officer on the Prosper Bank loan, and thus with control of the loan proceeds, concealed from lender Prosper Bank the fraudulent release of $498,720 of loan proceeds to provide funds for a $431,000 down payment.  Goh wired $498,720 of lender Prosper Bank’s funds from an escrow account, knowing that these seller proceeds funds would later be used as the source of borrower Lina Ma’s down payment on her loan from Prosper Bank.  

This case was prosecuted in connection with the President’s Financial Fraud Enforcement Task Force.  The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  With more than 20 federal agencies, 94 U.S. Attorney’s offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud.  Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations.  Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants, including more than 2,900 mortgage fraud defendants.  For more information on the task force, please visit www.stopfraud.gov.

The case was investigated by the U.S. Small Business Administration – Office of Inspector General and the FBI.  Assistant U.S. Attorney David L. Jarvis prosecuted.

DALLAS — Aaron Garcia, 21,of Grand Prairie, Texas, was sentenced yesterday by U.S. District Judge David C. Godbey to 96 months in federal prison, following his guilty plea in October 2013 to an Information charging one count of receipt of child pornography.  Today’s announcement was made by U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.

According to documents filed in the case, the investigation began as a result of a cyber-tip to law enforcement indicating that in September 2012, a minor girl, “Jane Doe,” began using an app on her cell phone to have sexual conversations with an adult male.  The conversations included solicitations from both the adult male and Jane Doe to meet for sex.  Jane Doe identified herself as a 14-year-old, although she was actually 13.  The male also solicited nude photos of Jane Doe, which she sent.  He sent her two sexually explicit images of himself.

An analysis of Garcia’s iPhone by the North Texas Regional Computer Forensic Lab revealed that it contained more than 40 images of child pornography, not including the images sent by Jane Doe.

The case was brought as part of Project Safe Childhood, a nationwide initiative, which was launched in May 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 marshals federal, state and local resources to better locate, apprehend and prosecute individuals, who sexually exploit children, and identify and rescue 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 investigation was conducted by the Grand Prairie Police Department and U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI).  Assistant U.S. Attorney Camille Sparks prosecuted.

DALLAS — Lawrence Hart, 37, appeared today before U.S. Magistrate Judge Renée Harris Toliver and pleaded guilty to a felony and misdemeanor Information charging various offenses stemming from his role as a caseworker for an outreach program that is managed by the City of Dallas’s Housing Department.  The announcement was made today by U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.

Specifically, Hart pleaded guilty to one count of witness tampering, one count of making a false statement to the U.S. Department of Housing and Urban Development (HUD) and one count of deprivation of rights under color of law.  He faces a maximum statutory sentence of 20 years in federal prison and a $250,000 fine for the witness tampering count, and a maximum statutory sentence of one year in federal prison and a $100,000 fine for the false statement count and for the deprivation of rights count.  He will remain on bond pending sentencing, set for July 14, 2014, by U.S. District Judge David C. Godbey. 

According to documents filed in the case, in 2012 and 2013, Hart was a caseworker for Project Reconnect, a HUD-funded outreach program managed by the City of Dallas’s Housing Department.  Project Reconnect provides reentry case management and community referrals to help non-violent offenders on parole settle back into the Dallas community.  One of the main components of Project Reconnect is to provide housing to eligible individuals.  As the program was being applied at the time, to be eligible for Project Reconnect, an individual must reside in Dallas, have felony conviction, be 18 years or older, be currently on parole or probation and meet HUD low to moderate income guidelines. 

Hart admitted that in July 2012, he arranged for “Person A” to sign a lease for an apartment in Carrollton, under the Project Reconnect program, even though Person A did not qualify for the program at that time.  The apartment’s rent was $980.00 per month, and Project Reconnect was responsible for $975 of that amount and Person A was responsible for $5.00 per month.  Hart admitted that while he worked for the City of Dallas’s Housing Authority, he was in fact the sole occupant of that apartment and Person A never resided there.  Hart further admitted that he submitted documentation to HUD reflecting that Person A was the sole occupant.  

When HUD, the Dallas Police Department (DPD) and the FBI began investigating fraudulent activity related to Project Reconnect, they interviewed Hart about his involvement in Project Reconnect and his potential criminal activity.  After that interview, Hart contacted Person A and instructed Person A to lie to a DPD detective and FBI special agent by telling them that Person A lived in the Carrollton apartment.

In late 2012, according to the factual resume filed in the case, Hart met “Person B” and fast-tracked Person B through the Project Reconnect program.  While Person B was qualified for the program, Hart propositioned her for sex and expedited her placement in an apartment because she agreed to have sex with him.  In January 2013, Person B ended her intimate relationship with Hart.  Acting under color of law, Hart removed her from the HUD-subsidized apartment, wilfully depriving her of the right, to be free from discrimination in the terms, condition and privileges of rental of a dwelling because of her sex.

The DPD, HUD and FBI investigated the case.  Assistant U.S. Attorney Errin Martin is prosecuting.

Defendant Also Ordered to Pay Nearly $100,000 in Restitution

FORT WORTH, Texas — Caleb Deason, 34, of Fort Worth, Texas, was sentenced yesterday by U.S. District Judge John McBryde to serve a total of 120 months in federal prison, following his conviction at trial in December 2013 on one count each of wire fraud and money laundering.  Departing upward from the U.S. Sentencing Guidelines, Judge McBryde remarked that it was obvious to him that Deason was nothing more than a “con man and a flim-flam” who has been amoral in the majority of his dealings in his professional life.  Judge McBryde also ordered Deason to pay $99,491 in restitution.  U.S. Attorney Sarah R. Saldaña of the Northern District of Texas made the announcement today.

Deason owned and operated CD Financial, a financial services business in Fort Worth.  He was an agent of Transamerica Life Insurance Company from November 2006 through May 2012.  In October 2011, Deason sold an individual a Transamerica policy with a death benefit of approximately $1 million.

In January 2012 the insured died unexpectedly.  Transamerica conducted extensive due diligence before agreeing to pay the policy’s death benefit to the insured’s wife.  However, Deason fraudulently changed the bank account and routing information and forged the beneficiary’s signature on a Transamerica wire request form in order to divert the proceeds from the life insurance policy to his own personal use, which included purchasing a 2010 Range Rover.  The Range Rover was administratively forfeited by the U.S. Secret Service.

The U.S. Secret Service and the Texas Department of Insurance investigated.  Assistant U.S. Attorneys Brian Poe and John de la Garza prosecuted.

Ran Ponzi Scheme Involving Medical Insurance Investments

DALLAS — Duncan MacDonald III, 50, of Dallas, was sentenced yesterday afternoon by U.S. District Judge Jane J. Boyle to five years in federal prison, following his guilty plea in July 2013 to a felony Information charging conspiracy to commit wire fraud.  Restitution owed will be determined at a later date.  The announcement was made today by U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.

In a related case, Gloria Ann Solomon, 71, also of Dallas, will be sentenced by Judge Boyle on April 17, 2014.  She pleaded guilty to an Information charging the same offense. 

According to documents filed, from at least 2006 and continuing into at least September 2012, MacDonald was President and Director of Global Corporate Alliance, Inc. (GCA).  MacDonald operated GCA out of offices in Addison and Euless, Texas.  He hired co-conspirator Solomon in January 2007 as GCA’s Chief Administrative Officer. 

GCA managed the North American Consumer Alliance (NACA), a not-for-profit member association that created and packaged insured benefit association healthcare programs and policies administered to corporations, organizations and other entities.  GCA sold the healthcare policies throughout the U.S. and maintained a conservative management fee.  It collected fees called “overages” that were in excess of the conservative management fee.

In 2008, MacDonald created GCA’s “Overage Program” to sell interests in the overages through “Overage Purchase Agreements.”  An investor’s potential return was directly related to the number of people who enrolled in a healthcare plan by purchasing a healthcare policy from CGA.  GCA would pay the investor for each new healthcare plan enrollee.  MacDonald installed Solomon as the program’s manager and she worked with MacDonald in conducting GCA’s activities regarding the Overage Program.

MacDonald initially planned to have only a single person invest in the Overage Program, but when one couldn’t be found, GCA fractionalized the program to make it available for multiple investors to provide smaller amounts of funds.  GCA contracted with a sales agent to solicit individuals to invest, and the sales agent used information regarding the Overage Program that was provided by MacDonald and Solomon.  That information included the number of current and projected healthcare plan enrollees that would drive investors’ potential returns.

MacDonald admits that he significantly inflated the current and projected enrollment figures by the thousands in an attempt to sell the Overage Program to investors.  He and Solomon knew that the figures were false and that the sales agent would relay the figures to investors he was soliciting.

MacDonald also personally acquired investors for the Overage Program.  In fact, MacDonald and Solomon provided false information to persuade one particular investor to invest $2 million in the Overage Program.  They then used this money to make payments to existing program investors.

When GCA had difficulty making timely payments to Overage Program investors, MacDonald authorized Solomon to respond to investor complaints and inquiries with excuses for the delayed payments.  Solomon sent these emails from accounts that were created for fictitious GCA employees.

The Overage Program did not generate any income or revenue.  Less than 50 people actually bought any healthcare policies during the lifetime of the program.  MacDonald and Solomon admit that any payments made to existing investors came from money that GCA received from new investors in the program.

In a parallel action, both defendants were also charged by the U.S. Securities and Exchange Commission (SEC) with securities fraud and conducting an unregistered securities offering while acting as unregistered broker-dealers.  That complaint alleges that GCA had raised nearly $10 million from investors and returned about $2 million to investors in the form of Ponzi payments.  On August 8, 2013, the district court entered Agreed Partial Judgments against both defendants, enjoining them from future violations of federal securities laws.  The SEC continues to seek disgorgement plus prejudgment interest and civil penalties against both defendants. 

This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force, which was established in 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For more information on the task force, please visit www.StopFraud.gov.

The FBI conducted the investigation.  The SEC’s Fort Worth Regional Office also provided valuable assistance.  Assistant U.S. Attorney Chris Stokes led the prosecution.

ATF, Texas Comptroller of Public Accounts and Euless Police Department
Led Investigation into Trafficking of Contraband Cigarettes

DALLAS — A multi-year investigation into the trafficking of untaxed cigarettes, including purchasing cigarettes and selling them with counterfeit tax stamps to avoid paying state cigarette taxes, in violation of the Contraband Cigarette Trafficking Act, has led to the conviction of 11 Texas residents, most of whom are from North Texas.

The last convicted defendant was sentenced this week in federal court in Dallas.  Glen Murray McDonald, 50, of Pasadena, Texas, was sentenced by U.S. District Judge David C. Godbey to serve nine months in federal prison and nine months on home confinement.  He pleaded guilty in August 2013 to one count of trafficking in contraband cigarettes and one count of receipt of counterfeit securities.  Ten other convicted defendants pleaded guilty to similar offenses and received a variety of sentences.  In addition, convicted defendants were ordered to pay restitution in amounts ranging from approximately $24,000 to $1.1 million.

The investigation began in October 2009 when officers from the Euless Police Department responded to a suspicious person call at a home in Euless, Texas.  Later that same night, they executed a search warrant at the house and confiscated more than 2,760 cartons of contraband cigarettes and 11,580 counterfeit Texas tax stamps. 

In making the announcement today, U.S. Attorney Saldaña said, “I commend the efforts of the men and women of the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), the Texas Comptroller of Public Accounts, the Euless Police Department and the Tarrant County District Attorney’s Office in this operation.”

During the investigation, special agents with ATF received information about various tobacco tax diversion schemes in North Texas, including purchasing cigarettes and selling them with counterfeit tax stamps to avoid paying state cigarette taxes. 

“ATF’s mission is to stop violent criminals and dismantle criminal organizations.  Through this joint investigative effort, multiple criminal organizations were dismantled which were responsible for the diversion of state revenue caused by the trafficking of contraband tobacco products.  I’d like to recognize the Euless Police Department, the Texas Comptroller of Public Accounts and the Tarrant County District Attorney’s Office whose outstanding efforts contributed to the successful outcome of this investigation,” said ATF Special Agent in Charge Robert R. Champion of the Dallas Field Division.

“This is an example of how federal investigators utilize the expertise of the Comptroller’s office to bring tax cheats to justice,” Texas Comptroller Susan Combs said.  “We have the expertise and statutory authority to conduct tax investigations as well as share information such as business purchases and tax reports with law enforcement.  We will continue to provide our services to federal and local investigators to ensure compliance and protect honest retailers.”

Cigarettes sold in Texas are required to have a federal tax assessed; that tax is paid by the manufacturer before cigarettes leave the warehouse.  Texas also requires that a state tax be paid in the form of a tax stamp affixed to each package of cigarettes sold.  Only companies licensed by the Texas Comptroller’s Office are allowed to purchase tax stamps and bond them to cigarette packages.  The current cigarette tobacco tax stamp is $1.41 per package of cigarettes.  By purchasing contraband cigarettes, people involved in the sale of untaxed cigarettes avoid paying Texas taxes in the amount of $1.41 per package, or $14.10 carton, or $846 for a master case of 60 cartons.

Assistant U.S. Attorney Katherine E. Pfeifle prosecuted the cases.

LUBBOCK, Texas — The last defendants convicted in an Organized Crime Drug Enforcement Task Force (OCDETF) operation targeting the Simon Chavez Drug Trafficking Organization (DTO), have been sentenced.  That DTO was responsible for distributing large quantities of methamphetamine in Lubbock, Texas, and surrounding areas.  The operation resulted in significant seizures of methamphetamine, three vehicles and more than $313,000 in cash.  The announcement was made today by U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.

On March 21, 2014, U.S. District Judge Sam R. Cummings sentenced Simon Orlando Chavez, Jr. to the statutory maximum of 240 months in federal prison.  Chavez pleaded guilty to distribution and possession with intent to distribute methamphetamine.  Judge Cummings also sentenced Jimmy Cordova, who pleaded guilty to the same offense, to 188 months in federal prison.

“Targeting drug organizations that have infiltrated north Texas and jeopardized the safety and security of our communities continues to be a priority in this district,” said U.S. Attorney Saldaña.  “I commend the dedicated investigative efforts of the DEA and Homeland Security Investigations (HSI), who were assisted by the Bureau of Alcohol, Tobacco, Firearms and Explosives, the Internal Revenue Service Criminal Investigation, the Lubbock Police Department, the Lubbock County Sheriff’s Office and the Texas Department of Public Safety.”

“The convictions of Simon Orlando Chavez, Jr. and his co-conspirators are indicative of DEA’s continued commitment to fully identify, investigate and bring to justice drug trafficking organizations determined to make a living on the backs of addiction,” said Daniel R. Salter, Special Agent in Charge of DEA, Dallas Field Division.  “A prison sentence of 240 months, which Chavez received, should serve as a warning to other drug trafficking organizations that DEA and our state, local and federal partners are united in our efforts to keeping our communities safe.”

Six additional defendants also pleaded guilty to distribution and possession with intent to distribute methamphetamine and were sentenced as follows:

• Jose Luis Lara-Sosa, 87 months
• Jose Montemayor, 87 months
• Sammy Chavez, 121 months
• Antonio Rosa, 51 months
• Ruben Deleon, 71 months
• Anthony Deleon, 57 months

Other defendants pleaded guilty to various other offenses and were sentenced:

• Jessica Trevino, 120 months, possession with intent to distribute methamphetamine
• Brian Melcher, 175 months, possession with intent to distribute methamphetamine
• Francisco Avalos-Alejandre, 100 months, possession with intent to distribute 500 grams or more of methamphetamine
• Ira Newton-Davis, 48 months, unlawful use of a communication facility
• Tiffany Lashell Copley, 12 months and a $5,000 fine for operating an illegal gambling business

“To maximize our effectiveness, organized criminal actions require a unified law enforcement response,” said David M. Marwell, Special Agent in Charge of HSI Dallas.  “Our collaborative work with the OCDETF task force resulted in this successful investigation, and these significant prison sentences.  The methamphetamine addiction that this criminal operation was promoting has destroyed countless lives.”

Assistant U.S. Attorney Justin Cunningham, of the U.S. Attorney’s Office in Lubbock, prosecuted the cases.

Defendants Owned a Physician House Call Company and Billed for Services Not Rendered

DALLAS — Two Grand Prairie, Texas, men, convicted at trial in October 2013 on conspiracy and health care fraud charges related to their operation of A Medical House Calls, a physician house-call company in North Texas, were sentenced this morning by U.S. District Judge David C. Godbey, announced U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.

Lawrence Dale St. John, 67, was sentenced to serve a total of 262 months in federal prison, and his son, Jeffrey Dale St. John, 42, was sentenced to serve a total of 135 months in federal prison.  Both St. John’s were ordered to pay restitution to the Centers for Medicare and Medicaid Services (CMS). 

Each defendant was convicted at trial on one count of conspiracy to commit health care fraud and 13 substantive counts of health care fraud.  Co-defendant Dr. Nicolas Alfonso Padron, 54, of Garland, Texas, pleaded guilty in September 2013 to one count of conspiracy to commit health care fraud.  Dr. Padron, who joined A Medical as its medical director in December 2009, testified, as did a number of nurse practitioners, physician assistants and company staff, services billed were never performed.  Earlier this month, Judge Godbey sentenced Dr. Padron to 57 months in federal prison and ordered that he also pay restitution to CMS.   

A Medical provided physician visits to Medicare beneficiaries in their homes rather than at a doctor’s office.  A Medical, aka A+ Medical House Calls and ANM Physician House Calls, was owned by Lawrence St. John; Jeffrey St. John ran its daily operations.  A Medical had locations in Mesquite, Texas; Dallas; and Carrollton, Texas.  Its primary purpose was to certify and re-certify Medicare beneficiaries for home health services, regardless of the true condition of the patient.

Once A Medical established a Medicare beneficiary for physician home-visit services, it would submit billing for fraudulent care plan oversight claims.  The company did not provide primary care physician services to Medicare beneficiaries.

According to documents filed in the case and evidence presented at trial, from May 2010 to January 2012, the defendants conspired together and with others to defraud the Medicare program.  A Medical, at the direction of Lawrence and Jeffrey St. John, submitted claims to Medicare using Dr. Padron’s unique Medicare number, with Dr. Padron’s permission, regardless of the claim’s merit. 

The defendants conspired together to bill Medicare for care plan oversight by Dr. Padron for numerous beneficiaries when Dr. Padron was out of town, including dates when he was out of the country and on a cruise.

In total, the defendants billed taxpayers for $1.4 million of services that were either not medically necessary or not rendered at all.  Through the fraudulent certifications, Medicare was billed an additional $9.7 million by home health agencies.

The U.S. Department of Health and Human Services - Office of Inspector General, the FBI and the Medicaid Fraud Control Unit of the Office of the Attorney General of Texas investigated.  Assistant U.S. Attorneys Kate Pfeifle and J. Nicholas Bunch prosecuted.