District of Utah

SALT LAKE CITY – A federal grand jury returned a five-count indictment this week charging David Brian Bybee, age 55, of Kaysville, Utah, a Utah businessman and CPA, with two counts of tax evasion and three counts of failure to pay taxes. The indictment alleges Bybee has taken steps to evade payment of personal tax debt and payroll taxes for his employees through the use of nominees and misrepresentations to IRS revenue officers.

            According to the indictment, Bybee managed and controlled several companies from his home in Kaysville or at other business addresses in Davis County.  Bybee hired and managed employees for the Bybee companies. His duties included generating revenue, keeping books and records, paying expenses, making employee payroll, withholding and paying over taxes from employee payroll, and filing all required business returns. Bybee issued payroll checks from Bybee companies and withheld Medicare and Social Security (often referred to as Federal Insurance Contribution Act or “FICA” taxes) and federal income tax withholdings, collectively referred to as “payroll taxes.”

            The first count of the indictment, attempt to evade and defeat payment of tax, alleges Bybee attempted to evade a large part of the income tax he owned to the federal government for calendar years 2000, 2001, 2002, 2005, 2006, 2007, 2008 and 2009, in an amount totaling about $153,569.41. The indictment alleges he took steps to conceal and attempt to conceal the nature, extent and location of his assets from the IRS to avoid paying the taxes.

            A second count of attempt to evade and defeat payment of tax relates to efforts the indictment alleges Bybee took to evade paying payroll taxes to the federal government on behalf of the employees of three companies he controlled from about April 30, 2000, to about March 14, 2011. Bybee deducted and collected payroll taxes totaling at least $39,244.49 but did not report the payroll taxes with the exception of one employment tax payment of $899.32 in April 2012. Bybee was determined to be responsible for the payroll taxes and was assessed penalties totaling $47,919.06 for the unpaid taxes. According to the indictment, he has failed to make any payments.

            The final three counts of the indictment allege Bybee failed to truthfully account for and pay over to the IRS all of the federal income taxes withheld and FICA taxes due to the United States on behalf of the Bybee companies and its employees for three calendar quarters, including approximate payroll taxes of $2,247.51 for the fourth quarter of 2010; $1,800 for the fourth quarter of 2011; and $1,830.66 for the fourth quarter of 2012.

            A summons will be issued to Bybee to appear for an arraignment in federal court.  The maximum potential penalty for each of the five counts in the indictment is five years, a fine of $250,000, and the costs of prosecution.

            Indictments are not findings of guilt.  Individuals charged in an indictment are presumed innocent unless or until proven guilty in court.

            The case is being prosecuted by the U.S. Attorney’s Office in Salt Lake City and investigated by special agents of IRS-Criminal Investigation.

SALT LAKE CITY – Jacob J. Kilgore, a former owner of a Salt Lake City durable medical equipment company, will serve 60 months in federal prison after pleading guilty to three counts of conspiracy to commit health care fraud as a part of Medicare fraud scheme involving power wheelchairs. Three company sales representatives were sentenced Thursday, two receiving prison terms, for their role in the fraud scheme.

          Kilgore, 36, of Fruit Heights, was the co-owner of and employed as the vice president, and later, president of Orbit Medical, a Utah- and Indiana-based national supplier of durable medical equipment that specialized in power wheelchairs.  Orbit maintained three Utah offices in the Salt Lake City area.  Kilgore acted as sales manager for Orbit’s western region sales territory which included offices in Utah, Arizona, Nevada, Idaho, Washington, and Oregon.  The case was investigated by the agents of the FBI, the Defense Criminal Investigative Service, and Health and Human Services Office of Inspector General.

          U.S. District Judge David Nuffer imposed the 60-month sentence for Kilgore last week. Kilgore will be on supervised release for 36 months following the completion of his federal prison sentence.  As a part of the resolution of the case, Kilgore has agreed to pay $4 million in restitution in the case over the next eight months. The first installment of $1 million was paid at his sentencing.  A second $1 million payment is due by June 1, 2016, with a final payment of $2 million due by Dec. 31, 2016 on the date of his sentence Kilgore also must forfeit $776,001, the amount of his personal gain from the criminal conduct.

          In a sentencing memorandum submitted to the court as a part of the sentencing hearing, federal prosecutors told the court the fraud scheme was driven by money and drove the imposition of a monthly quota demanding each sales representative sell 10 power wheelchairs per month. “While the genesis of the quota remains unclear, Jake Kilgore enforced it relentlessly throughout Orbit Medical’s western regional offices, at times threatening sales reps with probation and, if low sales persisted, termination,” federal prosecutors wrote in the sentencing memorandum.  Prosecutors said that pressure to perform and to reach unrealistic sales heights caused sales reps to alter physician charts to meet Medicare’s stringent medical necessity requirements.

          “This was a serious offense.  It was not a crime of opportunity.  It involved significant planning and an undaunted, selfish desire by a durable medical equipment company executive to maximize his company’s bottom line at the expense of compromising the values and morals of scores of Orbit sales reps,” prosecutors wrote in their sentencing memorandum.  To his credit, prosecutors wrote, “Jake Kilgore takes full responsibility for his actions.”

          Federal prosecutors told the court that the sales reps were not innocent victims.  “Many were young, inexperienced, hungry for success, and as is common in the sales industry, driven and competitive.  Jake Kilgore knew that.  He used commissions to entice sales reps, to encourage them, and, sadly, to corrupt them,” they wrote in a sentencing memorandum filed with the court.

            “Kilgore’s pressure to perform and close power wheelchair sales never let up, and over time, caused sales reps to pursue more shortcuts, essentially ramping up the fraud and deception. Rather than facilitating mobility evaluations and obtaining proper chart notes, sales reps instead requested a signed prescription and any recent chart notes.  With genuine physician chart notes in hand, sales reps chiseled away (electronically or via cut-and-paste), creating mobility evaluations that never occurred, concocting medical findings never made, and adding a physician signature never signed,” federal prosecutors said.

            While noting that Hartman, Evans, and Workman have taken responsibility for their misdeeds and sought to make amends, “falsifying physician chart notes cannot be defended, sugar-coated, or swept under the rug,” federal prosecutors said.

          Three sales representatives of the company, Hunter Hartman, age 31, of Ladera Ranch, Calif., David Evans, age 38, of South Jordan, and Morgan Scott Workman, age 37, of Farmington, each pleaded guilty to one count of conspiracy to commit health care fraud. Judge Nuffer imposed sentences on the three sale representatives Thursday morning.  Hartman was sentenced to 4 months in prison and 36 months of supervised release. He must pay $585,786.62 in restitution in the case, an obligation he shares with Kilgore.  Evans received a 6-month sentence and will be on supervised release for 36-months following his release from prison.  He was ordered to pay $957,055.77 in restitution, a responsibility he shares with Kilgore. Workman was sentenced to 36 months of probation.  He shares an obligation with Kilgore to pay $230,910.80 in restitution. 

            According to documents filed in court, throughout his employment at Orbit, Evans altered and concocted medical records resulting in approximately $957,055.77 in total reimbursements from the Medicare Trust Fund, paid under false and fraudulent pretenses.  Hartman altered and concocted medical records resulting in approximately $585,768.62 in total reimbursements from the Medicare Trust Fund. Workman’s conduct resulted in about $230,910.80 in total reimbursements.

            “The resolution of these four cases should discourage those in the health care industry tempted to cut corners and circumvent rules to maximize reimbursement from a health care benefit program for personal or business gain.  Durable medical equipment executives or sales reps currently engaged in or contemplating fraud against these programs would do well to reconsider their conduct,” U.S. Attorney John W. Huber said today.

            “The Salt Lake City FBI recognizes the significant collaborative effort among our federal partners in bringing this lengthy and complex health care fraud investigation to a suitable resolution.  We underscore the importance of protecting the Medicare trust fund as well as other government and private insurance programs for legitimate medical needs. We encourage our Utah citizens to bring to our attention any activity within the health care arena that appears to be illegal or suspicious,” FBI Special Agent in Charge Eric Barnhart said today.

            "Jacob Kilgore and Orbit Medical, Inc., overbilled federal health care programs, including the TRICARE program, which provides health care for our military warfighters, their families, and military retirees," said Janice M. Flores, Special Agent in Charge of the Defense Criminal Investigative Service (DCIS) Southwest Field Office.  "These sentences demonstrate that DCIS and its law enforcement partners will continue to aggressively investigate health care fraud and hold individuals or companies accountable for their actions."

          “These sentences are the result of the diligent work of several agencies.  Our office will continue to work with our law enforcement partners to pursue and bring to justice those individuals who attempt to cheat the federal health care programs,” said Steven D. Hanson, Special Agent in Charge of Health and Human Services Office of Inspector General.

WASHINGTON – Utah U.S. Attorney John Huber is joining other U.S. Attorneys around the country, local law enforcement, and community leaders for a series of events around the country to address backlash against Muslim, Arab, Sikh and South Asian Americans following the tragic terrorist attacks in Brussels, Paris and San Bernardino, California. The 14 events in 11 districts will build on both the Justice Department’s prosecutorial work in countering post-September 11th backlash, as well as its outreach efforts, including the new interagency initiative to combat religious discrimination throughout the country.

          From April 12 through May 6, U.S. Attorneys in Utah, California, Colorado, Connecticut, Idaho, Louisiana, Massachusetts, Michigan, Minnesota, New Jersey, and Ohio will work with community leaders and law enforcement to address discrimination, violence and harassment targeting people because of what they look like, which country they come from or where they worship. The aim is to reaffirm the Department of Justice’s commitment to protecting civil rights and preventing and prosecuting hate crimes.

          U.S. Attorney John Huber will visit the Khadeeja Islamic Center in West Valley City Friday where he will participate in Friday prayers and consultations with Center leaders. Salt Lake City Police Chief Mike Brown also made a recent visit to Utah’s largest mosque.

          “I value the relationships I have with leaders of the Muslim community in Utah and particularly, my association with those at the Khadeeja Mosque. Every religious community in Utah should be free from discrimination and harassment. Open lines of communication will help us quickly identify and address any issues that may develop,” Huber said.

          The Department of Justice is determined to uphold the fundamental principle that all Americans should be free from violence and protected from hatred no matter who they are, what they look like, or where they're from,” said Attorney General Loretta E. Lynch. “These events underscore our ongoing commitment to safeguard the civil rights of every American – including Muslim, Arab, Sikh and South Asian Americans, who are so often the targets of threats on the basis of their appearance or religion.  There is no place for intolerance in our country.  In the weeks and months ahead, the Department of Justice will continue to work with local law enforcement partners and community leaders to defend the safety and the dignity of all our people.”

          During the last several months, individuals who are, or who are perceived to be, Muslim, Arab, Sikh and South Asian have been targeted for harassment and violence around the country.

          A Connecticut man pleaded guilty to firing a high-powered rifle at a mosque; a Florida man pleaded guilty to threatening to firebomb two mosques and shoot their congregants; a former Missouri man pleaded guilty to violating the civil rights of others by leading a conspiracy to deface a local Islamic center with graffiti and burn two copies of the Qur’an; and a New York man was sentenced to 13 months in prison for emailing death threats to the executive director of an Islamic advocacy group.

          Places of worship also face discrimination through unlawful barriers to construction in many communities around the country.  In the last year, the Justice Department filed suit against Des Plaines, Illinois, over the city’s denial of rezoning to allow a Muslim congregation to use a vacant office building as a mosque.  The complaint alleged that the city treated the mosque less favorably than it has treated nonreligious assemblies, discriminated against the mosque based on religion and imposed a substantial burden on the mosque members’ religious exercise without justification.  The Justice Department also closed its investigation into Norwalk, Connecticut, after the city made changes to treat religious assemblies equally with nonreligious assemblies in five of its zoning districts.  The department had opened an investigation of Norwalk’s zoning practices in 2012 in response to the city’s denial of a special use permit to the Al Madany Islamic Center to build a mosque on land it had bought in a residential zoning district.

          Backlash against Muslim, Arab, Sikh and South Asian Americans can have a particularly harmful impact on education, employment and housing.  In March, the Civil Rights Division announced that the Educational Opportunities Section launched a new enforcement initiative with the U.S. Attorneys’ Offices to strengthen our efforts to combat religious discrimination in schools and other educational settings.  The new initiative, together with Justice Department’s recent work in Bakersfield, California; Lewisville, Texas; Pine Bush, New York; Dearborn Heights, Michigan; DeKalb County, Georgia; and many more cities and counties through the nation, will help ensure that schools remain free from discrimination, harassment and violence for all students.

          This effort is a reflection of the Department of Justice’s long-standing commitment to working to protect Muslim, Sikh, Arab and South Asian Americans from threats and violence directed at them because of their religion or ethnicity, and to prevent acts of discrimination against them in the workplace, schools or elsewhere.  Since September 11th, the Department of Justice has investigated over 1,000 incidents involving acts of violence, threats, assaults, vandalisms and arsons targeting Arab, Muslim, Sikh and South Asians, and those perceived to be members of these groups.  The Civil Rights Division and U.S Attorneys’ offices have brought prosecutions against more than 60 defendants in such cases, with 57 convictions to date.

SALT LAKE CITY – Wayne LeRoy Burr aka Miclo, age 32, of Salt Lake County, pleaded guilty to conspiracy to distribute heroin and money laundering in federal court Tuesday as a part of an investigation of drug trafficking activities involving La Raza, a local street gang.  The investigation, which was initiated by the Salt Lake City Police Department and the FBI’s Safe Streets Task Force, focused on an auto shop that was believed to be utilized as a stash house where illegal narcotics were received, packaged, and later distributed.

Burr admitted that between May 1, 2013, and June 27, 2013, he conspired with other individuals to violate federal drug laws by illegally distributing heroin.  He also admitted that he purchased a Dodge Ram 1500 on Feb. 12, 2013.  The purchase of the vehicle involved more than $10,000 obtained through the illegal trafficking of narcotics, Burr admitted.

The plea agreement reached with federal prosecutors includes a stipulated sentence of 96 months, which is subject to the approval of the Court at an upcoming sentencing hearing. Burr also has agreed to forfeit $1,248 in cash, three vehicles, and a 19-inch stainless steel knife as proceeds of illegal conduct or property used to help facilitate the illegal conduct.

Burr was one of 13 individuals charged with conspiracy to distribute methamphetamine and heroin, distribution of methamphetamine and heroin, possession of methamphetamine and heroin with intent to distribute, and money laundering in a 31-count indictment returned in March 2014. In addition to the FBI and the Salt Lake City Police Department, special agents of IRS-Criminal Investigation also joined the investigation.

Samuel Covarrubias-Velazquez, age 38, of Salt Lake County, was sentenced to 87 months in federal prison after pleading guilty to conspiracy to distribute methamphetamine and conspiracy to distribute heroin.  Javier Corrales, age 36, of Salt Lake County, is serving a 60- month sentence after pleading guilty to distribution of methamphetamine. David Miramontes, age 30, of Salt Lake County, is serving a 72-month sentence for possession of methamphetamine with intent to distribute and money laundering convictions. Carlos Tenengueno, age 26, of Salt Lake County, and Jose Munoz, age 28, of Salt Lake County, were each sentenced to 60 months in prison for distribution of heroin.   Guillermo Miramontes, age 24, of Salt Lake County, who pleaded guilty to money laundering, was sentenced to 36 months of probation and William Reveles, age 36, of Salt Lake County, who also pleaded guilty to money laundering, was sentenced to time served and 36 months of supervised release. Anthony Pedroza, age 28, of Salt Lake County, pleaded guilty to possession of heroin with intent to distribute. Sentencing in his case is set for June 27, 2016.  Sentencing is set for May 19, 2016, for Juan Reveles, age 37, of Sevier County, who pleaded guilty to possession of methamphetamine with intent to distribute.

Alejandro Arciniega-Zetin, age 26, of Salt Lake County, was convicted of distribution of heroin following a three-day trial in March. Sentencing in his case is set for June 28, 2015.  Prosecutors dismissed money laundering charges against two defendants in the case.

SALT LAKE CITY – Grant Hubert Checora, age 23, of Ft. Duchesne, who pleaded guilty to voluntary manslaughter while within Indian Country in January, will serve 60 months in federal prison.  Checora will be on supervised release for 36 months once he finishes his prison sentence.  U.S. District Judge Dale Kimball imposed the sentence Monday afternoon in U.S. District Court in Salt Lake City.

            As a part of a plea agreement reached in the case, Checora admitted that he killed an individual identified as E.C. on June 11, 2014.  The victim, an enrolled member of the Ute Indian Tribe, was killed on the Uintah and Ouray Reservation.  Checora admitted that he acted recklessly with extreme disregard for human life by killing E.C., while in a sudden quarrel.  Checora is also an enrolled member of the Ute Indian Tribe.

            The charges stem from a June 11, 2014, incident in the Little Chicago Community of Fort Duchesne.  Bureau of Indian Affairs officers responded to a shooting about 2 a.m.  A confrontation between two groups preceded the shooting.  The case was investigated by the BIA and the FBI.

            Checora was initially indicted on murder in the second degree, two counts of discharge of a firearm in furtherance of a crime of violence and attempt to commit murder while in Indian Country.  A felony information charging voluntary manslaughter was filed in connection with the plea agreement reached with federal prosecutors.  The charges in the indictment were dismissed at the sentencing hearing Monday.

            Kimball recommended that Checora receive vocational rehabilitation and participate in the Tribal Reentry Court when he finishes his federal sentence.

SALT LAKE CITY – Four individuals are charged with trafficking drugs in Utah   following an investigation by the DEA, the Davis Metro Narcotics Task Force, and the West Valley City Police Department.  The drugs were transported from Los Angeles to Salt Lake City for distribution.

Charged in the seven-count indictment are Fausto Alejandro Galaviz-Gaxiola, age 21, Fernando Galaviz-Castro, age 22, Jesus Pina-Cantua, age 22, and Efrain Espinoza, age unknown.  The defendants are citizens of Mexico living in West Valley City.  The charges include conspiracy to distribute methamphetamine; conspiracy to distribute heroin; possession with intent to distribute methamphetamine; possession with intent to distribute heroin; and distribution of methamphetamine.

According to a complaint filed in the case, the DEA and the Davis County task force initiated a joint investigation targeting the drug trafficking activities of Galaviz-Gaxiola, Galaviz-Castro, and Espinoza in October 2015. As a part of the investigation task force officers made several under cover purchases of methamphetamine and heroin from the defendants.

A search warrant was executed Feb. 18, 2016, at a residence in West Valley City shared by Galaviz-Gaxiola, Galaviz-Castro, and Pina-Cantua.  They also executed a search warrant on a vehicle used by the defendants.  Agents recovered approximately 4.8 kilograms of heroin (street value of about $480,000), 2.1 kilograms of methamphetamine (street value of $126,000), and $103,764 at the home.  About 615 grams of cocaine (street value of $61,500) was recovered during the search of the car, according to the complaint.

Agents also executed a search warrant on Espinoza’s residence in West Valley City and on a car he used.  According to the complaint, agents located $8,000 in a sophisticated, electronically-operated compartment hidden on the front passenger side of his car.

The defendants, who were initially charged by complaint, had initial appearances in court following their arrests. They were arraigned on the indictment Thursday afternoon and entered pleas of not guilty to the charges.  They will be in custody pending trial.      

Indictments are not findings of guilt.  Individuals charged in indictments are presumed innocent unless or until proven guilty in court.

The first six distribution counts of the indictment each carry potential 10-year mandatory minimum sentences. The seventh count of the indictment, distribution of methamphetamine, carries a potential 40 year sentence with a five-year mandatory minimum.  The indictment also seeks the forfeiture of $111,764 in U.S. currency and two vehicles obtained or used as a part of the commission of the offenses.

SALT LAKE CITY – Scott A. Williams, age 51, of Huntsville, Utah, is charged with two counts of unlawful exportation of goods from the United States, false statement in a document, and conversion of property of the United States in an indictment unsealed last week in U.S. District Court in Salt Lake City. Williams is a former civilian contract employee at Hill Air Force Base where he worked with the Foreign Military Sales Program with specific responsibility for F-16 parts.

The indictment alleges Williams exported two F-16 Aircraft brake assemblies, knowing it was a violation of federal law to export them.  The indictment alleges Williams prepared a document falsely authorizing two F-16 brake assemblies to be shipped to Indonesia in violation of federal law.  The indictment further alleges Williams exported several documents, identified in the indictment as U.S. Air Force technical orders for F-16 aircraft. The final count of the indictment alleges Williams converted to his own use, and for the use of another, technical data of F-16 aircraft through the use of an external hard drive containing U.S. Air Force orders. The indictment alleges the items were in Williams’ care and possession by virtue of his employment as a program and financial manager at Hill Air Force Base.

“The U.S. Attorney’s Office represents the interests of the United States in the federal court, and we are committed to protecting the assets and technology of the U.S. Air Force and the Department of Defense,” U.S. Attorney John W. Huber said today.

"Air Force Office of Special Investigations (AFOSI) takes allegations involving the illegal technical transfer of Department of Defense aircraft technologies very seriously. Prevention, detection, and/or prosecution of such transfers are essential to ensuring our ability to maintain air supremacy against our adversaries. This investigation was the result of hard work and contributions made by the personnel of the U.S. Department of Homeland Security’s Homeland Security Investigations, IRS Criminal Investigation, the Air Force Audit Agency, the Defense Contract Audit Agency, and the Defense Criminal Investigative Service," said OSI Special Agent Dave Bolton, OSI Detachment 113.

"The primary goal of Homeland Security Investigations (HSI) Counter Proliferation Investigations is detecting and disrupting illegal exports before they, or the actors behind them, damage U.S. national security interests," said David A. Thompson, Special Agent in Charge of HSI Denver. “HSI is committed to aggressively investigating these violations to prevent unauthorized countries from procuring anything that could harm the national security interests of the United States and its allies.”

Williams, who was arrested on the charges in the indictment on Feb. 19, 2016, was arraigned Feb. 23 in federal court in U.S. Magistrate Judge Dustin Pead’s courtroom. He entered a plea of not guilty to the four charges. Trial is set for May 2, 2016, before U.S. District Court Judge Jill N. Parrish. Magistrate Pead released Williams on strict conditions, including a restriction that he avoid contact with individuals considered either alleged victims, potential witnesses and or co-defendants in the case. He also must undergo a mental health evaluation and complete any recommended treatment, as directed by his pretrial release officer.

An indictment is not a finding of guilt. Individuals charged in indictments are presumed innocent unless or until proven guilty in court.

The potential maximum penalty for each count of unlawful exportation of goods from the United States is 10 years in prison.  False statement in a document carries a potential penalty of up to five years. Conversion of government property has a potential penalty of 10 years.

SALT LAKE CITY – Lorenzo Verduzco-Benitez, age 28, of West Jordan, Utah, head of a drug organization which sold heroin and methamphetamine in Utah, will serve 144 months in federal prison. U.S. District Court Judge Jill N. Parrish imposed the sentenced Thursday afternoon.

Verduzco-Benitez, a citizen of Mexico, pleaded guilty in December to one count of conspiracy to distribute heroin and one count of conspiracy to commit money laundering. He admitted that between July 1, 2014, and March 6, 2015, he was the head of a narcotics organization operating in Utah. He admitted that during this time he distributed approximately 10.5 kilograms of heroin and 10.7 kilograms of methamphetamine in Utah.  He admitted using surrogates to deposit drug proceeds into nominee bank accounts to pay his suppliers, allowing him to conceal and disguise the nature, source, and ownership of the drug proceeds. He also admitted that he reinvested drug proceeds into the drug distribution business to ensure its ongoing success.

According to a documents filed in court, DEA started an investigation of the drug trafficking organization in July 2014 after a confidential source provided information to them that law enforcement officers were able to independently corroborate.  Evidence showed Verduzco-Benitez resupplied numerous subordinate dealers in Utah, Colorado, Wyoming, and Michigan.  As a part of the investigation, agents intercepted significant loads of drugs on several occasions and conducted many controlled drug purchases from the Verduzco organization.

Verduzco-Benitez and five others drug distribution conspiracy were charged in a sealed indictment returned by a federal grand jury in March 2015. Ernesto Vega, age 29, of West Jordan pleaded guilty to conspiracy to deliver a controlled substance and conspiracy to commit money laundering and was sentenced to 72 months in federal prison. Jorge Aquino Andrade, age 44, of Salt Lake City pleaded guilty to conspiracy to distribute heroin and money laundering and is scheduled to be sentenced March 1. His plea agreement includes a stipulated sentence of 60 months. Miquel Escobedo-Mendoza, age 24, of West Valley City, pleaded guilty to possession of heroin with intent to distribute and possession of a firearm in furtherance of a drug trafficking offense.  He was sentenced to 120 months in federal prison. Melissa Cervantes, age 24, of Salt Lake City pleaded guilty to conspiracy to commit money laundering and was sentenced to a year in federal prison.  Elvira Damian, age 50, of West Jordan, is a fugitive. Several of the defendants are citizens of Mexico and will be referred to ICE for deportation proceedings when they finish their prison sentences.

As a part of his plea agreement, Verduzco-Benitez agreed to forfeit $11,231 in cash and a Cobra Enterprise .380 semi-automatic handgun.

The case is being prosecuted by the U.S. Attorney’s Office in Salt Lake City and investigated by the DEA, IRS Criminal Investigation, and the Davis Metro Narcotics Strike Force.

SALT LAKE CITY – A two-count indictment unsealed Tuesday afternoon in U.S. District Court in Salt Lake City charges 11 leaders and members of the Fundamentalist Church of Jesus Christ of Latter-day Saints (FLDS Church) with conspiracy to commit Supplemental Nutrition Assistance Program (SNAP) benefits fraud and conspiracy to commit money laundering.  The defendants include leaders of the church.

The indictment alleges church leaders diverted SNAP proceeds from authorized beneficiaries to leaders of the FLDS Church for use by ineligible beneficiaries and for unapproved purposes. A large percentage of FLDS Church members living in the Hildale, Utah – Colorado City, Arizona, community known as Short Creek receive SNAP benefits, amounting to millions of dollars in benefits per year.

Charged in the indictment are Lyle Steed Jeffs, age 56, John Clifton Wayman, age 56, Kimball Dee Barlow, age 51, Winford Johnson Barlow, age 50, Rulon Mormon Barlow, age 45, Ruth Peine Barlow, age 41, and Preston Yates Barlow, age 41, all of Hildale; Seth Steed Jeffs, age 42, of Custer, South Dakota; and Nephi Steed Allred, Hyrum Bygnal Dutson, age 55, and Kristal Meldrum Dutson, age 55, all of Colorado City.   Lyle Jeffs is the brother of Warren Jeffs.  In the physical absence of Warren Jeffs, Lyle Jeffs handles the daily affairs of the organization, including its financial matters.  Another of Warren Jeffs’ brothers, Seth Jeffs, leads a congregation of FLDS members in rural Custer County, South Dakota.  Arrest warrants were issued for all defendants charged in the indictment.

“This indictment is not about religion.  This indictment is about fraud,” U.S. Attorney John W. Huber said today.  “This indictment charges a sophisticated group of individuals operating in the Hildale-Colorado City community who conspired to defraud a program intended to help low-income individuals and families purchase food.”

Washington County Sheriff Cory Pulsipher, who helped initiate the investigation and has officers participating on the FBI’s Public Corruption Task Force, emphasized the role his local investigators played in starting the investigation. “What started as a small investigation quickly grew to a point where it was important to work with federal agencies to build a case to present to a grand jury.”  Washington County Attorney Brock R. Belnap, whose office also participated in the investigation, will participate in prosecuting the case as a Special Assistant U.S. Attorney.

Arrest warrants were executed Tuesday morning in Salt Lake City, in the FLDS community encompassing Hildale, Utah and Colorado City, Arizona, and in Custer County, South Dakota. The case is being investigated by the FBI, Washington County Sheriff’s Office,  IRS Criminal Investigation, the U.S. Department of Agriculture’s Office of Inspector General, and the Washington County Attorney’s Office. The Arizona Department of Economic Security, the Mohave Sheriff’s Office, the FBI’s Minneapolis and Phoenix Field Offices, and the U.S. Attorney’s Office in South Dakota assisted with the case.  Custer County, South Dakota Sheriff Rick Wheeler also assisted with the investigation and arrests Tuesday.

“Today’s indictment is the culmination of the tireless efforts of the FBI Public Corruption Task Force, which includes the IRS-Criminal Investigation, the U.S. Department of Agriculture’s Office of Inspector General, the Washington County Sheriff’s Office and the Washington County Attorney’s Office. The violations included in the indictment are especially egregious since they allege that leaders of the conspiracy directed others to commit crimes, for which only certain people benefited.  This type of conduct represents nothing less than pure theft.  The FBI and its law enforcement partners will actively pursue those entities or persons who unlawfully manipulate and control government programs for their own gain,” Eric Barnhart, Special Agent in Charge of the FBI’s Salt Lake City Field Office said today.

"IRS Criminal Investigation uses its financial expertise to unravel complex financial transactions and money laundering schemes designed to conceal the true source of funds," stated Acting Special Agent in Charge Aimee Schabilion.  "We are committed to working with our federal agency partners in combatting frauds against the government."

Washington County Attorney Brock R. Belnap, who will help prosecute the case, expressed appreciation for the efforts of the many agencies involved in the investigation.  "I am grateful for the numerous partners who have worked diligently on this case. It is our shared hope that this action will help innocent families receive the food assistance that they genuinely need while holding people accountable who conspire to divert those resources to illegal purposes."

Special Agent in Charge Lori Chan, Office of Inspector General (OIG) of the U.S. Department of Agriculture (USDA), Western Region, stated,  “Protecting the integrity of the Supplemental Nutrition Assistance Program (SNAP) is a major investigative priority for the Office of Inspector General.  Vendors who engage in SNAP fraud exploit the program’s needy beneficiaries, and misuse the substantial funding that taxpayers provide.   OIG is dedicated to ensuring SNAP funds are used for their intended purpose – feeding individuals and families. We look forward to continuing to work with our law enforcement partners to combat SNAP fraud.”

The U.S. Department of Agriculture’s Food and Nutrition Service operates the SNAP program to provide assistance to low-income individuals and families to purchase food products.

The authority to determine eligibility and to certify individual SNAP recipients who qualify for the program is delegated to individual states.  Persons in need of benefits apply with the appropriate state agency. Approved applicants receive an Electronic Benefits Transaction Card (EBT card), similar to a bank debit card, that is linked to a SNAP account. EBT cards have a  magnetic strip containing recipient information and the benefit amount. When a recipient presents a SNAP EBT card to a retailer to pay for eligible food items, the retailer debits funds from the recipient’s available SNAP benefits. SNAP benefits apply only to the purchase of eligible food items. Recipients cannot exchange their benefits for non-food items, household goods or cash. Only members of the recipient household may use the program benefits.

The indictment alleges that starting in about 2011, FLDS leaders, including Lyle Jeffs, instituted the “United Order” within the ranks of the Church.  Participation in the United Order purports to constitute the highest level of worthiness and spiritual preparedness in the church.  Devout FLDS members aspire to eligibility in the United Order.  Adherents to the United Order must donate all of their material assets to the FLDS Storehouse, a communal clearinghouse charged with collecting and disbursing commodities to the community.  United Order policy also dictates that members must obtain their food and household commodities solely through the FLDS Storehouse, according to the indictment.

The indictment alleges that the defendants engage in a variety of overt acts in furtherance of a conspiracy to defraud the SNAP program by diverting SNAP proceeds from authorized beneficiaries to leaders of the FLDS Church for use by ineligible beneficiaries and for unapproved purposes.  Church leaders, including Lyle Jeffs, Seth Jeffs, John Wayman and Kimball Barlow, held meetings in which they disseminated storehouse protocols, according to the indictment.  These protocols dictated methods for unlawfully diverting SNAP benefits to the FLDS Storehouse as well as instruction on how to avoid suspicion and detection by the government, according to the indictment.

FLDS members transferred their SNAP benefits to FLDS controlled stores without receiving eligible food products at the time of the transactions. For example, on Oct. 16, 2015, an FLDS member conducted a SNAP transaction for $800 without receiving eligible food products at the time of the transaction.  On one occasion, John Wayman collected EBT cards from legitimate beneficiaries, provided the cards to another individual, and directed that person to use the SNAP funds to purchase food and goods for non-eligible persons.

SNAP fraud proceeds also financed ineligible purposes.  For example, the indictment alleges that in March 2015, using SNAP fraud proceeds, Kimball Barlow signed a check for $16,978 to Orchid’s Paper Products Company for the purchase of paper products. During the period May 31, 2013, through September 22, 2014, the indictment alleges Ruth Barlow signed five checks totaling $13,561 made payable to John Deere Financial.  The SNAP fraud proceeds were used for installment payments on a 2013 John Deere load tractor.  SNAP fraud proceeds were also used for 16 checks totaling $30,236 payable to Ford Motor Credit for installment payments on a 2012 Ford F-350 purchased by Winford Barlow about Sept. 29, 2012.

The money laundering count of the indictment alleges the defendants conspired to conceal and disguise the nature, location, source, ownership and control of proceeds of a specified unlawful activity while conducting or attempting to conduct financial transactions. The indictment also seeks a money judgment equal to the value of the proceeds traceable to the alleged criminal offenses.

The potential penalty for conspiracy count is five years in prison.  The money laundering count carries a potential penalty of 20 years in prison.

An indictment is not a finding of guilt. Individuals charged in an indictment are presumed innocent unless or until proven guilty in court.

Lyle Steed Jeffs and John Clifton Wayman were arrested Tuesday morning in Salt Lake City. They are scheduled to make an initial appearance on the charges Wednesday at 10 a.m. in Room 7.1 of the federal courthouse in Salt Lake City.

Seth Steed Jeffs was arrested Tuesday morning in Custer County, South Dakota, and will have an initial appearance in federal court in South Dakota.

Defendants arrested Tuesday in the Hildale – Colorado City area will appear Wednesday at 10 a.m. in federal court in St. George. At this time, Ruth Peine Barlow and Kristal Meldrum Dutson have been taken into custody. (Will update through the day.)

           Law enforcement officers throughout the state serve and protect our communities. Where these professionals see someone in need, they act.

           Utah police officers have made our community a better place in ways both large and small.  We have seen many examples of their commitment to the communities they serve. A Unified police officer stopped to change a flat tire for a woman on Redwood Road to ensure she got home safely. One observant Orem police officer surprised a struggling single mother by coordinating the delivery of donated appliances and home essentials for her young family. A St. George police officer saved two lives in one day, by performing CPR on a critically ill middle school student and later by removing an obstruction from the airway of a 9-day-old infant.

           These professionals put their own lives at risk to keep our communities safe.  We have just experienced the tragic loss of Officer Doug Barney as he was working to protect the community he served. Other examples often go unnoticed. A Sandy police officer pulled a woman from a burning car moments before the car was engulfed in flames. A West Jordan police officer turned himself into a human shield while rescuing three children and their mother from an armed attacker. Another brave police officer came to the rescue of two adult sisters under deadly attack from a home intruder in Salt Lake City. Not long ago, a police officer dared to venture onto cracking ice to save a woman who had plunged into Mantua Reservoir.

           Whether the call for help requires a dramatic rescue or a simple act of kindness, officers consistently place the needs of the community above their own. These men and women suit up knowing that many with whom they come in contact during their shift will not appreciate their efforts. They know that split-second decisions may be second-guessed and scrutinized for months and years to come. They leave home with no promise of a safe return to their families.

           The overwhelming majority of these officers exercise sound judgment throughout their shifts each day. They enforce duly enacted laws with fidelity and soberness. These men and women also understand that they are accountable to those whom they serve. Our communities expect, and deserve, the very best from the law enforcement officers trusted with the power and authority to enforce the law.

           Public discourse regarding how law enforcement officers exercise that authority, while sometimes uncomfortable, is a hallmark of what makes our nation and judicial system great. When an officer does not live up to society’s high expectations, fair criticism often leads to positive improvements for more effective policing. When an officer acts outside the bounds of the law, our justice system is ready and able to address such transgressions.  The rule of law ensures that no one is above scrutiny.

           In addressing those isolated incidents where police power is abused, we must not forget that our law enforcement professionals are a force for good in our communities. It is misguided to impugn any group based on wrongs committed by a few aberrant members, but it is dangerous to apply that proposition toward all law enforcement.

           Utah communities have rallied around their police officers to express gratitude for their willingness to respond to the most dangerous and heart-wrenching episodes of our lives. They meet those expectations with courage and fortitude unknown to many of us.

           So hats off to our law enforcement professionals – the few who run toward the danger before it reaches the rest of us.

SALT LAKE CITY – Nghia Thi Sabol, age 65, a Vietnamese citizen living in Salt Lake County, pleaded guilty to wire fraud in U.S. District Court Wednesday afternoon in connection with a fraudulent auto leasing program.  Most of the investors in the scheme were promised returns of 4-5 percent per month on their investment, however they lost all or a majority of the funds they invested in the scheme.  Restitution owed to victims in the case is $943,250.

            Sabol, also known as Nia Sabol, Nghia Cano, Nghia Thi Nguyen, Nghia Wynn Sabol, and Nghia Wynn, is currently incarcerated in the Utah State Prison on unrelated securities charges.  She was charged in a federal indictment returned in November with four counts of wire fraud and one count of money laundering following an investigation by the FBI and IRS Criminal Investigation.

            According to documents filed in federal court, Sabol established a company called W.A.V.E., LLC (WAVE) with headquarters in Midvale. She claimed WAVE offered an automobile leasing program referred to as “WAVE’s American Evaluation Program” and solicited individuals to participate in the leasing program, promising returns of approximately 4 to 5 percent per month.  She also sold investments in WAVE.  Sabol represented that participants in WAVE’s automobile leasing program would receive a new automobile of their choice manufactured by one of the three major U.S. automobile manufacturers to “test drive” for one year with unlimited mileage.  In return, they were required to pay a one-time, non-refundable fee of about $300, pay 10 percent of the manufacturer’s suggested retail price for the vehicle chosen, and were required to complete vehicle evaluation forms to be furnished to the manufacturer.

            As a part of a plea agreement reached with federal prosecutors, Sabol admitted that she represented to investors that WAVE had contracts with three major U.S. automobile manufacturers and that WAVE would be paid a subsidy in exchange for vehicle evaluations provided by their participants, when in fact, she knew WAVE had no contracts with automobile manufacturers.  She also admitted that she represented to investors that WAVE had purchased vehicles for WAVE’s auto leasing program with funds received from major automobile manufacturers, when in fact, the funds were obtained from WAVE investors. She also represented to investors that WAVE attorneys had received millions of dollars from automobile manufacturers and were awaiting distribution to WAVE, when in fact, no such funds had been provided to WAVE.

            Sabol also concealed from investors that she had a previous felony conviction for fraud and was on parole, that the terms of her parole prohibited her from dealing in investments or being employed in a fiduciary position, and that most investors lost all or a majority of the funds they invested in WAVE.

            Sabol’s plea to wire fraud involved the transfer of $160,000 from a victim of the fraud to WAVE’s account at a bank in Utah.

            The plea agreement executed Wednesday includes a stipulated sentence of 24 months to be followed by 36 months of supervised release.  The sentence is subject to the approval of and acceptance of the Court.  The sentence would run concurrent with any indeterminate sentence imposed in a separate state case.

            U.S. District Judge Clark Waddoups presided at the plea hearing Wednesday and is scheduled to impose the sentence in the case on April 14 at 3 p.m.

WASHINGTON – The Department of Justice, the U.S. Environmental Protection Agency (EPA) and the State of Utah have reached an agreement with Salt Lake County to resolve alleged Clean Water Act violations associated with the County’s stormwater management program.  This agreement, lodged as a consent decree in the U.S. District Court for the District of Utah today, requires the county to take specific measures to reduce illegal stormwater and non-stormwater discharges to Jordan River Valley surface waters by thoroughly implementing the requirements of its municipal separate storm sewer system (MS4) permit. The county will also pay a civil penalty of $280,000.

         “This agreement is good news for water quality in Salt Lake County and the people and wildlife that depend on it,” said Assistant Attorney General John C. Cruden for the Department of Justice’s Environment and Natural Resources Division. “The settlement today is the result of a joint enforcement action by the State of Utah and the United States that will protect the area’s precious water resources from contaminated runoff for many years to come.”

         “Protecting the water quality in Salt Lake County is a priority for all of us,” said U.S. Attorney John W. Huber for the District of Utah. “Salt Lake County, working together with the State of Utah, the EPA, and the Department of Justice, has agreed to take several measures that will help protect the Jordan River watershed going forward.”

         “Preventing and managing polluted runoff in urban areas is essential to protecting water quality,” said Director Suzanne Bohan for EPA’s Enforcement Program in Denver, Colorado. “The rivers and streams in the Jordan River watershed support growing populations and provide significant economic and recreational benefits in Salt Lake County’s communities. EPA will continue to take steps to ensure that municipalities have viable stormwater programs in place to reduce polluted runoff and protect water resources.”

          Under the terms of the agreement, Salt Lake County will secure adequate resources to fully maintain and implement its stormwater program, including training and maintaining full-time staff. The county will also take measures to remedy several identified deficiencies, including procedures to review construction site stormwater control plans, inspect sites with active construction or industrial activity and enforce sediment and erosion control requirements.  In addition, the county will ensure structural controls are properly installed and maintained and will improve efforts to identify and eliminate illegal discharges to stormwater infrastructure.

         The volume of annual runoff in the Jordan River Valley is estimated at 190 million cubic meters per year, a figure that underscores the importance of local efforts to manage stormwater so it does not become contaminated before reaching surface waters.  The Jordan River watershed supports fish, migratory bird species and wildlife and provides water for recreation, irrigation and public supply.

         Stormwater runoff from rain and snowmelt events can pick up pollutants like trash, chemicals, oils and sediment as it flows over land and impervious surfaces, such as industrial storage areas, paved streets and parking lots.  These pollutants can damage the health of a watershed and cause changes in the water quality, resulting in impaired drinking water sources, habitat modification and loss, increased flooding, decreased aquatic biological diversity and increased sedimentation and erosion.  Stormwater controls—also known as best management practices—filter out pollutants and prevent pollution by controlling it at its source.

         The Clean Water Act uses a permitting process to manage stormwater discharges from three types of sources: municipal separate storm sewer systems (MS4s), construction activities, and industrial activities.  These permits are designed to prevent runoff from rain and snowmelt events from washing harmful pollutants into local surface waters.  MS4s are systems of conveyances for storm water that include infrastructure such as storm drains, pipes, ditches and roads.  MS4 permits are designed to reduce the release of contaminated runoff into MS4s and the waters into which they discharge.  EPA and the Utah Department of Environmental Quality inspected the County’s MS4 in 2012 and identified numerous violations of the County’s MS4 permit.

          The consent decree agreement requires the county to pay a one-time civil penalty of $280,000, including $140,000 to the United States and $140,000 to the State of Utah, with an opportunity to offset a portion of the state amount through the completion of supplemental environmental projects.

          The settlement, lodged today is subject to a 30-day public comment period and approval by the federal court.  The settlement will be available for viewing at www.justice.gov/enrd/Consent_Decrees.html

          For more information on EPA’s NPDES stormwater program visit: http://www.epa.gov/npdes/npdes-stormwater-program

SALT LAKE CITY – A jury concluded an eight-day trial in U.S. District Court Thursday evening finding Dr. Simmon Lee Wilcox, age 60, of Las Vegas, guilty of one count of conspiracy to distribute oxycodone and one count of distribution of oxycodone.  The jury acquitted Wilcox on three counts of distribution of hydrocodone. The jury deliberated about five hours before returning the verdict.

         Evidence at the trial showed Dr. Wilcox wrote about 618 prescriptions resulting in the diversion of approximately 74,000 30-milligram oxycodone pills for non-medical purposes between July of 2010 and March of 2013. Dr. Wilcox wrote hundreds of prescriptions to people using false identifications that were filled at various pharmacies in Utah and Nevada. Those who filled the prescriptions and took possession of the oxycodone either sold it or used it personally.

         Five co-conspirators in the case previously pleaded guilty to conspiracy to distribute oxycodone. Benjamin David Grisel, age 49, and Brenda Grisel, age 48, both of Santa Clara; Jeron Scott Hales, age 40, of Hurricane; Jeremy Daniel Perkins, age 36, of Washington; Randall David Ayrton, age 35, of St. George; and Wilcox were initially charged in a 12-count indictment returned by a federal grand jury in October 2013 following an investigation by DEA drug diversion investigators. The first 11 counts of the indictment involved drug trafficking offenses.  The final count charged identification document fraud.

         As a part of plea agreements reached with federal prosecutors, co-conspirators in the case admitted they conspired with Dr. Wilcox to use his medical license to write prescriptions for oxycodone pills. To facilitate the conspiracy, one of the co-conspirators created false identification documents for the group to use in filling the oxycodone prescriptions at various pharmacies. Co-conspirators in the case are scheduled to be sentenced in February.

         “I have talked before about the heroin and opioid tsunami threatening Utah.  In 2012, 31.71 pounds of heroin were seized in Utah.  In 2014, that number grew to 244.04 pounds,” U.S. Attorney John W. Huber said today.  “The 74,000 oxycodone pills that found their way into our communities through the 618 prescriptions Dr. Wilcox wrote are no different than a drug dealer selling heroin on the corner.  In fact, these crimes are worse because they abuse the trust we place in physicians.  To stop the wave we are seeing, we need to attack every angle of the heroin and opioid problem in our state,” Huber said.

         “DEA takes its responsibility to prevent the distribution of dangerous and addictive drugs to those who do not have a medical reason to have them very seriously,” Acting DEA Assistant Special Agent in Charge John Eddington said today.  “We are pleased the jury recognized the seriousness of the conduct involved in this case.”

         U.S. District Judge Ted Stewart, who presided over the trial, set sentencing for Dr. Wilcox for April 18, 2016, at 10 a.m. Wilcox faces up to 20 years in prison and a fine of $1 million for each of the two drug distribution counts of conviction.

SALT LAKE CITY -- Jonathan Brett Wood, age 49, of Salt Lake City, pleaded guilty to one count of possession of child pornography in U.S. District Court Wednesday afternoon.  The plea agreement reached with federal prosecutors includes a stipulated 156-month sentence. The case is a part of the Utah Project Safe Childhood initiative, which brings together federal, state and local agencies to investigate and prosecute individuals who exploit children.

            The significant sentence is subject to the approval of U.S. District Judge Clark Waddoups, who will impose a sentence in the case on June 2, 2016.  Judge Waddoups also will impose a term of supervised release for Wood, who faces at least five years of supervised release when he finishes his federal prison sentence with a maximum term of life. (There is no parole in the federal criminal system.)  Wood also agreed to forfeit a Samsung laptop computer as a part of the plea agreement reached with federal prosecutors.

            As a part of the plea agreement, Wood admitted that on a date unknown and continuing to Feb. 11, 2015, he possessed a computer that contained images of child pornography, including images depicting prepubescent children engaged in sexually explicit conduct.  He also acknowledged that he has a previous conviction for aggravated sexual abuse of a child in Utah’s 4th District Court.

            “Protecting vulnerable victims is a top priority for the Department of Justice and my office in Utah.  We are particularly focused on the exploitation of children,” U.S. Attorney John W. Huber said today.  “In this case, our federal, state, and local law enforcement partners contributed to the successful prosecution of an individual who is a repeat offender. We will continue to work together to keep children in Utah safe from these predators.”

            Wood was charged with distribution of child pornography, receipt of child pornography, and possession of child pornography in a three-count indictment returned by a federal grand jury in September following an investigation by local, state, and federal agents participating as members of the Utah Internet Crimes Against Children Task Force.

       “Like all who work in the criminal justice system, our hearts are heavy this week. We are deeply saddened by the loss of Officer Doug Barney and the serious injuries sustained by Officer Jon Richey. Our hearts are also full of gratitude for the heroic efforts of those who willingly risk their lives every day to keep our families and communities safe. We also want the families of our law enforcement officers to know we recognize how much they sacrifice on our behalf.

       “Those of us involved in the criminal justice profession will join others in the coming weeks to review the circumstances surrounding this tragedy.  Federal judges, prosecutors, and defense attorneys make decisions on detention issues every day. In each of these cases, those involved take their duties seriously and use their best judgment in balancing competing interests. While it is valuable and necessary to assess what happened and identify ways we can all do our jobs better, hindsight is 20/20. We would all do things differently knowing what we now know.

       “Our federal judges in Utah are thoughtful, careful, and have the best of intentions as they make difficult decisions. In this matter, the U.S. Attorney’s Office did not object to the judge’s ultimate pre-trial detention decision. Once we have had time to honor the two Unified Police Department officers and support their families, we intend to focus our energy on making sure we learn from this tragic situation.

       “In the emotional aftermath of these shootings, may we remember there is only one person to blame – the fugitive who committed these heinous crimes.”

SALT LAKE CITY – Roger Stanley Bliss, age 57, of Bountiful, Utah, will serve 12 months and one day in federal prison for his efforts to corruptly influence and obstruct the administration of justice in a Securities and Exchange Commission case filed against him in U.S. District Court in Salt Lake City. 

       U.S. District Court Chief Judge David Nuffer imposed the sentence Monday morning. Judge Nuffer also ordered that the sentence be served consecutive to any sentence imposed in a related state criminal matter. Bliss will be on probation for 24 months when he completes his federal prison sentence.

       Bliss was charged with obstruction of justice and false declaration before a Court of the United States in an indictment returned in August 2015. He pleaded guilty to both counts of the indictment in September. A co-defendant in the case, Kevin Carl Fortney, age 55, of Washington, Utah, was charged with one count of false declaration before a Court of the United States and one count of making a false statement to a federal agent. The case against Fortney is pending.

       Federal prosecutors sought the indictment after U.S. District Judge Robert Shelby referred the case to their office requesting a criminal perjury and obstruction investigation be opened against Bliss and Fortney.  Judge Shelby made the request following an evidentiary hearing in his court where it was proven that Bliss and Fortney violated his order freezing defendant Bliss’ assets and that they had made false declarations to the Court to conceal the conduct.

       As a part of his guilty plea, Bliss admitted that he understood that the Court had issued an ordering freezing all of his assets and that assets purchased with funds from any bank account in his name were subject to that order. He admitted that he arranged to have a third party to whom he owed money, take control of a sailboat that had been purchased with funds from a bank account in his name and was subject to the Court’s order freezing his assets. Bliss admitted he transferred the sailboat so it could be liquidated by the third party and the proceeds used to reduce a debt he owed to the third party.  He also admitted making a false statement while under oath as a part of a subsequent hearing. Bliss knew the declaration was not consistent with the facts when he made it, according to a statement made as a part of his guilty plea.

       “The integrity of our judicial system is paramount in our civilized society.  Those who attempt to obstruct the work of the Court by giving false testimony or who knowingly violate orders of the Court will face vigorous prosecution,” U.S. Attorney John W. Huber said today.

       In a sentencing document filed in the criminal case prior to Monday’s hearing, Assistant U.S. Attorney Jacob Strain noted that protecting investors is a component of the SEC’s mission and it satisfies its mission through filing civil lawsuits in federal court. “The public’s deference to, respect for, and compliance with orders issued from the federal judiciary are vital to the SEC’s ability to perform its statutory mandates,” Strain wrote.

       Asset freeze orders, like the one violated in the Bliss case, serve to prevent the unfair dissipation of assets and ensure the availability of funds for restitution to victims.  “Bliss lacks the resources to repay the investor-victims of his Ponzi scheme.  Bliss victimized them yet again by recruiting his brother-in-law, Kevin Fortney, to liquidate Bliss’ catamaran sailboat and then to lie about it to the Court and to investigators.  Bliss deliberately violated Judge Shelby’s asset freeze order, recruited a co-conspirator to his cause, and then provided false and misleading information to influence the Court’s decision on the matter.  Bliss circumvented the SEC’s efforts to protect investors,” Strain said in the sentencing document.

SALT LAKE CITY – A federal grand jury returned a three-count indictment Wednesday afternoon charging Jeremy Rose, age 38, of Tremonton, with production of child pornography, possession of child pornography, and coercion and enticement. 

            Rose was arrested Thursday morning and had an initial appearance late this afternoon before U.S. Magistrate Judge Evelyn Furse. The indictment was unsealed at the hearing.  Rose was released on conditions of supervised release and will have electronic monitoring.

            Rose, a former Tremonton police officer, was prosecuted in state court following an investigation by the Utah Internet Crimes Against Children task force. He was sentenced to 270 days in jail and 36 months of probation in November 2014. He was also ordered to register as a sex offender and complete 60 hours of community service.  

            Federal prosecutors sought a Department of Justice waiver which allowed them to pursue federal charges against Rose for the conduct.  Because the prior prosecution left substantial federal interests unvindicated, Utah prosecutors received authorization to prosecute Rose. 

            “In consultation with the Department of Justice and after careful deliberation, we believe that a federal prosecution is warranted given the facts of this case,” John W. Huber, U.S. Attorney for Utah, said today.  “There are areas of criminal law where we share concurrent jurisdiction with state prosecutors.  Production and possession of child pornography is one of those areas.  This is not a decision we made lightly. However, given the serious nature of the alleged crime, we presented the case to a grand jury this week and will proceed with a federal prosecution of Mr. Rose,” Huber said.

            The first count of the indictment alleges that between the spring of 2012 and June 2013, the defendant knowingly induced, enticed and coerced a minor to engage in sexually explicit conduct for the purpose of producing visual depictions of the conduct.  The second count of the indictment alleges possession of child pornography. The final count of the indictment alleges that Rose induced, enticed, and coerced an individual, who had not reached the age of 18, to engage in sexual activity for which a person can be charged with a criminal offense.  The FBI has joined the investigation for the federal case.

The potential maximum penalty for production of child pornography is 30 years in prison with a minimum mandatory 15-year sentence.  Possession of child pornography carries a maximum potential penalty of 10 years.  The enticement and coercion count has a 30-year maximum sentence with a 10-year minimum mandatory sentence.  Actual sentences for federal crimes are typically less than the maximum penalties.  Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.

            Indictments are not findings of guilt.  Individuals charged in indictments are presumed innocent unless or until proven guilty in court.

SALT LAKE CITY – A federal grand jury in Salt Lake City returned an indictment late Wednesday afternoon charging Kolar Rahman Anees Ur Rahman, age 44, who was born in India and lives in the United Arab Emirates, with violations of federal law in connection with alleged efforts to purchase 89 Sako .308 caliber sniper rifles and have them exported from the United States to Belarus.

            The charges in the four-count indictment include conspiracy to commit an offense against the United States, a violation of the Arms Export Control Act, smuggling goods from the United States, and money laundering.  Rahman was arrested in early November in Chicago on a complaint filed in Utah.  Following a removal proceeding in Chicago, he is being transferred to Salt Lake City by the U.S. Marshals Service.  An initial appearance will be scheduled in Utah when he arrives.

            According to the indictment, the Arms Export Control Act authorizes the President of the United States to control the export of defense articles and defense services from the United States. Unless a specific exception applies, the Act provides that no defense articles or defense services may be exported without a license for such export. It is the policy of the United States to deny licenses and other approvals for the export of defense articles and defense services destined for Belarus, as well as other countries subject to an arms embargo.

            In November 2013, according to the indictment, a firearms manufacturer in Salt Lake City was contacted through email by someone identified as Individual A in the indictment regarding the purchase of 50 sniper rifles to be shipped to Belarus. The firearms manufacturer notified Individual A that the purchase and delivery would be impossible due to current trade sanctions and embargoes against Belarus.  The firearms manufacturer subsequently informed a special agent with U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) about the suspicious inquiry.

            An HSI Salt Lake City undercover agent contacted Individual A by email. In those communications, Individual A reiterated his desire to procure sniper rifles in the United States for delivery to Belarus. From November 2013 through May 2015, negotiations between the undercover agent and Individual A did not result in a purchase. However, in May 2015, Individual A introduced the undercover agent to Rahman, designating Rahman as the principal broker for the procurement of the sniper rifles.

            The indictment alleges that from May 2015 until November 2015, the defendant engaged in a conspiracy to purchase 89 sniper rifles in the United States and have them exported to Belarus without first obtaining licenses as required.  In August 2015, Rahman and an undercover agent agreed that Rahman would make a first purchase of 10 sniper rifles and ammunition for approximately $66,285. No party to the transaction obtained export licenses for the rifles.

            In September, according to the indictment, Rahman informed the undercover agent that the final contract with Belarus had been completed and sent the undercover agent a down payment of approximately $13,257 for 10 sniper rifles. Rahman agreed to pay the remaining balance once the rifles arrived in Belarus.  He told the undercover agent not to include U.S. invoices with the shipment. Rahman requested that the sniper rifles be shipped by the most direct route possible to Belarus. According to the indictment, the undercover agent informed Rahman that the shipment route would be from the United States to South Africa, to Turkey and then to Belarus. 

            On Nov. 4, 2015, two undercover HSI agents met with an individual who identified himself as Kolar Rahman Anees Ur Rahman at a hotel near Chicago, according to the indictment.  Rahman confirmed he was the same individual the agents had been negotiating with since May.  Rahman, the indictment alleges, informed the agents that he understood the risk of illegally obtaining and shipping the sniper rifles to Belarus and that he desired to complete their business transaction as planned. Rahman and the agents discussed future purchases and shipments of the .308 caliber rifles to Belarus.   Rahman was arrested by the agents in Chicago later that day.   

            The potential maximum penalty for conspiracy to commit an offense against the United States is up to five years in prison and a fine of $250,000. A violation of the Arms Export Control Act is 20 years in prison and a fine of $1 million.  Smuggling goods from the United States has a potential penalty of 10 years in prison with a fine of $250,000.  The money laundering count is punishable by up to 20 years in federal prison and a fine of $500,000.

            Indictments are not findings of guilt.  Individuals charged in an indictment are presumed innocent unless or until proven guilty in court.

SALT LAKE CITY – A federal grand jury returned a one-count indictment Wednesday afternoon charging Michael Sherman Morlang, age 26, of Payson with making a bomb threat to a hospital.

            On the morning of Sept. 17, 2015, the Sevier Valley Medical Center in Richfield received a bomb threat.  The hospital evacuated everyone possible and remained on lockdown for several hours. Individuals seeking emergency care, including patients in ambulances, had to be diverted to another hospital.

            The indictment alleges Morlang called in the bomb threat, conveying information he knew to be false concerning an attempt being made to damage or destroy a building.  The potential maximum penalty for the charge is 10 years in prison and a fine of $250,000. An indictment is not a finding of guilt.  Individuals charged in indictments are presumed innocent unless or until proven guilty in court.

            Morlang is in custody in Idaho on an unrelated warrant.  A federal arrest warrant will be issued following today’s indictment.

            The Richfield Police Department, the Sevier County Sheriff’s Office, and the FBI have coordinated the investigation of the case.  The case is being prosecuted by the U.S. Attorney’s Office in St. George.

SALT LAKE CITY – Travis Javier Cruz, age 38, of the Salt Lake City area, who traveled to California in October 2014 to pick up 73.8 pounds of methamphetamine from a supplier destined for distribution in Salt Lake City, will serve 198 months in federal prison.  Cruz pleaded guilty to possession of methamphetamine with intent to distribute in May.

            U.S. District Court Judge Robert J. Shelby imposed the sentence last week in federal court.  He also ordered Cruz to be on supervised release for 60 months after he finishes his prison sentence.  Cruz also will forfeit three vehicles and $3,698 in U.S. currency.

            As a part of the plea agreement reached with federal prosecutors, Cruz admitted that he traveled to the Orange County area of California on Oct. 28, 2014, to pick up a large quantity of methamphetamine for distribution in the Salt Lake City area.  According to a complaint filed in the case, Cruz was already under surveillance by the FBI’s Safe Streets Task Force, in conjunction with the Salt Lake Unified Police Department, the Davis County Sheriff’s Office, and other law enforcement agencies prior to making the trip to California. Law enforcement agents believed that Cruz was running a major methamphetamine distribution ring in the Salt Lake Valley.

            Cruz arrived at a hotel in Huntington Beach, where the narcotics transaction would take place, with approximately $300,000 in cash to pay for 70 pounds of narcotics.  Cruz admitted meeting with a courier for the methamphetamine source of supply at the hotel on Oct. 28, 2014, and giving him $300,000. 

            The next day, according to the plea agreement, the courier returned to the hotel with five or six five-gallon buckets.  He took the buckets into Cruz’s room.  The buckets contained the methamphetamine Cruz planned to distribute in the Salt Lake City area.  Cruz admitted that he and others packaged the methamphetamine into plastic wrap and mustard to transport it back to Salt Lake City.  The narcotics were placed in a roller bag and two backpacks and loaded into the trunk of the Cruz’s car for transportation back to Salt Lake City.

            Agents and officers, who had been conducting surveillance at the hotel, conducted a vehicle stop after the narcotics were loaded in the car.  A dog alerted to the presence of narcotics in the trunk of the vehicle.  Cruz admitted as a part of the plea agreement that the amount of narcotics recovered was approximately 73.8 pounds.  On the same day, officers executed a federal search warrant at a storage unit in Utah and recovered approximately 1.5 pounds of methamphetamine. Cruz admitted it was his intent to distribute the methamphetamine in the Salt Lake City area.

            Federal prosecutors argued for a sentence of 252 months in the case, pointing out that Cruz admitted he had made the trip to California for drugs on at least one other occasion and that evidence suggests he has done it on a number of occasions.  “Indeed, one could extrapolate, based on the evidence, that Mr. Cruz is responsible for hundreds of pounds of methamphetamine distributed in the Salt Lake Valley.  His actions have been seriously destructive to the community, and his sentence should reflect that seriousness,” they wrote in a sentencing memorandum filed in the case.  Cruz also has previous criminal history including three convictions related to the operation of a clandestine lab. 

            “Mr. Cruz pleaded guilty to what appears to be his fourth narcotics trafficking offense. A substantial sentence is clearly warranted given his extensive criminal history as well as the large amount of methamphetamine trafficked in this case” prosecutors told the court.  

            Cruz was charged with conspiracy to distribute methamphetamine and possession of methamphetamine with intent to distribute in an indictment returned by a federal grand jury in November 2014.

SALT LAKE CITY – A Salt Lake City man who admitted he had more than 600 images of child pornography in his possession, including images depicting young children being sexually assaulted by adults, has been sentenced to 10 years in federal prison.

            Steven Seth Hansen, age 36, of Salt Lake City, who has a previous federal conviction for use of interstate facilities to transmit information about a minor, must also register as a sex offender, pay restitution in the case, and forfeit a phone and tablet.

            As a part of a plea agreement reached with federal prosecutors, Hansen pleaded guilty to one count of possession of child pornography, which included a minimum mandatory sentence of 10 years in federal prison. U.S. District Court Judge Robert J. Shelby, who imposed the sentence last week, ordered Hansen to report to federal prison to begin serving his sentence on Jan. 15, 2016.

            Law enforcement officers executed a search warrant at Hansen’s home in March, following up on tips from the National Center for Missing and Exploited Children. Agents and officers with U.S. Immigration and Customs Enforcement’s Homeland Security Investigations and the Utah Internet Crimes Against Children task force recovered a tablet and phone with child pornography images on them. Hansen was charged with receipt of child pornography and possession of child pornography in an indictment returned in March.

            This case was investigated and prosecuted as a part of Utah Project Safe Childhood, an   initiative targeting child sexual exploitation.  Project Safe Childhood marshals federal, state and local resources to locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims.

SALT LAKE CITY – A grand jury returned a one-count indictment Tuesday afternoon charging Jason Thomas Llewelyn, age 45, of Helper, Utah, with theft from programs receiving federal funds.

            The indictment alleges that from about Dec. 16, 2011, through about Aug. 19, 2015, Llewelyn, as an agent of Carbon County, embezzled money from grants given to the county and administered by the U.S. Department of Homeland Security.  The county received a series of grants in excess of $10,000 beginning in August 2010 and continuing through September 2014.

            According to the indictment, Llewelyn used the money to purchase hundreds of items for his houseboat and other personal interests.  The indictment alleges he misapplied property worth at least $5,000.

            Llewelyn will be issued a summons to appear in federal court for an initial appearance on the charge in the indictment.  The potential maximum penalty for the charge is up to 10 years in prison and a fine of $250,000.

            Indictments are not findings of guilt.  Individuals charged in an indictment are presumed innocent unless or until proven guilty in court.

            The case is being investigated by special agents of the FBI and prosecuted by the U.S. Attorney’s Office in Salt Lake City.

SALT LAKE CITY – Jacob J. Kilgore, a former owner of a Salt Lake City durable medical equipment company, pleaded guilty in U.S. District Court late Monday afternoon to three counts of conspiracy to commit health care fraud as a part of Medicare fraud scheme involving power wheelchairs. The plea agreement includes a stipulated sentence of 60 months in federal prison, subject to acceptance by the court.

            U.S. Attorney John W. Huber of the District of Utah, FBI Special Agent in Charge Eric K. Barnhart of the FBI’s Salt Lake City Field Office, Special Agent in Charge Gerald Roy of the U.S. Department of Health and Human Services Office of Inspector General; and Special Agent in Charge Janice M. Flores of the Defense Criminal Investigative Service’s (DCIS) Southwest Field Office announced the plea agreement.

            Kilgore pleaded guilty to a three-count Felony Information filed Monday afternoon.

            Kilgore, 36, of Fruit Heights, was the co-owner of and employed as the vice president, and later, president of Orbit Medical, a Utah- and Indiana-based national supplier of durable medical equipment that specialized in power wheelchairs.  Orbit maintained three Utah offices in the Salt Lake City area.  Kilgore acted as sales manager for Orbit’s western region sales territory which included offices in Utah, Arizona, Nevada, Idaho, Washington, and Oregon.

            “In the United States Attorney’s Office, we take our professional obligations seriously and will not trade our integrity for any case.  While upholding the highest ethical standards, my office will aggressively root out white collar fraud and hold law breakers accountable for the damage caused by their greed-driven actions,” United States Attorney John W. Huber said today.

            “Less than a month after the court rejected his motions claiming prosecutorial misconduct, Mr. Kilgore has accepted responsibility for a multi-million-dollar fraud scheme.  On October 8, 2015, Chief Judge David Nuffer denied the defense motion to dismiss and to disqualify the prosecution team, finding that the prosecution had not deliberately intruded into privileged attorney-client communications.  Today, the defendant has voluntarily agreed to a five-year prison sentence for his criminal conduct and has chosen to abandon any further challenge to the court’s ruling against him.  This development speaks volumes as to the denied claims that federal prosecutors were acting outside their ethical obligations,” Huber said.

            As a part of the plea agreement, Kilgore admitted that he knew that Medicare required the company to maintain supporting medical record documentation, including the prescription from the treating physician, which supported the medical necessity of the power wheelchair supplied to the beneficiary and billed to Medicare. He admitted knowing that Medicare could request the supporting medical record documentation of a claim submitted by Orbit for review, and, if the documentation did not meet Medicare’s requirements, the claim could be denied.

            Kilgore admitted that while at Orbit, he instructed inside and outside sales representatives in taking paperwork received from physicians and making changes to the paperwork – including revising, altering, modifying or replacing – in order to make it appear that beneficiaries qualified for Medicare coverage of a power wheelchair under false and fraudulent pretenses. This process was referred to at times as “chiseling.”  Kilgore admitted that while he was at Orbit, he had computer software installed on computers used by sales representatives.  That software enabled sales representatives to electronically “chisel” documents received from physician offices to make it appear that Medicare requirements were met. This process caused the submission of false and fraudulent claims to Medicare.  Throughout the conspiracy, Kilgore admitted he enforced a sales quota of 10 power wheelchairs per month and at times, terminated sales representatives for failing to meet the quota.

            As a part of his plea to three counts of conspiracy to commit health care fraud, Kilgore admitted that he and three individuals identified as unindicted co-conspirators 1, 2, and 3 submitted false claims to Medicare for power wheelchairs.  He admitted that from April 2008 to around July 2010, he and UC1 submitted claims under fraudulent pretenses from Orbit to Medicare for more than $500,000. From around October 2006 to around June 2011, he and UC2 caused Orbit to submit fraudulent claims to Medicare resulting in reimbursements from Medicare of more than $679,909.  From around 2009 to around August 2010, Kilgore and UC3 caused Orbit to submit fraudulent claims to Medicare resulting in reimbursements of more than $200,000.  From around October 2006 to around June 2011, Kilgore and other sales reps caused Orbit to submit claims to Medicare for power wheelchairs under false and fraudulent pretenses resulting in reimbursements to Orbit.

            “This guilty plea is the result of the diligent work and collaborative efforts of several agencies.  We will continue to work with our law enforcement partners to investigate those who attempt to cheat the federal health care programs,” said Gerald Roy, Special Agent in Charge of Health and Human Services Office of Inspector General.

            "This plea highlights the commitment of the Defense Criminal Investigative Service (DCIS) and its law enforcement partners to protect the integrity of federal health care programs, including the Department of Defense health care program known as TRICARE," said Special Agent in Charge Janice M. Flores of the DCIS Southwest Field Office. "DCIS aggressively investigates health care providers that defraud the DoD to preserve American taxpayer dollars intended to care for our warfighters, their family members and military retirees."

            As a part of the plea agreement, Kilgore agreed to pay restitution in the case, including for victims of relevant conduct.  Parties to the criminal case will try to resolve the amount of restitution through a stipulated agreement. If an agreement is not reached, a restitution hearing will be scheduled.  He also agreed to a forfeiture money judgment in an amount to be determined by the court at sentencing. Sentencing is set for Jan. 27, 2016, at 2 p.m.

            Additionally, former Orbit sales representatives Morgan Workman of Farmington, Utah; David Evans of South Jordan, Utah; and Hunter Hartman of Ladera Ranch, Calif., have each pleaded guilty to conspiring to commit health care fraud, based on the same alleged scheme to defraud Medicare.  Sentencing for the three will be in February.

SALT LAKE CITY – Moussa Sleiman Bitar, aka Justizego, age 36, a naturalized U.S. citizen who is also a citizen of Lebanon, will serve 84 months in federal prison after pleading guilty to wire fraud, aggravated identity theft, and false claims as a part of a scheme to use the personal identifiers of deceased individuals to file fraudulent tax returns.

            U.S. District Court Judge David Nuffer also ordered Bitar to pay $843,561 in restitution and placed him on supervised release for 60 months following his prison sentence. The case against Bitar, investigated by special agents of IRS Criminal Investigation, the FBI, the U.S. Marshal’s Service, and the West Valley City Police Department, was unsealed at sentencing in U.S. District Court in Salt Lake City last week.

            Bitar admitted that from about January 2013 until about July 2013, he obtained the names, addresses, social security numbers, and other personal identifiers of deceased individuals and used the information to file false and fraudulent tax returns. Based on these fraudulent tax returns, the IRS sent refunds to bank accounts under Bitar’s control and the control of other individuals working with him.  Once the funds arrived, Bitar would withdraw the funds or have others working with him withdraw the funds or transfer the funds to him.  Funds were moved through banks in Utah. Prosecutors believe Bitar operated the scheme from Lebanon and other countries using individuals in Utah and other locations.

            According to court documents, on Jan. 22, 2013, Bitar transmitted an email with attachments containing personal identifiers of deceased individuals to be used to file a fraudulent tax return, including personal identifiers of L.T., a deceased individual.  On about April 4, 2013, he caused a fraudulent 1040 tax return, in the name of L.T., to be filed with the IRS claiming a tax return in the amount of $1,004, which he received. The scheme was in violation of federal wire fraud, aggravated identity theft, and false claims laws.

            “This significant federal prison sentence is appropriate for the egregious conduct committed by Mr. Bitar.  Using the personal identifiers of deceased individuals to steal money from American taxpayers is graphic example of the continued willingness of identity thieves to do whatever they can to obtain money or property that doesn’t belong to them,” U.S. Attorney John W. Huber said today. “We recognize the outstanding work of the law enforcement agencies involved in this complex investigation.”

            "Investigating refund fraud and identity theft is a priority for IRS Criminal Investigation," said John G. Collins, Special Agent in Charge of IRS Criminal Investigation in Utah. "Stealing identities and filing false tax returns is a serious crime that hurts innocent taxpayers and their families, especially those who have lost loved ones. This sentence should serve as a strong warning to those who are considering similar conduct. Law enforcement is serious about investigating these crimes and holding those who defraud the government accountable."

            Bitar was charged in a federal indictment returned in June 18, 2014.  He was arrested in the Canary Islands on June 26, 2014, on a request from the United States for a provisional arrest.  A superseding indictment was returned on July 2, 2014. Bitar was turned over to U.S. Marshals custody after extradition proceedings, which he waived, and he was transported to the United States.

            As a part of the plea agreement reached with Bitar in Utah, the U.S. Attorney’s Office for the District of Colorado will move to dismiss its indictment against Bitar as well as a supervised release violation.  The U.S. Attorney’s Office in the Eastern District of Michigan also has agreed not to seek an indictment against Bitar for a similar fraud scheme, however, Bitar was ordered to pay restitution for claims made in Michigan.

SALT LAKE CITY – An alleged drug trafficking organization that sources say cultivated and acquired large amounts of marijuana in California for distribution in Utah since at least 2010 is under federal indictment this week in Salt Lake City.  Using marijuana cultivated or acquired from other growers in California, the organization has been responsible for 100 pounds of marijuana distribution in Utah each month, court filings say.  

            An indictment returned Wednesday afternoon, following an Organized Crime Drug Enforcement Task Force investigation, charges Collin Drexel Armstrong, age 29, address unknown; Zachary Fitts Hoppe, age 31; Christopher Trey Benson, age 25; Robert Daniel Benson, age 54; and Deborah Ellis Benson aka Trinity Benson, age 54, all of Salt Lake City; and Jared Bryce Roth, age 33, address unknown, with conspiracy to distribute marijuana, possession of marijuana with intent to distribute, and conspiracy to commit money laundering.  All six defendants are charged in the conspiracy count of the indictment.  Armstrong and the Bensons are charged with possession with intent to distribute. Armstrong, Hoppe, and Christopher Trey, Robert Daniel, and Deborah Ellis Benson are charged in the money laundering count.

            According to a complaint filed in the case, prosecutors and investigators obtained information about the alleged drug trafficking organization through another investigation.  For several years, according to the complaint, large amounts of marijuana were cultivated or acquired in California and transported to Utah for distribution.  The indictment alleges the conspiracy to distribute marijuana started no later than Jan. 1, 2010, and continued through at least Sept. 23, 2015.

            The indictment also includes a notice of intent by federal prosecutors to seek criminal forfeiture $101,000 in currency seized from three defendants in the case; a 1968 Chevy Camaro; and six parcels of real property, constituting about 300 acres, in Laytonville, California.

            Armstrong is in custody in California. All other defendants in the case were arrested on a complaint filed on Sept. 14 and have been released on conditions.

            The maximum potential penalty for charges in the case is life in prison and a $5 million fine with a 10-year mandatory minimum sentence.

            Indictments are not findings of guilt.  Individuals charged in indictments are presumed innocent unless or until proven guilty in court.

            The case is being prosecuted by Assistant U.S. Attorneys in Utah and investigated by special agents of IRS-Criminal Investigation and the DEA.

SALT LAKE CITY – A federal grand jury returned a two-count indictment Wednesday afternoon charging Jonathon M. Wall, age 29, of Layton with impersonation of a federal officer in connection with an attempt to get VIP tickets to the Salt Lake Comic Con.

        The indictment alleges Wall pretended to be a Special Agent of the Air Force Office of Special Investigations (AFOSI) and, in that pretended character, demanded VIP tickets to the event under the ruse that he was entering the VIP area to apprehend a wanted fugitive.  Wall’s alleged conduct attracted the attention of a retired Salt Lake City police officer working security at the event. The security officer questioned Wall about AFOSI and what fugitive he was looking for.  The security officer notified AFOSI special agents, who came to question Wall.

        The indictment also alleges one count of making a false statement to a federal agent.

        The maximum potential penalty for impersonating a federal officer is three years in prison.  The penalty for making a false statement to a federal agent is five years in prison.  Each count also includes a potential fine of $250,000. A summons will be issued to Wall to appear for an initial appearance on the charge.

        Indictments are not findings of guilt.  Individuals charged in indictments are innocent unless or until proven guilty in court.

SALT LAKE CITY – The U.S. Department of Justice has awarded Kane County a $194,006 grant to implement or enhance local drug court programs. The funding is a part of the Bureau of Justice Assistance’s Adult Drug Court Discretionary Grant Program.

        The Drug Court Discretionary Grant Program provides financial and technical assistance to states, state courts, local courts, units of local government, and Indian tribal governments to develop and implement treatment drug courts that effectively integrate substance abuse treatment, mandatory drug testing, sanctions and incentives, and transitional services in a judicially supervised court setting with jurisdiction over nonviolent, substance-abusing offenders.

        “Using the authority of the court, drug court programs work to reduce crime by changing defendants’ drug-using behavior.  Although there are common elements to many drug programs, each court and the stakeholders working with the court, can design a program that addresses its unique needs for participant eligibility and program requirements,” U.S. Attorney John W. Huber said today.  “This substantial grant should be a big boost to Kane County’s efforts to expand its services, and I am pleased that county officials sought the assistance of the U.S. Department of Justice.”

        Kane County will use the grant funds to establish new services for target populations not currently being served, enhance existing court operations, expand court services, and improve the quality or intensity of offender services.  These services could include health care, including mental health services; educational, vocational and job training; and childcare or other family support services for each adult participant who requires such services.

SALT LAKE CITY – U.S. District Court Judge Dale A. Kimball has signed a judgment and order against a Utah coal mining company that cancels its federal coal lease and orders the company to pay more than $230,000 for past-due royalties and rental payments, United States Attorney John W. Huber announced today.

            The judgment and order follows a stipulated agreement reached by the United States and Hidden Splendor Resources, Inc. (HSRI)

            “It is imperative that energy companies operating on federal lands abide by the terms of the lease, post the necessary bonds, and pay the royalties and rentals due to American taxpayers,” Huber said.

            The order issued by Kimball declares that HSRI violated the terms of its coal lease and a BLM Notice of Noncompliance by not posting a required bond.  It cancels the coal lease for HSRI’s failure to comply with the lease terms and the Notice of Noncompliance that BLM had previously issued to it. And finally, the judgment requires HSRI to pay past-due royalties and rentals in the amount of $230,929.04 plus 1 percent interest until the date of the judgment and, thereafter, interest at the statutory rate until the debt is paid in full.

           The U.S. Attorney’s Office in Utah originally filed a civil action against Hidden Splendor Resources on Dec. 29, 2014.  Hidden Splendor Resources agreed to work with the United States on the stipulated judgment.  The judgment was filed in July.

           “This judgment stipulates that unpaid royalties dating back to 2012 and rental payments from 2009 through 2014 must be paid by Hidden Splendor Resources,” said Office of Natural Resources Revenue (ONRR) Director Greg Gould.  “ONRR will remain vigilant in collecting every dollar due from energy production that occurs on Federal lands.”

           Acting State Director for the Bureau of Land Management in Utah Jenna Whitlock said, “As the administrator of a number of coal leases in Utah, the Bureau of Land Management is committed to helping ensure that minerals are responsibly extracted from public lands.  Despite the requirements of the coal lease and our Notice of Noncompliance, the company failed to post the required bond for important post-mining reclamation activities and it is appropriate to cancel their coal lease.”

            Hidden Splendor Resources acquired the lease in March 2006 for the Horizon Mine, an underground coal mine located approximately 15 miles northwest of Price, Utah.  The company failed to pay royalties from production in the “Horizon Mine” in February, April and July 2012, as well as associated rental payments from 2009 through 2014.

           The United States Attorney’s Office acknowledged the cooperation of agencies involved in reaching the stipulated judgment, including the Office of Natural Resources Revenue, the Bureau of Land Management, and the Department of the Interior’s Solicitor’s Office.

            The Office of Natural Resources Revenue and the Bureau of Land Management are part of the Department of the Interior.  BLM is the leasing and inspection agency involved in onshore production on federal lands, while ONRR is responsible for collecting and disbursing revenues from energy production that occurs onshore on federal and American Indian lands and offshore in the Outer Continental Shelf.  During Fiscal Year 2014, ONRR disbursed more than $13.4 billion to states, American Indian Tribes, individual Indian mineral owners, and to various federal accounts, including the U.S. Treasury, the Land and Water Conservation Fund, and the Reclamation Fund.

SALT LAKE CITY – The Department of Justice has awarded grants to several Utah cities under the Edward Byrne Memorial Justice Assistance Grant (JAG) Program. The JAG Program is the primary provider of federal criminal justice funding to state and local jurisdictions and supports a range of program areas including law enforcement, prosecution and court programs, prevention and education programs, corrections and community corrections, drug treatment and enforcement, crime victim and witness initiatives, and planning, evaluation, and technology improvement programs.

            Among the cities receiving local solicitation grants this year are West Valley City, Layton, Sandy, Provo, Ogden, West Jordan, Salt Lake City, South Salt Lake City, and Murray. The Utah Commission on Crime and Juvenile Justice (CCJJ) received a JAG grant of $1,421,840 under the state solicitation portion of the grant program.

            “This program allows cities to apply for grant funds to address local needs and to support a broad range of local initiatives. Our communities are using the funding to increase officer safety, build transparency between police officers and the communities they serve, and to reduce crime in our neighborhoods.  Grant recipients are also using funds to target specific issues we face in Utah, such as prescription drug abuse, domestic violence, and gang violence,” U.S. Attorney for Utah John W. Huber said today.  The grants are awarded through DOJ’s Bureau of Justice Assistance.

            CCJJ will used its JAG funds to enhance statewide public safety services, support of the Utah Residential Substance Abuse Treatment (RSAT) program; and continue other evidence-based projects that support the juvenile justice system, among other things.  CCJJ’s JAG priority areas include addressing gang prevention/education or enforcement, prescription drug abuse prevention/education or enforcement, sexual assault or domestic violence, mental health courts and problem solving courts.

            West Valley City will receive $90,892 to purchase body cameras for officers. The goals of the grant funding include facilitating transparency and fostering relationships of trust between officers and citizens of the city.

            Layton will receive $13,529 to purchase equipment to increase officer safety and to help provide effective service to city residents and Davis County.

            Sandy will also use its $19,579 grant to buy equipment, including in-car video camera systems, to provide increased safety for officers and help reduce crime.

            Provo will use its $22,532 grant to enhance officer safety and to protect residents of the city.  Purchases will include upgrading computers and software.  Funds also will be used to purchase Tasers.

            Ogden intends to use its $56,117 grant to purchase body cameras and provide training as a part of the city’s participation in multi-jurisdictional law enforcement efforts.

            West Jordan will receive $29,487 to purchase law enforcement equipment, including hand-held radios, to improve the capability of police officers.

            Murray intends to use its award of $26,439 to purchase digital in-car cameras to improve the capabilities of first responders in the city.

            South Salt Lake City will use its $27,963 grant to purchase body cameras for officers.

            Salt Lake City will receive a grant of $291,397 to support the Salt Lake City Police Department’s Explorer Program and the Salt Lake Peer Court.  The funding will be used to provide equipment and technology, training for civilians and sworn officers, and organizing enforcement and community overtime projects.

            Taylorsville, awarded $29,916, will use its grant money to purchase bicycles, lasers, printers, first aid equipment, surveillance equipment, digital cameras, and safety supply handouts for presentations.  The updated equipment will help improve neighborhoods security in Taylorsville.

SALT LAKE CITY – A federal grand jury returned a 48-count indictment late Wednesday afternoon charging Wayne LeMar Palmer, age 60, and Julieann Martin, age 47, both of West Jordan, with wire fraud, mail fraud and money laundering in connection with an alleged investment fraud scheme that raised more than $140 million from more than 600 investors.

According to the indictment, Palmer established National Note of Utah (NNU) about Dec. 30, 1992. NNU was located in West Jordan.  Palmer owned and operated NNU and made all business decisions, including decisions regarding the use of investor funds.  Martin began working at NNU in about 1993.  Among other duties, she functioned as a client relations manager, which allowed her to interact with many of NNU’s investors and gave her access to information about investors’ investments with NNU, the indictment alleges.

The indictment alleges NNU solicited and sold investments, generally in the form of fixed rate promissory notes at a rate of 12 percent per year. NNU purported to be in the business of purchasing existing real estate loans and funding new real estate loans.  NNU supposedly used investor funds to purchase discounted mortgage notes and deeds of trust and to originate real estate loans at above-market rates. NNU engaged in a variety of other business activities during its existence in an effort to generate revenue, the indictment says, including acquiring and operating rental properties, developing properties it obtained through foreclosures, purchasing real estate for development, buying and operating a mint, and seeking to extract precious metals from previously processed mine tailings.

The indictment alleges Palmer and Martin recruited and retained investors using fraudulent and misleading statements.  According to the indictment, Palmer traveled around the country to recruit individuals and entities to invest in NNU.  Martin also had contact with potential and existing investors over the phone, in person, and by email communications.  For some investors, Martin was their only contact with NNU.

The indictment alleges Palmer and Martin solicited investors with false and fraudulent statements, which included among others, that the investments were safe and guaranteed; NNU was profitable and generated sufficient income from its business operations to pay investors a 12 percent annual return; NNU’s business activities were generating 18 percent or more per year; investments in NNU were secured by real estate assets which exceeded NNU’s investor liabilities; and that NNU had a perfect payment record and had never been late on a single investor payment.

According to the indictment, Palmer and Martin did not tell investors that new investor funds were being used to make payments to older investors and to pay NNU operating expenses.  They also were used to pay Palmer’s personal expenses, the indictment alleges.

They also did not tell investors that the vast majority of NNU investments were with affiliated entities Palmer controlled, rather than arms-length investments with third parties.   They also did not disclose, among other things, that beginning around 2007, NNU and its affiliates had, on aggregate, reported net losses and negative equity every year and that NNU had insufficient operating revenues to pay investors and operating expenses.

Between 1995 and 2012, according to the indictment, Palmer and Martin raised more than $140 million from more than 600 investors.  Many investors, the indictment alleges, lost all or part of their money invested in NNU. Some of the investors utilized self-directed retirement funds to make their investments.  When investors complained about late or missing payments, Palmer and Martin typically did not disclose the true state of affairs at NNU but told investors to be patient and payments would be forthcoming.

The indictment includes 14 counts of wire fraud.  Palmer is charged in each of the 14 counts and Martin is charged in 11 counts. Palmer is charged in all 17 counts of mail fraud included in the indictment and Martin is charged in nine counts.  They are both charged in 17 counts of money laundering in the indictment.

The defendants will receive a summons to appear in federal court for an initial appearance on the charges. The potential maximum penalty for each count of wire and mail fraud is 20 years in prison.  The money laundering counts in the indictment carry potential maximum sentences of 10 years in prison.

An indictment is not a finding of guilty.  Individuals charged in indictments are presumed innocent unless or until proven guilty in a court.    

The case is being prosecuted by the U.S. Attorney’s Office in Utah. Special agents of the FBI and IRS Criminal Investigation are investigating the case.  The U.S. Department of Labor, Employee Benefits Security Administration has also contributed to the investigation.

SALT LAKE CITY – Four indictments unsealed late Wednesday afternoon in U.S. District Court in Salt Lake City charge eight individuals with sex trafficking of children and other related violations of federal law. A federal grand jury returned the indictments July 21. Arrest warrants were executed Tuesday as a part of an investigation by the FBI and the Salt Lake City Police Department.

            “Sex trafficking of children is a crime we take very seriously,” U.S. Attorney John W. Huber said today.  “We appreciate the commitment and coordinated efforts of the FBI and the Salt Lake City Police Department in investigating these four cases. With the arrests made and the indictments unsealed, the criminal court process will now begin.”

            Abiodu Damiloca Salankole, aka Case, age 20, last known address unavailable, is charged with two counts of sex trafficking of children in one indictment.  The counts allege conduct involving two victims, both minors who had not attained the age of 18 years.

            Gloire Seba, age 21, of Sandy and Kyle Jason Hale, age 21, of Riverton are charged in a nine-count indictment with sex trafficking of children, conspiracy to commit sex trafficking and transporting a minor for prostitution. This indictment involves four minor victims.

            A third indictment charges Saquan Marcell Smith, age 23, and Raquel Consuela Knell, age 21, both of Salt Lake City, with four counts of sex trafficking of children and conspiracy to commit sex trafficking involving two minor victims.

            Three individuals are charged with sex trafficking of children, conspiracy to commit sex trafficking, transportation with the intent to engage in criminal sexual activity, and transportation of a minor with intent to engage in criminal sexual activity in a nine-count indictment.  Charged in this indictment are Ashley Nicole Poike, age 23, of Sandy; Hector Yordano Irizarry Castro, aka Jordan, age 24, of Salt Lake City; and Thomas Marte-Pena, aka Luigi, age 27, of Salt Lake City.  This case involves one adult victim and two minor victims.

            Some victims of the alleged crimes are included in more than one indictment.

            Salt Lake City Interim Police Chief Mike Brown said these cases represent an important opportunity for state and federal law enforcement agencies to coordinate on investigating a serious crime.  “Very few crimes are as serious as crimes against children," said Brown.

            "Anytime we can disrupt that cycle of violence, it's a huge step in the right direction. I applaud our partnerships and the concerted effort made by everyone to get these alleged criminals off the street and away from future victims."

            All of the defendants charged in the indictments had initial appearances in federal court Wednesday afternoon and entered pleas of not guilty to the charges.  Knell and Kyle were released subject to supervision by the U.S. Probation Office. The other six defendants are in custody with several detention hearing set for Monday.

            The potential maximum penalty for sex trafficking of children is life in federal prison with a 10-year mandatory minimum sentence.  The potential penalty for conspiracy to commit sex trafficking has a penalty of any term of years or life. Transporting a minor for prostitution also carries a potential life sentence with a 10-year mandatory minimum sentence. Transportation with intent to engage in criminal sexual activity has a potential maximum sentence of 10 years.

            Indictments are not findings of guilt.  Individuals charged in indictments are presumed innocent unless or until proven guilty in court.

SALT LAKE CITY – Teri Ann Jarvis, age 41, of Clearfield, charged in a federal indictment returned in February with mail fraud, aggravated identity theft, and wire fraud in connection with embezzlement schemes involving two employers, will serve 42 months in federal prison.  Jarvis pleaded guilty Wednesday afternoon to one count of mail fraud, one count of wire fraud, and one count of aggravated identity theft.

        U.S. District Court Judge Dale A. Kimball imposed the sentence.  Kimball ordered Jarvis to pay $846,738.88 to Positive Power, LLC, and $42,958.04 to Bronco Fence Company.  She will be allowed to self-surrender in January 2016 to begin serving her sentence.

        According to the indictment, Jarvis was an employee of Positive Power, LLC, from   October 2006 until around September 2013. Positive Power is based in Ogden and provides electrical contracting services.  Jarvis’ duties at the company included assisting with the management of company bank accounts, credit cards, collectables, payables and other financial records.  She was not authorized to sign checks or credit cards.

        Jarvis was an employee of Bronco Fence Company in Kaysville from about March 2014 through about October 2014. The company specializes in fence, deck, and railing construction.  Jarvis’ responsibilities at Bronco Fence included assisting with the management of the office, coordinating with a merchant services company for payment processing, and making accounting entries.

        As a part of the plea agreement reached with federal prosecutors, Jarvis admitted that she devised a scheme to defraud her employers to get money. While working for Positive Power, she admitted she forged checks made payable to herself and to pay her mortgage, car payment, and personal credit card payment.

        She also admitted that she used the alias Teri James in her employment application with Bronco Fence to conceal her identity and avoid detection of her previous embezzlement from Positive Power. While working for Bronco Fence, she provided false refund information to the merchant services company used by the business so that the merchant servicer processed the false refunds and transferred the money to her personal bank account.  She admitted she offset the money she embezzled from Bronco Fence as “material expenses” in the company records. She admitted altering company financial accounts and records at both companies to conceal her embezzlement of $889,696.92 from the businesses.

        “This unscrupulous defendant thought she had figured out a clever scheme to defraud her employers, steal company funds, and thwart the IRS,” said John G. Collins, IRS Criminal Investigation Special Agent in Charge of Utah. “IRS Criminal Investigation has made investigating identity theft a top priority and, together with our partners at the U.S. Attorney’s Office, will hold those who engage in similar behavior fully accountable.”

        The case is being investigated by IRS Criminal Investigation special agents, the Weber County Sheriff’s Office, and the Kaysville Police Department and prosecuted by Assistant U.S. Attorneys in the U.S. Attorney’s Office in Salt Lake City.

SALT LAKE CITY – The U.S. Department of Justice’s Office of Justice Programs has awarded a $72,125 grant to the Utah Commission on Criminal and Juvenile Justice to support substance abuse treatment programs for prisoners.

            The funding comes from the Residential Substance Abuse Treatment for State Prisoners Program.  This program assists states and local governments in developing and implementing substance abuse treatment programs in state and local correctional and detention facilities and to create and maintain community-based aftercare services for offenders.  The goal of the program is to break the cycle of drugs and violence by reducing the demand for, use, and trafficking of illegal drugs.

            According to grant documents, Utah will use the funds to implement up to three types of programs, including residential, jail-based, and aftercare.  At least 10 percent of the total state allocation this year will be made available to local correctional and detention facilities.

SALT LAKE CITY – A federal grand jury returned a five-count indictment Wednesday charging Manmeet Singh Bhatia and Marc Conrad Kammerman with May 14, 2015, robberies of Check City located at 1295 East 3300 South and The Smoke Shop located at 2343 East 3300 South in Salt Lake County.

            Bhatia, age 28, of South Jordan and Kammerman, age 41, of Murray, are charged with two counts of robbery, which are violations of the federal Hobbs Act.  Kimmerman is also charged with two counts of using a firearm during the commission of a crime of violence and one count of felon in possession of a firearm.

            Police officers responded to a robbery in progress at a Check City on 3300 South on May 14, a rainy night.  By the time the officers arrived at the business, the alleged suspect had fled the scene. The victim of the robbery described a suspect wielding a black handgun.  Later that night, a man walked into The Smoke House, also on 3300 South, a committed a robbery.  A black handgun was also used during the commission of this robbery.  A witness watched the alleged robber flee the store and get into the passenger side of a black car.  The witness was also able to provide a partial license plate number.

            Responding officers later observed a black car in a self-service car wash and identified items matching descriptions provided by witnesses at the two businesses. Kammerman, who is a convicted felon, was found in possession of a Beretta 9mm handgun.

            The potential maximum penalty for a conviction of robbery under the Hobbs Act is 20 years in federal prison and a fine of $250,000.  The potential maximum penalty for brandishing a firearm during the commission of a violent crime is life in prison with a mandatory minimum sentence of seven years.  Possession of a firearm by a restricted person carries a potential 10-year sentence. Federal arrest warrants will be issued for the defendants.

            Indictments are not findings of guilt. Individuals charged in indictments are presumed innocent unless or until proven guilty in court.

            The case is being prosecuted by the U.S. Attorney’s Office and investigated by the FBI and the Unified Police Department.

SALT LAKE CITY – United States Attorney John W. Huber, who became U.S. Attorney for the District of Utah in mid-June after being nominated by President Obama and confirmed by the U.S. Senate, has announced his new office leadership team. The changes are effective immediately.

            “The attorneys I have appointed to leadership positions in the office bring experience and sound judgment to their new responsibilities.  They live in Utah neighborhoods and are committed to working with our local, state, and federal law enforcement partners to make communities safe for everyone,” Huber said.

            “These changes will have immediate impact.  For example, I have appointed veteran prosecutor Rob Lund as the new chief of our White Collar Section.  For the past 10 years, drug cartel members have been looking over their shoulders because of Lund’s work in fighting narcotics traffickers.  Now Ponzi scheme and white collar fraudsters in our state will do the same because of Lund’s dedication to bringing offenders to justice,” Huber said.

            Diana Hagen, who joined the U.S. Attorney’s Office in 2001 and has been chief of the Appellate Section since 2006, will be First Assistant U.S. Attorney in the office.  This is the top Assistant U.S. Attorney position in the office. Hagen has briefed hundreds of federal appeals and has personally argued more than 70 cases before the Tenth Circuit Court of Appeals. She was a member of the trial team that prosecuted Brian David Mitchell and Wanda Barzee for the kidnaping of Elizabeth Smart.  She also has been active in local and federal bar associations and is the president-elect of Women Lawyers of Utah.

            Andrew Choate will be Executive Assistant U.S. Attorney in the office.  Choate joined the U.S. Attorney’s Office as a Special Assistant U.S. Attorney in 2010 and became an Assistant U.S. Attorney in June 2014.  Prior to his new appointment, Choate worked in the office’s National Security Section as chief of the Immigration Crimes Unit and deputy section chief.  He has been involved in the prosecution of several immigration fraud, national security, and domestic terrorism cases. Before joining the U.S. Attorney’s Office, he worked as Assistant Chief Counsel for the U.S. Department of Homeland Security in Salt Lake City.

            Robert Lunnen has been named chief of the Criminal Division in the office.  The Criminal Division is one of three divisions in the office. Lunnen joined the U.S. Attorney’s Office in 2002 after working in the Narcotics and Dangerous Drug Section at the U.S. Department of Justice.  As a part of that position, Lunnen served for three years as the Judicial Attaché for DOJ in Bogota, Columbia.  Lunnen later served for more than three years as the Judicial Attaché in Kabul, Afghanistan, where he was the senior DOJ official in Afghanistan, directing the Department’s Rule of Law reform program.

            David Backman, who has been an Assistant U.S. Attorney for 13 years, will be deputy chief of the Criminal Division.  He previously worked in the office’s Violent Crime Section and also served as Executive Assistant U.S. Attorney in the office.  Backman clerked for U.S. District Court Judge Dee Benson prior to joining the office.

            Jared Bennett will continue as chief of the Civil Division in the office and Dan Price will continue as deputy chief of that division.

            Karin Fojtik, who has been an Assistant U.S. Attorney in the office since 2004, will be chief of the Violent Crime Section.  Fojtik clerked for former U.S. District Court Judge Paul Cassell. She also was an Assistant Utah Attorney General and an assistant prosecutor in Salt Lake City and Sandy.  Drew Yeates, who has been in the office for more than seven years, will be the deputy chief of the Violent Crime Section.  Yeates was a deputy district attorney and an assistant city prosecutor in Utah prior to joining the office. He also has been Project Safe Neighborhoods Coordinator in the U.S. Attorney’s Office.

            Robert Lund will be moving from chief of the Narcotics Section and the Organized Crime Drug Enforcement Task Force (OCDETF) in the office, a position he has had since 2007, to chief of the White Collar Section.  Lund joined the U.S. Attorney’s Office in 2001 after working as a state prosecutor and private attorney. Lund is a judge advocate in the Army National Guard and teaches trial advocacy at the University of Utah law school.

            Taking over as chief of the Narcotics Section and OCDETF will be Vernon Stejskal.  Stejskal was an Assistant Utah Attorney General and Special Assistant U.S. Attorney from 2002 to 2012 and was assigned to the DEA Metro Narcotics Task Force.  He became an Assistant U.S. Attorney in 2012 and has been working in the Narcotics Section.

            Elizabethanne Stevens, who joined the Utah office in 1995 after working in the Criminal Division’s Fraud Section at the Department of Justice, will be chief of the Appellate Section in the office. Stevens has been working in the Appellate Section since 2005.  Prior to joining the Appellate Section, Stevens was chief of the White Collar Section. Jeannette Swent, who has been an AUSA in the office since 1995 and has served as Civil Appellate Coordinator since 1997, will be deputy chief of the Appellate Section. Swent was chief of the office’s Civil Division for several years.

            Alicia H. Cook, who joined the U.S. Attorney’s Office in October 2012 after working as a Deputy District Attorney for Salt Lake County for about 12 years, will continue as chief of the National Security Section in the office.  Richard Daynes, who has been an Assistant U.S. Attorney for more than 13 years, has been appointed deputy chief of the National Security Section.  Daynes has been chief of the Identity Theft Unit in the office and co-chairs the Utah Identity Theft Task Force.  He was previously chief of the Asset Forfeiture Section in the office.

            Tyler Murray will continue as chief of the Asset Forfeiture Section in the office.  Murray joined the office in September 2008 as a member of the Affirmative Civil Enforcement section of the Civil Division where he focused on wildfire recovery litigation. He transferred to the Asset Forfeiture Section in 2012.

SALT LAKE CITY – Justin Andrew Adams, age 32, of Roy, charged in a federal indictment returned in November 2014 with three Weber County robberies and three firearms violations, pleaded guilty in U.S. District Court Friday morning to one robbery and one firearms violation.

            Adams admitted that he committed an Oct. 30, 2014, robbery of a Walmart located at 4848 South 900 West in Riverdale. He admitted he threatened to shoot the cashier during the robbery. He also admitted that on the same day, he was in possession of an unregistered short-barrel rifle.

            The plea agreement executed Friday morning includes a recommended sentence of 180 months in federal prison to be followed by 36 months of supervised release.  Adams is scheduled to be sentenced Sept. 8, 2015, at 2:30 p.m. by U.S. District Judge Robert J. Shelby.

            In addition to the Walmart robbery in Riverdale, Adams was also charged with an Oct. 24, 2014, robbery of the Walgreens Pharmacy located at 1208 Washington Boulevard in Ogden and an Oct. 26, 2014, robbery of a Walmart located at 1710 East Skyline Drive in South Ogden.  He also was charged with using a firearm during a crime of violence and possession of a firearm by a restricted person.  Although these charges will be dismissed at sentencing, the plea agreement includes a stipulated agreement that this relevant conduct can be considered as a part of the facts the Court takes into consideration in sentencing Adams.

            Adams was arrested by police officers responding to the Riverdale Walmart robbery.

            The case is being prosecuted by the U.S. Attorney’s Office in Utah.  The FBI, the ATF, the Weber County Sheriff’s Office and police departments in Ogden, South Ogden, and Riverdale contributed to the investigation.

SALT LAKE CITY – Ryan Lynn Cook, age 35, of Highland, Utah, pleaded guilty Thursday morning in federal court to one count of securities fraud in connection with an investment scheme involving his company, HelpMed, Inc.

            Cook was president and owner of HelpMed, a Utah company organized in April 2011 in Utah.  He represented to potential investors that HelpMed provided medical recruiting services for medical facilities to hire temporary doctors and other medical providers.

            According to a Felony Information filed Wednesday, Cook represented to potential investors that he was willing to sell a 10 percent ownership interest in his company through the issuance of company stock in exchange for $2 million.  The Felony Information alleges that starting around February 2015 and continuing to May 11, 2015, Cook devised a scheme to defraud investors and took steps to execute the scheme through the use of materially false representations.

            As a part of the his guilty plea Thursday, Cook admitted that he represented to investors that HelpMed earned approximately $3.8 million in revenue in January and February 2015, when in fact, HelpMed had no revenue.  He represented there were more than 12,000 health care providers in HelpMed’s system ready to be connected with hospitals and clinics, when in fact, the system contained approximately 100 health care providers.  He also represented there were more than 8,000 hospitals and clinics in the company’s system, when in fact, the system contained about five hospitals.

            He also represented to potential investors that HelpMed’s software developer had signed a non-disclosure agreement with a senior official from the Department of Labor and was being paid $40,000 per month on the agreement, when in fact, there was no such agreement.

            As a part of the plea agreement, Cook admitted sending an email in early March to potential investors containing an untrue statement of material facts with willful intent to defraud them saying, “We are continuing to grow more clients everyday so as jobs get filled new ones come in as hospital systems now have to use us to remain competitive . . . At our current rate we will hit more than 11,000 provider openings this year.” 

            Documents filed in court allege Cook directly solicited two investors and received approximately $2 million from about five individuals who invested in his scheme.

            According to a complaint filed in the case, investors demanded Cook provide them access to HelpMed’s server. Once they obtained server access, associates of the investors determined there were not thousands of hospitals and doctors in the system, but only a few hospitals and a few dozen doctors.

            According to the complaint, an investor confronted Cook about the lack of purported clients.  Cook claimed the data had been moved from the server. Cook also told the investor that FBI agents had shown up at his door, that his office had been bugged and that his cell phone had been tapped by the federal government.

            Cook was arrested on a federal warrant after a May 11, 2015, incident in the west desert. Cook drove to the west desert and called one of his investor victims claiming he was being followed, a person identified in the complaint as the “Software Developer” had been kidnapped by the government, and that the government had stolen his truck.  Later, Cook asked the investor to come out to the west desert and take his (Cook’s) gun from him or he was going to do something drastic, according to the complaint.  The investor called 911 and Cook was subsequently arrested.

            As part of the plea agreement executed in court Thursday morning, federal prosecutors and Cook agreed to recommend the court impose a 24-month sentence to be followed by two years of supervised release.  Cook agreed to pay restitution in the amount of $1,974,250 to the victims in the case.  He also agreed to forfeit  a 2015 Lexus RC; cash seized from a bank account; and real property located in Highland, Utah, in addition to a money judgment of $1,974,250.  He acknowledged that the money, car, and property were proceeds of illegal conduct or helped to facilitate illegal conduct.

            U.S. Magistrate Judge Dustin Pead, who presided at the change of plea hearing, set sentencing in the case for Sept. 9, 2015, at 2:30 p.m.

            The case is being prosecuted by the U.S. Attorney’s Office in Salt Lake City and investigated by the FBI.

WASHINGTON – Seven boa constrictors seized in connection with an illegal wildlife smuggling scheme have been returned to the government of Brazil, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney John W. Huber of the District of Utah.

            “This case exhibited many of the hallmarks that make illegal wildlife trafficking a growing international scourge, including actors motivated by greed who illegally smuggled rare and precious wildlife across international boundaries,” said Assistant Attorney General Caldwell.  “The return of the precious snakes to Brazil brings to an end this years-long international saga, and serves as an example of our commitment to working with law enforcement partners in Brazil and elsewhere to combat transnational crime.”

            “The successful prosecution of Mr. Stone and the recovery and repatriation of the offspring from this rare and valuable leucistic boa constrictor are due to the exceptional cooperation between the United States and Brazilian authorities,” said U.S. Attorney Huber.  “The illegal wildlife trade threatens the survival of many threatened and endangered species and Mr. Stone’s conviction in this case demonstrates our resolve to prosecute those who engage in such activities.”

            The seven boa constrictors are the offspring of a rare and extremely valuable white (leucistic) boa constrictor known as “Lucy” or “Diamond Princess” that was found in the Niterói district of Rio de Janerio in 2006.  Because of its rarity, Brazilian authorities housed the white boa at the Niterói Zoo, a private foundation that rescued and rehabilitated injured wild animals.  In January 2009, Jeremy Stone, a Utah-based collector, breeder and seller of reptiles, traveled to Brazil, secured possession of the snake and unlawfully returned with it back to the United States.

            After learning that Stone was marketing snakes bred from a rare white boa, the Brazilian government requested assistance from the United States in securing the return of the leucistic boa and any offspring.  Thereafter, pursuant to a mutual legal assistance treaty, federal investigators obtained a warrant authorizing the seizure of the snake and any offspring from Stone’s property in Utah.  In executing the warrant, agents from the FBI learned that the leucistic boa constrictor had died.  Agents turned the offspring over to the U.S. Marshals Service, which delivered the eight surviving offspring to the Hogle Zoo in Salt Lake City. One of the snakes died shortly thereafter.

            In July 2014, Stone pleaded guilty plea to unlawfully transporting wildlife into the United States.  As part of his plea agreement, Stone agreed to forfeit the boa’s offspring to the United States.

            In October 2014, the government of Brazil filed a petition asserting its ownership of the white boa and its offspring because it had been caught in the Brazilian wild.  Thereafter, the United States asked the court to amend the preliminary order of forfeiture to recognize Brazil’s claim to the snakes.  In February 2015, the court entered a final order of forfeiture awarding the white boa’s seven surviving offspring to the government of Brazil.

            The Criminal Division’s Asset Forfeiture and Money Laundering Section and Office of International Affairs, as well as the U.S. Attorney’s Office of the District of Utah and the FBI, worked jointly with the government of Brazil to secure the repatriation of the seven offspring.

SALT LAKE CITY – In a short ceremony Monday morning, John W. Huber was sworn in as the United States Attorney for the District of Utah.

            U.S. District Court Senior Judge Dee Benson administered the oath of office at a ceremony at the federal courthouse in Salt Lake City.  A public investiture ceremony will be held later this summer.

            Huber, age 47, has more than 10 years of experience in the U.S. Attorney’s Office where he has prosecuted cases ranging from violent gang and gun crime to domestic and international terrorism. He has served as a member of the office’s leadership team as the National Security Section chief, Executive Assistant U.S. Attorney, and most recently as Acting First Assistant U.S. Attorney.

            The U.S. Attorney’s Office currently has about 85 employees located in Salt Lake City and a branch office in St. George. There are 94 U.S. Attorneys’ Offices in the country.  The U.S. Attorney’s Office in Utah covers the entire state.

            “I have committed my career to public service.  I view the honor of serving as U.S. Attorney as my greatest opportunity thus far to help keep our communities safe.  Building on Utah’s tradition for smart, cooperative law enforcement, I will work with law enforcement agencies, community leaders, and others to protect our national security interests, combat violent crime, expose financial fraud, and protect vulnerable victims,” Huber said today.

            Huber was nominated by President Barack Obama to be the United States Attorney for Utah on Feb. 4, 2015, and confirmed by the United States Senate Wednesday.  The appointment is for four years. Carlie Christensen has been the interim U.S. Attorney for Utah since David Barlow resigned in July 2014 to go into private practice.

            A University of Utah graduate, Huber is a career prosecutor with broad experience in Utah’s state and federal trial courts.  He was a Weber County deputy county attorney. He also   worked for West Valley City for eight years, including a five-year term as Chief City Prosecutor.

SALT LAKE CITY – John Huggins, 48, of Tremonton, Utah, who pleaded guilty in February to possession of an unregistered destructive device, was sentenced to 27 months in federal prison Thursday afternoon in U.S. District Court in Salt Lake City.

            According to the plea agreement, Huggins admitted that in July 2014 he possessed a partially assembled explosive device.  He also agreed that he had the knowledge and the materials necessary, including an explosive substance, to readily assemble the device into a functioning explosive device.

            Huggins was charged with possession of an unregistered destructive device; possession of an explosive by a restricted person; and unlawful distribution of information relating to the manufacture and use of explosives or destructive devices in an indictment returned in July 2014.   The indictment followed an investigation by members of the FBI’s Joint Terrorism Task Force, the Utah Department of Public Safety, and the Tremonton Police Department.

            According to a sentencing memorandum filed by federal prosecutors, law enforcement officers received information from a confidential informant that Huggins was planning to use explosives to target the Tremonton Police Department.  The FBI then made contact with the defendant through another confidential informant.  This confidential informant met with the defendant and purchased a thumb drive containing references on how to start and train militias, and how to produce explosives.   An undercover agent, posing as a representative of an anti-government militia group, was introduced to the defendant and told Huggins he was looking for someone who could make explosives and train people in his group.  Huggins responded affirmatively that he could do that, according to the sentencing memorandum.  Huggins described what he could do and expressed an extreme dislike of law enforcement based on prior interactions with police officers.

            During a second meeting with the undercover agent, Huggins went to great lengths to convince the undercover agent that he could build explosives capable of killing people. The defendant offered to come and train the undercover agent’s group for a month for a fee. Huggins also presented and sold a notebook to the undercover agent.  The notebook included drawings detailing explosives production and writings on topics such as explosive theory and how to produce different types of explosives.

            “The defendant was a skilled and motivated explosives expert who was willing to train and manufacture explosives for an anti-government militia group,” prosecutors wrote in the sentencing memorandum.

            Huggins was arrested in July 2014.  According to court filings, he admitted that he was meeting with a man be believed to be a member of a militia extremist group. He admitted that although he did not provide the undercover agent with an explosive device at their meeting, he did have an inert explosive device in his trailer that he planned to show the undercover agent.  He admitted that the device would need to be loaded first to become a bomb, but that all of the necessary components to fully assemble the explosive device were at his residence.

            A further search of the defendant’s trailer yielded notebooks containing what appeared to be a diary with entries ranging from anti-government ideology to a system to watch and track police officers.

            U.S. District Judge David Nuffer also ordered Huggins to serve 36 months of supervised release at the conclusion of his prison sentence.  Federal prosecutors dismissed two counts from the indictment at Thursday’s sentencing hearing as a part of the plea agreement reached with Huggins.

SALT LAKE CITY – A Sandy, Utah, resident was sentenced Tuesday in U.S. District Court in Salt Lake City, Utah, to serve two years in prison for tax evasion, filing false claims for federal income tax refunds, and filing fictitious financial obligations with the U.S. government, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.

            Paul Ben Zaccardi was also ordered to pay restitution to the Internal Revenue Service (IRS) and to serve a four-year term of supervised release upon his release from prison.

            “Pursuing and prosecuting individuals who refuse to comply with our nation’s tax laws and take affirmative steps to evade their obligations remains a top priority of the Tax Division,” said Acting Assistant Attorney General Ciraolo.  “Tuesday’s sentence reflects what awaits those who engage in such criminal conduct.”

            “Yesterday’s sentencing of Paul Zaccardi again emphasizes the Internal Revenue Service and DOJ Tax Division’s aggressive pursuit of those who use fraudulent methods in an attempt to corrupt our nation’s tax system,” said Special Agent in Charge John Collins of the IRS Criminal Investigation’s Las Vegas Field Office.  “Honest taxpayers have been reassured today that no one is above the law–especially when the integrity of the tax administration is at stake.”

            On Oct. 29, 2014, Zaccardi pleaded guilty to the offenses charged in the superseding indictment, including one count of tax evasion, five counts of filing false claims for income tax refunds and three counts of filing fictitious obligations.  According to the superseding indictment and court documents, in April 2004, Zaccardi embarked on a scheme to evade the payment of his federal income taxes.  As part of that scheme and to avoid federal tax levies, Zaccardi transferred title to his residence to a nominee entity that he formed called Saved by Grace Christian Fellowship and caused his business receipts to be deposited into his wife’s bank account.

            Zaccardi also presented five separate false tax returns to the IRS falsely claiming tax refunds totaling more than $1.5 million.  In addition, from June 2008 to October 2011, Zaccardi presented three separate fictitious financial instruments to the IRS, U.S. Department of the Treasury and the U.S. District Court of the District of Utah for a combined total of $605 million, to purportedly pay his federal income tax liabilities.

            Acting Assistant Attorney General Ciraolo commended the special agents of IRS Criminal Investigation, who investigated the case, and Trial Attorneys Stuart Wexler and Ryan Raybould of the Tax Division, who prosecuted the case.  She also thanked the U.S. Attorney’s Office of the District of Utah for their substantial assistance.

            Additional information about the Tax Division’s national Tax Defier Initiative and its enforcements efforts in this area may be found on the division’s website.  Additional information about tax fraud schemes to watch out for may be found on the IRS Criminal Investigation Web site at http://www.ustreas.gov/irs/ci/.

SALT LAKE CITY – Orbit Medical Inc. and Rehab Medical Inc. will pay $7.5 million to resolve allegations that Orbit submitted false claims to federal health care programs for power wheelchairs and accessories, the Justice Department announced today.  Orbit Medical and Rehab Medical, a partial successor of Orbit, are durable medical equipment suppliers based in Salt Lake City, Utah and Indianapolis, Indiana, respectively.

            “Power wheelchair suppliers must bill federal healthcare programs accurately and honestly to ensure that federal dollars are used for individuals who truly need these mobility devices,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division.  “The Justice Department is committed to pursuing those who seek to abuse taxpayer-funded programs.”

            “The resolution of this case helps to restore funds taken from the Medicare trust fund through the use of falsified records and billings,” said U.S. Attorney Carlie Christensen of the District of Utah.  “Taxpayers’ dollars paid for power wheelchairs not legitimately prescribed by a physician.  Health care fraud is aggressively prosecuted in Utah and every effort is made to restore government funds taken through such conduct.”

            Medicare pays for power wheelchairs for beneficiaries who cannot perform activities of daily living in their home using other mobility-assistance equipment, such as a cane, walker or power scooter.  To qualify for reimbursement, a physician must conduct a face-to-face examination of the beneficiary and provide the supplier with a written prescription for a power wheelchair within 45 days of such an encounter, along with documentation that supports the medical necessity of the device.  The prescription must be completed by the physician who performed the exam and must include the beneficiary’s name, the exam date, the diagnoses and conditions the wheelchair is expected to accommodate, the length of need and the physician’s signature.

            The settlement with Orbit Medical and Rehab Medical resolves allegations that Orbit sales representatives knowingly altered physician prescriptions and supporting documentation to get Orbit’s power wheelchair and accessory claims paid by Medicare, the Federal Employees Health Benefits Plan and the Defense Health Agency.  In particular, the government alleged that Orbit sales representatives changed or added dates to physician prescriptions and chart notes to falsely document that the prescription was sent to the supplier within 45 days of the face-to-face beneficiary exam; changed the physician prescription to falsely establish medical necessity for the power wheelchair or accessory; created or altered chart notes and other documents to falsely establish the medical necessity of the power wheelchair or accessory; forged physician signatures on prescriptions and chart notes; and added facsimile stamps to supporting documentation to make it appear as though the physician’s office had sent the documents to Orbit.

            “Wheelchair schemes such as this divert Medicare funds meant to pay for legitimate health care, including providing wheelchairs for patients who have a genuine medical need for such equipment,” said Special Agent in Charge Gerald T. Roy of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG).  “Our agency will continue to investigate those who attempt to cheat federal health care programs.”

            The allegations resolved by the settlement with Orbit and Rehab were filed under the False Claims Act by two former Orbit employees, Dustin Clyde and Tyler Jackson.  Under the Act, a private party can sue for false claims on behalf of the government and share in any recovery.  Clyde and Jackson will receive approximately $1.5 million.  The whistleblowers’ suit also named as a defendant Jake Kilgore, the former vice president and sales manager at Orbit Medical for the Western region of the United States.  The United States intervened in that aspect of the suit on April 2, 2014, and today’s settlement does not resolve the pending claims against Kilgore.  Separately, on Oct. 23, 2013, a federal grand jury in Utah indicted Kilgore on three counts of health care fraud, three counts of false statements related to health care and three counts of wire fraud. 

            Today’s settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services.  The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.  One of the most powerful tools in this effort is the False Claims Act.  Since January 2009, the Justice Department has recovered a total of more than $24 billion through False Claims Act cases, with more than $15.3 billion of that amount recovered in cases involving fraud against federal health care programs.

            This case was a coordinated effort among the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office of the District of Utah, HHS-OIG, the FBI, the Office of Personnel Management and the Defense Health Agency.  The lawsuit is captioned United States ex rel. Clyde et al. v. Orbit Medical et al., No. 2:10-CV-00297 (D. Utah).

            The claims settled by the government are allegations only; there has been no determination of liability.

SALT LAKE CITY – Lorenzo Puentes, age 38, of Ogden, pleaded guilty in federal court in Salt Lake City Thursday to assault on a federal officer with a dangerous weapon and discharging a firearm during a crime of violence.

            U.S. District Judge Dee Benson accepted the guilty pleas and imposed a sentence of 150 months, including 30 months for the assault conviction and 120 months for discharging the firearm during a crime of violence, to run consecutively to each other.   Puentes will be on supervised release for 60 months following the completion of his federal prison sentence.  There is no parole in the federal prison system.  As a special condition of his supervised release, he  was ordered not to have any contact with any member or associate of a criminal street gang or prison gang either in person, by mail, by phone, by e-mail, by third party; or any other means.

            Deputy United States Marshals were conducting surveillance at a residence in Ogden, Utah, on the evening of Nov. 4, 2014.  Puentes, who had an outstanding no-bail arrest warrant for a weapons violation, was believed to be at the residence.  During the evening, Puentes stepped outside of the residence to smoke a cigarette.  He encountered three Special Deputy United States Marshals who verbally identified themselves as police officers.  They are local police officers assigned to the U.S. Marshal Service’s Violent Fugitive Apprehension Strike Team.

            Puentes raised his right arm, pointed a handgun at the deputies, and discharged one round toward the deputies.  He then turned and ran from the officers.  Deputies pursued Puentes approximately one block down the street and took him into custody.  A bullet hole was located in a fence directly behind where the deputies were standing at the time of the gunshot. Law enforcement officers recovered the firearm in a nearby driveway the next morning.

            “This incident demonstrates the danger that our task force officers face each day.  I am proud of their bravery and their service to our community,” James A. Thompson, U.S. Marshal for the District of Utah, said today.

            As a part of his plea agreement Thursday, Puentes admitted that he forcibly assaulted the three Special Deputy U.S. Marshals while they were engaged in their official duties.  He admitted pointing the handgun toward them and firing a shot in their direction.

            A federal grand jury returned an indictment charging Puentes with the two counts in November.

SALT LAKE CITY – A Midvale, Utah, man and a Henderson, Nevada, woman were sentenced Wednesday afternoon in U.S. District Court in Salt Lake City for tax crimes, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Carlie Christensen of the District of Utah.

            Gerrit Timmerman III, 73, of Midvale, was sentenced to 48 months in prison to be followed by three years of supervised release.  Carol Jean Sing, 75, of Henderson, was sentenced to 36 months in prison to be followed by three years of supervised release.  In February 2015, Timmerman and Sing were convicted at trial by a federal jury of conspiracy to defraud the United States related to their promotion of a tax fraud scheme.

            “Combatting abusive tax schemes remains one of the Tax Division’s highest priorities, and these sentences are the result of our continued efforts to pursue and prosecute fraudulent promoters to the fullest extent of the law,” said Acting Assistant Attorney General Ciraolo. “We will continue to work with our law enforcement partners at the IRS and in the U.S. Attorney’s Offices to identify and dismantle these criminal enterprises and in doing so, protect the American public and the U.S. Treasury.”

            “Individuals who enrich themselves by promoting tax avoidance schemes and assisting others in evading state and federal taxes are defrauding American taxpayers,” said U.S. Attorney Christensen.  “They should expect to be prosecuted, convicted and sentenced to federal prison for this conduct, as these sentences demonstrate.”

            According to the evidence introduced at trial, between April 23, 2004, and March 5, 2007, Timmerman and Sing conspired to defraud the United States by marketing “corporations sole” as part of their scheme to evade the assessment and payment of federal income taxes.  Timmerman and Sing falsely told their clients that corporations sole were exempt from United States income tax laws, had no obligation to file tax returns and had no obligation to apply for tax exempt status.  They further claimed that individuals could render their own income non-taxable by assigning it to the corporation sole, could draw a tax-free stipend from their corporation sole, and could render property immune from IRS collection activity by transferring property to the corporation sole.

            According to evidence presented at trial, Sing used Trioid International Group Inc. as a resident agent for corporations sole and other business entities for their clients.  Sing and Timmerman also utilized a website to list the tax benefits of corporations sole and to post articles about the supposed tax benefits of corporations sole.  At the same time, Timmerman was actively assisting others in evading their state and federal income tax liabilities and recommended the corporation sole to his clients as another way to impair the IRS.  Both defendants referred customers to one another and paid each other referral fees.

            “Yesterday’s sentencing of Gerrit Timmerman and Carol Sing should send a clear message: schemes to evade the payment of taxes are a violation of the federal tax laws and the consequences of such schemes can and will result in jail time,” said Special Agent in Charge John G. Collins of IRS-Criminal Investigation in Utah.  “The Internal Revenue Service, in partnership with the U.S. Attorney’s Office and the Tax Division, will continue the aggressive pursuit of those who use fraudulent methods in an attempt to corrupt our nation's tax system.  Honest taxpayers have been reassured today that no one is above the law -- especially when the integrity of tax administration is at stake.”

            A corporation sole is a form of incorporation allowed by some states, primarily for use by religious leaders to hold title to property.  Several states, including Utah and Nevada, have disallowed the creation of new corporations sole.  The IRS has publicized the fact that corporations sole have been abused by promoters in Revenue Ruling 2004-27, and has even included corporations sole on their “dirty dozen” tax scams in prior years.

            Assistant Attorney General Ciraolo and U.S. Attorney Christensen commended the special agents of IRS–Criminal Investigation, who investigated this case, as well as Trial Attorneys Dennis R. Kihm and Andrea A. Kafka of the Tax Division, who prosecuted the case.

SALT LAKE CITY – Travis Javier Cruz, age 38, of the Salt Lake City area, who traveled to California in October to pick up 73.8 pounds of methamphetamine from a supplier destined for distribution in Salt Lake City, pleaded guilty to possession of methamphetamine with intent to distribute in U.S. District Court Wednesday morning.

            As a part of the plea agreement reached with federal prosecutors, Cruz admitted that he traveled to the Orange County area of California on Oct. 28, 2014, to pick up a large quantity of methamphetamine for distribution in the Salt Lake City area.  According to a complaint filed in the case, Cruz was already under surveillance by the FBI’s Safe Streets Task Force, in conjunction with the Salt Lake Unified Police Department, the Davis County Sheriff’s Office, and other law enforcement agencies prior to making the trip to California.

            Cruz arrived at a hotel in Huntington Beach, where the narcotics transaction would take place, with approximately $300,000 in cash to pay for 70 pounds of narcotics.  Cruz admitted meeting with a courier for the methamphetamine source of supply at the hotel on Oct. 28, 2014, and giving him $300,000.

            The next day, according to the plea agreement, the courier returned to the hotel with five or six five-gallon buckets.  He took the buckets into Cruz’s room.  The buckets contained the methamphetamine Cruz planned to distribute in the Salt Lake City area.  Cruz admitted that he and others packaged the methamphetamine into plastic wrap and mustard to transport it back to Salt Lake City.  The narcotics were placed in a roller bag and two backpacks and loaded into the trunk of the Cruz’s car for transportation back to Salt Lake City.

            Agents and officers, who had been conducting surveillance at the hotel, conducted a vehicle stop after the narcotics were loaded in the car.  A dog alerted to the presence of narcotics in the trunk of the vehicle.  Cruz admitted as a part of the plea agreement that the amount of narcotics recovered was approximately 73.8 pounds.

            On the same day, officers executed a federal search warrant at a storage unit in Salt Lake City and recovered approximately 1.5 pounds of methamphetamine. Cruz admitted it was his intent to distribute the methamphetamine in the Salt Lake City area.

            As a part of the plea agreement, Cruz agreed to forfeit vehicles and cash used to facilitate the criminal conduct.

            Sentencing is set for Aug. 4, 2014, in U.S. District Judge Robert J. Shelby’s courtroom.  Federal prosecutors agreed in the plea agreement to recommend that Cruz be sentenced at the mid-range level of the federal sentencing guidelines in the case, as determined by the court. He faces a 10-year minimum mandatory sentence in the case.

            Cruz was charged with conspiracy to distribute methamphetamine and possession of methamphetamine with intent to distribute in an indictment returned by a federal grand jury in November.

SALT LAKE CITY – Randy Olshen, age 52, of Newport Beach, Calif., indicted by a federal grand jury in September on charges of mail fraud, wire fraud, and money laundering in connection with an investment fraud scheme, entered guilty pleas to money laundering and wire fraud Friday in federal court.  At times relevant to the charges in the case, Olshen maintained a residence in Summit County, Utah.

     Olshen was one of the founders and president of an entity known as Innovative Health Solutions, LLC (IHS), organized in 2008. IHS specialized in manufacturing and selling sports hydration drinks designed to boost energy and stamina. Olshen, in an effort to promote the growth of IHS, sought investors and made representations to encourage investments in the company.

     As a part of the plea agreement reached with federal prosecutors, Olshen admitted that beginning around 2009 and continuing until about February 2013, he devised a scheme to get money and property from IHS investors through materially false representations and the omissions of material facts.  He also admitted he diverted portions of the invested funds for purposes not disclosed to or authorized by investors.

     For example, Olshen admitted in the plea agreement that he represented to victim investors that IHS had approximately $1.1 million in sales in 2009, when it had approximately $98,275 in sales in 2009. He represented that IHS had projected sales of more than $28 million in sales in 2012, when it had approximately $579,239 in sales in 2012.  He also represented that the company had large receivable accounts with various national chains such as Costco, Rite Aid, CVS, and Food Lion. In fact, no such large receivable accounts were owed to IHS.

     Olshen admitted he created two sets of IHS accounting records, one that accurately represented company finances and one that was provided to investors and potential investors; fabricated paperwork, such as sales records, to support his misrepresentations regarding the growth of IHS; failed to make numerous payments to creditors; paid a portion of investor funds to others as commissions for obtaining investments for IHS; that he personally declared Chapter 7 bankruptcy around October 18, 2011; and that he used IHS funds for his own personal benefit and expenses in excess of his reported salary.  He concealed these material facts from investors as a part of his fraud scheme.

     The loss to IHS victim investors resulting from his scheme is approximately $7 million.  A final figure will be determined at sentencing. There are more than 50 victims.

     The plea agreement includes a recommended sentence of 54 months in federal prison and 36 months of supervised release at the conclusion of the prison term.  The sentence is subject to the approval of the court.  Sentencing in the case is set for July 29, 2015, at 2:30 p.m.

     The case is being investigated by special agents of the FBI, IRS Criminal Investigation, and the Utah Division of Securities.  It is being prosecuted by the U.S. Attorney’s Office in Salt Lake City.

SALT LAKE CITY – The Justice Department’s Civil Rights Division and U.S Attorney Carlie Christensen of the District of Utah announced today the filing of a complaint in U.S. District Court in Salt Lake City against Veteran’s Trading Company (VTC), a business with headquarters in Park City, Utah.

            The complaint alleges the business violated the employment rights of Naval Reserve Captain Paul M. Costello under the Uniformed Services Employment and Reemployment Rights Act (USERRA).  Costello is a Navy veteran with a disability who has served his country as an F-18 fighter pilot.  He has served as a member of the United States Naval Reserve since 1997.

            According to the complaint, filed by the United States on Costello’s behalf, Costello’s military service was a motivating factor in VTC’s decisions to deny his request for re-employment and, ultimately, to terminate his employment.  The United States claims that both actions by VTC violated Costello’s USERRA rights.

            “Members of our National Guard and Reserves make many sacrifices, including spending months or years away from their jobs and families,” said U.S. Attorney Christensen.  “When our service members are deployed in the service of our country, they are entitled to retain their civilian employment and to the protections of federal law that prevent them from being subject to discrimination based upon their military obligations.  We are filing suit today, on behalf of Captain Costello, a member of the U.S. Naval Reserve, to ensure that he does not lose his rights while he was protecting ours.”

            The complaint alleges that in July 2013, VTC fired Costello from his job as company President due to his military service and subsequently denied Costello’s application for reemployment following his active military duty in September 2013.  On April 30, 2015, VTC pre-emptively filed its own suit against Costello in Utah state court claiming that he was inappropriately remunerated for his service to the company while he was on military leave; despite the fact that while he was on military he took personal leave in order to preside over company meetings.  In addition to filing its federal complaint, the United States removed the employer’s action from state court to federal court.

            “The brave men and women who serve in our Armed Forces should never have to fear losing their job while they’re deployed overseas,” said Acting Associate Attorney General Stuart F. Delery.  “That’s why the Department of Justice is committed to protecting the employment rights of service members and we will continue to devote time and resources to hold bad actors accountable.”

            “Captain Costello served our nation honorably, and USERRA guarantees his right to re-employment upon his return from service,” said Principal Deputy Assistant Attorney General Vanita Gupta of the Civil Rights Division.  “Through the department’s newly created Service Members and Veterans Initiative, we will continue to build on our strong ties with federal partners and continue using every tool at our disposal to protect the rights of the men and women who serve in our Armed Forces.”

            USERRA protects the rights of uniformed service members to retain their civilian employment following absences due to military service obligations, and proved that service members cannot be discriminated against because of their military obligations.

            The lawsuit filed by the United States seeks damages equal to the amount of Costello’s lost wages and other benefits caused by VTC’s failure to comply with USERRA and a dismissal of VTC’s complaint.  It also seeks an order requiring VTC to return Costello’s ownership and distribution shares and pay him all amounts that were distributed to shareholders between June 9, 2013, and the date of judgment. The lawsuit seeks an order requiring VTC to pay for all litigation fees related to the court action.

            Costello initially filed a complaint with the Labor Department’s Veterans’ Employment and Training Service, which investigated this matter and, after resolution failed, referred it to the Justice Department’s Civil Rights Division, Employment Litigation Section.  This lawsuit followed as a collaborative initiative between the Civil Rights Division and the U.S. Attorney’s Office for the District of Utah.  The Department of Justice has given a high priority to the enforcement of service members’ rights under USERRA.  Additional information about USERRA can be found on the Justice Department’s Web sites at http://www.usdoj.gov/crt/emp and http://www.servicemembers.gov, as well as on the Labor Department’s website at http://www.dol.gov/vets/programs/userra/main.htm.

SALT LAKE CITY – A federal indictment unsealed Thursday afternoon charges eight individuals with conspiracy to distribute XLR-11, a synthetic cannabinoid commonly known as spice; possession of spice with intent to distribute; and conspiracy to commit money laundering. The indictment was returned by a grand jury Wednesday afternoon.

      Charged in the indictment are Issa Haig Babikyan, age 51, of Carlsbad, Calif.; Michael Suliman Haig Babikyan, age 25, of Murray; Fahad Ali Khalil, age 24, of Murray; Ammar Ibrahim Alobaidi, age 35, of Midvale; Yaser Saeed Majeed Al-Najjar, age 46, of Murray; Joseph Lara Paez, age 39, of Fresno, Calif.; Tiffany Nicole Velo, age 32, of Fresno; and Hanan Saeed, age 43, of Salt Lake City.

      The case is being investigated by two FBI task forces, the Safe Streets Task Force and the Wasatch Range Task Force. Member agencies involved in the task forces are the FBI, Salt Lake City, West Valley City, West Jordan and Sandy City police departments; the Utah Highway Patrol, the Utah Department of Public Safety, the Utah Department of Corrections; and the Unified Police Department.

      The first count of the indictment charges seven defendants with conspiracy to distribute spice from at least Jan. 31, 2015, through April 29, 2015. Counts two through nine charge various defendants in the case with possession of spice with intent to distribute. Count 10 of the indictment charges Khalil and Saeed with conspiracy to commit money laundering, alleging they conducted transactions involving the proceeds of a specified unlawful activity and that the transactions were designed to conceal and disguise the nature, location, source, ownership, and control of the proceeds of the unlawful activity.

      Spice is a mixture of herbs and spices that is typically sprayed with a synthetic compound similar to THC, the psychoactive ingredients in marijuana, according to a DEA Drug Fact Sheet. However, spice is commonly more potent than organic marijuana and the dose can be irregular due to a lack of quality control in the manufacturing process. Spice is commonly purchased in; tobacco shops, various retail outlets, and over the Internet. It is often marketed as incense or “fake weed.” Purchasing over the Internet or from a smoke shop can be dangerous because it is not usually known where the products come from or what amount of chemical is on the organic material.

      Issa Haig Babikyan and Michael Suliman Haig Babikyan were arrested Thursday in California and had initial appearances in federal court. Khalil, Alobaidi, Al-Najjar, Velo and Seed were arrested in Utah and will have initial appearances Friday at 1 p.m. in U.S. Magistrate Judge Brooke C. Wells’ courtroom.  Paez remains a fugitive in California.

      Several firearms, vehicles, and cash were seized during the execution of the arrest warrants Thursday. Approximately 2,000 pounds of spice were seized during a two-month period of the investigation.

      The potential maximum penalty for each of the nine drug counts alleged in the indictment is 20 years and a $1 million fine.  Conspiracy to commit money laundering carries a potential 20 year prison sentence.  The fine for the money laundering count is up to $500,000 or two times the dollar amount of the property involved in the alleged money laundering transaction.

      Indictments are not findings of guilt.  Individuals charged in indictments are presumed innocent unless or until proven guilty in court.

SALT LAKE CITY – Two individuals stopped by law enforcement officers in Utah following an attempt to locate a stolen truck request from law enforcement authorities in Multnomah County, Oregon, were indicted by a federal grand jury in Utah Wednesday afternoon.

      Juan Carlos Andino-Mejia, age 24, of Los Angeles, a citizen of Honduras, and Marlon Emilio Vasquez-Garcia, age 45, of Los Angeles, a citizen of El Salvador, are charged with one count of interstate transportation of stolen property and one count of re-entering the country after a previous deportation. The indictment alleges the two transported 5,820 pairs of Keen Shoes with a value of more than $5,000 from Multnomah County, Ore., to Box Elder County, Utah.

      The shoes were in the truck when it was reported stolen from a trucking company in Oregon, on March 23, 2015. The trucking company notified law enforcement authorities that a GPS on the truck indicated it was at a truck stop in Box Elder County, Utah. The Utah Highway Patrol, Box Elder County Sheriff’s Office, and the Tremonton City Police were involved in stopping the truck and conducting the investigation. ICE Enforcement and Removal officers also contributed to the investigation.

      Andino-Meja and Vasquez-Garcia, who have used a variety of names, have had multiple deportations from the United States. They face up to 10 years in prison if convicted of interstate transportation of stolen goods and up to 10 years in prison for re-entering the country after a previous deportation. An initial appearance on the charges will be scheduled for the pair.

      Indictments are not findings of guilt. Individuals charged in indictments are presumed innocent unless or until proven guilty in court.

SALT LAKE CITY – Jacquelin Boyd, aka Jacquelyn Boyd, age 37, of West Jordan, who pled guilty in January to making a false claim to the IRS, has been sentenced to a year in federal prison.  U.S. District Judge Tena Campbell imposed the sentence Wednesday afternoon.

            Judge Campbell also ordered Boyd to serve 36 months of supervised release when she finishes her prison sentence.  She must pay $32,243 in restitution to the IRS.

            As a part of a plea agreement reached in the case, Boyd admitted that from May 2, 2012, through about Oct. 13, 2012, she worked with others to obtain the names, addresses, social security numbers and other personal identifiers of deceased individuals and used the information to file false and fraudulent tax returns with the IRS.

            Boyd admitted that she created false records of employers, wages, and Utah addresses to submit with the returns.  She directed that the refunds, based on the fraudulent information, be deposited to various bank accounts under her control.  She withdrew the money after it was deposited in the accounts. She pled guilty to a count involving a false tax return filed on Oct. 13, 2012, in the name of A.B., who is deceased.  A return of $2,444 was mailed to Boyd.

            “Individuals thinking about stealing identities and participating in tax fraud including filing false tax returns should stop and look at the consequences,” stated John Collins, IRS Criminal Investigation Special Agent in Charge of Utah. “These consequences include going to prison, being branded a convicted felon for the rest of their lives, and paying back all the taxes owed plus steep penalties and interest. It’s not worth it.”