Western District of Washington

            An Arlington dog kennel operator was sentenced today in U.S. District Court in Seattle to ten years in prison for conspiracy to distribute heroin and methamphetamine, and possession of counterfeit money, announced Acting United States Attorney Annette L. Hayes.  SHAWN LUNDY, 61, the operator of Arlington Doggy Day Care, was arrested February 25, 2014 and pleaded guilty November 24, 2014.  When law enforcement agents searched the kennel facility in February 2014, they found cash from the sale of drugs and counterfeit money in various safes on the property and in hidden voids in the walls they found heroin, methamphetamine, cash and other drug trafficking paraphernalia.  U.S. District Judge Robert S. Lasnik imposed five years of supervised release to follow the prison term.

            According to records filed in the case, LUNDY came to the attention of law enforcement as someone distributing significant amounts of heroin in Snohomish County, an area particularly hard hit by heroin overdoses.  LUNDY has previous federal drug trafficking convictions in both Connecticut and Washington.          

This was an Organized Crime and Drug Enforcement Task Force (OCDETF) investigation, providing supplemental federal funding to the federal and state agencies involved, The case was investigated by the Drug Enforcement Administration (DEA, Bellingham Resident Office), the Whatcom County Drug and Gang Task Force, Skagit County Inter-local Drug Enforcement Unit, Snohomish Regional Drug and Gang Task Force, the U.S. Secret Service, the Bureau of Alcohol, Tobacco, Firearms & Explosives (ATF), U.S. Immigration and Customs Enforcement’s Homeland Security Investigation (HSI) and Customs and Border Protection Air and Marine Division.

The case was prosecuted by Assistant United States Attorneys Karyn Johnson and Steven Masada.

            A Tacoma woman who worked for more than 27 years at a military hotel on Joint Base Lewis McChord was sentenced today in U.S. District Court in Tacoma to two years in prison for theft of more than $250,000 in government funds, announced Acting United States Attorney Annette L. Hayes.  GAIL JEANETTE MOODY, 52, was hired in 1985 as a desk clerk at the Rainier Inn on what was then Fort Lewis.  She worked her way up over the years to an accounting position where she reconciled the cash receipts at the hotel along with other payments, and made deposits into the Armed Forces Bank.  Records from the hotel reveal that between September of 2010 and October of 2012, MOODY stole more than $250,000 in cash receipts.  At sentencing U.S. District Judge Ronald B. Leighton said MOODY “violated a position of trust . . . . it’s a lot of money.  It’s a lot of deception.”

            The Rainier Inn was operated by the Department of Defense (DOD) to provide low cost lodging to active duty military personnel, persons under official military orders from the United States Department of Defense, retired military personnel, and their families.  Profits earned by the hotel were funneled back into the facilities so DOD could provide the benefit of low cost lodging.  According to records filed in the case, MOODY was a trusted employee with access to the locked security container where desk clerks put receipts at the end of their shifts.  In August 2012 when MOODY took an extended leave, the staff discovered significant discrepancies regarding the cash receipts and what had been deposited into the hotel bank accounts.  A forensic review revealed MOODY had altered records to disguise the fact that she was taking the cash for her own use.  MOODY abruptly quit her job when confronted about the discrepancies.

            After completing her prison sentence, MOODY is required to get treatment for a gambling addiction pursuant to the terms of her three years supervised release.

            The case was investigated by the FBI.  The case was prosecuted by Assistant United States Attorney Erin Wilson.

A Renton man who shot and killed an 18-year-old as he ran from the scene of a failed drug robbery was sentenced today in U.S. District Court in Seattle to ten years in prison and four years of supervised release, announced Acting U. S. Attorney Annette L. Hayes.  DAVID STEVEN ROSS, 36, pleaded guilty to three federal felonies: conspiracy to distribute marijuana, possession of a firearm in furtherance of a drug trafficking crime and unlawful possession of a firearm.  At the sentencing hearing U.S. District Judge Robert S. Lasnik said, “The fact that you brought that firearm to a volatile situation, knowing it was suspicious…. You should have walked away.”

            “This case is a grim reminder that drugs and guns don’t mix, said Acting U.S. Attorney Annette L. Hayes.  “No matter what the drug, we will not allow the violence that comes from this dangerous combination to go unpunished.  That is especially true when – as in this case – the gun is in the hands of a convicted felon.”

According to the records filed in King County Superior Court and federal court, ROSS and an associate arrived at a Federal Way apartment complex to sell two pounds of marijuana to two men – Lenny Brikn and his brother, Deshawn Boykin.  ROSS was armed with a stolen gun, despite having two previous felony drug convictions that prohibited him from possessing a firearm.  Brikn and Boykin drew “Mac 10” style semi-automatic pistols, ordered ROSS and his associate to lie on the ground, and attempted to rob them of the marijuana.  ROSS claimed to be an undercover police officer, and scared Brikn and Boykin into running away.  As the two would-be robbers fled, ROSS drew his gun, aimed and fired multiple times at the men.  Boykin was hit twice in the back and died of his wounds at St. Francis Medical Center.

Lenny Brikn, Jr., 20, of Federal Way was sentenced last September to seven years in prison for Possession of a Firearm in Furtherance of a Crime of Violence & a Drug Trafficking Crime.

The case was investigated by the Federal Way Police Department and the Bureau of Alcohol, Tobacco, Firearms, and Explosives.  The case is being prosecuted by Assistant United States Attorney Todd Greenberg.

A registered sex offender with a long history of sex crimes was sentenced today in U.S. District Court in Tacoma to 23 years in prison and 25 years of supervised release, announced Acting United States Attorney Annette L. Hayes.  BLAINE K. NIPP, 37, from Vancouver, Washington, made sexually explicit videos and photographs of a 10-year-old girl who had been given pain medicine for a broken bone.  The girl’s parents had no idea NIPP was a registered sex offender when they accepted his offer to care for their daughter while she recovered from the injury.  At sentencing U.S. District Judge Robert J. Bryan said, “The defendant’s actions are harmful to others, so it is important to keep him in custody for a long period of time to protect the public from further crimes.”

            “This horrifying betrayal of trust deserves a significant prison sentence,” said Acting United States Attorney Annette L. Hayes.  “The defendant knew he was prohibited from having contact with children and yet he still did so to satisfy his prurient interests.  To molest a child suffering from a serious injury, and under the influence of powerful pain medication, is outrageous.  I commend the efforts of the DHS HSI agents and investigators whose careful investigative work uncovered the defendant’s crime and led directly to the sentence that the court imposed today.”

NIPP was convicted of his first sex offense nearly 20 years ago when he fathered a child with a 13-year-old girl.  In the years that followed NIPP was convicted of child pornography offenses and of entering and trespassing in an apartment where a 10-year-old was home alone.  In August 2013, NIPP volunteered to assist the family of a 10-year-old girl who had suffered a broken leg while riding her bike.  The family was acquainted with NIPP, but did not know him well.  While alone with the injured child, NIPP took sexually explicit pictures of her while she was asleep on pain medication.  NIPP also made explicit videos of his own sexual arousal and the drugged child.  The photos were later discovered on NIPP’s electronic devices, after he became the target of an investigation for trading child pornography over the internet.  NIPP was arrested in January 2014 and has remained in custody since that time.

“Nipp’s trading of Internet child pornography was a symptom of a larger problem,” said Brad Bench, special agent in charge of Homeland Security Investigations in Seattle.  “As we later learned through our investigation, the defendant used his charm to manipulate his way into situations where he could victimize young girls.  With this sentence, children will be safe from Nipp.  However, his victims must live the rest of their lives with the scars of his sexual abuse.”

The case was investigated by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations.  The case was prosecuted by Assistant United States Attorney Marci Ellsworth.

A second heart monitoring company, BioTelemetry, Inc., is resolving allegations that it overbilled Medicare for outpatient services that were not medically necessary, announced Acting U.S. Attorney Annette L. Hayes.  BioTelemetry has agreed to pay $6.4 million to resolve allegations that its subsidiary, CardioNet, improperly billed the Medicare Program for Mobile Cardiac Outpatient Telemetry (MCOT) services when those services were not reasonable or medically necessary.  This is the second cardiac monitoring company to settle overbilling charges for these services following an investigation led in Western Washington.  In March 2012, LifeWatch Services, Inc., of Rosemont, Illinois, agreed to pay the United States $18.5 million to resolve allegations that the company submitted false claims to federal health care programs.  The investigation of CardioNet’s billing practices grew out of a qui tam or “whistleblower” lawsuit against LifeWatch.

 

“Billing for a higher-level service that is not necessary to treat a patient’s condition to receive higher reimbursement from federal health care programs will not be tolerated,” said Acting Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division.  “Such conduct wastes critical federal health care program funds and drives up the costs of health care for all of us.”

 

“Today’s settlement is another example of how we will act to stop abusive billing practices and hold companies accountable for conduct that raises everyone’s healthcare costs,” said Acting U.S. Attorney Annette L. Hayes for the Western District of Washington.  “This settlement should send a message to all providers: do not misuse federal billing systems to improperly gouge the healthcare system upon which so many Americans rely.”

 

An MCOT monitor is a real-time, outpatient cardiac monitoring service.  MCOT monitors are worn by patients for a period of time during which the device continuously records the activities of the patient’s heart, including any irregular rhythms.  The MCOT monitor differs from traditional, less expensive event monitors in that it incorporates cell phone technology, which allows it to continuously transmit data to CardioNet’s diagnostic center (whereas traditional event monitors only download data periodically through a landline).

 

The government’s investigation revealed that CardioNet was aware that MCOT services were not eligible for Medicare reimbursement when provided to patients who had experienced only mild or moderate heart palpitations, since less expensive “event” or “Holter monitors” could effectively collect data about those patients’ conditions.  Nonetheless, the government’s investigation revealed that CardioNet knowingly submitted claims to Medicare for more expensive MCOT services by using an inaccurate diagnostic code that ensured that the claims would be reimbursed by Medicare at a higher rate.

 

“Sticking taxpayers with a hefty bill for unneeded medical care will never be tolerated,” said Special Agent in Charge Ivan Negroni of U.S. Health and Human Services, Office of Inspector General, Regional Office including Washington.  “Working in close coordination with our law enforcement partners we will tirelessly pursue and prosecute these suspected violators.”

 

“Federal employees deserve health care providers, including remote monitoring companies, that meet the highest standards of ethical and professional behavior,” said Patrick E. McFarland, Inspector General of the U.S. Office of Personnel Management.  “Today's settlement reminds all providers that they must observe those standards, and reflects the commitment of Federal law enforcement organizations to pursue improper and illegal billings that increase the cost of medical care.”

 

The claims resolved by this agreement are allegations only, and there has been no determination of liability.

 

The settlement was negotiated by Assistant United States Attorney Kayla Stahman of the U.S. Attorney’s Office, Western District of Washington, who was assisted by investigators from the Office of Inspector General of the Department of Health and Human Services and the Office of Inspector General for the Office of Personnel Management.

A Kirkland, Washington resident was sentenced today in U.S. District Court in Seattle to two months in prison, announced Acting U.S. Attorney Annette L. Hayes.  JALEEL TARIQ ABDUL-JABBAAR, 46, was arrested December 2, 2014, after he made threats on Facebook against a former Ferguson, Missouri Police Officer.  ABDUL-JABBAAR pleaded guilty on February 2, 2015 and was released from custody.  At sentencing U.S. District Judge Robert S. Lasnik recognized that everyone involved in the case has worked hard to obtain a just outcome that ensures public safety.  Judge Lasnik noted that the U.S. Supreme court is considering a case concerning Facebook threats.  “It is an area of the law that is in a state of flux,” Judge Lasnik said.  Judge Lasnik emphasized that ABDUL-JABBAAR had to comply with a series of conditions as part of his court supervision and specifically ordered that ABDUL-JABBAAR’s internet use be monitored by probation and law enforcement during his three year term of supervised release.

According to records in the case, ABDUL-JABBAAR started posting threats on his Facebook page shortly after the August 9, 2014 shooting of Michael Brown.  The threats continued through late November.  ABDUL-JABBAAR posted various statements about killing police officers and traveling to Ferguson, Missouri.  Among others, ABDUL-JABBAAR stated: “We need to kill (the officer) and anything that has a badge on.”  ABDUL-JABBAAR also used Facebook communications to discuss acquiring a firearm.

The case was investigated by the FBI and was prosecuted by Assistant United States Attorney Todd Greenberg.

The former Police Chief of the Swinomish Tribe was indicted today by the grand jury for six counts of wire fraud and four counts of theft of tribal funds, announced Acting United States Attorney Annette L. Hayes.  THOMAS J. SCHLICKER, 57, of Stanwood, Washington, served as the Swinomish Police Chief from 1997 until September 2014, when his employment was terminated.  SCHLICKER is scheduled to appear for arraignment next week.

            According to the indictment, between 2008 and 2014, SCHLICKER is alleged to have embezzled more than $30,000 from the tribe.  SCHLICKER allegedly set up a secret bank account in the name of the Swinomish Police Department without the knowledge of the tribal accounting department.  The indictment alleges that SCHLICKER then deposited checks made out to the tribal police into the secret account and withdrew the proceeds in cash, which he then used for his own purposes.  Some of the money deposited in the account came from the sale of vehicles seized and sold by the Tribal Police.  The indictment also alleges SCHLICKER used the Tribe’s Chevron/Texaco credit card to purchase gas for his and his family members’ personal vehicles.  Finally, the indictment alleges that SCHLICKER turned in paperwork asking to be reimbursed for the purchase of a uniform shirt, when in fact the charge was for an entry fee at a golf tournament.

            Wire fraud is punishable by up to twenty years in prison and a $250,000 fine.  Theft of tribal funds is punishable by up to five years in prison and a $250,000 fine.

            The charges contained in the indictment are only allegations.  A person is presumed innocent unless and until he or she is proven guilty beyond a reasonable doubt in a court of law.

            The case was investigated by the FBI and the Washington State Patrol.  The case is being prosecuted by Assistant United States Attorneys Seth Wilkinson and Ye-Ting Woo.

A former Bellevue based developer and lender who spent millions on personal luxuries while evading a tax obligation of over half a million dollars, was sentenced today in U.S. District Court in Seattle to 54 months in prison and three years of supervised release announced Acting United States Attorney Annette L. Hayes.  Instead of paying his taxes, THOMAS R. HAZELRIGG, III, 68, spent millions on gambling, thoroughbred horse racing, private aircraft, country club fees, a Bellevue penthouse, and two homes in the Palm Springs, California area by hiding his income and assets in the names of other people.  HAZELRIGG was indicted in July 2013.  In December 2014, a jury found HAZELRIGG guilty following a nine-day trial.  U.S. District Judge Thomas S. Zilly ordered HAZELRIGG to pay $1,082,249 in restitution to the IRS which includes taxes, interest and penalties.   “You went to extremes to keep money from the IRS,” Judge Zilly said.  “You manipulated family members and friends to accomplish this goal.”

“This defendant used family members and friends in a wide ranging scheme of deceit and manipulation all to avoid paying taxes he knew he owed,” said Acting United States Attorney Annette L. Hayes.  “His greed was enormous – he had all the means to pay but instead chose to embark on a sophisticated effort to evade his obligation to pay taxes.  As we approach April 15th, this case serves as a reminder that everyone has an obligation to pay their fair share of taxes and those who don’t – no matter how devious their attempts at evasion are – will be held accountable.”

“We are all taught from a young age that the lie is often worse than the original offense,” said Special Agent in Charge Teri Alexander of IRS Criminal Investigation.  “Thomas Hazelrigg cheated on his taxes and then spent many years and a great deal of effort trying to cover it up.  The truth finally caught up with him.”

Evidence presented at trial described how HAZELRIGG first agreed to pay $533,454 in taxes owed for tax years 1989, 1990 and 1991 and then failed to pay the tax debt while living a lavish lifestyle that included multi-million dollar property purchases and remodels, and expensive artwork.  HAZELRIGG also evaded payment of his taxes owed for 1994, for which he had filed a return showing tax owed, but for which he made no payments.  According to testimony at trial, between 1997 and 2007, HAZELRIGG illegally funneled income from his businesses into accounts that he controlled but that he kept secret from the IRS.  HAZELRIGG used these accounts to pay for the multi-million dollar purchase and remodel of a Bellevue penthouse, two Chihuly glass chandeliers worth more than $460,000, and two luxury homes in Palm Springs, California.  He also used these secret accounts to pay various household expenses including the services of a butler.

HAZELRIGG hid his assets for ten years, until the IRS collection statutes expired.  After one of the IRS liens were removed, HAZELRIGG sent an email saying he was “legit again.”  Following that email, HAZELRIGG once again took out loans in his own name, and purchased property in his own name.

In their sentencing memo prosecutors noted that HAZELRIGG’s tax evasion scheme “is particularly egregious because he was convicted of evading an agreed obligation that he could well afford to pay.  In 1997, after litigating the issue with the IRS for several years, Hazelrigg settled the IRS audit for less than a third of what the IRS initially assessed through its audit.  Realizing that he got a good deal, Hazelrigg… pledged to pay what he owed.  By 2005, there is no question that Hazelrigg had enough money to easily pay what he had promised the IRS.  But instead, Hazelrigg went back on his promise and continued to evade and cheat the IRS out of what he owed.”

The case was investigated by the Internal Revenue Service Criminal Investigation (IRS-CI). The case was prosecuted by Assistant United States Attorneys Matthew Diggs and Brian Werner.

A 40-year-old Bellevue, Washington man who was a prolific drug dealer on the online marketplace “Silk Road,” was sentenced today in U.S. District Court in Seattle to five years in prison and four years of supervised release for conspiracy to distribute illegal drugs, announced Acting U.S. Attorney Annette L. Hayes.  STEVEN SADLER sold nearly a million dollars’ worth of cocaine, heroin and methamphetamine to people who ordered over the internet via the Silk Road site.  He shipped the drugs through the mail.  At sentencing U.S. District Judge Ricardo S. Martinez said he is “troubled by this new method, new frontier of drug dealing that is creating a new crop of victims.”

“This defendant thought he could use the internet to spread the poison of illegal drugs far and wide,” said Acting U.S. Attorney Annette L. Hayes.  “We will not allow internet connectivity to be blatantly misused to harm public safety.  Moreover, as this and other prosecutions demonstrate, attempts to hide in the “dark net” will not succeed.”

According to records in the case, SADLER, under the screen name NOD, began selling illegal drugs on Silk Road in 2012.  The internet site was dubbed an anonymous marketplace, where the majority of the business was the sale of illegal drugs.  SADLER was selling as much as $70,000 worth of cocaine each month as a dealer on the internet site.  When police searched his apartment on July 31, 2013, they found more than a kilogram of cocaine and heroin each, as well as 400 grams of methamphetamine.  They also found a .45 caliber semi-automatic pistol hidden under the mattress in his bedroom.  SADLER is also forfeiting a 2007 BMW 525 and $4,200 cash seized the day the search warrants were served.

“Sadler transformed himself into one of the top Silk Road drug distributors and profited from the destruction of untold lives,” said Brad Bench, special agent in charge of Homeland Security Investigations in Seattle.  “Criminals who operate digital black markets and those who trade their illicit goods on them believe they are above the law.  They are mistaken.  HSI and its partners are dedicating considerable resources to infiltrating and dismantling underground Internet sites such as the former Silk Road.”

The case was investigated by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) and the U.S. Postal Inspection Service.  The case is being prosecuted by Assistant United States Attorney Thomas Woods.

A Kirkland, Washington resident with one of the largest collections of images of children being raped and molested ever seized in Western Washington was sentenced today in U.S. District Court in Seattle to ten years in prison and ten years of supervised release, announced Acting United States Attorney Annette L. Hayes.  DEREK M. HALVERSON, 53, was identified as part of “Project Spade,” an international crackdown on customers of a Toronto, Canada based film company, Azov Films, that distributed child pornography under the guise of “nature films.”  HALVERSON was an “affiliate partner” with the company and received commissions and discounts as a result of advertisements HALVERSON knowingly posted on two websites that he operated.  At sentencing U.S. District Judge John C. Coughenour ordered $7,500 in restitution to victims who had filed with the court.

            “This defendant profited financially from the sale and trade of images of children being sexually abused,” said Acting United States Attorney Annette L. Hayes.  “His blog posts, “movie reviews,” and other website postings promoted sexual interest in children putting more kids at risk in our communities.”

            According to records filed in the case, law enforcement led by the U.S. Postal Inspection Service served a search warrant on HALVERSON’s home in March 2013.  Agents seized a large number of digital devices containing over 50,000 images and 200 movies of children being sexually exploited.  Agents also recovered paperwork indicating HALVERSON received a commission from Azov Films for customers who purchased from the company after clicking on links posted on HALVERSON’s websites.

            The international investigation dubbed “Project Spade” has resulted in 348 arrests worldwide.  Here in Western Washington, three other defendants have been charged in connection with  “Project Spade.”

            The case was investigated by the United States Postal Inspection Service and is being prosecuted by Special Assistant United States Attorney Cecilia Gregson.  Ms. Gregson is a Senior Deputy King County Prosecutor specially designated to prosecute child exploitation cases in federal court.

The former cross country ski coach at a Seattle private school was returned to the U.S. today to appear for arraignment on his indictment on five child pornography related offenses, announced Acting U.S. Attorney Annette L. Hayes.  JASON CHRISTOPHER PAUR, 44, of Seattle was arrested by the Royal Canadian Mounted Police in December 2013 at Silver Star ski area in British Columbia, Canada.  The arrest came after female students on a school sponsored field trip discovered a video camera had been hidden in their bedroom.  The camera had been positioned to video-tape the students while they got dressed after showering.  PAUR was immediately removed from the field trip by the chaperones who notified police.  PAUR was fired by the school, which has fully cooperated with law enforcement.  PAUR is charged with two counts of Production and Transportation of Child Pornography, Production of Child Pornography with Intent to Transport, Possession of Child Pornography and Transportation of Minors with Intent to Engage in Criminal Sexual Activity.  PAUR was turned over to U.S. authorities today and will make his initial appearance in U.S. District Court in Seattle tomorrow at 2:00.

According to records in the case and the indictment, the investigation revealed that PAUR had also secretly recorded students while on the annual field trip in 2011 and 2012.  The camera seized in Canada contained images, taken in 2013, of students between the ages of 14 and 17 being secretly filmed while changing clothes or after exiting the shower.  The indictment alleges PAUR used the pictures for his own sexual gratification, and transported the pictures from Canada to the U.S.  The indictment further alleges that PAUR traveled with the juveniles to Canada with the intent to film them for his own sexual gratification.

The charges contained in the indictment are only allegations.  A person is presumed innocent unless and until he or she is proven guilty beyond a reasonable doubt in a court of law.

The case is being investigated by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI).  The case is being prosecuted by Assistant United States Attorney Kate Vaughan.

            A Seattle man who was the subject of an international manhunt last fall, pleaded guilty today in U.S. District Court in Seattle to International Parental Kidnapping, announced Acting United States Attorney Annette L. Hayes.  JEFFREY FORD HANSON, 46, was taken into custody in late October 2014, on the South Pacific island of Niue, 1,500 miles northeast of New Zealand.  HANSON had been sought by law enforcement since September 12, 2014, when he was charged with international parental kidnapping for leaving Seattle with his son in violation of a court approved parenting plan.  U.S.  District Judge James L. Robart scheduled sentencing in the case for June 8, 2014.

According to records filed in the case, on July 17, 2014, HANSON’s son arrived in Seattle with his mother’s permission to visit for the summer months.  HANSON knew he was required to return the child to Hazelton, Pennsylvania prior to the start of school in early September 2014.  On August 30, 2014, unbeknownst to the mother, HANSON departed the Seattle area aboard his sailboat, the Draco, with the child onboard and set sail across the Pacific Ocean.  When the boy failed to return to Pennsylvania before school started, the boy’s mother alerted law enforcement.  The Coast Guard and law enforcement agencies throughout the Pacific Rim were then asked to be on the lookout for the boat and the child.

According to the FBI, the Niue Police arrested HANSON on Wednesday, October 29, at his sailboat which was docked on Niue shores in violation of Niue immigration and customs laws.  The Niue police knew of the warrant for Hanson's arrest because the FBI’s Legal Attaché office in Canberra, Australia, passed the missing person and wanted fliers to the Pacific Transnational Crime Coordination Center (PTCCC), a multi-national law enforcement network, of which the Niue Police Department is a member.  Niue police publicized the search for Hanson in the country and alert members of the public provided the crucial tip that led authorities to the boat.  The 9-year-old boy was safely returned to his mother in Pennsylvania.

International Parental Kidnapping is punishable by up to three years in prison.  Under the terms of the plea agreement, prosecutors will recommend HANSON be sentenced to time served – approximately seven months in prison.  Judge Robart is free to impose any sentence up to the maximum allowed by law.

The investigation was led jointly by the FBI’s Seattle Safe Streets Task Force (SSSTF), whose many Task Force Officers include members of the Seattle Police Department Major Crimes Task Force.  The Hazleton Police Department, the FBI’s Philadelphia and Los Angeles field offices, the Port of Seattle Police Department, the U.S. Coast Guard, and the National Center for Missing and Exploited Children, collaborated on the investigation from the beginning.  The FBI also values the tremendous assistance of the New Zealand Police, New Zealand Customs Service, and Immigration New Zealand.

The case is being prosecuted by Assistant United States Attorneys Justin Arnold and Steven Masada.

            A Tacoma, Washington woman who used a prison pen pal program to obtain other peoples’ personally identifying information pleaded guilty today in U.S. District Court in Tacoma to wire fraud and aggravated identity theft, announced Acting United States Attorney Annette L. Hayes.  SHANNON HENDERSON, 45, filed more than 150 fraudulent tax returns between 2009 and 2014, seeking more than $170,000 in tax refunds.  Some $56,000 in tax refunds were sent to HENDERSON before the scheme was discovered.  HENDERSON is scheduled to be sentenced on May 29, 2015.

            According to the plea agreement, between 2007 and 2009, while incarcerated at the Washington Women’s Correctional Center at Purdy, Washington, HENDERSON became pen pals with various inmates across the country and obtained the names and identifying information of real people from these inmates. HENDERSON also purchased the personal information of people who were employed in Washington State by ABM Janitorial Services from a co-conspirator in order to use these names to file false and fraudulent U.S. Individual Income Tax Returns.  HENDERSON used both the names provided by inmates and the names purchased from the coconspirator to file the fraudulent returns.  HENDERSON had the fraudulently claimed refunds loaded onto prepaid debit cards and used the addresses of friends and relatives for her fraud scheme.

            Wire fraud is punishable by up to twenty years in prison. Aggravated Identity Theft is punishable by a mandatory minimum two years in prison to run consecutive to any sentence imposed on the wire fraud count.

            The case was investigated by Internal Revenue Service Criminal Investigation and is being prosecuted by Assistant United States Attorney Rebecca Cohen.

A registered sex offender with a 1974 conviction for raping and murdering a 6-year-old boy, was arrested yesterday for possession and distribution of images of child rape, announced Acting United States Attorney Annette L. Hayes.  ANDREW NICHOLAS EVICH, 67, of Everett, Washington made his initial appearance in U.S. District Court in Seattle yesterday and will remain in federal custody pending a detention hearing scheduled for Tuesday March 10, 2015.

Agents with U.S. Immigration and Customs Enforcement’s Homeland Security Investigations identified EVICH as the person posing online as a 13-year-old boy with an interest in sexually explicit images of children.  The criminal complaint in the case alleges EVICH was using a peer-to-peer file sharing computer program to receive and distribute sexually explicit images of young boys being molested or raped.  The investigation is still determining the origin of hundreds of sexually explicit images and videos.

If convicted, EVICH faces a mandatory minimum 15 years in prison and up to 40 years in prison because of his criminal history as a sex offender.  He was convicted in 1974 in Whatcom County Superior Court of the sexual assault and murder of a 6-year-old boy.  EVICH was returned to prison in 1985 when he was convicted of Contributing to the Delinquency of a Minor for sexual contact with a 15-year-old.   In 1998 he was sentenced to five years in federal prison for receipt of child pornography.

The charges contained in the complaint are only allegations.  A person is presumed innocent unless and until he or she is proven guilty beyond a reasonable doubt in a court of law.

This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice.  Led by United States Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims.  For more information about Project Safe Childhood, please visit www.justice.gov/psc

The case is being investigated by ICE’s Homeland Security Investigations (HSI) and is being prosecuted by Assistant United States Attorney Kate Vaughan.  Ms. Vaughan serves as the Project Safe Childhood Coordinator for the U.S. Attorney’s Office.

            A King County couple who fled to Moldova, in Eastern Europe before being indicted by a federal grand jury for bank fraud related to loans fraudulently obtained from Westsound Bank, entered guilty pleas today in U.S. District Court in Seattle, announced Acting United States Attorney Annette L. Hayes.  ALEKSANDR KRAVCHENKO, 36, pleaded guilty to conspiracy to commit bank fraud and filing a false income tax return.  GALINA KRAVCHENKO, 35, pleaded guilty to filing a false income tax return.  The couple profited from a mortgage fraud scheme in which ALEKSANDR KRAVCHENKO submitted phony loan applications to Westsound Bank.  GALINA KRAVCHENKO acted as the real estate agent in the scheme earning large commissions on the fraudulent sales.  ALEKSANDR KRAVCHENKO’s plea agreement estimates the loss amount on the bank fraud scheme at more than $10 million, and the tax loss on the false returns at more than $370,000.  Chief U.S. District Judge Marsha J. Pechman scheduled sentencing for June 5, 2015.

            According to records filed in the case, the KRAVCHENKOs were indicted in May 2009 for an extensive bank fraud scheme involving straw buyers and false statements on mortgage applications.  According to facts admitted in the plea agreements, ALEKSANDR KRAVCHENKO had his wife GALINA, a real estate agent, locate real property that was available for purchase.  ALEKSANDR KRAVCHENKO then recruited otherwise unqualified buyers to participate in purchasing and building on the properties.  ALEKSANDR KRAVCHENKO submitted false and fraudulent construction loan applications and related documents to Westsound Bank, thereby causing Westsound Bank to make loans.  A portion of the fraudulently-obtained loan proceeds were diverted for ALEKSANDR KRAVCHENKO’s personal use and benefit, and to further the fraud scheme.  GALINA KRAVCHENKO made substantial real estate commissions on the deals.  ALEKSANDR KRAVCHENKO submitted 55 loan packets to Westsound Bank worth $49 million – ultimately the bank suffered a $10.7 million loss on the loans and was closed by regulators on May 8, 2009.

            Aware of the investigation, but before the indictment was returned, the two KRAVENCHENKOs fled the U.S. and went to Moldova where ALEKSANDR KRAVCHENKO retains citizenship.  The two were out of the reach of U.S. law enforcement until December 2014, when GALINA KRAVCHENKO was returned to the U.S. based on an extradition warrant.  GALINA KRAVCHENKO had been arrested in Moldova in September 2014 for having false Moldovan and Russian travel documents.  GALINA KRAVCHENKO has been in custody since December 2014.  ALEKSANDR KRAVCHENKO returned to the U.S on February 23, 2015 to resolve the criminal charges.

            Under the terms of the plea agreements, both the prosecution and defense will recommend a five year prison term for ALEKSANDR KRAVCHENKO.  He has agreed to make restitution of $10,759,722 for the bank fraud scheme and $370,541 for filing a false tax return.  GALINA KRAVCHENKO is equally responsible for the $370,541 for filing a false tax return.  Prosecutors will recommend a sentence of time already served in prison for her.

            The case was investigated by the FBI, the Federal Deposit Insurance Corporation, Office of Inspector General, the Internal Revenue Service, Criminal Investigations, and the Washington State Department of Financial Institutions.  The case is being prosecuted by Assistant United States Attorneys Tessa Gorman and Thomas Woods.

            Press contact for the U.S. Attorney’s Office is Public Affairs Officer Emily Langlie at (206) 553-4110 or Emily.Langlie@usdoj.gov.

            Two men whose hash oil manufacturing operation exploded on New Year’s Day 2014, were sentenced today in U.S. District Court in Seattle to federal prison terms, announced Acting United States Attorney Annette L. Hayes.  ROBBY WAYNE MEISER, 46, was sentenced to 30 months in prison and three years of supervised release, and BRUCE W. MARK, 62, was sentenced to 18 months in prison and three years of supervised release.  The men were ordered to pay over $97,000 in restitution for damage to the apartment building.  U.S. District Judge John C. Coughenour imposed the sentences.

“Hash oil manufacturing, and resulting explosions, are a growing and serious problem in Western Washington and elsewhere in the country,” said Acting United States Attorney Annette L. Hayes.  “The materials and processes used to produce this product are dangerous and should never be used where they risk explosions or other serious harm.  Those who put lives and property at risk will be prosecuted and punished.”

            According to records filed in the case, on January 1, 2014, Kirkland Fire Department units responded to reports of an explosion and fire at the Inglenook Apartments on 142nd Street in Kirkland.  Both defendants suffered burns in the explosion.  Butane gas used in the manufacturing of hash oil exploded and blew out windows on the structure, expelling debris some 25 feet away.  The north wall of the apartment was displaced outward approximately 6 – 8 inches by the blast, and the roof was disconnected from the wall.  The fire department condemned parts of the building due to structural concerns.  Officers found thirteen empty 8 ounce butane cans, and a box of twenty-four full 8 ounce cans in the apartment, together with a marijuana grow and other implements used to make hash oil.

            When the defendants were arrested in July 2014, investigators found a second marijuana grow at the home they occupied in the Green Lake neighborhood of Seattle, as well as a small amount of butane used in hash oil manufacturing.  In November 2014 the defendants pleaded guilty to Endangering Human Life While Manufacturing Controlled Substances.

            Federal charges have been filed in connection with four other hash oil operations – three of them resulting in explosions and fires.  In one of the cases from Bellevue, Washington, an apartment resident was injured trying to escape the flames and later died following complications from her hospitalization.  The defendants in that case will be sentenced later this year.
The cases were investigated by multiple local and federal agencies including: the Drug Enforcement Administration (DEA), the Bureau of Alcohol, Tobacco, Firearms & Explosives (ATF), the U.S. Marshals Service, the Bellevue Police Department, the Seattle Police Department, and the Kirkland Police Department.
The cases are being prosecuted by Assistant United States Attorneys Todd Greenberg and Vince Lombardi.
Press contact for the U.S. Attorney’s Office is Public Affairs Officer Emily Langlie at (206) 553-4110 or Emily.Langlie@usdoj.gov.

            Two men whose hash oil manufacturing operation exploded on New Year’s Day 2014, were sentenced today in U.S. District Court in Seattle to federal prison terms, announced Acting United States Attorney Annette L. Hayes.  ROBBY WAYNE MEISER, 46, was sentenced to 30 months in prison and three years of supervised release, and BRUCE W. MARK, 62, was sentenced to 18 months in prison and three years of supervised release.  The men were ordered to pay over $97,000 in restitution for damage to the apartment building.  U.S. District Judge John C. Coughenour imposed the sentences.

“Hash oil manufacturing, and resulting explosions, is a growing and serious problem in Western Washington and elsewhere in the country”, said Acting United States Attorney Annette L. Hayes.  “As more states decriminalize marijuana, people such as these defendants are creating danger as they seek to manufacture a stronger product.  It is important to send a public message that those who go too far and put lives at risk will be prosecuted and punished.”

            According to records filed in the case, on January 1, 2014, Kirkland Fire Department units responded to reports of an explosion and fire at the Inglenook Apartments on 142nd Street in Kirkland.  Both defendants suffered burns in the explosion.  Butane gas used in the manufacturing of hash oil exploded and blew out windows on the structure, expelling debris some 25 feet away.  The north wall of the apartment was displaced outward approximately 6 – 8 inches by the blast, and the roof was disconnected from that wall.  On the inside, large gaps were seen between the ceiling and interior walls, and one interior wall had been moved about 10 inches.  The sliding glass doors and frame were blown outward, away from the structure.  The fire department condemned parts of the building due to structural concerns.  Officers found thirteen empty 8 ounce butane cans, and a box of twenty-four full 8 ounce cans in the apartment, together with a marijuana grow and other implements used to make hash oil.

            When the men were arrested in July 2014, investigators found a second marijuana grow at the home they occupied in the Green Lake neighborhood of Seattle, as well as a small amount of butane used in hash oil manufacturing.  In November 2014 the men pleaded guilty to Endangering Human Life While Manufacturing Controlled Substances.

            Federal charges have been filed in connection with four other hash oil operations – three of them resulting in explosions and fire.  In one of the cases from Bellevue, Washington, an apartment resident was injured trying to escape the flames and later died following complications from her hospitalization.  The defendants in that case are to be sentenced later this year.
The cases were investigated by multiple local and federal agencies including: the Drug Enforcement Administration (DEA), Bureau of Alcohol, Tobacco, Firearms & Explosives (ATF), the U.S. Marshals Service, the Bellevue Police Department, the Seattle Police Department, and the Kirkland Police Department.
The cases are being prosecuted by Assistant United States Attorneys Todd Greenberg and Vince Lombardi.
Press contact for the U.S. Attorney’s Office is Public Affairs Officer Emily Langlie at (206) 553-4110 or Emily.Langlie@usdoj.gov.

            An enrolled member of the Tlingit and Haida Indian Tribes of Alaska was sentenced to an additional 12 months in prison today for failing to register as a sex offender, announced Acting United States Attorney Annette L. Hayes.  THOMAS LEE PETERS, 52, failed to register as a sex offender when he moved back to the Swinomish Reservation near La Conner in Skagit County.  In 2009, PETERS was sentenced to five years in federal prison for three counts of sexual abuse of a minor for molesting a young relative while residing on the Swinomish Reservation.  After his release from prison, PETERS initially registered in King County, but fled his Seattle residence without notice, and failed to check in with his probation officer as required.  At sentencing U.S. District Judge Robert S. Lasnik told him the original charges of conviction were very serious and that he needed to register as a sex offender.

            According to records filed in the case, PETERS was released from federal custody and registered as a sex offender with the King County Sheriff in February 2014.  He signed a statement acknowledging that if he moved from the residence he listed in Seattle he needed to notify law enforcement.  In late June 2014, PETERS violated the terms of his ten years of supervision.  The violations included consuming alcohol, and failing to report to his probation officer as directed.  In August 2014, Swinomish Tribal Police located PETERS on tribal land and arrested him at the request of the U.S. Marshal Service for failing to register as a sex offender.     

            PETERS pleaded guilty November 25, 2014.

            The case was investigated by the U.S. Marshals Service and the Swinomish Police Department.

            The case was prosecuted by Assistant United States Attorney J. Tate London.  Mr. London serves as a Tribal Liaison for the U.S. Attorney’s Office.

            A Mexican citizen who illegally possessed a firearm while dealing heroin was sentenced today in U.S. District Court in Seattle to eight years in prison, announced Acting United States Attorney Annette L. Hayes.  Melquiades GARCIA GONZALEZ, 29, made a series of  heroin sales to a person working with law enforcement in April 2014.  In May 2014, GARCIA GONZALEZ agreed to sell three kilos of heroin to an undercover officer, with the promise of additional kilos of heroin in the future.  At sentencing U.S. District Judge Richard A. Jones said GARCIA GONZALEZ “was controlling the lives of countless other people by providing the drug for their addiction.”

            GARCIA GONZALEZ was arrested May 20, 2014, after attempting to deliver the three kilos of heroin to undercover officers in the parking lot of the Kent, Washington Home Depot.  According to records filed in the case, GARCIA GONZALEZ drove through the parking lot at a high rate of speed narrowly missing other cars and pedestrians.  Ultimately GARCIA GONZALEZ bolted from his car, and was chased on foot by officers.  The officers saw GARCIA GONZALEZ throw a handgun into the bushes near a housing complex with young children playing in the yard.  The weapon was a loaded Kahr .40 caliber pistol.  In addition to the 3 kilos of heroin in the car, another kilo of heroin and a second loaded firearm was discovered at GARCIA GONZALEZ’ home.

            On November 3, 2014, GARCIA GONZALEZ pleaded guilty to Alien in Possession of a Firearm, Possession of Heroin with Intent to Deliver; and Possession of Firearm in Furtherance of Drug Trafficking Crime.

            The case was investigated by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) and officers with Kent Police Department and Seattle Police Department.

            The case is being prosecuted by Special Assistant United States Attorney Stephen Hobbs.  Mr. Hobbs is a Senior Deputy King County Prosecutor specially designated to prosecute gun  cases in federal court.

            A large bank fraud ring responsible for nearly a million dollars in fraud was indicted this week in U.S. District Court for the Western District of Washington, announced Acting United States Attorney Annette L. Hayes.  Ten defendants are named in the indictment for fraud on seven different financial institutions.  The indictment alleges that between November of 2010 and the present, the co-schemers used 219 different bank accounts to steal more than $987,000 from the banks.  Eightof the defendants are in custody.  Seven made their initial appearances in U.S. District Court today.  Two defendants are still being sought, and one defendant is in state custody and will make his appearance next week.

            According to the indictment, the defendants allegedly used stolen checks to make fraudulent deposits into various bank accounts.  Using debit cards, the co-schemers would withdraw large amounts of cash before the bank determined the check used to inflate the balance was no good.  Some of the people whose bank accounts were inflated were complicit in the fraud, allowing the co-schemers to use their debit cards.  According to law enforcement records, many of the checks were stolen in car prowls and then used for the fraud.  The victim banks include: Bank of America, Boeing Employees Credit Union (BECU), TwinStar Credit Union, Wells Fargo Bank, Sound Credit Union, Key Bank, and Banner Bank.  All are federally insured financial institutions.

            The 60 count indictment charges the defendants with bank fraud and aggravated identity theft for the fraudulent use of the debit cards.  The defendants named in the indictment are:

CLAYTON LEON BIAS, JR., 25, Kent, Washington
ARTHUR NAPOLEAND WILCHER, 29, Tacoma, Washington
CALVIN DEWAYNE DAVIS, 26, Federal Way, Washington
OKILA AYANNA MALAYKA ULMER, 31, Renton, Washington
AMANDA RAE RIFFLE, 28, Tacoma, Washington
RELONNA DOLLINN WARD,  34, Tacoma, Washington
AVERY EDWARD LEE, 32, Milton, Washington
JOHNATHAN MARQUIEL TURNER, 22, Federal Way, Washington
SHAWN ANDRE TURNER, 24, Kent, Washington
SEPHORA QUILYN WATKINS, 27, Tacoma, Washington

            The charges contained in the indictment are only allegations.  A person is presumed innocent unless and until he or she is proven guilty beyond a reasonable doubt in a court of law.

            The case is being investigated by the U.S. Secret Service and the Pierce County Sheriff’s Office.  The case is being prosecuted by Assistant United States Attorney Matthew Hampton.

            The former bookkeeper for the St. Vincent de Paul Society Stores of Tacoma, Washington, was arrested yesterday afternoon on an indictment returned by a federal grand jury charging her with multiple counts of wire fraud and aggravated identity theft, announced Acting United States Attorney Annette L. Hayes.  ANGELA TONEY SAUCIDO, 44, was arrested in Phoenix, Arizona.  SAUCIDO moved from the Tacoma area to Phoenix in 2007, but continued to work for the charity as its bookkeeper.  The indictment alleges the embezzlement began at least in 2006 and continued throughJuly 2013.  SAUCIDO will make her initial appearance in U.S. District Court in Arizona today, with future court appearances in Tacoma.

            According to the indictment the embezzlement scheme involved a variety of frauds.  SAUCIDO would transfer funds from the St. Vincent de Paul Society Stores bank accounts to her own bank accounts and falsify entries making it appear the transfers were for legitimate purposes.  SAUCIDO forged signatures on checks and made electronic fund transfers to benefit her and her family.  SAUCIDO made purchases for her personal use on the St. Vincent de Paul Society Stores Home Depot credit account, and then used the charity’s funds to pay for the purchases.  Finally, SAUCIDO used the identities of other employees to make it appear they had received additional pay when in fact she had deposited the money into bank accounts she and her husband controlled.

            The indictment charges seven counts of wire fraud and four counts of aggravated identity theft.  Wire fraud is punishable by up to 20 years in prison and a $250,000 fine. Aggravated Identity Theft is punishable by a mandatory two years of prison that must follow any term imposed on the wire fraud counts.

            The charges contained in the indictment are only allegations.  A person is presumed innocent unless and until he or she is proven guilty beyond a reasonable doubt in a court of law.

            The case was investigated by the FBI and is being prosecuted by Assistant United States Attorney Matthew Hampton.

A man who sold guns and heroin from the basement apartment of a home in Seattle’s Magnolia neighborhood, was sentenced today in U.S. District Court in Seattle to six years in prison and three years of supervised release, announced Acting United States Attorney Annette L. Hayes.  JORGE CARLOS CAMPS, 34, was arrested in May 2014, when law enforcement seized a dozen weapons including a Mac-11 submachine gun and silencer.  The home was just a few blocks from a busy playground in a neighborhood park.  CAMPS pleaded guilty in November 2014.  At sentencing U.S. District Judge Richard A. Jones said CAMPS was dealing in “a dangerous combination of firearms and drugs.”

“This defendant played Russian Roulette with public safety by offering to put high powered firearms into the hands of anyone ready to pay,” said Acting U. S. Attorney Annette L. Hayes.  “By ignoring the regulatory requirements that licensed dealers must comply with, Camps became part of the black market that regularly provides guns to convicted felons who often go on to use them to commit further crimes.  Our communities should not have to deal with additional murders, assaults and armed robberies because of this defendant’s wrong doing.”

According to records in the case, on April 28, 2014, CAMPS sold heroin and a firearm to a person working with law enforcement.  CAMPS sent pictures of various weapons via text message, along with a price list for the guns.  He was selling assault rifles, tactical ballistic body armor, military grade ammunition, silencers, and a variety of tactical accessories.  CAMPS also possessed, and was willing to sell, various badges and patches from area police departments.  CAMPS has a prior felony conviction for violating a domestic violence court order and is prohibited from possessing firearms.

A second defendant, Roger Lee Hiddleston, 44, of Seattle, pleaded guilty in November 2014 and was sentenced to six years in prison for possessing a firearm and supplying heroin to CAMPS.  Police stopped Hiddleston’s car after he left the Magnolia home.  Inside they found heroin, methamphetamine, drug distribution materials, and $2,225 in currency.  In the trunk they recovered a Sig Sauer Model P230 9mm Kurz semi-automatic pistol.  Hiddleston is also prohibited from possessing firearms due to a domestic violence order.

The case was investigated by the Seattle Police Department, the Drug Enforcement Administration (DEA) and the Bureau of Alcohol, Tobacco, Firearms & Explosives (ATF).

The case was prosecuted by Assistant United States Attorney Todd Greenberg.

Two members of the Lummi Indian Tribe were sentenced today in U.S. District Court in Seattle to prison terms for conspiracy to distribute controlled substances,  including heroin and methamphetamine, announced Acting U.S. Attorney Annette L. Hayes.  TANYA JEFFERSON, 45, was sentenced to 18 months in prison, and her husband JOHN JEFFERSON, 37, was sentenced to 46 months in prison.  Both were charged federally in August 2014, following an undercover investigation by the Lummi Police Department and the FBI.  In November 2014, both entered guilty pleas admitting that on five different occasions in April 2013, the JEFFERSONs sold heroin or methamphetamine to a person working with law enforcement.  At sentencing U.S. District Judge Richard A. Jones said, “Every time you sell drugs you impact someone’s life…. Anytime you introduce those drugs in your tribe, you don’t know what type of tailspin of addiction you have introduced.”

“Heroin and methamphetamine trafficking has no place in any of our communities, least of all on tribal lands,” said Acting U.S. Attorney Annette L. Hayes.  “Heroin abuse is a growing problem in Western Washington and beyond, with an alarming increase in overdose deaths, especially among people under thirty.  Last week I convened a heroin summit to focus community resources on battling what has become a growing epidemic of opioid abuse.  I commend the work of our Tribal partners, the Lummi, to lead in the effort to prevent heroin use and overdose deaths.”

In partnership with Lummi public health agencies, Lummi Nation police officers are some of the first in Western Washington to be trained to recognize the symptoms of heroin or opioid prescription drug overdose and administer naloxone, an opioid blocker to help prevent needless overdose deaths in the community.  In the first ten months of the program, officers have successfully administered naloxone in eleven overdose situations and saved lives that otherwise would have been lost.

JOHN JEFFERSON has a lengthy criminal history with 59 adult convictions for a range of offenses, including assault and battery, aggravated theft, violation of no-contact orders, and resisting arrest.  His most recent conviction is for domestic violence against his wife, and in that case he attacked her to prevent her from calling the police.  He also failed to complete his domestic violence treatment sessions.  TANYA JEFFERSON has prior convictions for drug dealing and forgery.  She is now barred by the tribe from the Lummi reservation because of her drug dealing.

The case was investigated by the Lummi Police Department and the FBI.  The case was prosecuted by Assistant United States Attorney Jerrod Patterson.

February 20, 2015

The Chief Executive Officer of an energy firm headquartered in Tukwila, Washington, was sentenced today in U.S. District Court in Seattle to five years in prison, three years of supervised release and a $10,000 fine for two counts of Securities Fraud, announced Acting United States Attorney Annette L. Hayes.  DICKSON LEE, 66, served as the CEO of L & L Energy Inc., until his arrest last year.  L&L, a formerly NASDAQ listed company, purported to be engaged in various aspects of the coal business including mining, washing, and wholesale distribution of coal, all within the People’s Republic of China.  LEE falsified reports to the U.S. Securities and Exchange Commission (SEC) regarding the existence of a Chief Financial Officer and, in a separate scheme, issued under false pretenses hundreds of thousands of shares of L&L stock to individuals controlled by LEE in a scheme to raise cash for the company.  At the sentencing hearing U.S. District Judge Richard A. Jones said the case should send a message to CEOs  “if you engage in deceit and false representations. . . there will be severe consequences.”

“Investors rely on the representations made by publicly traded companies, both in accounting records and their filings with regulators such as the Securities and Exchange Commission,” said Acting U.S. Attorney Annette L. Hayes.  “Mr. Lee’s fabrications about key facts concerning his company undermined one of the foundations of our capital markets.  That is what he has been held to account for today.”

According to records in the case, in 2008 and 2009, while trying to get L&L stock listed on a national exchange, LEE falsely reported the identity of the company’s Chief Financial Officer (CFO) and lied about the existence of adequate internal controls in public SEC filings.  In fact, the person LEE claimed was the CFO had refused to accept the position, and L&L had no CFO to ensure accurate financial reporting.  In 2009, when the purported CFO discovered the fraud, LEE paid the individual tens of thousands of dollars in cash and stock in exchange for her silence, and never disclosed the arrangement to shareholders.  Finally, in 2013, during a subsequent SEC investigation, LEE falsely testified under oath about the CFO’s role in the company.

In the second count of Securities Fraud, LEE admits that in 2011 and 2012, he issued 730,000 shares of company stock to third-parties in China who, at LEE’s direction, sold the shares on the market to generate revenue for cash-strapped L&L.  At the time, LEE knew that the SEC had initiated an investigation into L&L’s affairs and that raising cash through established investment banks was no longer a viable option.  LEE also knew that L&L’s Board had been specifically advised that it could not authorize the direct issuance and sale of stock without public disclosure of the investigation.  LEE, therefore, secretly issued L&L stock to China-based individuals under false pretenses and then directed their sale without ever disclosing the truth about the company.  In order to further conceal his actions, LEE directed that the shares be falsely recorded in L&L’s accounting records as having been issued for compensation for services, although none of these individuals provided any benefit to L&L in return for the shares.

“This case should serve as a warning to those out there who think that rules don’t apply to them, who let their greed outweigh their obligation to the public trust,” said Special Agent in Charge Frank Montoya, Jr., of the FBI’s Seattle field office.  “Those people should know the FBI is deeply committed to protecting the community against those who would violate that trust.”

In their sentencing memo, prosecutors explain how these crimes impact the investing public, writing to the court:  “Dickson Lee’s conduct was particularly egregious because he flagrantly and repeatedly sought to undermine basic gatekeeping systems erected to prevent unaccountable corporate executives from fleecing investors….Lee…betrayed a deep contempt for the regular investor.  The consequence of Lee’s actions is continued mistrust by the public in corporate executives, erosion of confidence in the securities markets, and significantly higher investment costs as investors spend more to conduct their own due diligence.  This limits participation and the result is a less open and less liquid market to the detriment of the economy.”

The case was investigated by the FBI.  A parallel civil case is being pursued by the SEC.  The case is being prosecuted by Assistant United States Attorney Kathryn Kim Frierson.

            MED-EL USA, based in Durham, NC, has settled claims that it improperly sought to influence military physicians to surgically implant MED-EL hearing devices in patients with hearing loss, Acting United States Attorney Annette L. Hayes announced today.  MED-EL USA, a subsidiary of Austrian-based MED-EL, manufactures and sells cochlear implants and other hearing devices.  The company agreed to pay the U.S. Army and U.S. Navy a total of $494,951 to settle allegations that it improperly provided meals and trips to an Army and a Navy Ear, Nose and Throat (ENT) specialist.  The physicians were stationed at Madigan Army Medical Center in Tacoma, Washington and at the San Diego Naval Medical Center in San Diego, California.

            “Patients need to be confident that their physician is selecting the best and most appropriate medical devices for their medical conditions – not the device that will result in free travel and/or a free meal for their doctor,” said Acting United States Attorney Annette L. Hayes.  “That is why the Anti-Kickback Statute and False Claims Act generally prohibit payments to physicians, in cash or in-kind, in the hopes of influencing their medical decision-making and inducing them to order particular procedures, treatments and/or medical devices.  Enforcement of these laws is particularly important in the military context given our obligation to provide quality healthcare to our servicemen and women and their families.”

            According to today’s settlement, between 2010 and 2013, MED-EL USA embarked upon a deliberate campaign to increase the use of its products in Defense Department medical facilities.  The government’s investigation revealed that MED-EL USA targeted the above-referenced Army and Navy ENTs and attempted to influence their choice of hearing devices by providing them free meals, overseas travel opportunities and honoraria requiring little to no actual work by the physicians.  MED-EL USA sales to the military jumped from none to $400,000 during the period the two military physicians were the recipients of the company’s largesse.

            In resolving the allegations involved in today’s settlement, MED-EL USA admits to no wrongdoing.  Further, the company has dismissed its former Chief Operating Officer and terminated its relationship with the external sales consultant who orchestrated the alleged improper payments scheme. 

The case was investigated by the Seattle Office of the Defense Criminal Investigative Service and the Army Criminal Investigation Command, Major Procurement Fraud Unit.

            The case was handled by Assistant United States Attorney Harold Malkin.  Mr. Malkin heads the Affirmative Civil Enforcement (ACE) Unit for the U.S. Attorney’s Office.

A long-time Seattle area pimp was sentenced today in U.S. District Court in Seattle to 10 years in prison and 25 years of supervised release for Sex Trafficking of a Child, announced Acting United States Attorney Annette L. Hayes.  DESMOND TREVAIN MANAGO, 26, pleaded guilty in September 2014, admitting that he forced a juvenile female to engage in prostitution in Washington, Idaho, Colorado, Arizona, and California.  At sentencing U.S. District Judge Ricardo S. Martinez said, “Sex trafficking of children is seen as one of the worst crimes. . . You are affecting someone’s life forever.”

“Like the countless pimps who came before him, this defendant was manipulative and predatory,” said Acting United States Attorney Annette L. Hayes.  “He viewed his victims as commodities that earned him money, and has spent his entire adult life exploiting troubled young women for his financial gain.  The prison term and the federal supervision imposed by the court will produce long-term protection against future exploitation of vulnerable victims by this defendant.”

According to records in the case, between October and December 2012, MANAGO used force, fraud and coercion to cause a juvenile female victim to engage in commercial sex acts.  MANAGO advertised the juvenile victim on Backpage.com and also forced her to “walk the track” – an area known for prostitution.  The juvenile victim was forced to give MANAGO all the money she earned.  In November 2012, MANAGO, accompanied by one of his family members, drove the juvenile victim and an adult woman to other states to work as prostitutes.  MANAGO posted advertisements of his victims on Backpage.com in the different states and physically assaulted the adult victim.  MANAGO left his victims in California and instructed them to wire their prostitution earnings to him in Seattle.  Once MANAGO left the juvenile victim in California she broke free from his control.

MANAGO was prosecuted in King County Superior Court in 2009 as a member of the West Side Street Mobb – a gang that forced girls into prostitution to make money.  MANAGO was sentenced to 30 months in prison.  After he finished his prison sentence, he returned to the King County Jail for various violations.  Jail records show that he continued to run his prostitution business while incarcerated, forcing women to pay some of their prostitution earnings to him while he was locked up.

MANAGO was arrested October 3, 2013 during a traffic stop for outstanding warrants.  He was transferred to federal custody a year ago.

The case was investigated by the FBI, King County Sheriff’s Office and Tacoma Police Department. The case was prosecuted by Assistant United States Attorneys Kate Crisham and Ye-Ting Woo.

A Palmdale, California resident who defrauded a federal government program designed to provide computers to needy schools and non-profits was sentenced today in U.S. District Court in Seattle to 10 years in prison for wire fraud, aggravated identity theft, and filing a false income tax return, announced Acting United States Attorney Annette L. Hayes.  STEVEN ALEXANDER BOLDEN, 51, pleaded guilty in January 2014.  His sentencing was delayed while criminal charges in California were resolved.  At today’s sentencing hearing U.S. District Judge Ricardo S. Martinez ordered BOLDEN to pay $7.2 million in restitution.  Judge Martinez said, “You’ve been a con man for a long, long time. . . You committed a very serious crime . . . Stealing from children . . . Children all across America.”

“Thousands of kids would have benefitted from the equipment this defendant stole,” said Acting United States Attorney Annette L. Hayes.  ”The Computers for Learning program’s goal has always been to put computer technology in more classrooms, so that more kids have the opportunity to be educated to their full potential.  Stealing education opportunities from needy kids makes this fraud particularly egregious.”

According to court records, between 2007 and 2013, BOLDEN defrauded a Government Services Administration (GSA) program called “Computers for Learning,” that transfers excess government computers and related peripheral equipment directly to qualified schools and educational non-profit organizations.  BOLDEN posed as 14 different non-profits to obtain the computers for free, and then sold them for his personal profit.  Over the course of the scheme, BOLDEN obtained 19,442 items through the program with an original purchase price of $30.3 million.  Based on its “fair market value,” the computer equipment that BOLDEN fraudulently acquired was worth about $7.2 million.

            According to records in the case, BOLDEN became acquainted with a person operating a legitimate non-profit in Southern California.  BOLDEN convinced the head of the non-profit to let him review the paperwork for the organization.  Using the non-profit organization’s information, BOLDEN created an account in the Computers for Learning program, and in July of 2010, obtained 41 Dell and HP computers that were made available by the Border Patrol at Blaine, Washington.  BOLDEN claimed the computers and later sold them for his own benefit.  BOLDEN was convicted of aggravated identity theft because he used the identities of the non-profit organization and his acquaintance to further his scheme.

BOLDEN failed to report any income from the sale of the computers.  In fact, records from a computer recycler in Santa Ana, California show it paid BOLDEN more than $64,892 in 2012.  BOLDEN failed to report any of that income on his tax return.

BOLDEN was sentenced in California in September 2014, to a seven year prison sentence for a domestic violence crime which occurred in October 2013.

The case was investigated by multiple law enforcement partners led by the General Services Administration Office of Inspector General (GSA-OIG), the Internal Revenue Service Criminal Investigation (IRS-CI), the Department of Transportation Office of Inspector General (DOT-OIG), the Department of Justice Office of Inspector General (DOJ-OIG), the Department of Energy Office of Inspector General (DOE-OIG), the Department of Veterans Affairs Office of Inspector General (VA-OIG), the Social Security Administration Office of Inspector General (SSA-OIG), the Department of Homeland Security Office of Inspector General (DHS-OIG), the Army Criminal Investigation Division (CID) and the FBI.

The case was prosecuted by Assistant United States Attorney David Reese Jennings.

            A 47-year-old man from Surrey, British Columbia was arrested yesterday afternoon at a park in Burlington, Washington, where he was expecting to meet a 12-year-old girl whom he had tried to entice into having sexual contact with him, announced Acting United States Attorney Annette L. Hayes.  KULDIP “KELLY” SINGH MAHAL, responded to a Craigslist posting and began communicating with what he believed to be a 12-year-old girl.  In fact, he sent multiple sexually explicit messages and photos to an undercover agent with U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI).  MAHAL, who works as a facilities manager for a Vancouver BC tech firm, crossed the border into the U.S. at Blaine yesterday and headed toward the park where he had agreed to meet the girl.  MAHAL is a volunteer coach for a U-16 soccer team in British Columbia.  He made his initial appearance in U.S. District Court in Seattle today and will remain detained pending a hearing on Monday, February 9, 2015.

            “Homeland Security Investigation Agents work hard each day to keep our country, and in this case our children, safe from those who would do them harm,” said Acting United States Attorney Annette L. Hayes.  “I am grateful for their hard work in this case.”

            According to the complaint filed in the case, MAHAL responded to a posting on the Vancouver BC Craigslist site on January 15, 2015.  MAHAL sent a picture of his arms and upper body, and expressed interest in a sexual relationship.  MAHAL continued to communicate with the undercover agent even after the agent said she was 12-years-old.  In fact MAHAL is alleged to have sent sexually explicit photos of himself and repeatedly requested the “girl” send sexually explicit photos of herself back to him.  MAHAL allegedly engaged in lengthy sexualized chats via text message with the “girl.”

“In three weeks’ time, the defendant went from responding to an online posting to traveling from Canada to Washington State to meet a minor for illicit sex,” said Brad Bench, special agent in charge of Homeland Security Investigations in Seattle.  “Fortunately, he was actually communicating with an undercover HSI special agent.  Individuals who cross international borders to sexually abuse children, whether they are Americans traveling overseas or foreigners traveling to the U.S., are within HSI’s jurisdiction and will be held to account for their crimes.”

            Enticement of a Minor is punishable by a mandatory minimum term of imprisonment of ten years, and up to life.

            The charges contained in the complaint are only allegations.  A person is presumed innocent unless and until he or she is proven guilty beyond a reasonable doubt in a court of law.

            The case is being investigated by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) and is being prosecuted by Assistant United States Attorney Kate Vaughan.  Ms. Vaughan heads up the Project Safe Childhood efforts of the U.S. Attorney’s Office.  More on Project Safe Childhood here.

A federal grand jury has indicted a former federal employee for multiple counts of wire fraud and mail fraud, and making false statements in connection with an extensive scheme to fraudulently obtain federal and state benefits, announced Acting United States Attorney Annette L. Hayes. DARRYL LEE WRIGHT, 46, of Snoqualmie, Washington, will appear today in U. S. District Court in Tacoma at 2:30 p.m. His sister KAREN M. BEVENS, 43, of Duvall, Washington, who is charged in one of the counts, will appear for arraignment next week. The indictment was returned following an investigation that revealed that WRIGHT was making false and conflicting claims to various agencies in an effort to fraudulently obtain benefits. The charged criminal conduct allegedly occurred from 2005 to the present, during which WRIGHT is alleged to have fraudulently received more than $250,000 in benefits.

According to the indictment, WRIGHT made a variety of false claims in his scheme to defraud the Department of Veterans Affairs, the Social Security Administration, and the Washington State Department of Employment Security. False statements also were made to the Department of Commerce, the Office of Personnel Management, the Washington State Department of Social and Health Services and the U.S. Army.

The nine count indictment charges schemes to commit both wire fraud and mail fraud, making false statements to the Army, and making a false statement to the U.S. Department of Commerce.

The charges contained in the indictment are only allegations. A person is presumed innocent unless and until he or she is proven guilty beyond a reasonable doubt in a court of law.

The case was investigated by multiple agencies led by the Social Security Office of Inspector General (SSA-OIG). The Office of Inspector General of these agencies were involved in the investigation: Veterans Affairs (VA-OIG), Department of Commerce (DOC-OIG), Office of Personnel Management (OPM-OIG), and General Services Administration (GSA-OIG). Also contributing to the investigation is the FBI, U.S. Army Criminal Investigation Division, the Washington National Guard, the Washington Employment Security Department and the Washington State Department of Social and Health Services.

The case is being prosecuted by Assistant United States Attorney David Reese Jennings.

A convicted bank robber who absconded from supervised release and committed crimes across two states pleaded guilty today in U.S. District Court in Seattle to escape, being a felon in possession of a firearm and interstate transportation of a stolen vehicle, announced Acting United States Attorney Annette L. Hayes. BRADLEY STEVEN ROBINETT, 46, will be sentenced by U. S. District Judge James L. Robart on May 4, 2015. ROBINETT was arrested in Hillsboro, Oregon, in June 2014, after being on the run for nearly five years. ROBINETT was arrested after police, using an automated license plate reader in a shopping mall parking lot, determined the car he was driving had been stolen in King County, Washington. The police officers waited for the driver to return to the vehicle and arrested ROBINETT without incident.

According to court filings, ROBINETT was convicted of bank robbery, and in 2004 was sentenced to seven years in prison. In August 2009 he was released from a federal prison in Arizona and put on a bus to Seattle with the requirement that he report to a specific halfway house within 48 hours. ROBINETT never reported to the halfway house and a warrant was issued for him for escape. In September 2009, police on Bainbridge Island, Washington attempted to stop a car that led them on a high speed chase. ROBINETT was driving the car, fled from it and got away. Inside the car officers found a Glock 9mm pistol and a ballistic vest. Both items were stolen from the Seattle Police Department several years earlier. The vehicle ROBINETT was driving was reported stolen in Oregon. Prior to his arrest in June, the last time law enforcement saw ROBINETT was in November of 2009, when Washington State Patrol detectives encountered ROBINETT at a Park & Ride facility in Bellevue. At the time, ROBINETT was operating a stolen vehicle. ROBINETT attempted to ram a WSP vehicle before fleeing the area. The WSP trooper driving the vehicle managed to avoid the collision, but ROBINETT was able to escape.

In addition to his bank robbery conviction, ROBINETT has prior felony convictions for possession of stolen property (King County and Clallam County), unlawful possession of a machine gun, car theft and burglary (King County).

In 2011, ROBINETT was featured on the programs Washington’s Most Wanted and America’s Most Wanted.

The investigation was a joint effort between the Bureau of Alcohol, Tobacco, Firearms & Explosives (ATF), the FBI, the U.S. Marshals Service, the Washington State Patrol (WSP), the Bainbridge Island Police Department, and the Hillsboro, Oregon Police Department.

The case is being prosecuted by Assistant United States Attorney Mike Dion.

A South King County man who preyed on people across the country with a phony sweepstakes scam, was sentenced today in U.S. District Court in Seattle to two years in prison, three years of supervised release and $238,346 in restitution announced Acting United States Attorney Annette L. Hayes. EUGENE MAGANYA, 30, of Des Moines, Washington was indicted and arrested in February 2014, after a victim alerted law enforcement that he had sent a money order to a commercial post office business in Covington, Washington. The investigation revealed that more than 120 people had sent money orders or wired funds to various false identities used by MAGANYA. The victims sent the money thinking it was a fee for processing sweepstakes winnings. At sentencing U.S. District Judge Thomas S. Zilly noted the scam specifically targeted those who are “older and more vulnerable.”

According to records filed in the case, MAGANYA and co-conspirators in California sent out letters indicating the recipients had won a substantial sweepstake prize. The letters contained a check, and the recipients were told to deposit the check and send a portion of the money back as a fee to process the sweepstakes winnings. The checks were bogus, but before the recipient knew the check would not clear, the victim had withdrawn funds for the “fee” and sent it back to the scammers. The man who originally tipped off police had sent a money order for $2600 to one of MAGANYA’s false identities at the commercial mail box location. The day after MAGANYA’s arrest, the operators of the mail box store alerted police when another letter arrived for that same false identity – inside was $1000 cash from a 77-year-old woman who thought she too had won a sweepstakes.

At the time of his arrest, law enforcement discovered false drivers’ licenses in seven different names, all with MAGANYA’s picture. Agents contacted MoneyGram and Western Union and requested a list of all payments that had been sent to one of the fake identities that MAGANYA had in his possession at the time of his arrest. According to MoneyGram and Western Union, their records showed that over 120 victims had sent $346,760 in funds to the fake identities that MAGANYA possessed. Three co-conspirators were arrested in California and are being prosecuted there as well.

Writing to the court, Assistant United States Attorney Thomas Woods described the impact on the victims. “This was a cruel scheme. It preyed upon people’s hopes and wishes, leading them to believe that they had won a substantial amount of money. Many of the victims undoubtedly were down on their luck, and the letter must have appeared as a godsend. Very few of the victims likely could afford to lose the money that they did. Many of them lost thousands of dollars. Just as important, many of the victims emerged from the case scarred, less likely to trust others….”

Investigators were able to trace $238,346 of the wired funds to specific victims, but were unable to identify the victims associated with about $100,000 of wired funds.

The Federal Trade Commission has information on the sweepstakes scam here. As the FTC notes on the webpage, “Throw away any offer that asks you to pay for a prize or a gift. If it’s free or a gift, you shouldn’t have to pay for it. Free is free.”

The case was investigated by the U.S. Postal Inspection Service, the Covington Police Department and the FBI. The case was prosecuted by Assistant United States Attorney Thomas Woods.

A serial bank robber dubbed the “Alabama Band Robber” because of a hat he wore, pleaded guilty today in U.S. District Court in Seattle to five counts of bank robbery and one count of possession of a stolen firearm, announced Acting United States Attorney Annette L. Hayes. MICHAEL RYAN HARDESTY, 40, of Woodinville, Washington was arrested August 19, 2014, after law enforcement linked him to five bank robberies in King, Snohomish and Whatcom Counties. When HARDESTY is sentenced on April 23, 2015, both sides agree to recommend a sentenced between nine and 13 years in prison. However, U.S. District Judge Ricardo S. Martinez is not bound by the recommendation and can impose any sentence allowed by law.

According to records filed in the case, HARDESTY was identified as a suspect in multiple bank robberies after the FBI released surveillance photos from the banks and dubbed him the “Alabama Band Robber” because of a hat that had the band’s distinctive name above the brim. He wore the hat in the July 11, 2014 robbery. A tipster identified the robber from the photos. HARDESTY pleaded guilty to the following robberies:

Bank of America, Martha Lake Branch, Lynnwood, July 7, 2014

Whidbey Island Bank, North Seattle Branch, July 11, 2014

Washington Federal, Bakerview Branch, Bellingham, July 18, 2014

Washington Federal, Lakeview Branch, Bellingham, July 25, 2014

Wells Fargo, Martha Lake Branch, Lynnwood, July 30, 2014

 

 

Law enforcement identified two cars associated with HARDESTY. One car was located in Burlington, Washington, but HARDESTY was able to evade police. Later, the Snohomish County Violent Offender Task Force (SCVOTF) located HARDESTY on I-5 in Snohomish County. He fled on foot and was ultimately apprehended by a K-9 who tracked him to the 12700 block of 3rd Avenue West. Law enforcement discovered a stolen firearm in HARDESTY’s belongings. A total of nearly $35,000 was stolen in the five robberies.

The case is being prosecuted by Assistant United States Attorney J. Tate London.
Several agencies were involved in the bank robbery investigation, as well as searching for the suspect, including the FBI’s Seattle Safe Streets Task Force, King County Sheriff’s Office, Whatcom County Sheriff’s Office, Bellingham Police, Mt. Vernon Police, Burlington Police and Child Protective Services. The Snohomish County Violent Offender Task Force is a multi-agency unit partnership with the Snohomish County Sheriff’s Office, U.S. Marshals Service and Department of Corrections.

A Bellevue, Washington resident who assisted in the management of the Silk Road 2.0 website was arrested late last week on a complaint charging him with conspiracy to distribute heroin, methamphetamine, and cocaine, announced Acting United States Attorney Annette L. Hayes. BRIAN RICHARD FARRELL, 26, who used the moniker “DoctorClu” on the Silk Road site came to the attention of Homeland Security Investigations agents last July. Silk Road 2.0 was a hidden website designed to enable its users to buy and sell illegal drugs and other unlawful goods and services anonymously and beyond the reach of law enforcement. The investigation of FARRELL resulted in a search warrant that was served earlier this month, and the arrest of FARRELL. He will appear in U.S. District Court in Seattle at 2:00 PM today.

“The arrest of Mr. Farrell is proof that federal law enforcement continues its efforts to root out those who subvert the Internet to set up black markets for illegal goods,” said Acting U.S. Attorney Annette L. Hayes. “Those who attempt to hide their tracks using sophisticated computer networks will be found because of the determined work of law enforcement agencies such as Homeland Security Investigations, the U.S. Postal Inspection Service and the FBI.”

“The coordinated efforts of U.S. and international law enforcement agencies to disrupt anonymous black market websites continues to pay off with this arrest,” said Brad Bench, special agent in charge of Homeland Security Investigations in Seattle. “It is one of HSI’s top priorities to shutdown these hidden websites and bring their criminal operators and customers to justice."

According to the criminal complaint, Silk Road 2.0 went online in November 2013 following the government’s seizure of the first Silk Road website and the arrest of its alleged owner and operator, Ross William Ulbricht, a/k/a “Dread Pirate Roberts.” In November 2014, Blake Benthall, a/k/a “Defcon,” the operator of the Silk Road 2.0 site, was arrested in San Francisco. The complaint filed today charges that FARRELL was a key assistant to Benthall in running the site.

“Silk Road 2.0” was one of the most extensive, sophisticated, and widely used criminal marketplaces on the Internet. The website operated on the “Tor” network, a network of computers on the Internet, located around the world, designed to ‘anonymize’ or conceal the true IP addresses of computers that used the network and thereby the identities of the network’s users. Since its launch in November 2013, Silk Road 2.0 was used by thousands of drug dealers and other vendors to distribute hundreds of kilograms of illegal drugs and other illicit goods and services to buyers throughout the world, as well as to launder millions of dollars generated by these unlawful transactions. As of September 2014, Silk Road 2.0 was generating sales of at least approximately $8 million per month and had approximately 150,000 active users.

FARRELL was one of the small staff of online administrators and forum moderators who assisted Blake Benthall with the day-to-day operation of the website. Benthall and this small staff controlled and oversaw all aspects of Silk Road 2.0, including, among other things: the computer infrastructure and programming code underlying the website; the terms of service and commission rates imposed on vendors and customers of the website; and the massive profits generated from the operation of the illegal business. The complaint alleges that FARRELL, operating under the moniker “DoctorClu,” was involved in activities such as approving new staff and vendors for the website, and organizing a denial of service attack on a competitor. When the search warrant was served at FARRELL’s Bellevue home, agents seized $35,000 in cash as well as silver bullion and various types of drug paraphernalia.

The charges contained in the complaint are only allegations. A person is presumed innocent unless and until he or she is proven guilty beyond a reasonable doubt in a court of law.

The case is being investigated by Seattle-Tacoma Border Enforcement Security Task Force (BEST Seattle), U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), the United States Postal Inspection Service (USPIS), and the FBI. The case is being prosecuted by Assistant United States Attorney Thomas Woods.

BEST Seattle is comprised of members from HSI; U.S. Customs and Border Protection's Office of Field Operations; the U.S. Secret Service; the U.S. Coast Guard Investigative Service; the USPIS; and the Seattle and Port of Seattle police department. BEST Seattle investigates smuggling and related crimes and combats criminal organizations seeking to exploit vulnerabilities at the Seattle and Tacoma seaports and adjacent waterways.

The former Vice President of Finance for the NW Division of US Foodservice was sentenced today in U.S. District Court in Tacoma to 30 months in prison, three years of supervised release and $496,845 in restitution, announced Acting United States Attorney Annette L. Hayes. JASON A. GREEN, 37, of Puyallup, Washington, conspired with his friend, Jimmie Dillingham, to steal from GREEN’s employer, US Foodservice. GREEN pleaded guilty to mail fraud, resulting in a loss of nearly half a million dollars to US Foodservice, in November 2013. In November 2014 Dillingham pleaded guilty to mail fraud and will be sentenced later this year. At the sentencing hearing U.S. District Judge Ronald B. Leighton told GREEN, “This offense is serious, it tears at the fabric of society . . . [it is the type of offense that] has a corrosive effect on people who didn’t have your opportunity. You were blessed. I can’t see the motivation.”

According to records in the case, beginning in July 2009 and continuing until late 2010, GREEN and Dillingham made up phony invoices indicating that Dillingham’s company had done work for US Foodservice. GREEN abused his access to payment systems at the company to approve expenditures for work that was never done. GREEN changed computer codes in the accounting records to conceal the fraud. In one part of the scheme, the men invented a security company and submitted phony bills for work it allegedly did at a Clark County warehouse. GREEN used his access to US Foodservice accounts to cancel the contract with a legitimate company and instead steered the business to Dillingham’s company. The warehouse property was later sold. After the men submitted the invoices for payment, Dillingham would deposit the checks and share the funds with GREEN. Both men gambled significant amounts of the embezzled money at area casinos.

In December 2010, the company tried to untangle shortfalls in various accounts and GREEN quit his job when confronted about fraudulent entries in the books. The company notified law enforcement which began the financial investigation.

The case was investigated by the FBI and the U.S. Postal Inspection Service. The case was prosecuted by Assistant United States Attorney Arlen Storm.

A repeat offender with prior convictions for forgery and identity theft pleaded guilty today in U.S. District Court in Seattle, announced Acting U.S. Attorney Annette L. Hayes. BOBBIE DENISE CATTON, 50, pleaded guilty to two counts of possession of stolen mail, one count of access device fraud and one count of aggravated identity theft. When sentenced by U.S. District Judge James L. Robart, CATTON faces a mandatory minimum two years in prison for the aggravated identity theft that will run consecutive to any other prison time imposed on the other charges.

According to records filed in the case, between March of 2013 and January of 2014 CATTON and her cohorts stole large volumes of mail throughout King County from homes and apartment complexes. They used stolen checks, credit and debit card information and identifying documents to commit various types of fraud. When arrested by a King County Sheriff’s Deputy following a traffic stop, CATTON had dozens of credit/debit cards and bank statements in others’ names in her possession, along with financial and identifying information for hundreds of others.

CATTON was previously prosecuted federally in 2002 for identity fraud and was sentenced to 33 months in prison. She has multiple state convictions for, among other things, forgery and possession of stolen property.

The case was investigated by the King County Sheriff’s Office and the U.S. Postal Inspection Service (USPIS). The case is being prosecuted by Assistant United States Attorney Matthew Hampton.

The former owner of ‘Sellin Style’ car dealership in Sequim, Washington pleaded guilty last week to conspiracy to distribute methamphetamine and possession of methamphetamine with intent to distribute, announced Acting U.S. Attorney Annette L. Hayes. TIMOTHY P. SMITH, 30, was arrested in February 2014, following a high speed chase that ended after two sets of spike strips were placed on the highway. All of SMITH’s charged co-conspirators, Kelsey J. Davis, Tammy R. Coburn, Holli A. Bell, Jacob E. Davis, and Charles D. Aslin, have also pleaded guilty in the case. SMITH faces a mandatory minimum ten years in prison, and up to life imprisonment, when sentenced by U.S. District Judge Robert J. Bryan on March 27, 2015.

According to records in the case, SMITH and his cohorts were under investigation by federal law enforcement since 2011. Some of the federally indicted offenses, investigated by local law enforcement, went back even further. In particular, SMITH sold methamphetamine to a person working with law enforcement on multiple occasions in June, July and August 2013 at his ‘Sellin Style’ car dealership on Old Blyn Highway near Sequim.

In conjunction with a separate investigation and take-down of a larger drug ring, which was supplying methamphetamine to SMITH and others, law enforcement arrested SMITH as he traveled back to Sequim from Kitsap County on Sunday evening, February 23, 2014. Shortly after SMITH’s vehicle crossed the Hood Canal Bridge, the Washington State Patrol pulled the car over. After initially stopping, SMITH sped away, traveling at speeds nearing 100 mph and weaving into the lane for oncoming traffic. Troopers noticed white bags tossed from the car; inside was 1.6 pounds of methamphetamine. The car hit one set of spike strips and continued on. After hitting a second set of spike strips the car came to a halt and SMITH and his girlfriend, Kelsey Davis, were taken into custody. Davis also had $4,000 in cash on her person, which she revealed in a monitored jail call to have been given to her by SMITH during the police chase.

The case was investigated by the FBI, ATF, and Olympic Peninsula Narcotics Enforcement Team (OPNET), a task force containing officers from Clallam County Sheriff’s Office, Jefferson County Sheriff’s Office, Port Angeles Police Department, Sequim Police Department, Neah Bay Department of Public Safety, Elwha Klallam Police, LaPush Police, the U.S. Coast Guard, U.S. Border Patrol, the Washington Department of Corrections, Washington State Patrol and the West Sound Narcotics Enforcement Team (WestNet).

The case is being prosecuted by Assistant United States Attorney Gregory A. Gruber.

A long-time tax and financial adviser in Bellingham, Washington was sentenced today to 51 months in prison, three years of supervised release and $251,892 in restitution for wire fraud, announced Acting U.S. Attorney Annette L. Hayes. JEFFREY M. KNUTSEN, 43, owned and operated Bellwether Financial Services dba Bellwether Wealth Management. In July 2005, KNUTSEN was barred by the Financial Industry Regulatory Authority (“FINRA”) from associating with any broker-dealer as a stock broker because of a customer complaint that KNUTSEN had embezzled from the client’s account. FINRA is an industry organization which regulates financial brokers and brokerage firms. Despite being barred, KNUTSEN continued to work with clients – many of them elderly – and now has been convicted of stealing more than $255,000 from 26 client accounts. At sentencing U.S. District Judge James L. Robart noted that KNUTSEN had continued a career of misappropriating money saying, “This is a crime of greed -- pure unadulterated greed – plain and simple.”

“This fraud damaged the elderly victims emotionally as well as financially,” said Acting U.S. Attorney Annette L. Hayes. “They trusted Jeffrey Knutsen to honestly invest their savings so they could enjoy a secure retirement. Now they are betrayed and wary as they try to safeguard any savings they have left.”

According to records filed in the case, after being barred by FINRA, KNUTSEN did not tell his clients that he had been barred, but instead told them he was moving to a different online brokerage to reduce the fees they would have to pay. He set up online accounts with TD Ameritrade and later E*Trade in his clients’ names and retained full access and control over the accounts, including check-writing privileges. He told the clients he would charge them a management fee of one percent or less per year to manage their accounts. However over seven and a half years he caused the online broker/dealers to issue more than 200 checks for more than $250,000 without the authorization or knowledge of his clients. KNUTSEN then deposited the checks in his account and used the money for his personal gain. Many of the victims were elderly and had little understanding of online brokerage accounts.

The Financial Industry Regulatory Authority (“FINRA”) has online resources to allow clients to check on their financial advisor’s disciplinary history here. The BrokerCheck website is a free tool that FINRA has set up to help investors research the professional backgrounds of current and former FINRA-registered brokerage firms and brokers, as well as investment adviser firms and representatives.

The case was investigated by the FBI and Bellingham Police Department. The case was prosecuted by Assistant United States Attorneys Steven Masada and Justin Arnold.

                        In honor of Native American/Alaska Native Heritage Month, Tulalip Tribal Chief Judge Theresa Pouley spoke to the U.S. Attorney’s Office about justice in Indian Country.  The Tulalip Tribes are one of three tribal entities in the country that were authorized by Attorney General Holder to set up a pilot program to prosecute domestic violence cases involving non-native defendants in tribal court under the Violence Against Women Act (VAWA) of 2013.    Judge Pouley noted that over the last nine months five cases have been brought as part of the pilot project with three convictions, one dismissal and one case scheduled for trial in January 2015.  More on VAWA is available here.

            Judge Pouley is also the Associate Justice of the Colville Court of Appeals, and is the former Chief Judge of the Lummi Tribal Court.  Judge Pouley was appointed to the Indian Law & Order Commission by President Obama in 2011.  Judge Pouley graduated from Wayne State University Law School in 1987 and is admitted to the Michigan and Washington Bars.  She is a member of the Colville Confederated Tribes in eastern Washington.  More on Judge Pouley is available here.

          A Tacoma man who was arrested in a hotel room with as much as $200,000 worth of methamphetamine pills, was sentenced today in U.S. District Court in Tacoma to ten years in prison, announced Acting United States Attorney Annette L. Hayes.  KYLE ANDREW EVERHART, 28, was convicted at trial of possession of methamphetamine with intent to distribute in September 2014.  The jury determined the quantity of the drug as part of its verdict, which by law triggered a ten year mandatory minimum sentence.  At sentencing U.S. District Judge Benjamin H. Settle noted that methamphetamine is “highly addictive” and a “poison.”

           According to records filed in the case, EVERHART came to the attention of law enforcement in 2013, in connection with a drug distribution ring that moved as much as $1.2 million in drug proceeds through bank accounts since 2010.  A search warrant executed in June 2013, resulted in the seizure of 4,700 MDMA pills, nearly a half a pound of cocaine, approximately 1,270 pills of oxycodone, and about 3 pounds of marijuana.  Law enforcement officers also found a loaded Ruger semi-automatic handgun in the glove box of EVERHART ’s car.  EVERHART was prosecuted in Pierce County Superior Court in connection with that conduct he was sentenced to a deferred jail term.  In April 2014, he was arrested in a Tacoma hotel with two large bags of methamphetamine worth an estimated $100,000 to $200,000.  Possession of those drugs was the subject of the federal prosecution.

          The case was investigated by the South Sound Gang Task Force (SSGTF).  The SSGTF is composed of members of the FBI Seattle Division, Lakewood and Tacoma police departments, the Washington State Patrol, the Washington State Department of Corrections, the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF), and the Drug Enforcement Administration (DEA).

            The case was prosecuted by Assistant United States Attorneys Jerrod Patterson and Rebecca Cohen.

A former Bellevue based developer and lender who spent millions on gambling, thoroughbred horse racing, private aircraft, country club fees, a Bellevue penthouse, and two Palm Springs, California, homes was convicted late yesterday of two counts of tax evasion following a nine day jury trial, announced Acting United States Attorney Annette L. Hayes.   THOMAS R. HAZELRIGG, III, 68, of Redmond, Washington, was indicted in July 2013.  The jury deliberated three and a half hours before finding HAZELRIGG guilty.  He faces up to five years in prison on each count when sentenced by U.S. District Judge Thomas S. Zilly on March 12, 2015.

“This trial laid bare Mr. Hazelrigg's wide ranging deceit and manipulation -- all in the service of greed,” said Acting United States Attorney Annette L. Hayes.  “The failure to pay taxes -- especially by someone with this defendant's financial means -- tears at the fabric of our public trust.  When Mr. Hazelrigg chose not to pay his fair share, he effectively cheated everyone.”

Evidence presented at trial described how HAZELRIGG first agreed to pay $533,454 in taxes owed for tax years 1989, 1990 and 1991 and then failed to pay the tax debt while living a lavish lifestyle that included multi-million dollar property purchases and remodels and expensive artwork. HAZELRIGG also evaded payment of his taxes owed for 1994, for which he had filed a return showing tax owed, but for which he made no payments.  According to testimony at trial, between 1997 and 2007, HAZELRIGG illegally funneled income from his businesses into accounts that he controlled but that he kept secret from the IRS. HAZELRIGG used these accounts to pay for the multimillion dollar purchase and remodel of a Bellevue penthouse, two Chihuly glass chandeliers worth more than $460,000, and two luxury homes in Palm Springs, California.  HAZELRIGG used these secret accounts to pay various household expenses including the use of a butler.

“Thomas Hazelrigg III, wrongly thought he could hide from his tax liability,” stated Special Agent in Charge Teri Alexander of IRS Criminal Investigation.  “What makes this case so egregious is that he consented that he owed the tax and then immediately took exceptional actions to avoid his obligation to pay, all while living a lavish lifestyle. This verdict today sends a strong message that tax evasion will not and cannot be tolerated.  Americans who pay their fair share can be confident that IRS Criminal Investigation will pursue those who do not.”  

HAZELRIGG hid his assets for ten years, until the IRS liens expired.  After the liens were removed, HAZELRIGG sent an email saying he was "legit again."  Following that email, HAZELRIGG took out loans in his own name, and purchased a condo in his own name.

The case was investigated by the Internal Revenue Service Criminal Investigation (IRS-CI).  The case was prosecuted by Assistant United States Attorneys Matthew Diggs and Brian Werner.

            Two men have been indicted for being felons in possession of firearms in two separate incidents in Seattle’s Capitol Hill neighborhood, announced Acting United States Attorney Annette L. Hayes.  ROBEL SISAY GEBREMEDHIU, 31, and AWAD Y. AYNISHER, 30, both of Seattle were arrested in September and October 2014, as part of the Seattle Police Department’s emphasis patrols in response to community concerns about crime and safety.  GEBREMEDHIU was arrested on September 27, 2014, after witnesses called 9-1-1 reporting a man running down Broadway with a gun. AYNISHER was arrested October 5, 2014, after a security guard alerted police to an impaired driver at a gas station on Broadway.  AYNISHER had a loaded gun in his front seat and an Uzi type weapon in the trunk of his car.  Both men are prohibited from possessing firearms because they each have prior federal felony convictions.

            “Convicted felons armed with high powered firearms in busy city neighborhoods are a recipe for disaster,” said Acting U.S. Attorney Hayes.  “I commend the Seattle Police Officers who worked quickly to protect the public and get these individuals off the streets safely.”

            “I meet regularly with Capitol Hill residents and business owners and we’ve talked at length about their crime and quality of life issues,” said Seattle Police Chief Kathleen O’Toole.  “These cases demonstrate that we’re listening carefully and working with our Federal partners to address their concerns.”

            Both defendants recently served lengthy federal prison sentences and were on federal supervision at the time of their arrests.  In the prior criminal cases, both defendants admitted distributing drugs as part of a gang known as the East African Posse (EAP).  Both have been in federal custody for violating the terms of their court-ordered supervision  and will be arraigned on these new indictments next week.

            According to records filed in King County Superior Court, on September 27, 2014, two Seattle Police bike officers received a report of a man with a gun running south on Broadway just as various clubs and bars were emptying out for the night.  The officers saw a man in clothes matching the suspect’s description in a parking lot, standing behind a truck.  As the officers approached, GEBREMEDHIU dropped what was later identified as a loaded .40 caliber Glock firearm.  GEBREMEDHIU was taken into custody for being a felon in possession of a firearm.

            One week later, on October 5, 2014, police officers were monitoring the late night crowd at a gas station on Broadway when a security guard alerted them to a driver who had pulled into the parking lot in a reckless manner.  The officers observed that the driver appeared to have difficulty standing.  When the driver, AYNISHER, returned to his car, he backed up, hitting another car in the lot.  Officers asked AYNISHER to get out of the car, screened him, and arrested him for driving under the influence.  The car was impounded and officers saw in plain view a loaded semi-automatic 9mm handgun on the floor of the driver’s seat.  The officers obtained a warrant, searched the car and found a second firearm – a Cobray M-11 9mm semi-automatic (Uzi type) pistol -- in the trunk.

            The statutory penalty for being a felon in possession of a firearm is ten years in prison.  Additional penalties are available to the court for those on supervised release at the time of the new charge.

            The charges contained in the indictment are only allegations.  A person is presumed innocent unless and until he or she is proven guilty beyond a reasonable doubt in a court of law.

            The case is being investigated by the Seattle Police Department and the Bureau of Alcohol, Tobacco, Firearms & Explosives (ATF).  The case is being prosecuted by Assistant United States Attorneys Todd Greenberg and Andrew Friedman.

A Kirkland, Washington resident was arrested on a criminal complaint charging three counts of making interstate threats, announced Acting U.S. Attorney Annette L. Hayes.  JALEEL TARIQ ABDUL-JABBAAR, 46, was arrested this morning at his home without incident, and will make his initial appearance in U.S. District Court in Seattle at 2:00 p.m. today.  According to the complaint, ABDUL-JABBAAR made repeated threats to kill an officer formerly with the Ferguson, Missouri Police Department, members of the officer’s family and other law enforcement officers.

            “We are fortunate to live in a country where the right to speak out about current events and disagree with our government is protected by the highest law of the land.  Our freedom of speech does not, however, extend to making threats to kill or injure law enforcement officers,” said Acting United States Attorney Annette L. Hayes.  “Although we each have the right to express our views about the decision reached by the state grand jury in Ferguson, Missouri, we cannot tolerate violence or threats of violence that are intended to intimidate, and ultimately silence debate.  Such threats are crimes, and the individuals who make them must be held to account.”

            According to the criminal complaint, ABDUL-JABBAAR started posting threats on his Facebook page shortly after the August 9, 2014 shooting of Michael Brown, through late November.  ABDUL-JABBAAR posted various statements about killing police officers and traveling to Ferguson, Missouri.  Among others, ABDUL-JABBAAR stated: “We need to kill (the officer) and anything that has a badge on.”  ABDUL-JABBAAR also used Facebook communications to attempt to acquire a firearm.

            Making interstate threats is punishable by up to five years in prison.

            The charges contained in the complaint are only allegations.  A person is presumed innocent unless and until he or she is proven guilty beyond a reasonable doubt in a court of law.

The case is being investigated by the FBI and is being prosecuted by Assistant United States Attorney Todd Greenberg.

            Four men charged in July 2014 with two separate hash oil explosions pleaded guilty this week in U.S. District Court in Seattle, announced Acting U.S. Attorney Annette L. Hayes.  The charges relate to explosions in Kirkland on January 1, 2014 and in Bellevue on November 5, 2013.  Sentencing hearings for the defendants are scheduled for March 2015.

            DANIEL JAMES STRYCHARSKE, 28, and JESSE D. KAPLAN, 31, pleaded guilty today to Endangering Human Life While Manufacturing Controlled Substances, Maintaining a Drug Involved Premises and Manufacturing Hash Oil and Marijuana in connection with the Bellevue explosion and fire on November 5, 2013 at the Hampton Greens apartment complex. Former Bellevue Mayor Nan Campbell was hospitalized for a broken pelvis she suffered trying to escape the flames. She later died following complications after her hospitalization. Two other apartment residents suffered shattered bones as they had to jump from their upper level apartments.

Yesterday, ROBBY WAYNE MEISER, 46, and BRUCE W. MARK, 62, pleaded guilty to Endangering Human Life While Manufacturing Controlled Substances in connection with the January 1, 2014 explosion and fire at the Inglenook Apartments in Kirkland.  The explosion and fire threw debris some 25 feet, moved the north wall of the building 6-8 inches, and disconnected the roof from the building walls.

Endangering Human Life While Manufacturing Controlled Substances is punishable by up to ten years in prison. Maintaining a Drug Involved Premises is punishable by up to 20 years in prison and Manufacturing Hash Oil and Marijuana is punishable by up to five years in prison.

The cases were investigated by multiple local and federal agencies including: the Drug Enforcement Administration (DEA), Bureau of Alcohol, Tobacco, Firearms & Explosives (ATF), the U.S. Marshals Service, the Bellevue Police Department, the Seattle Police Department, and the Kirkland Police Department.

The cases are being prosecuted by Assistant United States Attorneys Todd Greenberg and Vince Lombardi.

Acting U.S. Attorney Annette L. Hayes announced today that the U.S. Attorney’s Office for the Western District of Washington collected $6.9 million in criminal and civil actions in Fiscal Year 2014.  Of this amount, $4.7 million was collected in criminal actions and $2.2 million was collected in civil actionsThe Western District of Washington also collected an additional $12.2 million in forfeited assets related to criminal activity.

Additionally, the Western District of Washington worked with other U.S. Attorneys’ offices and components of the Department of Justice to collect an additional $5.2 million in cases pursued jointly with these offices.  The vast majority of the collections in shared cases were collected in civil actions.

Attorney General Eric Holder announced that the Justice Department collected $24.7 billionin civil and criminal actions in the fiscal year ending September 30, 2014.  The more than $24 billion in collections in FY 2014 represents nearly eight and a half times the appropriated $2.91 billion budget for the 94 U.S. Attorney’s offices and the main litigating divisions in that same period.

“Every day, the Justice Department’s federal prosecutors and trial attorneys work hard to protect our citizens, to safeguard precious taxpayer resources, and to provide a valuable return on investment to the American people,” said Attorney General Holder.  “Their diligent efforts are enabling us to achieve justice and recoup losses in virtually every sector of the U.S. economy.  And this result shows the fruits of the Justice Department’s tireless work in enforcing federal laws; in protecting the American people from violent crime, national security threats, discrimination, exploitation, and abuse; and in holding financial institutions accountable for their roles in causing the 2008 financial crisis.”

“These financial recoveries on behalf of the taxpayers demonstrate that this office will use all the tools at its disposal to protect public safety and our tax dollars,” said Acting U.S. Attorney Annette L. Hayes.  “Among many other key recoveries, the amounts collected from those who have committed environmental crimes are particularly important.  They send a clear message that those who damage our natural heritage will be held to account.”

In March and April 2014, Stowe Construction Inc. paid more than $334,000 related to their conviction for violation of the Clean Water Act.  Stowe Construction, and its President Bryan Stowe, admitted knowingly violating the Construction General Storm Water Permit for the Rainier Park of Industry project, located on West Valley Highway in Sumner.  Permit violations contributed to two major landslides at the site in 2010 and 2011.  Both slides forced closure of the West Valley Highway.  The case is one of the first storm water pollution criminal cases brought in the United States.  More on the case is available here.

In a second environmental case, Ray Caldwell, owner of All-Out Sewer And Drain Service, Inc., a Longview, Washington, septic tank pumping business paid a $250,000 fine in April 2014 for violations of the Clean Water Act.  Caldwell illegally dumped more than two million gallons of waste and pollutants into the Longview sewer system.  More on the case is here.

In civil litigation, the largest collection was $500,000 from Alaska Airlines in September 2014 to settle an FAA civil penalty claims regarding a maintenance issue.  More on that case here.

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

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

           Additionally, the U.S. Attorney’s office in the Western District of Washington working with partner agencies and divisions, collectednearly $12.2 million in asset forfeiture actions in FY 2014. Forfeited assets deposited into the Department of Justice Assets Forfeiture Fund are used to restore funds to crime victims and for a variety of law enforcement purposes.

            One of the most significant forfeiture actions concerned three former motels in Tukwila, Washington, which were seized by the government as chronic drug involved residences.  To date the value of properties forfeited in that case exceeds $3 million.  Additional forfeiture proceeds in that case will be recorded in fiscal year 2015.  The motel properties are now being redeveloped by the City of Tukwila. More on this innovative case is available here.

A former executive recruiter for Amazon.com was sentenced today in U.S. District Court in Tacoma to one month in prison and three years of supervised release for Social Security fraud, announced Acting United States Attorney Annette L. Hayes.  Between 2009 and 2012, MARLENE SCOTT, 42, concealed the fact that her mother and sister, who were welfare recipients, had moved from the United States to Lebanon and therefore were no longer entitled to collect welfare benefits in this country.  SCOTT falsely told caseworkers that her mother and sister lived with her in the Magnolia neighborhood of Seattle.  By hiding her mother and sister’s departure, defendant caused the Social Security Administration to pay out more than $50,000 in benefits, which Scott then withdrew.  U.S. District Judge Ronald B. Leighton noted that SCOTT took the witness stand and lied when the case went to trial in June 2014.  The judge declared a mistrial after the jury was unable to reach a unanimous verdict.  Judge Leighton said the story SCOTT told on the witness stand was “preposterous.”  Judge Leighton said Scott’s lies on the witness stand “were a profound offense to the legal system,” and, but for the false testimony, he might have given her a probationary sentence.

            According to records filed in the case, SCOTT’s mother and sister moved to Lebanon in June 2009.  The following year the women visited Scott in Seattle.  They opened bank accounts in Magnolia and had their welfare payments deposited into those accounts.  SCOTT repeatedly accessed the benefits by using her mother’s debit card or by forging her mother’s signature.  During the 2010 visit, SCOTT called Social Security and claimed her mother was living in her home and SCOTT was charging her mother fair market rent.  SCOTT forged her mother’s signature on forms and lied to Social Security personal when they called asking to speak to SCOTT’s mother.  When investigators visited her home, SCOTT claimed her mother was visiting her sister and brother in North Carolina and provided a non-working phone number. SCOTT knew at the time that no one in her family remained in North Carolina since her brother had moved from there to Lebanon in 2003.

            After the jury failed to return a verdict, SCOTT pleaded guilty on July 25, 2014.  In accordance with the plea she repaid $50,973 to the government.

            As prosecutors pointed out in their sentencing memorandum, those who defraud Social Security are stealing from the very poorest and most vulnerable Americans.  Worse, fraud on the welfare system corrodes the trust required to maintain programs that provide a lifeline of last resort for the poor.  Taxpayers contribute to SSI based on trust that the funds will be used to support others in real need.  When someone like SCOTT, an Amazon professional, intentionally exploits that trust through fraud, the result is public cynicism, which further undermines these programs.  The true victims of this offense are those genuinely in need.

            In choosing to impose a prison term instead of home confinement, Judge Leighton said the prison time is “important as a message.  This institution, the judiciary, cannot and will not knowingly tolerate perjury.”

            The case was investigated by the Social Security Administration Office of Inspector General (SSA-OIG).  The case was prosecuted by Assistant United States Attorneys Seth Wilkinson and Kate Crisham.

A citizen of China was sentenced today in U.S. District Court in Seattle to two years in prison for violating the Arms Control Export Act, announced Acting U.S. Attorney Annette L. Hayes.  SEE KEE CHIN, a/k/a, Alfred Chin, 56, of Hong Kong was arrested in Seattle on February 10, 2014, after he entered the United States as part of a scheme to obtain restricted parts and illegally smuggle them to China.  CHIN attempted to obtain and export accelerometers that are designated on the United States Munitions List, International Traffic in Arms Regulations.  The accelerometers are designed for low and zero gravity inertial navigation systems that can be used in satellites and launch vehicle applications.  At the sentencing hearing, U.S. District Judge John C. Coughenour noted that it is important to send a message to others overseas that violations of the Arms Control Act will be punished.

“We will hold to account those who circumvent requirements designed to protect our national security,” said Acting U.S. Attorney Annette L. Hayes.  “This defendant attempted to smuggle restricted equipment out of the United States knowing it was illegal to do so, and he admits he was working for others in China.  Ensuring our technology does not fall into the wrong hands remains a top priority.”

According to the criminal complaint, a U.S. company that sells accelerometers reported suspicious contact with a Canadian who wanted to purchase restricted equipment.  Between September 2013 and February 2014, the investigation revealed that the Canadian was inquiring on behalf of CHIN, who indicated he would personally pick up the order.  CHIN was arrested in Seattle after he made payment of over $85,000, and attempted to pick up the items.  CHIN had indicated he planned to smuggle the parts out of the country in his suitcase.  He previously discussed hiding the items in children’s toys.

“Accelerometers are fairly common, in fact most people have one in their pocket installed in their cellphone,” said Brad Bench, special agent in charge of HSI Seattle.  “What Chin was after wasn’t one of those.  The accelerometers he attempted to purchase are specialized pieces of equipment designed to be used in satellites.  This caught the attention of HSI special agents, whose job it is to keep restricted arms parts out of the hands of our nation’s enemies.  HSI is committed to thwarting clandestine attempts by foreign nationals to illegally export sensitive technology from the U.S.”

The Department of State promulgates the United States Munitions List, which consists of categories of defense articles and services that cannot be exported without a license issued by the Department of State.  The U.S. Munitions List includes the accelerometers ordered in this case. As a result, the export required an export license.

The case was investigated by U.S. Immigration and Customs Enforcement Homeland Security Investigation (HSI).  The case was prosecuted by Assistant United States Attorney Thomas Woods.

A 47-year old Olympia, Washington man who was convicted in May 2014, was sentenced today in U.S. District Court in Tacoma to 15 years in prison for production and possession of child pornography, announced Acting U.S. Attorney Annette L. Hayes.  MICHAEL T. LAURSEN was found guilty by U.S. District Judge Robert J. Bryan following a two day bench trial.  Evidence at trial revealed that LAURSEN supplied a 16-year-old with drugs and photographed her in sexually explicit conduct.  Judge Bryan imposed 10 years of supervised release following prison.

“This defendant betrayed the trust of a vulnerable young woman, claiming he would help and protect her when it really was just a ploy to exploit her,” said Acting U. S Attorney Annette L. Hayes.  “He persisted in blocking the efforts of her family to get her into drug treatment and law enforcement officers investigating the crime.  This 15 year prison sentence with ten years of federal supervision to follow will protect other vulnerable members of the community.”

According to records filed in the case, the victim was known to LAURSEN through her relatives.  She first met LAURSEN when she was 12-years-old.  After she turned 16 years old in 2012, LAURSEN initiated a sexual relationship with her, supplied her with drugs, and encouraged her to miss school.  In June 2012 and October 2012, LAURSEN took photographs of the victim, including photographs of his sexual conduct with her.  LAURSEN encouraged the victim to run away from home, and then had her stay with him in motel rooms, apartments, and other person’s homes.  He directed her to engage in sexually explicit acts while he took photographs.

“This joint federal, state and local agency investigation illustrates the lengths to which law enforcement will go to bring a child predator to justice,” said Brad Bench, special agent in charge of HSI Seattle. “Now, with this federal sentence, the public can rest assured Laursen will spend more than a decade behind bars with close federal monitoring to follow.”

The case was investigated by the Washington State Patrol-Missing and Exploited Children’s Task Force, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI)-South Sound Investigative Task Force, Bureau of Alcohol Tobacco and Firearms, and the Federal Bureau of Investigation.

The case was prosecuted by Assistant United States Attorneys Ye-Ting Woo and Seth Wilkinson.

            A 42-year-old man, who trolled neighborhoods in south King County looking for teen-age girls to recruit into prostitution, was convicted today in U.S. District Court in Seattle of four criminal counts related to sex trafficking, announced Acting U.S. Attorney Annette L. Hayes.  NATHAN BONDS was convicted of two counts of sex trafficking of a juvenile and two counts of transportation of a juvenile to engage in prostitution.  The jury deliberated for five hours following a four day trial.  U.S. District Judge John C. Coughenour scheduled sentencing for February 10, 2015, at 9:00 a.m.

            According to records in the case and testimony at trial, in April 2013, BONDS was parked outside a Kent convenience store when he spotted and befriended a 15-year-old girl who had run away from home.  BONDS let the girl borrow his cell phone, and then let her sit in his car, out of the rain.  BONDS manipulated the girl into accompanying him to a hotel room where he raped her.  Over the next few days, BONDS coerced the girl into working for him as a prostitute, convincing her she had no other options.  BONDS advertised the girl on Backpage.com and made her give him all of the money she earned from prostitution acts.  He also recruited the girl’s 17-year-old friend to work for him as a prostitute.  On April 19, 2013, BONDS transported the 15-year-old girl and her 17-year-old friend, as well as a drug-addicted, homeless adult woman that he had also manipulated into working for him as a prostitute, to Portland to engage in prostitution.  BONDS forced the two teens to take sexually explicit photographs, and then used some of those photographs to advertise them on Backpage.com.    

            Ultimately, both teens returned to their families and law enforcement identified BONDS as a sex trafficker.  He was arrested June 5, 2013, and law enforcement recovered the computer and cell phone he used to conduct the prostitution business, both of which contained evidence establishing BONDS’s longtime involvement in prostitution.

            Sex trafficking of juveniles is punishable by a mandatory minimum sentence of ten years, and up to life imprisonment.

            The case was investigated by the North-Central Sound Child Exploitation Task Force which includes officers and agents from the Kent Police Department and FBI.  The King County Prosecutors Office contributed substantial assistance to the prosecution.  The case was prosecuted federally by Assistant United States Attorneys Kate Crisham and Ye-Ting Woo.

WASHINGTON – The Justice Department today announced that Longview, Washington, landlords Linda and Bert Barber, and their management agent, Lori Thompson, have entered into a consent decree and have agreed pay $25,000 to resolve claims that they discriminated on the basis of disability by refusing to grant a reasonable accommodation to waive a $1,000 pet deposit for a tenant with mental disabilities who needed a dog as an emotional support animal.

The consent decree resolves a lawsuit filed by the department on July 1, 2013, alleging that the defendants refused to grant a waiver of the pet deposit despite numerous attempts by the tenant to provide documentation of her disability and her need for the emotional support animal.  The complaint also alleged that the defendants retaliated against the tenant after she filed a complaint with the U.S. Department of Housing and Urban Development (HUD).  After HUD investigated the complaint, it issued a charge of discrimination and referred the matter to the Justice Department.  The department’s complaint also alleged that defendants’ policies constituted a pattern or practice of discrimination in violation of the Fair Housing Act because they allowed reasonable accommodations for specially-trained service animals but precluded reasonable accommodations for emotional support animals.  Defendants also refused to consider accommodation requests unless tenants had their physician complete forms that threatened penalty of perjury and threatened to require the physician to defend the information provided in court.  Trial was set to begin on Nov. 19.

The settlement, which was approved today by Judge Benjamin H. Settle, requires the defendants to pay $20,000 to the HUD complainant and $5,000 to the United States.  The settlement also requires that the defendants adopt a reasonable accommodation policy that complies with the Fair Housing Act, receive training on the requirements of the Fair Housing Act and report to the department for a period of eighteen months on their compliance with the settlement.

“The Fair Housing Act ensures that persons with disabilities have an equal opportunity to use and enjoy housing,” said Acting Assistant Attorney General Vanita Gupta.  “This includes providing reasonable and necessary accommodations to persons who need assistance animals to help them with their disabilities.  The Justice Department will continue its vigorous enforcement of fair housing laws that protect the rights of persons with disabilities.”

“Landlords may not impose barriers that undermine the housing rights of people with disabilities,” said Acting United States Attorney Annette L. Hayes.  “This settlement requires training for property managers, and clear statements in all advertisements about fair housing/non-discrimination policies to ensure this conduct will not be repeated.”

“Property owners have a legal obligation to permit reasonable accommodations where doing so allows persons with disabilities to fully enjoy their homes,” said HUD Assistant Secretary Gustavo Velasquez for Fair Housing and Equal Opportunity.  “This consent decree reaffirms HUD’s commitment to working with the Department of Justice to take appropriate action anytime the Fair Housing Act is violated.”

Fighting illegal housing discrimination is a top priority of the Department of Justice.  The federal Fair Housing Act prohibits discrimination in housing based on race, color, religion, national origin, sex, disability and familial status.  More information about the Civil Rights Division and the laws it enforces is available at www.justice.gov/crt.  Individuals who believe that they may have been victims of housing discrimination can call the Justice Department at 1-800-896-7743, e-mail the Justice Department at fairhousing@usdoj.gov, or contact HUD at 1-800-669-9777 or through its website at http://portal.hud.gov/hudportal/HUD?src=/program_offices/fair_housing_equal_opp.

            The latest participant in a well-known fraudulent tax refund scheme will spend 18 months in prison for four counts of filing fraudulent tax returns, announced Acting U.S. Attorney Annette L. Hayes.  CHARLES SCOTT BROWN, 54, of Camas, Washington, was sentenced last week and ordered to pay more than $1.2 million in restitution to the Internal Revenue Service.  At the sentencing hearing U.S. District Judge Robert J. Bryan told him, “This is a huge tax theft, not a nickel and dime deal.  This is a serious, serious offense.  I don’t know how someone can do this and not expect to get jail time.”

            “This defendant is the latest in a line of U.S. and Canadian scammers illegally claiming huge tax refunds at the expense of law abiding Americans,” said Acting U.S. Attorney Annette L. Hayes.  “Now he is paying with his freedom, and with a share of his future earnings for the money he stole.”

            Between December 2007, and February 2008, BROWN submitted four fraudulent tax returns, claiming he was owed more than $1.2 million in tax refunds.  When the refund checks came in, BROWN used the money for travel to Mexico and Hawaii, shopping sprees at Nordstrom and Zappos.com, and luxury hotel stays with expensive dinners out.

“At IRS Criminal Investigation, our top priority is protecting the integrity of our nation’s tax system,” said Special Agent in Charge Teri Alexander.  “Together with the Department of Justice, we have a long history of identifying and prosecuting those who promote and use abusive tax schemes.  The 1099 OID scheme that was used by this defendant and others sentenced in this district is particularly troublesome. These individuals not only evaded their legal tax obligation, they took their fraud a step further and attempted to blatantly steal millions from the U.S. Treasury.  Our Special Agents are dedicated to ensuring that our tax laws are administered fairly under the law.  When unscrupulous individuals such as this defendant seek to take advantage of the taxpaying public, we will be there to bring them to justice.”

            Examples of other defendants prosecuted in the Western District of Washington for 1099 OID fraud include:

Franzie F. Colaco,

Nine years in prison

$6 million tax loss

Ronald L. Brekke,

12 years in prison

$6 million tax loss

33 months in prison

$360,000 tax loss

John Chung

One year in prison

$370,000 tax loss

Wonita Chung

18 months in prison

$612,237 tax loss

Raymond Jarlik-Bell

Eight years in prison

$705,276 tax loss

Peter Gibney

One year in prison

$465,136 tax loss

Debra Aaron

Five years in prison

$723,275 tax loss

            The IRS has more information on 1099 OID fraud here: http://www.irs.gov/uac/Newsroom/IRS-Releases-the-“Dirty-Dozen”-Tax-Scams-for-2014;-Identity-Theft,-Phone-Scams-Lead-List.
The case was investigated by the Internal Revenue Service Criminal Investigation (IRS-CI).  BROWN was prosecuted by Assistant United States Attorney Marci Ellsworth.