The following examples of money laundering investigations are written from public record documents on file in the court records in the judicial district in which the cases were prosecuted.
Dallas Lawyer Sentenced for Money Laundering
On September 26, 2013, in Dallas, Texas, Patrick Robert Simon was sentenced to 24 months in prison. Simon pleaded guilty in January 2013 to money laundering charges. According to court documents, during Fall 2009, Simon met with an individual to discuss putting aside proceeds from the individual’s drug trafficking activities for his family’s use while he was in prison for drug trafficking. After numerous meetings, on March 16, 2010, the individual met with Simon at Simon’s law office to transfer the cash. Simon stated his scheme was that the individual was going to hire Simon’s firm to handle the appeal of his drug trafficking conviction. Simon stated that he would then use his attorney trust fund to write a check every month to the individual’s designee. Simon explained that because it was a legal transaction, he would not have to report it. It was agreed that the checks would be written for $7,500, unless a different amount was specified later. The individual gave $110,000 in cash to Simon. Simon accepted the cash and during the time Simon was counting the cash, the three repeatedly discussed the individual’s participation in the drug trade and that the money being counted was from his drug trafficking activities. Simon also instructed the individual on a code to use in all future communications to discuss the scheme.
Texas Man Sentenced for Role in ‘Black Market Peso Exchange’ Scheme
On September 11, 2013, in Houston, Texas, Willie Whitehurst was sentenced to 151 months in prison for his role as one of the leaders of a criminal conspiracy that laundered more than $20 million through “shell” business bank accounts. In January and February 2013, Whitehurst and co-conspirators Enrique Morales, Fulton Smith and Anthony Foster pleaded guilty to conspiracy to commit money laundering and conspiracy to operate an unlicensed money transmitting business. Another co-conspirator, Sarah Combs, also pleaded guilty to conspiracy to operate an unlicensed money transmitting business. In August 2012, a federal grand jury in Houston indicted the five defendants for their parts in a large “Black Market Peso Exchange” scheme. From October 2009 to September 2011, the defendants placed United States currency gained through the sale of drugs into bank accounts held in the names of the organization’s “shell” companies. The money was then transferred to different accounts in the United States and in Mexico. In exchange, pesos were transferred back to accounts owned by the organization’s clients. Morales was previously sentenced to 188 months in prison, and Foster received a sentence of 121 months in prison. Smith was sentenced to 30 months, while Combs was sentenced to 24 months in prison.
Los Zetas Cartel Members Sentenced for Drug Trafficking, Money Laundering
On September 6, 2013, in Austin, Texas, Eusevio Maldonado Huitron, of Austin, was sentenced to 97 months in prison and three years of supervised release for his role in a complex conspiracy to launder millions of dollars in illicit Los Zetas drug trafficking proceeds. On May 9, 2013, a jury convicted Huitron of one count of conspiracy to commit money laundering. On September 5, 2013, Jose Trevino Morales, Francisco Colorado Cessa and Fernando Solis Garcia were sentenced for their roles in laundering millions of dollars. Morales, of Balch Springs, Texas and Cessa, of Veracruz, Mexico, were each sentenced to 240 months in prison and three years of supervised release. Garcia, of Ruidoso, New Mexico, was sentenced to 160 months in prison and three years of supervised release. Morales and Cessa were convicted by a federal jury on May 9, 2013 of one count of conspiracy to commit money laundering. Evidence presented during trial revealed that Los Zetas are a powerful drug cartel based in Mexico and generate multi-million dollar revenues from drug trafficking. Since 2008, Miguel and Oscar Trevino Morales would direct portions of the bulk cash generated from the sale of illegal narcotics to Jose Trevino and his wife, Zulema Trevino, for purchasing, training, breeding and racing American quarter horses in the United States. Testimony also revealed a shell game by the defendants involving straw purchasers and transactions worth millions of dollars in New Mexico, Oklahoma, California and Texas to disguise the source drug money and make the proceeds from the sale of quarter horses or their race winnings appear legitimate. Furthermore, the defendants implemented a scheme to structure cash deposits in amounts under $10,000 in order to circumvent mandatory bank reporting requirements. Over 400 quarter horses were seized by federal authorities and later auctioned for approximately $9 million. The Government also seeks the forfeiture of real property; farm and ranch equipment; and funds contained in multiple bank accounts allegedly used in the defendants’ scheme. The Government is also seeking a monetary judgment in the amount of $60 million representing property involved in, and derived from, the conspiracy.
Oklahoma Man Sentenced for Drug, Firearm and Money Laundering Charges
On September 5, 2013, in Tulsa, Okla., Brandon Royce Taylor was sentenced to 180 months in prison and three years of supervised release. Taylor pleaded guilty on June 3, 2013 to drug, firearm and money laundering violations. According to court documents, from 2006 through January 2009, Taylor maintained the Elgin Place property for the purpose of storing and distributing marijuana, cocaine and methamphetamine. He also possessed cocaine while intending to distribute it and had an unregistered “street sweeper” shotgun. He committed money laundering when he made a $13,000 cash payment to buy the Elgin Place property. Co-conspirator Thamous Eugene Taylor was sentenced on August 21, 2013, to 60 months in prison. On August 8, 2013, a joint $650,000 criminal forfeiture money judgment was made against the Taylors representing the currency, firearms, ammunition and substitute property that they obtained as a result of their drug crimes.
Two Defendants Sentenced in Tax Rebate Scam
On August 30, 2013, in Roanoke, Va., Khaldoun Khalil Khawaja, of Wesley Chapel, Fla., was sentenced to 70 months in prison, three years of supervised release and ordered to pay $17,333,246 in restitution. Khawaja pleaded guilty to one count of conspiracy to defraud the United States for buying, selling or exchanging treasury checks bearing forged endorsements and one count of conspiracy to commit money laundering. A second defendant, Muawua Khalil Abdeljalil, of Roanoke, Va., was sentenced to 57 months in prison, three years of supervised release, ordered to pay $1,702,123 in restitution and a money judgment of $2,243,731. Abdeljalil pleaded guilty to the same two charges as Khawaja, plus an additional count of structuring. According to court documents, the defendants admitted to purchasing fraudulent income tax refund checks and then presenting those fraudulent checks for payment at financial institutions in Virginia, Florida and elsewhere. In all, the defendants fraudulently deposited more than $17.5 million as a result of the scheme.
Minnesota Coin Dealer Sentenced For Mail Fraud, Wire Fraud and Money Laundering
On August 29, 2013, in Minneapolis, Minn., David Laurence Marion, of Excelsior, Minn., was sentenced to 60 months in prison. Marion pleaded guilty on February 21, 2013 to one count of conspiracy to commit mail and wire fraud and one count of money laundering. According to court documents, Marion owned International Rarities Corporation (IRC), a business that bought, sold, and traded gold coins and precious metals, among other things. Between December 2010 and August 2011, IRC received over $2 million in coins, precious metals, and money from customers who intended to make purchases or trades. In August 2011, IRC purportedly had over $2 million in unfulfilled customer orders. When customers inquired about the status of their orders, they were ignored by Marion and the IRC sales staff, or they were falsely advised that their orders were being processed or their money, coins, and precious metals could not be returned at that time. In the meantime, Marion used the customers’ money, coins, and precious metals to support his gambling and lavish lifestyle as well as to pay commissions and salaries, fulfill other customer orders, and support his family. Customers lost approximately $1.7 million in money, coins, and precious metals as a result of this scheme. As president of International Rarities Holdings (IRH), Marion directed his sales staff to sell securities in the form of ownership shares in the company. However, Marion was not registered with the Securities and Exchange Commission (SEC) as a broker or dealer at that time, nor was he associated with a registered SEC broker or dealer. In fact, in April 2009, the SEC rejected Marion’s attempt to register the IRH offering as a security, yet, from at least November 2008 through July 2009, Marion and his sales staff raised approximately $1 million from at least 26 investors who believed they were purchasing ownership shares in the company. Marion used approximately $200,000 of those investor funds for his own personal use.
Man Sentenced on Drug and Money Laundering Conspiracy Charges
On August 29, 2013, in Buffalo, N.Y., Will Johnson, of League City, Texas, was sentenced to 120 months in prison, five years of supervised release and ordered to forfeit $203,000 in cash. Johnson was convicted of conspiracy to distribute kilograms of cocaine and conspiracy to commit money laundering. According to court records, Johnson distributed kilograms of cocaine from the Houston area to other individuals who thereafter distributed that cocaine in Buffalo and elsewhere in the Western New York. In July 2010, law enforcement officers executed search warrants at locations including an apartment leased by the defendant in Missouri City, Texas, and his residence in League City, Texas. Officers seized cocaine and plastic wrappers consistent with packaging for multiple kilograms of cocaine, $55,000 in United States currency, a loaded handgun, and boxes of assorted ammunition. Johnson also deposited and transferred funds generated as a result of his drug trafficking to financial institutions. Johnson also paid approximately $13,000 to a used car lot to purchase a 2004 Escalade motor vehicle. He arranged to have cash deposits of $20,000 made into bank accounts which he used as a down payment for his residence.
Ohio Jewelry Store Owner Sentenced for Tax Evasion
On August 28, 2013, in Columbus, Ohio, Elie J. Hannoush, of Westerville, Ohio was sentenced to 12 months and one day in prison, followed by eight months of home confinement, and ordered to pay $91,140 in restitution to the IRS. Hannoush pleaded guilty in November 2012 to one count of tax evasion and one count of failure to report cash payments greater than $10,000 received in a business. According to court documents, Hannoush failed to report almost $300,000 in cash he received from the jewelry stores he owns, Farah Jewelers, from 2005 through 2008. Hannoush often accepted large cash payments from his customers, but failed to report the cash he received as income. He also kept a separate accounting system for the cash receivables. In addition, Hannoush structured cash receipts by breaking receipts greater than $10,000 into small receipts in order to evade federal cash reporting requirements. When he filed his federal income tax return for 2006, he reported an income of $27,054 and claimed he was due a $30 refund. His real taxable income for 2006 was $194,817 and he owed $35,188 in taxes for that year.
Ohio Business Owner Sentenced for Tax Evasion and Structuring Currency Deposits
On August 22, 2013, in Columbus, Ohio, Jon Scott Diamond, of Westerville, Ohio, was sentenced to 12 months and one day in prison, three years of supervised release and ordered to pay $177,183 in restitution to the IRS. Prior to sentencing, Diamond paid $57,873 to the IRS. In addition, Diamond agreed to forfeit his interest in a 2005 BMW 645ci. Diamond pleaded guilty on March 22, 2013, to income tax evasion and to knowingly engaging in a structured currency transaction. According to court documents, Diamond owned and operated Gem Ventures, LLC, dba Gem Skill Games, which was established in December 2005. During the years 2006 through 2008, Gem Ventures distributed computerized gaming machines in various bars and clubs in or around Columbus, Ohio. In order to play the gaming machines, bar patron’s had to insert cash into them. Diamond and/or his assistant visited each establishment weekly to collect the funds and print off the weekly receipt tickets on each gaming machine. They counted the cash at the bar, compared it to the receipt printout, and reimbursed the bars for the Jack Pot prize awards. Diamond split the remaining funds with the bar owners on a 60/40 basis. They gave the bar owners receipts for their share of the split, and left the bars with the cash. Generally, Diamond deposited the cash collections each week into a business account in the name of Gem Ventures, LLC. Between 2006 and 2008, Diamond structured the cash deposits exceeding $1 million by making numerous cash deposits in amounts just under $10,000. Diamond knew that financial institutions were legally required to report transactions exceeding $10,000 and he knowingly structured the currency transactions. In addition, for the 2006 tax year, Diamond willfully attempted to evade and defeat approximately $97,044 of income taxes due and owing to the IRS by concealing income and failing to file a federal income tax return.
Las Vegas Attorney Sentenced for Structuring Bank Deposits and Tax Crimes
On August 22, 2013, in Las Vegas, Nev., Paul Wommer, an attorney, was sentenced to 41 months in prison, three years of supervised release, ordered to pay a $7,500 fine and to forfeit any proceeds of his crimes. Wommer was found guilty in April following a bench trial for making structured bank deposits to hide money from the IRS, evading income taxes and filing a false tax return. According to the court records and evidence introduced at trial, between June 30 and July 15, 2010, Wommer made or assisted in 15 structured deposits totaling $138,700 for the purpose of evading bank reporting requirements. These deposits were made as part of a pattern of illegal activity involving more than $100,000 during a 12-month time period. During that same time period, Wommer willfully attempted to evade federal income taxes in the amount of $13,020 by concealing and attempting to conceal his assets, by making false statements to the IRS, and by placing funds and property in the names of nominees. The judge found that Wommer’s testimony at trial was not credible and increased his prison sentence for obstruction of justice.
Ohio Business Owner Sentenced in Mortgage Fraud Scheme
On August 22, 2013, in Cincinnati, Ohio, Antonio Weathers was sentenced to 17 months in prison, three years of supervised release and ordered to pay $242,340 in restitution to the victim lenders. Weathers pleaded guilty on April 8, 2013 to mail fraud and money laundering. According to court documents, Weathers formed a real estate business in which he arranged for the purchase and resale of mostly low income properties. Weathers committed mail fraud by securing mortgage closing funds for the purchase of a property located in Cincinnati, which resulted in a U.S. Postal Service Express Mail package to be sent from Strongtower Title Agency to the lender, Preferred Capital. Weathers then transferred $42,532 in mail fraud proceeds from one bank account to another bank account in the name of Antonio Weathers, dba, KI Enterprises.
Former New Mexico Fireman Sentenced for Structuring Drug Trafficking Proceeds
On August 21, 2013, in Albuquerque, N.M., Steve Chavez was sentenced to 30 months in prison, three years of supervised release and ordered to forfeit $182,000 to the United States. In April 2013, Chavez, a fireman, pleaded guilty to a currency structuring charge. According to court documents, between July 2011 and August 2011, Chavez structured 37 cash deposits and withdrawals over a 55-day period as part of a pattern of illegal activity. He structured deposits and withdrawals to avoid reporting requirements and thus conceal his support of drug trafficking organization led by Homer Varela. In addition, Chavez brokered cocaine transactions for the drug organization and “cleaning” its drug money. In January 2013, Varela pleaded guilty to conspiracy to distribute controlled substances, conspiracy to launder money and money laundering. Varela was sentenced in July 2013 to 135 months in prison and five years of supervised release.
Nebraska Businessman Sentenced for Racketeering and Money Laundering
On August 19, 2013 in Omaha, Neb., William Knox was sentenced to 12 months and one day in prison, two years of supervised release and fined $100,000. Knox also forfeited a 2005 Ford Expedition, a 2004 Nissan Roadster and three bank accounts totaling $4,641, as well as pay a $225,000 money judgment. Knox pleaded guilty to charges of conspiracy to use facilities in interstate commerce in aid of a racketeering enterprise and money laundering. According to court documents, starting in the late 1990’s and continuing to 2012, Knox owned and managed a “spa” in Omaha. The spa was frequently referred to as the Ninety Third Street Spa and was, in fact, a front for prostitution. Knox, and others acting at his direction, deposited revenue generated by the operation of Ninety Third Street Spa into a bank account which Knox opened and controlled, under the name NTS Spa, Ltd. dba Ninety Third Street Spa (“Spa Bank Account”). Knox wrote checks drawn on the Spa Bank Account for “management fees” and deposited them into another account he had opened, under the name Knox Contracting & Development, William R. Knox (“KCD Bank Account”). Knox then wrote checks drawn on the KCD Bank Account for particular “pay periods” and deposited them into a personal checking account he had opened under his name.
Couple Sentenced on Oxycodone Distribution and Money Laundering Charges
On August 14, 2013, in Beckley, W.Va., Christopher Brooks, of Glen Fork, Wyoming County, was sentenced to 120 months in prison for conspiracy to distribute oxycodone and money laundering charges. Brooks’ co-defendant and wife Jennifer Brooks, also of Glen Fork, was sentenced to 84 months in prison. Both defendants previously pleaded guilty in February 2013. According to court documents, from at least March 2010 until April 27, 2012, the Brooks received packages by mail containing oxycodone from a known individual located in Tampa, Fla. They received at least 130 express mail packages containing approximately 17,000 30-milligram oxycodone tablets between October 15, 2010 and April 27, 2012. The Brooks deposited at least $300,000 cash into bank accounts that were owned and controlled by a known individual in exchange for the oxycodone tablets.
Louisiana Man Sentenced on Structuring Charges
On August 8, 2013, in New Orleans, La., Christopher Benson was sentenced to 21 months in prison and one year of supervised release. Benson pleaded guilty in December 2012 to structuring financial transactions to evade reporting requirements. According to court documents, Benson was the sole owner of Louisiana Home Elevations, a home elevation and shoring company. Benson maintained a business bank account in the name of Louisiana Home Elevations. Benson issued two checks payable to his co-defendant in dollar amounts below $10,000 in ordered to avoid the financial institution from issuing a currency transaction report.
Virginia Car Dealer Sentenced for Evading Taxes
On August 6, 2013, in Richmond, Va., Samad Jafari, of Henrico, Va., was sentenced to 30 months in prison and ordered to pay $668,791 in restitution for a tax evasion scheme involving his used car sales business known as United Import Company, Ltd. On March 25, 2013, United Import was ordered to pay forfeiture of $735,225 as a result of its guilty plea to structuring cash deposits to prevent banking institutions from reporting currency transactions to the IRS. Jafari and United Import pleaded guilty on March 25, 2013. According to court documents, Jafari was the sole signatory and owner of a business account in the name of United Import. Beginning in 2006, Jafari developed a scheme to receive cash payments for the financing of used cars, and subsequently structured cash deposits into the business account, as well as other personal bank accounts. Jafari also created a second set of figures to provide to his accountant in preparing his 2006 and 2007 federal income tax returns, which significantly understated the amount of cash payments he received for vehicle financing. The total tax loss identified in the investigation was in excess of $698,000. In addition, Jafari acknowledged that, acting as the president of United Import, he structured or caused to be structured, over $735,000 in cash deposits during a 24-month time period in an effort to prevent banking institutions from filing a currency transaction report (CTR).
Georgia Woman Sentenced for Health Care Fraud and Money Laundering
On July 31, 2013, in Macon, Ga., Christine Rahl, of Social Circle, Ga., was sentenced to 57 months in prison, three years of supervised release and ordered to pay $1,586,847 in restitution. Rahl pleaded guilty on May 9, 2012 to embezzlement in connection with health care and money laundering. According to court documents, Rahl was an employee in charge of payroll at a hospice in Social Circle, Georgia. The payroll and expense information was electronically submitted to an external payroll company who would then make electronic deposits into the accounts of employees. In order to receive extra pay, Rahl gave herself unauthorized raises and submitted false expenses for herself. Rahl continued this activity during a five and a half year time period. Rahl admitted that she illegally appropriated for her own use and benefit $1,586,847 from the hospice. The money she received was deposited into a bank, where she would then write checks and use credit cards to purchase items for her personal use.
Utah Man Sentenced in Connection with Real Estate Investment Scheme
On July 25, 2013, in Salt Lake City, Utah, Patrick Merrill Brody was sentenced to 41 months in prison, three years of supervised release and ordered to pay $1,331,075 to the victims. Brody pleaded guilty in May 2013 to wire fraud and money laundering in connection with a real estate investment scheme. According to court documents, Brody and his wife, Laura Ann Roser, operated Art Intellect, Inc., a Utah corporation doing business as Mason Hill. It offered potential clients an option for investing in rental residential properties in several states. Mason Hill offered to sell investors rental properties at a low price, repair and rehabilitate them if necessary, find renters for the properties, collect rent, and maintain and manage the properties for the benefit of the investors. Once received, investors’ funds were co-mingled with other investors’ money, used to purchase properties for earlier investors, and used to pay operating expenses of Mason Hill as well as personal expenses for the defendants. In some instances, investors’ money was used to make Ponzi payments to earlier investors. As a part of a plea agreement, Brody admitted that from April 2009 through early 2011 he made important business decisions for the company, hired and instructed employees, and directed the use of company proceeds. Brody admitted that the company ultimately began operating a scheme that obtained money or property through fraudulent representations or promises. The fraudulent representations were made with the intent to induce clients to make investment payments to Mason Hill. Funds invested through the scheme were converted to personal use by Brody, which deprived the company of the capital necessary to complete real estate transactions as promised. Many of the clients, who invested in the scheme, did not receive any property or any other thing of value in return for their investment payments, and did not receive a refund of their payments.
North Carolina Businesswoman Sentenced for Participation in a Drug Conspiracy and Money Laundering
On July 22, 2013, in New Bern, N.C., Cynthia Marquez, of Grifton, N.C., was sentenced to 120 months in prison and five years of supervised release. Marquez pleaded guilty on October 24, 2011 to conspiracy to distribute and possess with the intent to distribute 5 kilograms of cocaine and money laundering. According to court documents, Marquez distributed approximately 67 kilograms of cocaine from 2010 through January 18, 2012. Marquez laundered drug proceeds through her businesses including Joyeria Perez Jewelry Incorporated in Greenville and her real estate business. Marquez previously agreed to forfeit over $146,000 in U.S. currency and 18 pieces of real property. Additionally, Marquez previously entered into agreements to settle a state-level drug tax lien of approximately $100,000 and forfeit a Hummer motor vehicle.
Store Owners Sentenced for Conspiring to Structure Funds Obtained from Illicit Cigarette Sales
On July 19, 2013, in Richmond, Va., Jayant Khare and Loveleen Khare, both of Powhatan, Va., were each sentenced to 24 months in prison. Jayant Khare and Loveleen Khare both pleaded guilty in April 2013 to conspiring to structure more than $10,000,000 in cash transactions. According to court documents, Jayant and Loveleen Khare owned and operated two cigarette retail stores known as Cigarettes America Plus and Cigarettes America at Westchester. From October 2011 to December 2012, they conspired to structure over $10,000,000 by splitting up cash deposits into accounts maintained at six banks, all in an effort to prevent the banks from filing Currency Transaction Reports with the IRS, which must be filed on cash deposits of $10,000 or greater. The structured cash was obtained by selling large quantities of cigarettes to out-of-state individuals who were known to be transporting the cigarettes to locations outside of the Commonwealth of Virginia for resale as contraband cigarettes because the appropriate state taxes were not paid on them. The sales took place at Jayant and Loveleen Khare’s personal residence and from the back door of the retail stores.
North Carolina Woman Sentenced for Role in Drug and Money Laundering Conspiracy
On July 18, 2013, in Raleigh, N.C., Claudette Petrina Griffin was sentenced to 42 months in prison and three years of supervised release for her participation in a cocaine distribution and money laundering conspiracy. According to court documents, Griffin conspired with Thomas Alston to deliver more than 500 grams of cocaine. In 2007, while Alston was on house arrest for a state drug conviction, and in 2009, while Alston was serving a state prison sentence, Alston paid Griffin to make multiple deliveries of cocaine. Griffin also conspired with Alston to use her name as the owner and purchaser of a 2006 Mercedes in order to conceal the true ownership of the vehicle and the illegal source of the currency paid to purchase the vehicle. Alston was sentenced on February 8, 2012, to 324 months in prison and five years of supervised release for his role in the conspiracy.
Texas Man Sentenced for Failing to File IRS Form 8300
On July 18, 2013, in Dallas, Texas, William Luck II, of Fort Worth, was sentenced to 37 months in prison and agreed to pay $17,000 in restitution to the IRS. Luck pleaded guilty in February 2013 to one count of failure to file IRS Form 8300. According to court documents, Luck owned a business called Hydro Expo. Law enforcement learned that Hydro Expo was facilitating indoor marijuana cultivating operations by supplying growing equipment and supplies to persons who were illegally growing marijuana. During an undercover operation, law enforcement arranged the purchase of approximately $20,000 worth of growing equipment and supplies from Hydro Expo. Luck was clearly informed that the equipment and supplies were going to be used in an illegal indoor hydroponic marijuana cultivation operation. In October 2009, Luck accepted $17,000 in cash from an undercover who then took delivery of the marijuana growing equipment. During that meeting, Luck stated that he would break up the $17,000 cash into smaller amounts and that he would not identify the purchasers in any paperwork. Luck never filed the required IRS Form 8300, as required by law and regulations.
Oklahoma Man Sentenced for Narcotics-Related Money Laundering
On July 9, 2013, in Oklahoma City, Okla., Johnnie Ray Bragg Jr. was sentenced to 480 months in prison, four years of supervised release and ordered to forfeit $260,752. Bragg pleaded guilty in August 2012 to drug and money laundering conspiracies. According to court documents, from about September 21, 2010 to about April 20, 2011, Bragg and others received currency from the sale of narcotics and deposited the proceeds into bank accounts at branches of a bank in Oklahoma, which were controlled by others in the conspiracy. Bragg and others also wire transferred drug proceeds from Oklahoma to California and purchased “money packs” that were then used to load funds from the drug proceeds onto Bragg’s prepaid Visa card. Bragg used the Visa card to pay for his travel between Oklahoma and California in furtherance of the drug-trafficking conspiracy.
Former U.S. Army Corps of Engineers Manager Sentenced for $30 Million Bribery and Kickback Scheme
On July 11, 2013, in Washington, D.C., Kerry F. Khan, formerly of Alexandria, Va., was sentenced to 235 months in prison on charges of bribery and conspiracy to commit money laundering. Khan was also ordered to pay $32.5 million in restitution to the U.S. Army Corps of Engineers, forfeit $11,082,687 in a money judgment and forfeit more than $1.3 million in bank account funds, properties and a vehicle. Khan previously forfeited over $700,000 in bank account funds and four luxury automobiles. Khan, a former program manager for the Army Corps of Engineers, pleaded guilty in May 2012 to charges stemming from his leadership of a ring of corrupt public officials and government contractors that engaged in bribery and kickbacks and stole over $30 million through inflated and fictitious invoices. According to court documents, Khan was paid, directly and indirectly, over $12 million through the bribery scheme. The government contracts were awarded from 2007 until 2011 through the U.S. Army Corps of Engineers and the Department of the Army. Khan and others attempted to obtain more than $30 million through the submission of fraudulently inflated invoices to the government. In most cases, the corrupt companies provided the equipment and services legitimately included in the contracts, but also billed for inflated and fictitious equipment and services. Khan referred to the fraudulently inflated amounts as “overhead.” Khan and others agreed to split the “overhead.” In the overall investigation, to date, the United States has seized for forfeiture or recovered approximately $7.5 million in bank account funds, cash, and repayments, 20 real properties, eight luxury cars, and multiple pieces of fine jewelry.
Former Ohio School District Employee Sentenced for Money Laundering, Wire and Mail Fraud
On July 9, 2013, in Cleveland, Ohio, Joseph M. Palazzo, of Independence, Ohio, was sentenced to 136 months in prison and ordered to pay $3.4 million in restitution. Palazzo pleaded guilty to conspiracy to commit mail fraud, conspiracy to commit money laundering and wire fraud. According to court documents, Palazzo was employed by the Cuyahoga Heights School District as its Information Technology Director until February 2011. His duties included purchasing hardware and software and making other IT expenditures. Palazzo diverted millions of dollars through submission of false invoices to the district that purported to be for IT-related goods and services purchased from legitimate companies. Palazzo approved the false invoices himself or forged the signature of another in the approval section. However, these invoices were for services never performed, fictitious software and hardware, software and hardware never received or already purchased by the district from another source. The companies named on the invoices were nothing more than “shells” companies established and owned by others working with Palazzo. As a result of the conduct of Palazzo and his co-conspirators, the district was defrauded and sustained a total loss of at least $3,333,448. In a second scheme to defraud the school district, Palazzo purchased various personal electronic items, such as I-Pads, cameras and televisions, from legitimate district vendors. He then altered the invoices from the purchases to falsely reflect that classroom items, such as digital microscopes, projectors and laptops, had been purchased for the district and submitted those invoices to the district for payment. Upon receipt of these personal electronic items, Palazzo sold them to third-parties at a discounted price and kept the money from such sales for his own personal use. As a result of the Palazzo’s conduct in the second scheme, the district was defrauded and sustained an additional loss of at least $76,214.
Arizona Man Sentenced on Drug and Money Laundering Charges
On July 8, 2013, in Phoenix, Ariz., Nadunt Chibeast, of Tempe, Ariz., was sentenced to 120 months in prison and five years of supervised release. Chibeast was convicted in April 2013 of conspiracy to possess with intent to distribute more than 1,000 kilograms of marijuana and less than 500 grams of cocaine, and conspiracy to commit money laundering. According to evidence presented at trial, Chibeast assisted a drug trafficking organization by driving a suspected drug load, assisting with marijuana packaging and conspiring to launder money. Chibeast allowed the organization to direct its drug buyers to deposit money into his bank accounts in their home states and then he would transfer the money to the drug trafficking organization member’s bank accounts or withdraw cash to physically provide it to other members.
Woman Sentenced for Role in Drug Trafficking and Money Laundering Conspiracy
On June 26, 2013, in Anchorage, Alaska, Jennifer McGrath, of Sacramento, Calif., was sentenced to 38 months in prison for her role in a drug trafficking and money laundering conspiracy. According to court documents, between January 2009 and continuing through July 2010, McGrath was involved in a large scale drug trafficking conspiracy transporting oxycodone from California for later sale in Juneau, Alaska. As part of the conspiracy, McGrath made multiple airline trips from California to Juneau carrying the oxycodone pills on her person. McGrath distributed the pills to local dealers and collected the drug proceeds. McGrath either laundered the drug proceeds using commercial wire transfers or body carried drug proceeds back to California for members of the conspiracy. During the course of the conspiracy, McGrath transported approximately 1500 pills of oxycodone and laundered over $14,000 in drug proceeds.
Four Sentenced for Operating Black Market Peso Exchange Scheme
On June 26, 2013, in Houston, Texas, the leader and several members of an organization that laundered more than $20 million through “shell” business bank accounts were sentenced to the following terms: Enrique Morales was sentenced to 188 months in prison; Anthony Foster was sentenced to 121 months in prison; Fulton Smith was sentenced to 30 months in prison; and Sarah Combs was sentenced to 24 months in prison. Morales, Foster and Smith all pleaded guilty to conspiracy to commit money laundering and conspiracy to operate an unlicensed money transmitting business. Combs pleaded guilty to conspiracy to operate an unlicensed money transmitting business. According to court documents, the four defendants were part of the “Black Market Peso Exchange” scheme. From October 2009 to September 2011, the defendants placed United States currency gained through the sale of drugs into bank accounts held in the name of the organization’s “shell” companies. The money then was transferred to different accounts in the United States and in Mexico. In exchange, pesos were transferred back to accounts owned by the organization’s clients.
Minnesota Man Sentenced for Operating a Continuing Criminal Enterprise and Money Laundering
On June 24, 2013, in Fargo, N.D., Noah R. Bergland, of Roseau, Minn., was sentenced 120 months in prison and three years of supervised release. Bergland was also ordered to pay a $200 special assessment to the Crime Victim’s Fund and to forfeit $250,000 to the United States. Bergland pleaded guilty on July 10, 2012 to charges of operating a continuing criminal enterprise and money laundering conspiracy. According to court documents, Bergland was part of an organization that brought cocaine, heroin, marijuana and ecstasy from the Twin Cities to various cities in North Dakota and Minnesota. Bergland and others were responsible for depositing and withdrawing funds into bank accounts in North Dakota, Minnesota and other states that were derived from the sale of controlled substances. These funds were then stored on value cards as well as transferred through wire transfers to various places in North Dakota, Minnesota and elsewhere. To date, an additional 25 defendants have been sentenced to terms ranging from 180 months in prison to 2 years’ probation as part of this investigation.
Missouri Man Sentenced for Structuring Financial Transactions
On June 21, 2013, in Springfield, Mo., Jesse Arnold, of Sarcoxie, Mo., was sentenced to 12 months and a day in prison and ordered to forfeit $207,817. Arnold pleaded guilty on December 18, 2012, to structuring financial transactions in order to evade federal reporting requirements. According to court documents, Arnold operated 4 States Grease Company, a collection facility for spent cooking oil. Arnold had reason to believe he was buying spent cooking oil that had been stolen by various drivers. These drivers obtained the stolen cooking oil from businesses in Missouri, Kansas, Oklahoma, and Arkansas. The drivers sold the spent cooking oil to Arnold who then sold the oil to another company for processing. In order to avoid federal reporting requirements, Arnold deliberately and knowingly structured withdrawals from his business checking account. Arnold made numerous withdrawals on consecutive days that were individually less than $10,000, but which totaled more than $10,000 when added together. All of the cash withdrawals from January 1, 2009 to September 30, 2011, were done by checks written to “Cash” and signed by Arnold. Many of the cash withdrawals were done on successive banking days and were for $9,000 for each withdrawal.
Longtime Fugitive Who Ran Telemarketing Fraud Scheme Sentenced
On June 10, 2013, in Los Angeles, Calif., Matthew Craig Rubin was sentenced to 78 months in prison and ordered to pay a $16 million judgment obtained for his fraud victims by the Federal Trade Commission. In September 2005, Rubin pleaded guilty to two counts of money laundering and one count of witness tampering. According to court documents, Rubin admitted that he laundered the proceeds of a telemarketing fraud scheme through foreign bank accounts. Matthew Rubin also admitted that he persuaded the former controller of his company to lie in the Federal Trade Commission case against him and his company. Rubin and his brother, Andrew Rubin, ran Medicor, LLC, a Van Nuys-based marketing company that deceived customers into believing that the customers could set up home-based medical billing businesses. Matthew Rubin and his brother executed a scheme to defraud consumers who purchased medical billing software, in part by making false claims about customers receiving a list of doctors who needed medical billing services. Between July 1999 and March 2001, Medicor sold more than 30,000 Kwic-Claim Medical Billing Software packages for approximately $400 each, but only 65 people were actually able to successfully bill using Medicor software. Matthew Rubin also set up National Business Information Systems (NBIS). Following a script provided by Matthew Rubin, Medicor employees referred potential Medicor customers to NBIS, which existed solely to provide positive references for Medicor. In 2006, just before he was to be sentenced in this case, Matthew Rubin fled to Mexico, where he remained a fugitive for over five years. With the assistance of the U.S. Postal Inspection Service and the Mexican government, Rubin was returned to the United States last year.
Money Courier for Large Guatemalan Drug Ring Sentenced
On May 31, 2013, in Greenbelt, Md., Nery Gustavo Ramos-Duarte, of Chiquimula, Guatemala, was sentenced to 160 months in prison and five years of supervised release for conspiring to distribute and import five kilograms or more of cocaine, commit money laundering, and smuggle bulk cash. According to court documents, Duarte was a money courier for a large international organization that imported cocaine into the United States from Guatemala and smuggled the proceeds back to Guatemala. Duarte was a trusted member of the organization who could speak directly with its leader in Guatemala, and helped the leader collect drug debts. On September 25, 2003, Duarte was stopped while driving in Arkansas. Law enforcement seized $1,168,000 in cash wrapped in bundles from a secret compartment in his vehicle. In 2005, Duarte picked up drug money from a co-conspirator in Connecticut to take to the ringleader in Guatemala. Later in 2005, Duarte took a Mercedes-Benz from another member of the conspiracy as payment for a drug debt to the ringleader.
Texas Money Launderer and Former Fugitive Sentenced
On May 23, 2013, in Corpus Christi, Texas, Leonel de La Torre, of Brownsville, Texas, was sentenced to 165 months in prison and three years supervised release. De La Torre was charged in an indictment in July 2006 and had been a fugitive until his capture earlier this year. De la Torre pleaded guilty on February 27, 2013, to conspiracy to launder funds generated by narcotics trafficking. According to court documents, De La Torre admitted he helped lead a group of individuals who transported cocaine from South Texas for distribution in Houston, as well as in Ohio and Michigan. He further acknowledged he helped lead the “laundering” of those funds generated by the cocaine business. The funds were moved through the banking system using both domestic and international means. The group invested in real estate to help conceal the illegal source of the funds.
Former Dallas Securities Broker Sentenced for Money Laundering
On May 16, 2013, in Tulsa, Okla., Joshua Wayne Lankford, of Dallas, Texas, was sentenced to 84 months and ordered to forfeit $250,000. Lankford pleaded guilty on December 10, 2012 to money laundering. According to court documents, Lankford and his co-defendants manipulated the stocks of three companies. The defendants devised and engaged in a scheme to defraud investors known as a “pump and dump,” in which they manipulated publicly traded penny stocks. According to court records, Lankford and his co-defendants obtained a majority of the free-trading shares of stock of the company they intended to manipulate. Lankford and others “parked” their shares with various nominees, such as friends, relatives or other entities that they owned and controlled. Subsequently, they engaged in coordinated trading in order to create the appearance of an emerging market for these stocks. The defendants and their nominees obtained significant profits by selling large amounts of shares after they had artificially inflated the stock price. For each of the three manipulated stocks, the conspirators’ sell-off caused declines of the stock price and left legitimate investors holding stock of significantly reduced value. According to Lankford’s guilty plea, he laundered $250,000 in proceeds derived from the stock manipulation scheme. Evidence presented in the 2010 trial showed that the overall scheme resulted in illegal proceeds of more than $43 million from more than 17,000 investor victims. Other defendants sentenced in this scheme include George David Gordon and Richard Clark who were sentenced to 188 months and 151 months in prison, respectively; James Reskin was sentenced to serve five years of probation; and Dean Sheptycki remains a fugitive.
Pecan Farm Owners Sentenced on Drug and Money Laundering Charges
On May 15, 2013, in Albuquerque, N.M., Sandra L. Portillo was sentenced to 15 months in prison and three years of supervised release. On May 8, 2013, Oscar L. Portillo, Sr., was sentenced to 98 months in prison and four years of supervised release. Also on May 8, 2013, Matthew Portillo was sentenced to 60 months in prison and four years of supervised release. Oscar Portillo, Sr. and Sandra Portillo also were ordered to forfeit $135,735, the value of their ownership interest in the pecan farm which was sold after they were arrested. In addition, the court entered a $17,900 money judgment against the Portillos and their son, Matthew Portillo. According to court documents, Oscar Portillo, Sr., and his wife Sandra Portillo were part owners and operators of “Pettit Farms and Nursery,” a pecan farm and nursery in Anthony, N. M. The Portillos used the pecan farm as a place to store and sell drugs. They laundered the proceeds from some of these drug deals by asking an undercover agent to pay for the drugs with money orders which they subsequently cashed and deposited into bank accounts in the name of the pecan farm, and by providing the agent with invoices that falsely asserted that the agent purchased pecan trees. Six other co-defendants have been sentenced in this investigation.
• Ruben Ortiz-Rivera was sentenced on April 17, 2013, to 15 months in prison. Ortiz-Rivera is a Mexican national and will be deported after he completes his prison sentence.
• Cesar Ramos was sentenced on March 26, 2013, to 120 months in prison. Ramos is a Mexican national and will be deported after he completes his prison sentence.
• April Garcia was sentenced on February 12, 2013, to one year of probation.
• Fernando Ramos was sentenced on January 30, 2013, to 30 months in prison and three years of supervised release.
• Oscar Portillo, Jr., was sentenced on September 26, 2012, to 15 months in prison and three years of supervised release.
• Natasha N. Coronado was sentenced on August 24, 2012, to time served (212 days) and three years of supervised release.
Missouri Trucking Company Owners Sentenced for Fraud and Money Laundering
On May 10, 2013, in Springfield, Mo., James Keith Ivey and his wife, Melinda Kay Ivey, both of Lebanon, Mo., were sentenced for their roles in a conspiracy to defraud Tracker Marine, a manufacturer of boats and trailers. James Ivey was sentenced to 70 months in prison. Melinda Ivey was sentenced to 30 months in prison. The Iveys were ordered to pay $797,325 in restitution. According to court documents, the Iveys owned and operated J&M Trucking, Inc., which contracted with Tracker to transport boats and trailers. From January 2006 to April 2009, the Iveys and co-defendant Paul Ray Hunting, of Paso Robles, Calif., devised a scheme to defraud Tracker Marine by inflating purchase orders and shipping invoices. Hunting was transportation manager for Tracker. During that time, the Iveys and Hunting caused more than 2,550 fraudulent invoices to be submitted to Tracker, which created a total loss of at least $797,325 to Tracker. J&M’s compensation from Tracker was determined primarily by the distance its trucks traveled. Hunting caused Tracker to pay J&M excessive fees by listing an inflated and false number of billable miles on purchase orders. In exchange, James Ivey paid Hunting in cash a portion of the revenue generated by the fraudulently increased billable miles. From 2006 to 2008, James Ivey paid Hunting a total of $265,775. Hunting claimed some of those payments on his federal income tax return as income from a catering business, which was false. The Iveys claimed the payments represented a percentage of revenue generated by two trucks they claimed Hunting owned and was leasing to J&M, which was also false. Hunting was sentenced in December 2012 to 12 months and one day in prison and ordered to pay $294,496 in restitution.
Michigan Arson Ringleader Sentenced for Arson, Money Laundering and Other Federal Charges
On May 8, 2013, in Detroit, Mich., Ali Darwich, of Beverly Hills, Mich., was sentenced to 137 years in prison for arson and other charges related to wire fraud, mail fraud, and money laundering. According to trial evidence, beginning in 2005, Darwich, along with eight co-defendants, ran an arson-for-profit ring in the greater Detroit metropolitan area. Specifically, Darwich, along with his co-conspirators, would purchase insurance for various dwellings, businesses and vehicles. After purchasing the insurance, Darwich and others would intentionally burn, vandalize, or flood the various properties or vehicles and then file false insurance claims seeking reimbursement for such things as structural repair, contents replacement, loss of profits and alternative living costs. Seven insurance companies were defrauded for over $5 million.
President of Car Dealership Sentenced for Laundering Money for the Gulf Cartel
On May 8, 2013, in Orlando, Fla., Joel Torres, of Apopka, was sentenced to 40 months in prison for money laundering and failing to file IRS Forms 8300 (a report required for cash purchases over $10,000). Torres was found guilty on December 3, 2012. According to court documents, Torres, the President of JM2 Auto Sales, Inc., laundered narcotics proceeds for the Gulf Cartel, a drug trafficking organization based in Mexico. Torres received cash, and then sent vehicles back to members of the Cartel in Texas. He also sold vehicles to local Cartel members. During this joint investigative effort, law enforcement seized more than 6,000 pounds of marijuana, more than 70 firearms, bullet proof vests, and nearly $1 million.
Co-Owner of Los Angeles County Toy Company Sentenced in Money Laundering Case
On May 6, 2013, in Los Angeles, Calif., Dan “Daisy” Xin Li, co-owner of the Woody Toys, Inc., was sentenced to eight months in prison, followed by six months of home detention. Li’s husband, Jia “Gary” Hui Zhou, will be sentenced at a later date. Li and Zhou pleaded guilty in September 2012 to conspiring to structure currency transactions with a U.S. financial institution to avoid the filing of a Currency Transaction Report. As part of their agreements, the couple forfeited to the federal government $2 million in proceeds that were derived from their money laundering scheme. According to court documents, Li and Zhou participated in an elaborate scheme known as a Black Market Peso Exchange, which is an underground money transfer system that enables international drug trafficking organizations to launder narcotics proceeds. The scheme used “structured” cash deposits in the United States to launder illicit proceeds generated by drug trafficking organizations based in Mexico and Colombia. From 2005 through 2011, approximately $3 million in structured, out-of-state cash was deposited into Woody Toys’ bank accounts. During that same time, Woody Toys took in approximately $3 million in cash without filing the required federal documents. As part of the Black Market Peso Exchange scheme alleged in this case, foreign toy retailers with Colombian and Mexican pesos would contact currency brokers to buy discounted United States dollars, which they used to purchase merchandise from Woody Toys. The dollars being “sold” were allegedly proceeds from illegal drug sales that had been deposited in the toy company’s accounts or delivered to the business. The Colombian or Mexican pesos that the currency broker received from the foreign toy retailer were remitted to the drug trafficking organizations. Previously in this case, Woody Toys, Inc. was sentenced in November 2012 to five years of probation after pleading guilty to money laundering conspiracy charges. The sentence prohibits the company from receiving payments of more than $2,000 in cash and the business may not receive cash from anyone who is not a customer. The company must also report the identity and contact information of all its customers. Finally, the business will be subject to unannounced examinations of its books and records.
Cincinnati Grand Prix Promoter Sentenced for Wire Fraud and Money Laundering
On May 1, 2013, in Cincinnati, Ohio, Curtis Boggs, formerly of Harrison, Ohio, was sentenced to 27 months in prison and ordered to pay $352,745 in restitution. In addition, Boggs was ordered to forfeit any assets that he received as proceeds of the fraudulent scheme he promoted to bring a Grand Prix race to Cincinnati in 2009. Boggs pleaded guilty on January 3, 2013 to one count each of wire fraud and money laundering. According to court documents, Boggs was employed by an insurance company as an investment advisor from 2000 to 2009. Beginning in approximately October 2008 and continuing through approximately August 2009, Boggs solicited his customers and others to invest in silver and gold or in a grand prix race, through a corporation called Cincinnati Grand Prix (CGP). Boggs admitted that, during that period, he fraudulently obtained investments of at least $352,745 for CGP in exchange for shares in the “stock” of CGP. On or about October 21, 2008, Boggs laundered money derived from the fraud scheme by using $27,232 to buy a Lincoln MKX vehicle for his personal use.
Arizona Businessman Sentenced to Prison
On April 30, 2013, in Phoenix, Ariz., Jere Loy Parkhurst was sentenced to 13 months in prison and three years of supervised release. Parkhurst pleaded guilty in January 2013 to conspiracy to commit wire fraud. According to the plea agreement, starting in 2006, Parkhurst was in the business of remodeling and reselling homes in the Phoenix metropolitan area. Parkhurst and others would raise capital for the purchase or remodel of homes by telling investors they would make 25 percent or more interest on their investment. By the end of 2006, with the housing market in decline, Parkhurst began using investor money to fund other areas of his business instead of repaying or making interest payments to investors as promised. In March 2007, one investor wired $100,000 to an escrow account for the purchase and remodel of a Phoenix home. On that same day, Parkhurst directed the title group to wire $55,821 to a bank account under Parkhurst’s control. Parkurst falsely represented to the investor that he would pay 20 percent annual interest on his money with a full repayment by March 8, 2008. As of January 2013, none of the $100,000 had been paid back.
Ohio Man Sentenced for Conspiring to Distribute Oxycodone and Money Laundering
On April 29, 2013, in Cincinnati, Ohio, Kevin Huff, of Portsmouth, Ohio, was sentenced to 262 months in prison and ordered to forfeit six properties in Ohio, three vehicles, three ATV’s, a boat, $20,000 in currency, and the contents of two bank accounts totaling approximately $118,875. Huff, owner of Primary Health Care clinic, pleaded guilty on June 27, 2012 to one count of unlawfully conspiring to distribute oxycodone and one count of money laundering. According to court documents, Primary Health Care charged each “patient” $200 in cash in return for prescriptions for Oxycodone and other narcotics without the benefit of a legitimate medical examination by a physician. Huff received between $5,000 and $8,000 in U.S. currency three times a month for his share of the clinic’s proceeds. In 2009, Huff received approximately $245,000 in U.S. currency from the operation of the clinic. Huff did not deposit this cash into a bank. Instead he used the money to pay day-to-day expenses, purchase assets, and take vacations. According to court documents, Huff also used $40,000 in drug proceeds to pay for a house in Lucasville, Ohio and concealed the purchase of the house by deeding the house in the name of another individual. The proceeds generated from the operation of Primary Health Care clinic represented the proceeds of illegal narcotics trafficking.
Kansas City Lawyer Sentenced for Money Laundering
On April 29, 2013, in Kansas City, Kan., Ronald E. Partee, of Kansas City, Mo., was sentenced to 60 months in prison. Partee pleaded guilty on January 30, 2013 to one count of conspiracy to commit money laundering and one count of money laundering. In his plea, Partee admitted that he conspired with Mendy Read-Forbes to launder money from a drug dealer. The investigation began in March 2012 when an undercover Kansas Bureau of Investigation agent, posing as a marijuana dealer, met Read-Forbes. According to court documents, Read-Forbes presented herself as the owner of Forbes & Newhard Credit Solutions, Inc., a nonprofit organization established to provide credit counseling to people who were in bankruptcy proceedings. In fact, she was not the legal owner but exercised control of the company’s bank account along with Partee. As part of the scheme, money from the undercover agent was deposited into the bank accounts of Forbes & Newhard Credit Solutions or related companies and then the money was returned to the dealer via checks, money orders or wire transfers. To make it appear that the drug dealer was engaged in business as a certified credit counselor with Forbes & Newhard Credit Solutions, the drug dealer was given a certificate saying he had completed training as a bankruptcy specialist. Partee was at various times a member of the board of directors for Forbes & Newhard and a signator on FCP’s bank accounts. On April 20, 2012, Partee approved two wire transfers from the FCP account that he believed were drug funds. In addition, to make transactions appear legitimate, Read-Forbes gave the drug dealer a contract titled “Purchase and Sale of Business Agreement.” The contract, bearing the signature of Partee and the drug dealer, made it appear that the marijuana dealer was purchasing assets of FCP, Inc., a corporation controlled by Read-Forbes and Partee. Read-Forbes and another defendant are awaiting trial.
Pennsylvania Man Sentenced for Money Laundering
On April 24, 2013, in Pittsburgh, Pa., Adrian M. Taylor, aka Tate, of Beaver Falls, Pa., was sentenced to 131 months in prison and three years of supervised release. Taylor pleaded guilty to money laundering. According to court documents, from on or about December 4, 2009, and continuing to on or about September 29, 2011, in Pennsylvania and elsewhere, Taylor, with the help of others, conspired to knowingly launder money derived from illegal drug trafficking.
Pennsylvania Man Sentenced on Drug and Money Laundering Charges
On April 22, 2013, in Pittsburgh, Pa., Eric Michael Mason, of New Brighton, Pa., was sentenced to 131 months in prison and five years of supervised release. On November 29, 2012, Mason pleaded guilty to violating federal narcotics and money laundering laws. According to court documents, from on or about December 4, 2009, and continuing to on or about September 29, 2011, in Pennsylvania and elsewhere, Mason conspired with others to possess with the intent to distribute and distribute four kilograms of cocaine. During the same time period, Mason purchased real estate and vehicles with drug proceeds and conspired with others to launder the proceeds of the illegal drug trafficking.
California Man Sentenced on Structuring Charges
On April 22, 2013, in Fresno, Calif., Joseph Edwin Gable Jr., aka Mike Jones, of Fresno, Calif., was sentenced to 57 months in prison and three years of supervised release. Gable pleaded guilty on January 18, 2013. According to court documents, Gable structured $693,905 in cash derived from the sales of marijuana in order to evade currency transaction reporting requirements. Financial institutions are required to file currency transaction reports for cash transactions involving more than $10,000. To accomplish the scheme, Gable used multiple bank accounts held by friends and relatives. According to court documents, some of the marijuana was grown on property leased in Fresno County. People were recruited to obtain California medical marijuana recommendations from a local physician for the purpose of growing marijuana, which was in fact shipped to other states.
New York Man Sentenced for Money Laundering
On April 18, 2013, in Rochester, N.Y., Michael Kardonick, of Brooklyn, N.Y., was sentenced to 120 months in prison and ordered to pay $2,164,059 in restitution for conspiracy to commit money laundering. According to court documents, between January 2004 and July 2008, Kardonick defrauded investors who had invested approximately $2.5 million in international currency trading investments through the company Atwood & James S.A. During the course of the scheme, Kardonick used the mail and wire communications to facilitate the execution of the fraud, using the illegally obtained investor proceeds to promote the scheme, in violation of the federal money laundering provisions.
Two Men Sentenced in Cigarette Trafficking Operation
On April 12, 2013, in Florence, S.C., two men were sentenced for their roles in an illegal cigarette trafficking ring believed to have smuggled over three million dollars worth of cigarettes between South Carolina and New York. Nathaniel Elmore, of Newark, N.J., was sentenced to 32 months in prison and Charley Antonio Davis Jr, of Bishopville, S.C., was sentenced to six months probation. Elmore used a front business called “The Cigar Room” in Florence, S.C. to purchase cigarettes so he could avoid paying the significantly higher taxes levied in his home state of New Jersey. He then used a series of specially modified vans to transport millions of cigarettes from Florence to New York City. Elmore, the leader of the smuggling ring, pleaded guilty to one count of money laundering. Davis, a driver and purchaser for the organization, pleaded guilty to one count of failure to keep tobacco records.
Final Defendant of Drug Trafficking Organization Sentenced on Drug and Money Laundering Charges
On March 27, 2013, in Columbus, Ohio, Antwane J. Rhodes, aka “Rho”, formerly of Springfield, Ohio, was sentenced to 120 months in prison, fined $5,000 and ordered to forfeit cash, vehicles and jewelry. Rhodes pleaded guilty on September 25, 2012 to conspiracy to possession with intent to distribute more than 1,000 kilograms of marijuana and money laundering. According to court documents, the investigation into the organization began in 2007. Sources identified Rhodes as one of the leaders of a drug trafficking organization. Loads of marijuana were received from a variety of sources. Evidence shows Rhodes laundered the money he was receiving from the sale of the marijuana by buying vehicles and custom jewelry, making deposits into bank accounts of a small company called T & J Investments of Ohio LTD and other means. Rhodes also made trips to Las Vegas with his co-conspirators and gave each of them just under $10,000 cash to carry with them. Five other defendants in the case were sentenced as follows:
•Marc Clark – Sentenced on January 7, 2013 to 100 months in prison
•Steve Blackmon – Sentenced on November 29, 2012 to 15 months in prison
•Jayson Reed – Sentenced on February 27, 2013 to 12 months and a day in prison
•Shawnte M. Lynn – Sentenced on January 25, 2013 to 15 months in prison
•Erik Neely – Sentenced on January 25, 2013 to 18 months in prison.
Los Zetas Money Launderers Sentenced
On March 25, 2013, in Laredo, Texas, Laredoans Laurencio Montes and Jose Luis Gonzales were sentenced for their roles in laundering millions of dollars in drug proceeds from the Los Zetas drug trafficking organization. Montes was sentenced to 120 months in prison and ordered to forfeit $6 million. Gonzales was sentenced to 60 months in prison, three years of supervised release and ordered to forfeit $2,999,319. Montes and Gonzales pleaded guilty on October 30, 2012 to conspiracy to launder drug proceeds. According to court documents, the organization shipped multiple loads of cocaine from Mexico to major distribution centers in the United States such as Chicago, Philadelphia and Dallas. During the course of the investigation, approximately $21 million was seized from various tractor trailer drivers, couriers and stash homes in Texas and Illinois which was destined to be transported into Mexico for delivery to the Zeta drug trafficking organization.
Korean National Sentenced for Structuring Over $1.5 Million Using Fraudulent Passports
On March 21, 2013, in Honolulu, Hawaii, Young Mo Sung, a citizen of South Korea, was sentenced to 31 months in prison. Sung pleaded guilty on November 9, 2012 for to passport fraud and structuring transactions to evade reporting requirements of the IRS. According to court documents, Sung had structured approximately 254 transactions totaling $1,538,385 with domestic financial institutions through multiple bank accounts he had opened using passports under fraudulent identities. He structured the financial transactions to move currency he received from females employed at bars and/or clubs in Honolulu, Hawaii and Los Angeles, California. Sung was paid a commission to deposit and transfer the female workers’ cash proceeds.
North Carolina Tobacco Broker Sentenced
On March 21, 2013, in Raleigh, N.C., Jesse Ray “Tommy” Faulkner, II, was sentenced to 66 months in prison, three years of supervised release and ordered to pay $13,261,662 in restitution. On December 10, 2012, Faulkner pleaded guilty to conspiring to make false statements, making material false statements, committing mail and wire fraud, structuring financial transactions and conspiracy to commit money laundering. According to court documents, Faulkner was an agent for a cigarette manufacturer, and operated as an independent tobacco broker. Faulkner also operated independent tobacco receiving stations in Wilson, N.C. Through his tobacco receiving stations, Faulkner bought and sold tobacco from farmers with cash or in nominee names to facilitate the farmers in hiding their production. The conspiring farmers would not report the sales of the “hidden” tobacco in connection with their federal crop insurance claims, thereby being paid for losses they did not suffer. Faulkner then resold the “hidden” tobacco to the cigarette manufacturer. During the course of the conspiracy, Faulkner sold or caused to be sold $5,181,816 worth of “hidden” flue-cured tobacco and $8,097,429 worth of “hidden” burley tobacco.
Defendant Sentenced for Conspiracy and Money Laundering Crimes
On March 20, 2013, in Las Vegas, Nev., Shawn Rice, of Seligman, Ariz., was sentenced to 98 months in prison, three years of supervised release and ordered to forfeit $1.29 million in assets and pay $95,782 in restitution. Rice, a member of an anti-government movement known as the “Sovereign Movement,” was convicted by a jury in July 2012 of one count of conspiracy to commit money laundering, thirteen counts of money laundering, and four counts of failure to appear. According to court records, from about March 2008 to March 2009, Rice and co-defendant Samuel Davis, of Council, Idaho, laundered approximately $1.3 million of monies that they thought were from the theft and forgery of stolen official bank checks. Rice and Davis laundered the monies through a nominee trust account controlled by Davis and through an account of a purported religious organization controlled by Rice. Davis and Rice took approximately $74,000 and $22,000, respectively, in fees for their money laundering services. Davis was sentenced in October 2011 to 57 months in prison. Davis and Rice are heavily involved in the “Sovereign Movement,” whose members believe they do not have to pay taxes and believe the federal government deceived Americans into obtaining social security cards, driver’s licenses, car registrations, etc., and that if these contracts are revoked; persons are “sovereign citizens.” Members of the sovereign movement also believe that U.S. currency is invalid. They widely use fictitious financial instruments such as fraudulent money orders, personal checks, and sight drafts, and participate in “redemption” schemes where the fictitious financial instruments are used to pay creditors. Davis is a national leader of the movement, traveling nationwide to teach different theories and ideologies of the movement. Rice allegedly claims that he is a lawyer and Rabbi, and uses his law school education and businesses to promote his sovereign ideas and to gain credibility in the community.
Minnesota Man Sentenced for Money Laundering and Wire Fraud
On March 18, 2013, in Minneapolis, Minn., Jason Michael Meyer, of Rochester, Minn., was sentenced to 60 months in prison and three years of supervised release. Meyer pleaded guilty on September 18, 2012, to money laundering and wire fraud. In his plea agreement, he admitted to starting an investment company, 3 Hooligans Investment Properties, LLC, in 2007. Meyer represented himself as an experienced investor and began soliciting people to invest their money with 3 Hooligans. He promised his clients both significant and rapid returns for their investments, with little or no risk. Meyer deposited their money into a bank account he controlled. Instead of investing their money, however, Meyer often used the funds to pay for personal expenses, including house payments and family vacations. To continue the scheme, Meyer found new clients and used their money to pay previous clients. Until the fraudulent scheme was discovered in 2010, Meyer participated in approximately 30 transactions of money laundering and 30 transactions of wire fraud, which together, resulted in losses exceeding $11 million.
Four Co-Conspirators Sentenced in Idaho Drug Case
On March 8, 2013, in Pocatello, Idaho, four co-conspirators were sentenced for their roles in a large-scale methamphetamine trafficking organization. Antonio Javier Mendoza, of Shelley, Idaho, was sentenced to 96 months in prison, five years of supervised release and ordered to pay a $1,000 fine. Fabiola Esmerelda Marin Castro, a Mexican national formerly living in Rexburg, Idaho, was sentenced to 36 months in prison, fined $300 and ordered to forfeit $83,575 and two vehicles. Daniel Quiroz, a Mexican national formerly residing in Rexburg, was sentenced to 78 months in prison and five years of supervised release. Quiroz will be subject to deportation following his release from prison. Abel Garcia, of Idaho Falls, Idaho, was sentenced to one month in prison, two years of supervised release and fined $750. According to the plea agreements, from June 2005 through January 2012, these individuals and others entered into a conspiracy to possess and distribute in excess of 50 grams of actual methamphetamine in the Idaho Falls area. In addition to distributing methamphetamine, several defendants laundered proceeds from the sale of the methamphetamine, and made false loan application to local banks to further the laundering of money. During the course of the conspiracy, the defendants obtained in excess of $500,000 from the distribution of methamphetamine. Nine other defendants have pleaded guilty and are awaiting sentencing. One defendant is a fugitive.
Arizona Woman Sentenced on Mail Fraud and Illegal Monetary Transaction Charges
On March 8, 2013, in Tucson, Ariz., Mayra Jeannette Angulo was sentenced to 22 months in prison, three years of supervised release and ordered to pay $953,176 in restitution. Angulo pleaded guilty on October 30, 2012 to mail fraud and engaging in an illegal monetary transaction. According to the plea agreement, Angulo was employed as a representative of Woodbury Financial Services selling life insurance and brokerage services to clients in the Republic of Mexico and the United States. Beginning in 2002, Angulo and her ex-husband Mark Ophelia Islas embezzled clients’ insurance premium payments for their personal use by creating a corporation, International Financial Services Group. They opened a bank account in the corporation’s name to deposit the money they embezzled. They then transferred the money to personal bank accounts for their own personal benefit. To cover their actions, Angulo and Islas opened numerous postal boxes in the names of clients and changed the clients’ addresses in the system so the statements would be sent to the postal boxes not the true clients. Additionally, Angulo and Islas created false account statements for the victim clients which were hand-delivered. They also made minimal payments to the clients’ life insurance policies to keep them from lapsing.
Man Sentenced for Narcotics and Money Laundering Conspiracies
On March 6, 2013, in Waco, Texas, Eliseo Montes, Jr. was sentenced to 240 months in prison, five years of supervised release and fined $2,000. On December 20, 2012, Montes was convicted of conspiracy to possess with intent to distribute at least 1,000 kilograms of marijuana and conspiracy to commit money laundering. According to court documents, beginning in October 2004, Montes and others began to acquire quantities of controlled substances for distribution. Once the controlled substances were sold and the currency collected, Montes, and other members of the organization, used the banking system or the bulk transportation of currency to transfer the currency. The proceeds were used to further the ongoing illegal activity and purchase assets, some of which were placed in nominee names to conceal their true ownership.
Alabama Man Sentenced for Laundering Money
On February 28, 2013, in Birmingham, Ala., Paul Haskell Lane, Jr., of Pelham, was sentenced to 37 months in prison his role in a scheme that collected more than $400,000 for expenses of a lawsuit that never existed. Paul Lane was also ordered to pay $343,900 in restitution to 20 victims and forfeit $10,500 to the government as proceeds of the illegal activity. Paul Lane pleaded guilty in August 2012 to the money laundering charge. According to court documents, in late 2009, Lane and his daughter were separately indicted for their roles in a plan to get people in other states to wire money to Lane’s bank account. Those who sent money were led to believe it would go toward costs for a personal-injury lawsuit filed by the Lane family after Katherine Lane suffered a brutal assault at work. The Lanes represented that proceeds from the lawsuit would be used to repay people who donated. Most who provided money also believed that they would get back from the Lanes more money than they sent. Katherine Lane, however, had not been assaulted and the Lanes had no lawsuit. Over the course of several years, Lane took the money that was wired into his account and gave it to his daughter. Katherine Lane pleaded guilty in 2010 to wire fraud, aggravated identity theft, and money laundering. She was sentenced in 2011 to 87 months in prison.
Professional Counselor Sentenced for Illegal Distribution of Prescription Drugs
On February 25, 2013, in Springfield, Mo., Tammy L. Neil, of Carthage, Mo., was sentenced to 12 months and one day in prison for her role in conspiracies to illegally distribute more than $1.5 million in prescription drugs and to engage in money laundering. Neil was also ordered to pay a $10,000 fine and forfeit cash and property representing the proceeds of her criminal conduct. According to court documents, Neil pleaded guilty on July 18, 2012 to her role in a conspiracy to illegally distribute phentermine from January 1, 2005, through March 26, 2008. Neil also admitted that she participated in a conspiracy to engage in money laundering during the same timeframe by aiding and abetting others to conduct financial transactions that involved the proceeds of the illegal distribution of prescription drugs.
Two Outlaws Motorcycle Club Members Sentenced on Federal Charges
On February 21, 2013, in Indianapolis, Ind., Kent D. Whitinger was sentenced to 87 months in prison and five years of supervised release under the federal Racketeer Influenced and Corrupt Organization (RICO) statute for his role in the operation of the Outlaws Motorcycle Club (OMC). Steve A. Reynolds, of Fort Wayne, was sentenced to 70 months in prison and five years of supervised release for his role. According to court documents, members of the Indianapolis OMC were charged with engaging in organized criminal activity in Indianapolis and across the state. Whitinger and Reynolds both pleaded guilty to a variety of crimes in furtherance of the OMC. Whitinger, a member of the Indianapolis chapter of the club, engaged in money laundering, gambling, extortion, witness tampering and cocaine distribution. Reynolds, a member of the Fort Wayne chapter, engaged in extortion and the distribution of prescription drugs.
Ohio Man Sentenced for Fraud and Money Laundering
On February 21, 2013, in Dayton, Ohio, Omar Yahya, formerly known as Darnell Bernard Watts, was sentenced to 12 months and one day in prison and three years of supervised release. Yahya along with three co-defendants was ordered to repay $3.8 million, forfeit their interests in approximately $80,209 in bank accounts and cash. Yahya pleaded guilty on October 11, 2012, to conspiracy and conspiracy to launder money. Between 2009 and 2011, Yahya and others conspired to traffic in electronic benefit cards in order to defraud the USDA’s Supplemental Nutrition Assistance Program (SNAP). The conspiracy caused more than $3.8 million in criminal proceeds in the form of USDA SNAP wire transfers to be deposited into various bank accounts and more than $1.2 million in criminal proceeds in the form of currency withdrawals to be made from the store’s accounts. The other three defendants were also sentenced to twelve months and one day in prison on charges of conspiracy and conspiracy to launder money.
Illinois Man Sentenced for Money Laundering
On February 14, 2013, in Benton Ill., Kerry L. Smith, of Carbondale, Ill., was sentenced 150 months in prison, five years of supervised release and ordered to pay $41,802 restitution. In addition, Smith was ordered to pay a monetary forfeiture judgment in the amount of $790,020, as well as forfeit eight homes, two vehicles, $10,576 in cash and other personal property. Smith pleaded guilty to conspiracy to distribute marijuana, engaging in an unlawful monetary transaction, concealment of material information from the Social Security Administration (SSA), and making a false statement. According to evidence at the hearings, from at least May 2001 through February 2007, Smith and others were involved in the distribution of marijuana. On December 6, 2007, Smith used over $12,000 of marijuana proceeds to purchase a vehicle. During this time, Smith also concealed information from the SSA and the U.S. Department of Agriculture that he was working and acquiring real estate and other assets. This concealment allowed Smith to fraudulently collect Supplemental Security Income and food stamps.
Vice-President of Car Dealership Sentenced for Money Laundering and Drug Trafficking for the Gulf Cartel
On February 4, 2013, in Orlando, Fla., Eladio Marroquin-Medina, of Apopka, Fla., was sentenced to 72 months in prison for conspiracy to possess with the intent to distribute 1,000 kilograms or more of marijuana and conspiracy to engage in money laundering. Medina was the vice-president of JM2 Auto Sales located in Apopka, Florida. According to court documents, Medina and Joel Torres, the president of JM2, laundered narcotics proceeds for the Gulf Cartel at their car dealership. The Gulf Cartel was a drug trafficking organization based out of Mexico. As payment for vehicles, Medina and Torres received money that was derived from narcotics sales. These vehicles were sent back to members of the Cartel in Texas and also used by local Cartel members in Florida. From October 26, 2010 to November 16, 2010, one Cartel member brought more than $115,000 in cash into JM2 for the purchase of vehicles. Joel Torres was previously convicted of money laundering and failure to file IRS Form 8300 and awaits sentencing.
Former Convenience Store Owner Sentenced for Food Stamp Fraud, Wire Fraud and Unlicensed Money Transmitting
On January 25, 2013, in Fort Worth, Texas, Ali Mohamud, of Arlington, Texas, was sentenced to 57 months in prison and ordered to pay $1,418,027 in restitution. Mohamud pleaded guilty in October 2012 to seven counts of food stamp fraud, five counts of wire fraud and one count of conducting an unlicensed money transmitting business. According to court documents, Mohamud owned a grocery store in Arlington, and participated in the United States Supplemental Nutrition Assistance Program (SNAP), formerly known as the “Food Stamp Program.” Beginning in 2009, Mohamud exchanged food stamp benefits for cash or wired money to other individuals in Somalia using food stamp benefits. From September 2008 through February 2010, Mohamud wired thousands of dollars from an EBT management for retailers, to his bank in Arlington.
San Diego Man Sentenced for Money Laundering and Other Charges
On January 24, 2013, in San Diego, Calif., Joshua John Hester, of San Diego, Calif., was sentenced to 100 months in prison for conspiracy to launder money, conspiracy to maintain drug-related premises and other charges. According to court documents, Hester admitted that he was the silent owner of two marijuana dispensaries where he made millions of dollars in the retail sale of marijuana. Hester originally used a supplier to distribute over 1,000 kilograms of high-quality marijuana and laundered millions of dollars of profits. When his supplier was arrested, Hester opened dispensaries and started selling and manufacturing his own marijuana and purchased bulk quantity from others. Hester also admitted that he laundered over $2 million in connection with the purchase of a residence in Rancho Santa Fe, California, where he also manufactured marijuana. Hester also agreed to forfeit over $575,000 in assets, including cash, vehicles, and jewelry.
California Man Sentenced on Drug Charges and Structuring Financial Transactions
On January 23, 2013, in Sacramento, Calif., Charles Miller Hilkey Jr., of the Nevada City area, was sentenced 49 months in prison and ordered to forfeit 25 different pieces of property in Oregon and California worth more than $2.4 million. Hilkey pleaded guilty on February 21, 2012 in connection with the cultivation of marijuana and structuring cash transactions to avoid reporting requirements. According to court documents, Hilkey and others were involved in a four-year conspiracy to cultivate and sell marijuana. Between 2006 and 2009, Hilkey structured more than $850,000 in cash deposits with the intent of evading reporting requirements. He admitted that the funds he structured either were proceeds of marijuana cultivation or were intended to promote marijuana cultivation. By 2009, Hilkey was the organizer of a well-concealed and well-funded marijuana operation. He had several marijuana grow sites under his control, he used straw owners to separate himself from a number of those grows, and he regularly used underlings to sell his marijuana, bringing in tens-of-thousands of dollars with each sale. In September 2009, investigators seized evidence of more than 200 marijuana plants, several pounds of processed marijuana, marijuana growing equipment, a firearm and ammunition, and more than $143,000 in cash on properties controlled by Hilkey.
Pain Clinic Owner and Physician Sentenced for Prescription Drug and Money Laundering Conspiracies
On January 18, 2013, in Pensacola, Fla., Dennis M. Caroni, of Los Angeles, Calif., and Dr. Gerard M. DiLeo, of Bradenton, Fla., were sentenced for their roles in running illegal pill mill pain clinics and conspiring to unlawfully launder the proceeds of their prescription drug distribution violations. Caroni was sentenced to 240 months in prison. DiLeo was sentenced to 24 months in prison and one year of home confinement. Following a six-week trial in October and November 2011, the defendants were found guilty of conspiring to unlawfully distribute prescription painkillers and conspiring to launder the proceeds. According to court documents, Caroni was the owner and operator of Global pain management clinics in Pensacola and the New Orleans area between 2004 and 2008. Dileo was the part-owner of one of the clinics and full-time prescribing physician.
Ohio Auto Dealer Sentenced for Money Laundering and Falsifying Tax Returns
On January 11, 2013, in Dayton, Ohio, Earl Clark, of Franklin, Ohio, was sentenced to 12 months and one day in prison, three years of supervised release and ordered to pay a $10,000 fine. In addition, Clark was ordered to forfeit two bank accounts containing $353,211 and $33,388, plus $21,524 in U.S. currency, nine automobiles, and a trailer, and to pay $80,000 in restitution to the IRS. According to court documents, Clark owned and operated Clark’s Auto Sales and assisted several individuals in concealing their assets, which represented the proceeds of illegal drug sales. Between 2007 and October 2010, Clark sold cars to drug dealers, but titled the cars in the names of individuals other than the drug dealers in order to help conceal ownership of the vehicles. He also placed false liens of the vehicles to prevent law enforcement from trying to seize the property as proceeds of drug trafficking. Clark laundered the proceeds from the illegal auto sales by depositing cash, totaling between $120,000 and $200,000, into his bank account. Additionally, Clark earned significant income between 2004 and 2009 from the sale of fireworks and explosive materials. Clark willfully failed to report at least $80,000 in income per year during each of these tax periods.
Cleveland Man Sentenced for Bank Fraud and Money Laundering
On January 10, 2013, Zrino Jukic, of Cleveland, Ohio, was sentenced to 37 months in prison and ordered to pay nearly $1.7 million in restitution on charges of bank fraud and money laundering. Sccording to court documents, Jukic, co-owner of the Zlato Group, engaged in a scheme to defraud the St. Paul Croatian Federal Credit Union by providing false information in connection with approximately 11 loan applications. The proceeds of these fraudulent loans were used to allow Jukic and others, through the Zlato Group, to invest in certain business ventures. Jukic also engaged in a money laundering transaction by transferring fraudulently obtained funds from a Zlato Group bank account to his own bank account, according to court documents.
Leader of Nevada–Alaska Oxycodone Ring Sentenced on Drug and Money Laundering Charges
On January 3, 2013, in Las Vegas, Nev., Nicholas Ghafouria was sentenced to 180 months in prison, three years of supervised release and ordered to forfeit $1.2 million in cash and property. Ghafouria pleaded guilty on October 12, 2012 to conspiracy, drug and money laundering charges. According to court documents, between May 2009 and October 2010, Ghafouria organized and led a group of individuals who distributed over 4,000 oxycodone pills in Alaska and laundered at least $1.2 million in cash proceeds. Ghafouria and his co-conspirators used various ways to get the drugs to Alaska, including sending them in packages and transporting them on airplane flights. Ghafouria sold the pills for approximately $65 each in Alaska. Co-conspirators in Alaska either provided money directly to couriers who delivered it to Ghafouria in Las Vegas, or they deposited money into bank accounts in Alaska which was withdrawn in Las Vegas by individuals under Ghafouria’s direction.
Rabbi and Brooklyn Man Sentenced in Money Laundering Conspiracy
On December 27, 2012, in Trenton, N.J., Lavel Schwartz, a rabbi based in Brooklyn, N.Y., was sentenced to 12 months and one day in prison and three years of supervised release. On January 3, 2013, in Trenton, N.J., David S. Goldhirsh, of Brooklyn, N.Y., was sentenced to 12 months and one day in prison, three years of supervised release and ordered to forfeit $154,289. According to court documents and statements made in court, beginning in May 2008, Schwartz and his brother, Rabbi Mordchai Fish, met with Solomon Dwek. For a fee of approximately 10 percent, Fish and Schwartz agreed to launder and conceal Dwek’s funds through a series of purported charities, also known as “gemachs.” Fish would instruct Dwek to make checks payable to various “gemachs” including Boyoner Gemilas Chesed (BGC), which was operated by Goldhirsh, who provided cash directly to Fish and Dwek. Schwartz admitted that prior to laundering Dwek’s funds, Dwek informed him that the funds that he sought to launder were the proceeds of Dwek’s purported illegal businesses, which included the trafficking in counterfeit goods. Schwartz admitted that, despite knowing the illicit nature of the funds, he engaged in approximately 10 money laundering transactions with Dwek.
Defendant Sentenced for Role in Investment Fraud Scheme
On December 20, 2012, in Missoula, Mont., Shanna Krista Raymond, of Oregon, was sentenced to 24 months in prison, three years of supervised release and ordered to pay $1,500,000 in restitution. Raymond pleaded guilty to wire fraud and money laundering. According to court documents, in early 2008, Raymond learned of a purported high-yield investment through an associate. The investment was to return a large amount of money over a relatively short amount of time and involved Dan Two Feathers, who would invest the funds. Raymond was interested in promoting the investment and met with several investors or potential investors. Raymond received in her bank account a total of $900,000. She sent $500,000 from her bank account in Portland, Oregon, to Two Feathers’ bank account and used the remaining $400,000 for other purposes.
New Jersey Man Sentenced for Money Laundering
On December 19, 2012, in Newark, N.J., Juan Carlos Done, of Morristown, N.J., was sentenced to 92 months in prison and three years of supervised release for his involvement in a conspiracy to launder narcotics proceeds from 2007 through June 2009. According to court documents and statements made in court, Done agreed to conduct financial transactions with drug proceeds in a manner intended to conceal the source of the funds. He and others made anonymous cash deposits of drug proceeds into various bank accounts in New Jersey, Pennsylvania, and North Carolina. The amount of these deposits was intended to avoid federal transaction reporting requirements. Done’s brother, Enrique Done, was previously sentenced to 75 months in prison for his role in a conspiracy to possess heroin with intent to distribute in New Jersey and elsewhere.
Former President of CORF Licensing Services Sentenced on Conspiracy and Money Laundering Charges
On December 11, 2012, in Phoenix, Ariz., David Steven Goldfarb, of Scottsdale, Ariz., was sentenced to 36 months in prison and ordered to pay $19,567,512 in restitution. Goldfarb pleaded guilty on September 19, 2012, to conspiracy to commit mail fraud and transactional money laundering for his role in a multi-million dollar investment fraud scheme. Goldfarb, along with co-defendants, owned and operated CORF Licensing Services, LP (CLS) and CORF Management Services, LP (CMS) from 1999 until May 2003, when the companies declared bankruptcy. Goldfarb served as the president of both companies. During the life of CLS and CMS, the defendants convinced hundreds of investors to contract with CLS to establish a for-profit Comprehensive Outpatient Rehabilitation Facility, which they claimed would provide an alternative to hospitals for rehab services. For an investment fee of $100,000 to $165,000, CLS was supposed to establish a profitable, Medicare-certified, business for the investor. The defendants entered into 338 contracts and collected over $40,000,000. However, CLS was unable to establish medical businesses for over two thirds of its clients. In addition, at the facilities CLS did establish, its clients were losing substantial sums of money. Despite these problems, Goldfarb and his partners convinced hundreds of investors to pay CLS through an elaborate fraudulent scheme. Goldfarb and his co-defendants placed ads in newspapers and magazines that falsely represented that an investor could expect to make $450,000 in net profit during the first year. Goldfarb and his co-defendants held sales seminars at an upscale and exclusive country club in Scottsdale, Ariz., to convey the impression that CLS and its existing clients/investors were financially successful. Goldfarb and his co-defendants gave prospective investors a false impression that CLS clients were successful and were collecting more than $1,000,000 a year. As part of the fraud scheme, investors were directed to speak to owners who were identified as “independent” references. Goldfarb and his co-defendants paid the “independent” references approximately $2,000,000 to provide misleading information. When speaking to prospective investors, the “independent” references falsely confirmed the financial representations Goldfarb and his co-defendants had made. Goldfarb received over $3,000,000 from CLS during the life of the company.
West Virginia Man Sentenced on Wire Fraud and Money Laundering Charges
On December 3, 2012, in Martinsburg, W.Va., David F. Brackett, Jr., of Shepherdstown, West Virginia, was sentenced to 282 months in prison and three years of supervised release. Brackett pleaded guilty on August 27, 2012, to wire fraud and money laundering. According to court documents, Brackett obtained “loan” money from victims and falsely promising to repay the victims with substantial lottery winnings that he had never won. Brackett also fraudulently obtained money by making materially false statements about his assets and expected profitability of his business ventures. In total, Brackett fraudulently obtained over $5.5 million from his victims and laundered his money through a variety of bank transactions involving different banks and accounts.
Former Penn State Professor Sentenced for Misappropriation of Federal Grant Funds
On November 30, 2012, in Harrisburg, Pa., Craig Grimes, a former Pennsylvania State University professor, was sentenced to 41 months in prison and ordered to pay $640,660 in restitution. On January 31, 2012, Grimes was charged in a three-count Information with wire fraud, false statements, and money laundering. During the time period contained in the Information, Grimes was a Professor of Electrical Engineering at Pennsylvania State University. According to court documents, between June 30, 2006 and February 1, 2011, Grimes defrauded the National Institutes of Health (NIH) of federal grant monies. The NIH provides funding for medical research through grants. Grimes, acting through his solely-owned company, SentechBiomed, requested a $1,196,359 grant from NIH. The NIH funded the clinical trial. In the application, Grimes specifically represented to the NIH that he would direct approximately $509,274 to a Medical Center to conduct clinical research. However, the money was never paid. Instead, the grant funds were misappropriated, in part, by Grimes for his own personal use. The clinical studies/trials were not performed. Grimes also made false statements to the United States Department of Energy in connection with a second federal grant. In August 2009, Grimes completed a grant application seeking a $1,908,732 from the Advanced Research Projects Agency – Energy (ARPA-E). Due to the limited amount of funds available for research, ARPA-E seeks to avoid funding research already funded by other government and private entities. It requires applicants for grants to disclose other funding sources. In the application Grimes completed and submitted to ARPA-E, he stated there was no other funding, when, in fact, he had received a grant for the same research from the National Science Foundation.
Former Executive Director of Alaska Eskimo Whaling Commission Sentenced on Federal Charges
On November 29, 2012, in Anchorage, Alaska, Maggie Ahmaogak was sentenced to 41 months in prison and ordered to pay $393,000 in restitution. Ahmaogak was sentence on two counts of intentional misapplication of funds from an organization receiving federal grant money and one count of money laundering. According to court documents, Ahmaogak was the executive director for the Alaska Eskimo Whaling Commission (AEWC) from 1990 until April 2007. AEWC receives funding from several sources, with the majority of its budget coming from grants issued by the U.S. Department of Commerce, National Oceanic and Atmospheric Administration (NOAA). Between 2004 and April 2007, AEWC received federal grant funds from NOAA totaling approximately $2.3 million. Ahmaogak intentionally misapplied $393,000 of AEWC funds, including federal grant money, to purchase luxury items and for gambling.
Former Kentucky Fire Chief Sentenced for Embezzlement and Money Laundering
On November 19, 2012, in Louisville, Ky., Paul Barth was sentenced to 41 months in prison, three years of supervised release and ordered to pay $190,000 in restitution to the Crusade for Children and $8,277 in restitution to the McMahan Fire Protection District (MFPD). Barth pleaded guilty on June 21, 2012 to mail fraud, wire fraud, and money laundering. According to court documents, from January 2001 through November 2009, Barth, while employed as the Chief of the MFPD, used money donated to MFPD and the Crusade for Children for his own personal use. Barth deposited approximately $218,995 into a bank account that he solely controlled in the name of the Crusade. He then used the majority of these funds to pay for personal expenses that included Disney World vacations, Corvette Club expenses, and vehicle property taxes. Barth also used the MFPD credit card to pay for more than $36,000 in expenses.
Missouri Man Sentenced on Money Laundering Charge
On November 15 ,2012, in Springfield, Mo., Richard B. Gillette, of Springfield, was sentenced to 24 months in prison and ordered to pay $1,292,256 in restitution. On May 23, 2012, Gillette pleaded guilty to money laundering, which was related to a mortgage fraud scheme. According to court documents, in May 2006, Gillette obtained two loans totaling $1,125,000 from Homecomings Financial to refinance existing loans on his residence. In the loan applications, Gillette claimed that his monthly income was $35,000; in reality, it was substantially less than that amount.
Two Texas Men Sentenced for Money Laundering
On October 30, 2012, in Laredo, Texas, Nelson Casarez and Miguel Santos were sentenced their roles in laundering millions of drug proceeds for the Los Zetas organization. Casarez was sentenced to 108 months in prison and ordered to forfeit $$2,999,310. Santos was sentenced to 72 months in prison and ordered to forfeit $4 million. According to court documents, Casarez provided a tractor trailer yard in Laredo for use by Los Zetas as a receiving station for other co-conspirators who transported bulk cash drug proceeds from the Chicago, Ill., area to Laredo. Casarez then coordinated the receipt and transfer of bulk cash drug proceeds to other co-conspirators who would transport it to Nuevo Laredo, Mexico. Casarez was involved in the laundering of approximately $5 million. Santos was a commercial truck driver who transported drug proceeds from the Chicago area to Laredo. Santos transported drug proceeds on at least two occasions in 2010 with each bulk shipment totaling approximately $2 million.
Former General Manager of West Coast Car Company Sentenced
On October 16, 2012, in Boise, Idaho, Kurt Bates, of Nampa, Idaho, was sentenced to 12 months in prison, three years of supervised release and ordered to pay a fine of $1,000 for misprision of a felony. Bates, former general manager of West Coast Car Company, pleaded guilty to a superseding information on June 5, 2012. According to the plea agreement, Bates admitted that on September 16, 2008, he became aware that one or more persons committed the felony crime of money laundering. These individuals conspired to conduct a sale of two automobiles for cash represented to be the proceeds of drug dealing activities. Bates admitted that he failed to notify law enforcement officers or other authorities that this crime had been committed. Bates was interviewed by law enforcement personnel about the money laundering activities on January 22, 2009, and failed to answer their questions truthfully. Bates’ co-defendant, Joseph Monte Johnson, formerly of Idaho Falls, pleaded guilty in August 2011 to conspiracy to launder monetary instruments. Johnson, the former finance manager of West Coast Car Company, is currently serving 40 months in federal prison.
Operator of Illegal Gambling Business Sentenced
On October 10, 2012, in Urbana, Ill., Jimmy A. LaCost, of Kankakee, Ill., was sentenced to 12 months and one day in prison. LaCost was convicted in April 2012 for structuring financial transactions and laundering the proceeds of his illegal gambling business. LaCost’s son, Michael, was sentenced to 12 months of home confinement with electronic monitoring. LaCost Amusements, Inc., was sentenced to three years of probation. The court also ordered Jimmy LaCost, Michael LaCost and LaCost Amusements, Inc., to jointly forfeit $4,285,829 in illegal gambling proceeds, 300 illegal video gambling machines, and nine separate properties. In April 2012, a jury found Jimmy LaCost guilty of 54 counts of structuring financial transactions and one count of money laundering. The jury found that Jimmy LaCost structured approximately $6.4 million in cash deposits over four years, from January 2005 to July 2009, to evade Currency Transaction Reporting requirements. In addition, the jury found Jimmy LaCost guilty of money laundering related to the bank deposits of proceeds from the operation of the illegal gambling business.
North Carolina Man Sentenced in Illegal Credit Scheme
On October 4, 2012, in Raleigh, N.C., James Walter Goddard, aka Walter James Karbley, Jr., was sentenced to 224 months in prison and five years of supervised release. Goddard was also ordered to pay $1,112,132 in restitution and a $900 special assessment. On May 5, 2011, Goddard pleaded guilty to one count of bank fraud, three counts of wire fraud, three counts of money laundering, one count of obstruction of justice, and one count of aggravated identity theft. According to the indictment, from 2005 to 2009, Goddard submitted hundreds of false credit card and lines of credit applications in the names of multiple individuals or businesses to various banks. Goddard, who called himself the Credit Doctor of North Carolina, met with individuals/business owners during which time they provided him some personal information. Goddard touted his specialized skills included obtaining credit for newly formed businesses as well as credit repair charging a 15 percent fee on each credit line he obtained. The individuals believed they were only going to get one or two credit cards. However, Goddard submitted falsified applications and was approved for between 10-20 cards on the individuals’ behalf. Through the use of a return preparer, fictitious tax returns were also created. Goddard, collecting his 15 percent by charging the credit cards under the merchant name, Goddard, Inc., laundered over $950,000 in merchant payments to his bank accounts from 2006-2009. In addition, from 2005 to 2011, Goddard has caused over $4,000,000 in credit application and wire fraud. Also, the indictment alleged Goddard applied for and was approved for 14 business credit cards in which he overstated his income and/or falsified his date of business establishment.
Source: IRS website