FBI Los Angeles: “$11 Million Boiler Room Mail and Wire Fraud Indictment Unsealed Today”

October 2, 2013

The Federal Bureau of Investigation on October 1, 2013 released the following:

Owner, Manager, and Salesperson at Fraudulent Investment Venture Taken into Custody for Mail and Wire Fraud in Connection with $11 Million Fraudulent Oil and Gas Well Investment Scheme.

LOS ANGELES—Two men were taken into custody today by special agents of the FBI for their alleged involvement in an Orange County boiler room operation that defrauded investors by falsely claiming high returns from oil and gas wells and by failing to disclose high sales commissions on investments, announced Bill L. Lewis, Assistant Director in Charge of the FBI’s Los Angeles Field Office and André Birotte Jr., United States Attorney for the Central District of California. A third defendant charged in this indictment is already in custody on unrelated charges.

Jerry Aubrey, 51, already in custody, his brother Timothy Aubrey, 53, of Moreno Valley, who self surrendered to the FBI’s Riverside Resident Agency, and Aaron Glasser, 30, of Mission Viejo, who was arrested without incident, are all in custody today after a federal grand jury indictment that charges them with mail and wire fraud was unsealed.

The indictment alleges Jerry Aubrey founded, managed, and operated the telemarketing investment scheme (also known as a “boiler room”) located in Costa Mesa, CA, doing business as Progressive Energy Partners, LLC (PEP). Timothy Aubrey worked as a PEP manager and salesperson, in addition to preparing, with Aaron Glasser, the sales scripts read to potential investors. Finally, Aaron Glasser was a PEP salesperson who worked as both a sales “fronter” and “closer,” making cold calls and closing deals. In his work as a salesperson, the indictment alleges Glasser raised around a quarter of the total amount of investments.

PEP allegedly employed salespersons called “fronters” and “closers” to raise over $11 million in five unregistered securities offerings for the purported purpose of developing and supporting oil and gas wells. In reality, most of the money was used to pay for the Aubrey brothers’ personal expenses, to pay up to 30% commissions to salespersons, and to make Ponzi-like payments to previous investors.

The defendants directed salespersons to cold call potential investors from purchased lead lists and solicit investments using scripts touting the profitability of investing in PEP. Fronters would pass the names of those who were potentially interested to closers, who could conclude the sale.

As alleged in the indictment, the defendants caused the salespersons to make material misrepresentations and conceal material facts when speaking to investors about, among other things, the percentage of investor money that would be spent on the development and operation of oil and gas wells, the anticipated amount and timing of returns to investors, and the payment of sales commissions to PEP salespersons, i.e., the fronters and closers.

Some of the false and deceptive statements indicated that investors would receive a greater than 50% annual rate of return on their investments; that almost half of the investor funds would be spent on oil and gas wells, and that the remainder of the investor funds would be spent on other business expenses; that salespersons would only receive a sales commission in the form of a share of the investment profits; and that PEP would use the assistance of an “independent CPA firm” to make distributions to investors.

The indictment alleges that, through the scheme, the defendants concealed from investors the material facts that approximately 30% of the investor funds would be spent on the Aubreys’ personal expenditures; that almost 20% of the investor funds would be used to make investor distributions and to return investor principal; that less than 10% of investor funds was spent on oil and gas wells; that investors would not, in fact, earn an annual rate of return of over 50%; and that defendant Jerry Aubrey, rather than an “independent CPA firm,” would determine the distributions to investors. The indictment alleges that by devising, executing, and participating in the above scheme, the defendants induced more than 200 investors to distribute to PEP over $11 million between 2005 and 2010.

In 2011, the Securities and Exchange Commission (SEC) obtained summary judgment against these defendants in connection with the PEP investment scheme. Additionally, Jerry Aubrey was charged in 1998 by the SEC with violating the broker-dealer registration provisions of the Securities Exchange Act of 1934 in connection with an offering fraud in which he sold securities in a fictitious cruise ship. The following year, he was permanently enjoined from future violations of Section 15(a)(1) of the Exchange Act (failure to register as a broker dealer), a permanent injunction he has violated through his alleged activities in PEP.

If convicted on all eight counts of Mail Fraud and two counts of Wire Fraud, the defendants face a maximum statutory penalty of 200 years in federal prison.

The criminal investigation was conducted by the FBI. The Securities and Exchange Commission conducted the civil investigation.

An indictment itself is not evidence that the defendants committed the crimes charged. Every defendant is presumed to be innocent until and unless proven guilty in court.”

More Information on Federal Mail Fraud Statutes, Jury Instructions, and Crimes
Federal Mail Fraud Crimes – 18 U.S.C. § 1341

Video on Federal Mail Fraud Crimes

More Information on Federal Wire Fraud Statutes, Jury Instructions, and Crimes
Federal Wire Fraud Crimes – 18 U.S.C. § 1343

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Douglas McNabb – McNabb Associates, P.C.’s
Federal Criminal Defense Attorneys Videos:

Federal Crimes – Be Careful

Federal Crimes – Be Proactive

Federal Crimes – Federal Indictment

Federal Crimes – Detention Hearing

Federal Mail Fraud Crimes

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To find additional federal criminal news, please read Federal Criminal Defense Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition Defense, OFAC SDN Sanctions Removal, International Criminal Court Defense, and US Seizure of Non-Resident, Foreign-Owned Assets. Because we have experience dealing with INTERPOL, our firm understands the inter-relationship that INTERPOL’s “Red Notice” brings to this equation.

The author of this blog is Douglas C. McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


Ex-Enron Executive Jeffrey Adam Shankman Indicted by a Federal Grand Jury Alleging Bankruptcy Charges and Concealment of Assets

October 1, 2013

The Federal Bureau of Investigation on September 30, 2013 released the following:

“HOUSTON— A federal grand jury has returned a 24-count indictment against Jeffrey Adam Shankman with bankruptcy fraud and concealment of assets, announced United States Attorney Kenneth Magidson.

The indictment was returned today. Shankman is expected to turn himself in to federal authorities and make an initial appearance before a U.S. magistrate judge in the near future.

According to the indictment, Shankman engaged in a scheme to conceal assets to defraud creditors and the trustee who was appointed to collect and dispose of all Shankman’s assets in his bankruptcy estate.

A debtor is required to complete several documents to carry out the bankruptcy process, which consist of a petition which contains summary information about the debtor’s financial condition, various bankruptcy schedules, and a statement of financial affairs. That statement contains, among other things, detailed information about the debtor’s assets, liabilities, recent payments to creditors, past and current income, and anticipated future income. The documents are required to be signed and certified under penalty of perjury that the information contained in them is true and correct. A debtor is required to disclose all creditors to the bankruptcy court so that the court can provide notice to the creditors of the filing of the bankruptcy petition. One purpose of this requirement is to allow the creditors the opportunity to participate in the bankruptcy proceeding and protect their interests.

Shankman, 46, filed for Chapter 7 bankruptcy in October 2008. The indictment alleges he concealed, transferred, and sold various pieces of fine art, decorative art, and jewelry and other assets without the knowledge, consent, and approval of the trustee or the bankruptcy court. The approximate value of the assets was $952,125, according to allegations.

Shankman was head of the Global Markets Division of Enron in 2001 before its collapse and served on the Art Committee of Enron.

In order for the bankruptcy system to work for all parties, it is imperative for the debtor to be truthful and forthright in all aspects of the bankruptcy process. The bankruptcy system is based on an honor system; the debtor agrees to provide all the necessary information requested by the trustee and to assist the trustee in collecting all assets of debtors and comply with the court’s orders to obtain the relief desired under the chapter the case was filed.

If convicted, he faces up to five years in federal prison and a possible $250,000 fine of on each count.

The case was investigated by the FBI and is being prosecuted by Assistant United States Attorney Quincy L. Ollison.

An indictment is a formal accusation of criminal conduct, not evidence. A defendant is presumed innocent unless convicted through due process of law.”

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Douglas McNabb – McNabb Associates, P.C.’s
Federal Criminal Defense Attorneys Videos:

Federal Crimes – Be Careful

Federal Crimes – Be Proactive

Federal Crimes – Federal Indictment

Federal Crimes – Detention Hearing

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To find additional federal criminal news, please read Federal Criminal Defense Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition Defense, OFAC SDN Sanctions Removal, International Criminal Court Defense, and US Seizure of Non-Resident, Foreign-Owned Assets. Because we have experience dealing with INTERPOL, our firm understands the inter-relationship that INTERPOL’s “Red Notice” brings to this equation.

The author of this blog is Douglas C. McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


Former University at San Antonio Projects Manager Indicted by Federal Grand Jury in Connection with an Alleged Bribery Scheme

August 26, 2013

The Federal Bureau of Investigation (FBI) on August 23, 2013 released the following:

“A federal grand jury in San Antonio this week returned a bribery indictment against 41–year-old James Paul Council, a former project manager in the Facilities Department at the University of Texas at San Antonio, and three other San Antonio area residents in connection with a bribery scheme announced United States Attorney Robert Pitman and FBI Special Agent in Charge Armando Fernandez. As of today, all four defendants have surrendered to federal authorities.

The 17-count indictment charges Council; 47-year-old Alfredo Romero Gonzalez, owner of Power Source Electric, an electrical construction and repair business in San Antonio; 60-year-old Power Source Electric chief estimator and project manager Magin Villalon (a.k.a. “Buddy”); and Villalon’s wife, 56-year-old Sarah Anne Luna, with one count of conspiracy to commit bribery concerning programs receiving federal funds and four counts of mail fraud. Council is also charged with six counts of receiving a bribe; the other defendants, six counts of paying a bribe.

According to the indictment, from approximately August 2011 through September 2012, the defendants allegedly conducted a scheme to bribe a purchasing officer in order to secure UTSA construction contracts. The indictment further alleges that the defendants colluded in the submission of fraudulent, inflated bids to UTSA under the names of sham companies, GNZ Enterprise LLC and Vista Contracting, and fixed at least 40 UTSA contracts. Authorities estimate the submitted bids totaled more than $200,000. Furthermore, the indictment alleges that Council received cash, as well as improvements to his residence for his role in the scheme.

Upon conviction, the defendants face up to five years’ imprisonment on the conspiracy count, up to 10 years’ imprisonment for each bribery related count, and up to 20 years in federal prison for each mail fraud count. All four defendants are on bond pending further court proceedings.

This indictment resulted from an investigation conducted by the agents with the Federal Bureau of Investigation, together with the San Antonio Police Department and the University of Texas at San Antonio Police Department. Assistant United States Attorney James Blankinship is prosecuting this case on behalf of the government.

An indictment is merely a charge and should not be considered as evidence of guilt. The defendants are presumed innocent until proven guilty in a court of law.”

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Douglas McNabb – McNabb Associates, P.C.’s
Federal Criminal Defense Attorneys Videos:

Federal Crimes – Be Careful

Federal Crimes – Be Proactive

Federal Crimes – Federal Indictment

Federal Crimes – Detention Hearing

Federal Mail Fraud Crimes

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To find additional federal criminal news, please read Federal Criminal Defense Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition Defense, OFAC SDN Sanctions Removal, International Criminal Court Defense, and US Seizure of Non-Resident, Foreign-Owned Assets. Because we have experience dealing with INTERPOL, our firm understands the inter-relationship that INTERPOL’s “Red Notice” brings to this equation.

The author of this blog is Douglas C. McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


Lee Police Chief Federally Indicted for Alleged Extortion and Money Laundering

August 9, 2013

The Federal Bureau of Investigation (FBI) on August 8, 2013 released the following:

“Alleged Activity Includes Coercing Payment from Individuals Facing Prostitution Charges and Diverting Money Through Children’s Toy Fund

BOSTON—A federal grand jury in Springfield returned an indictment today against Lee Police Chief Joseph Buffis for extortion and three counts of money laundering.

It is alleged that in February 2012 Buffis, 55, of Pittsfield, acting in his official capacity as Lee Police Department chief, extorted a $4,000 “donation” from two individuals who were facing prostitution-related charges. The “donation” was made payable to the Edward J. Laliberte Toy Fund, a holiday toy fund that Buffis controlled. Buffis deposited the $4,000 check into the Toy Fund’s bank account and quickly withdrew $3,990, which he then deposited into a joint bank account that he operated with his wife. The diverted money was then used to pay for various personal expenses. Buffis is alleged to have lied to law enforcement about the disposition of the funds.

“To be entrusted to serve and protect is a great honor and privilege. The alleged actions of Chief Buffis disgrace the many incredible law enforcement stewards who uphold and enforce the law. Actions like these threaten the credibility of our justice system, and we will not stand idly by and allow the trust of our communities to be violated,” said United States Attorney Carmen M. Ortiz.

Berkshire District Attorney David F. Capeless said, “The allegations contained in the federal indictment describe a serious breach of the public trust, and my office will continue to work with United States Attorney Ortiz and her office to see that justice is done and order restored. It should be made clear that these accusations are made against one man, Joseph Buffis, not the Lee Police Department or any other members of its force. My office will continue to work proudly alongside the Lee Police Department to ensure safety and justice in the town of Lee and throughout Berkshire County.”

“This is another example of a successful investigation and extraordinary teamwork between the FBI, the Massachusetts State Police, the United States Attorney’s Office, and the Berkshire District Attorney’s Office. The conduct charged in this indictment demonstrates law enforcement’s commitment to pursue public corruption at any level. We will not tolerate these acts, especially from those who have sworn to serve and protect the community and its citizens,” said FBI Special Agent in Charge Vincent B. Lisi.

If convicted, Buffis faces a maximum of 20 years in prison on each of the counts followed by five years of supervised release, and $250,000 fine. Buffis will be summoned to appear in court for his initial appearance.

U.S. Attorney Ortiz; District Attorney Capeless; FBI Special Agent in Charge Lisi; and Colonel Timothy P. Alben, Superintendent of the Massachusetts State Police, made the announcement today. The U.S. Attorney’s Office would like to thank District Attorney Capeless and the Massachusetts State Police Berkshire Detective Unit for uncovering the alleged violations and initiating the investigation which led to today’s indictment.

The case is being prosecuted by Assistant U.S. Attorney Steven H. Breslow of Ortiz’s Springfield Branch Office.

We are seeking the public’s assistance in this case. For those who have donated cash or toys to the Edward J. Lalilberte Toy Fund or for those who have applied to the Edward J. Laliberte Toy Fund, please contact the Federal Bureau of Investigation, Springfield Resident Agency, at (413) 732-0159. Please contact the FBI if you have any information, questions, or concerns regarding this matter.

The details contained in the indictment are allegations. The defendant is presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.”

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Douglas McNabb – McNabb Associates, P.C.’s
Federal Criminal Defense Attorneys Videos:

Federal Crimes – Be Careful

Federal Crimes – Be Proactive

Federal Crimes – Federal Indictment

Federal Crimes – Detention Hearing

Federal Mail Fraud Crimes

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To find additional federal criminal news, please read Federal Criminal Defense Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition Defense, OFAC SDN Sanctions Removal, International Criminal Court Defense, and US Seizure of Non-Resident, Foreign-Owned Assets. Because we have experience dealing with INTERPOL, our firm understands the inter-relationship that INTERPOL’s “Red Notice” brings to this equation.

The author of this blog is Douglas C. McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


FBI: Six Joplin Family Members Among 21 Indicted in an Alleged Meth Conspiracy

August 5, 2013

The Federal Bureau of Investigation (FBI) on August 5, 2013 released the following:

“KANSAS CITY, MO—Tammy Dickinson, United States Attorney for the Western District of Missouri, announced today that a Joplin, Missouri couple and their four adult sons are among 21 defendants who have been indicted by a federal grand jury for their roles in a conspiracy to distribute large quantities of methamphetamine in Jasper County, Missouri.

Gerardo Hernandez Cazares, Sr., 51, his wife, Leticia Cazares, 51, a citizen of Mexico who is a permanent legal resident of the United States, and his four sons, Jose DeLeon Cazares, 28, Gerardo Cazares Jr., 29, Eric Eziquel Cazares, 30, and Abraham Cazares, 24, all of Joplin; Casey Murray, 19, Gilbert Roland, 49, David Roland, 32, Charles Jackson Lee III, 29, James Pickel, 55, Michael Fordyce, 52, Michael Ray Hendrix, 33, Jimmy Don Thompson, 22, Nathan Kent Hernandez, 33, Jorge Ercules, 27, a citizen of Honduras, Henry Gonzalez, 31 and Hugo Rodriguez, 41, both citizens of Mexico, all of Joplin; Daniel Nevarez, 27, (Gerardo Cazares’s son in law), of Carl Junction, Missouri; Gabrielle Sharp, 20, of Springfield, Missouri; and Jose Puente, 41, of Commerce, Oklahoma, were charged in a 34-count indictment returned by a federal grand jury in Springfield on July 24, 2013. The indictment replaced a federal criminal complaint that was filed on June 13, 2013.

According to an affidavit filed in support of the original criminal complaint, law enforcement authorities noticed a significant increase in the availability of methamphetamine in the Joplin area beginning in June 2012. A confidential source stated there was a drug trafficking organization in Joplin that was importing very pure methamphetamine from Mexico into the United States, then transporting it by automobile to Joplin.

The federal indictment alleges that all 21 defendants participated in a conspiracy to distribute methamphetamine from July 16, 2012 to June 14, 2013.

In addition to the conspiracy, Gerardo Cazares, Sr., Gerardo Cazares, Jr., Jose Cazares, Hendrix, Pickel, Ercules, and Gonzalez are variously charged in 22 counts related to distributing methamphetamine.

Gerardo Cazares, Sr., Gerardo Cazares, Jr., Jose Cazares, Eric Cazares, Leticia Cazares, Hendrix, Pickel, Sharp, Thompson, Hernandez, Rodriguez, and Lee are also variously charged in 11 counts related to using a telephone to facilitate the drug trafficking conspiracy.

The federal indictment also contains two forfeiture allegations, which would require Pickel to forfeit to the government $1,600 that was seized by law enforcement officers, and would require Roland to forfeit to the government $4,162 that was seized by law enforcement officers.

Dickinson cautioned that the charges contained in this indictment are simply accusations, and not evidence of guilt. Evidence supporting the charges must be presented to a federal trial jury, whose duty is to determine guilt or innocence.

This case is being prosecuted by Special Assistant U.S. Attorney Ami Harshad Miller. It was investigated by the Drug Enforcement Administration, the Bureau of Alcohol, Tobacco, Firearms and Explosives, the FBI, IRS-Criminal Investigation, U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), the Bureau of Indian Affairs, the Missouri State Highway Patrol, the Kansas Bureau of Investigation, the Jasper County Drug Task Force, the Joplin (Missouri) Police Department and the Miami (Oklahoma) Police Department.”

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Douglas McNabb – McNabb Associates, P.C.’s
Federal Criminal Defense Attorneys Videos:

Federal Crimes – Be Careful

Federal Crimes – Be Proactive

Federal Crimes – Federal Indictment

Federal Crimes – Detention Hearing

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To find additional federal criminal news, please read Federal Criminal Defense Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition Defense, OFAC SDN Sanctions Removal, International Criminal Court Defense, and US Seizure of Non-Resident, Foreign-Owned Assets. Because we have experience dealing with INTERPOL, our firm understands the inter-relationship that INTERPOL’s “Red Notice” brings to this equation.

The author of this blog is Douglas C. McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


“Twists and turns in federal honey case lead to judge’s rebuke of prosecution, dismissal of charges”

July 22, 2013

The Florida Times-Union on July 20, 2013 (updated July 21, 2013) released the following:

By Jim Schoettler

“Qiao Chu sat in a federal detention center for 18 months, missing the birth of his first child and death of his grandfather, primarily based on the work of government chemist Sharon Stricklin.

Chin Shih Chou’s wife and two children suffered as he was locked up for the same period. Wei-Tang Lo’s family also missed him, though he got out in a year.

The three men were charged in 2011 with smuggling Chinese-origin honey into Jacksonville and other ports without paying $1.1 million in tariffs that would have been required for contents of more than 50 percent honey. The arrests were the latest efforts by the federal authorities to protect domestic honey producers from a surge into the country of cheaper foreign product.

A year later, a federal judge cut Stricklin as an expert witness after finding her analysis that the barrels were predominantly filled with honey had no scientific basis. The U.S. Attorney’s Office dropped the charges in May after an independent lab ruled the barrels contained syrup, as the men originally claimed, with little to no honey at all.

Stricklin wouldn’t discuss her work when reached this month by the Times-Union at her government lab in Savannah.

“I’m under kind of a hush order,” she whispered over her office phone.

Senior federal prosecutors and agents also stayed mum about jailing the men, who were from China, Taiwan and California.

But a powerful figure who had plenty to say was U.S. District Judge Marcia Howard.

Howard’s frustration with the case can be heard after prosecutors announced plans to drop the charges in May. Six months earlier, she’d struck Stricklin as an expert witness after finding that the lab tests that found the product full of honey had no scientific basis.

Prosecutors told Howard in early May they intended to dismiss the indictment. During three days of hearings, she called the case an embarrassment. She also described it as the worst miscarriage of justice she’d witnessed in 10 years as a judge.

“It’s the American justice system being everything it is not supposed to be,” she said.
Howard said the men deserved an apology from lead prosecutor Russell Stoddard for their loss of liberty. When Stoddard refused, Howard apologized instead.

She then watched them walk free on May 8 from her Jacksonville courtroom.

COMPETITION BRINGS ARRESTS

Among the many tasks of federal Customs and Border Protection is to protect American beekeepers.

In 2001, the U.S. Commerce Department slapped a tariff of more than 200 percent on any import found to contain more than 50 percent Chinese-origin honey to appease domestic producers fearful about unfair competition. The cost is now imposed based on the weight of the shipped barrels.

Federal authorities have seized multiple shipments of suspected Chinese-origin honey brought through U.S. ports in the past 12 years without paying the required tariff. Those containers include barrels labeled as rice fructose syrup and then relabeled as honey. Some importers have been convicted, imprisoned and ordered to pay restitution.

Enter Chou, 48, from Taiwan; Chu, 25, from China; and Lo, 48, from California.

The three men, acting on behalf of a number of Chinese-based importers, sold more than 50,000 55-gallon barrels labeled as honey coast-to-coast over a two-year period, said the U.S. Attorney’s Office. Federal agents began a smuggling investigation of the trio in 2011, according to hundreds of pages of court records reviewed this month by The Times-Union.

Authorities said they seized more 21,000 barrels illegally imported into Jacksonville and 10 other ports based on sample tests. A federal grand jury indicted the men in Jacksonville in November 2011.

The men faced 20 years in prison after being charged with smuggling barrels “filled with Chinese honey,” but marked as rice fructose syrup, to avoid paying the tariffs, the U.S. Attorney’s Office said in a news release at the time. They were also charged with providing false descriptions of the goods. Authorities said that once the barrels passed through customs, they were taken to a nearby warehouse, washed of all markings and relabeled as amber honey for domestic sale.

Deemed flight risks, Chu and Chou were held in a federal detention center without bond, while Lo’s was set at $1 million. The government later placed immigration detainers on Chou and Chu, keeping them in custody for deportation even if they posted bond. Chou pleaded guilty in June 2012 through his public defender after being confronted with evidence that included Stricklin’s lab findings. He sat for 11 more months in jail awaiting sentencing.

Meanwhile, private attorneys hired by Chu and Lo devoured research about the world of Chinese-origin honey. What they learned blew apart the prosecution’s case.

A FLAWED FINDING

Dana Krueger, a chemist hired by the defense, said he was bewildered that Stricklin’s conclusions were based on finding an overabundance of pollen on microscopic samples taken from the product.

The method was scientifically unproven, unpublished and non-peer reviewed, said Krueger, who runs a food processing laboratory in Massachusetts.

“The government locking up [the defendants] for months and months and months on the basis of this evidence was a travesty,” said Krueger, who earned his bachelor’s degree in chemistry from the Massachusetts Institute of Technology.

But Eric Wenger, chairman of True Source Honey LLC, said it’s not unusual for U.S. Customs laboratories like the one in Savannah to shroud their work in secrecy and remain unpublished. Wenger said the intent is to keep people who run illegal import businesses from studying such work and circumventing the process.

The attorneys for Chu and Lo used Krueger’s testimony to refute Stricklin’s findings before Judge Howard in an August 2012 Daubert hearing, where the admissibility of expert witnesses’ testimony can be challenged. Stricklin’s own testimony didn’t help. She admitted her analysis was based on looking at a book of food microscopy and reading up on methods used to study pollen.

“I am not a pollen expert,” she told Howard.

Howard ruled in November that Stricklin’s work was unreliable and inadmissible at trial, leaving the prosecution’s case on life support. The judge pointed out months later how key the lab findings were.

“It was her test and her test alone that caused this prosecution,” Howard said in a May court hearing. She declined to comment for this story.

Rob Scroggie, a Los Angeles-based attorney for Chu, applauded Howard’s ruling. He said the charges should never have been filed.

“The testing conducted by the customs laboratory was a complete sham,” said Scroggie, who served as Chu’s co-counsel with Jacksonville attorney Mark Rosenblum.

Mitch Stone, the attorney who represented Lo, said he was incensed to learn that neither Stricklin nor any of her bosses sought more input to support the new testing method.

“They did nothing other than pow-wow among themselves,” Stone said.

While the attorneys fought to dismiss the charges — Chou’s public defender later sought to withdraw his guilty plea — prosecutors fought on. Lo eventually was released on bond after nearly a year in jail, but the other men remained in custody.

The case for Chu and Lo moved toward a June trial date as Chou waited to be sentenced.
But time had just about run out for the government’s case.

CASE DISMISSED

In April, five months after they lost the Daubert motion, prosecutors sent samples of the suspected honey to an independent German laboratory. A summary of that analysis returned May 3 found it was predominantly corn or rice syrup, with little, if any, honey.

Stoddard, the prosecutor, told Howard on May 7 that the indictment was being dismissed against all three men, but didn’t say if a new indictment would be sought for fraudulently relabeling the barrels. The smuggling allegations were felonies, while the fraud charges were misdemeanors, the defense lawyers said.

Stoddard’s mention to Howard that his case was based on the Savannah lab’s findings and not any ill will on the part of the prosecution prompted this exchange:

Stoddard: “I’m not a scientist, your honor, I’m a lawyer. … Now, with the benefit of hindsight, things would have been done differently.”

Howard: “And with that, would it not be your intention to apologize to them for the fact that, with the benefit of hindsight, it’s determined that an error was made? Isn’t that what we teach our children to do?”

Stoddard: “You are asking me if I’m personally going to apologize to them or am I going to apologize to them on behalf of the United States?”

Howard: “Probably all of the above …”

Stoddard: “I do not believe so.”

Howard: “You might want to think about that.”

Fresh from their jail cells, Chu and Chou stood before Howard the next day eager to fly home and reunite with their families. Lo, out on bond, was already free and not required to be in the courtroom.

Howard told the men she didn’t believe prosecutors did anything intentionally to hurt them or acted in bad faith, but she’d hoped Stoddard would have at least expressed his regrets.

“Because it’s my view, and as I was raised, that when the facts turn out not to be what one believed and because of that another person has in some way been harmed, that they should receive an apology,” Howard said.

“It is my sincere regret that you have spent the last 18 months in custody and I truly hate that you will go back to your home country with that impression of the United States justice, because it works, and the truth is in your case it worked ultimately. It just worked slowly. But it did work in that the charges have been dismissed. I hope that will provide some solace.”

Neither Chou nor Lo could be reached by The Times-Union. Chu, in an email of somewhat broken English, called the case unfair, offered his thanks to supporters and did what prosecutors would not.

“I want to say sorry to my family, especially my grandpa and my wife,” Chu wrote from his home in China.

His message ended with a lament over missing both the birth of his first child and the death of his grandfather while locked up in a United States detention center.

“Hope my grandpa can hear me.””

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Douglas McNabb – McNabb Associates, P.C.’s
Federal Criminal Defense Attorneys Videos:

Federal Crimes – Be Careful

Federal Crimes – Be Proactive

Federal Crimes – Federal Indictment

————————————————————–

To find additional federal criminal news, please read Federal Criminal Defense Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition Defense, OFAC SDN Sanctions Removal, International Criminal Court Defense, and US Seizure of Non-Resident, Foreign-Owned Assets. Because we have experience dealing with INTERPOL, our firm understands the inter-relationship that INTERPOL’s “Red Notice” brings to this equation.

The author of this blog is Douglas C. McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


Local Physician, Clinic, and Nurse Practitioner Indicted by a Federal Grand Jury Alleging Federal Health Care Fraud Charges

July 19, 2013

The Federal Bureau of Investigation (FBI) on July 18, 2013 released the following:

“ST. LOUIS, MO— Dr. Mel Lucas, Patterson Medical Clinic Inc., and nurse practitioner Robyn Levy were indicted on multiple health care fraud related charges for their alleged false billing for services never rendered and false statements in patients’ medical records.

According to the indictment, from June 2008 to June 2011, the Patterson Medical Clinic Inc. and osteopath Mel E. Lucas billed Medicare, Tricare, and private insurers for more X-rays than were actually taken. The clinic had X-ray equipment in-house. The indictment also alleges that from 2008 to 2011, the clinic and Dr. Lucas billed for Lucas’ services on 573 occasions when he was actually out of town or in Cabo San Lucas, Mexico.

The indictment states that insurers were also billed for Lucas’ services on Fridays, when he did not come into the clinic. Instead, the patients were seen by medical assistants, who took their vital signs and drew their blood or gave them an injection. Lucas reviewed the records when he returned and billed insurers as if he had actually examined the patients.

Finally, the indictment alleges that Patterson, Lucas, and nurse practitioner Robyn Levy also billed insurers for an FDA-approved drug when Lucas had actually bought a non-approved version in Canada for hundreds of dollars less. The patients were not told they were receiving a drug that was not FDA-approved.

Lucas, of Florissant, Missouri, and Patterson Medical Clinic Inc. were indicted by a federal grand jury on eight felony counts of health care fraud and seven felony counts of false statements related to health service. Levy was indicted on two felony counts of health care fraud and three felony counts of false statements related to health service.

If convicted, each count of health care fraud carries a maximum penalty of 10 years in prison and/or fines up to $250,000 and each count of making false statements carries a maximum of five years in prison and/or fines up to $250,000. In determining the actual sentences, a judge is required to consider the U.S. Sentencing Guidelines, which provide recommended sentencing ranges.

Additionally, upon a finding of guilt, the defendants will be subject to forfeiture, which will require them to forfeit to the government all money derived from their illegal activity.

This case was investigated by the Department of Health and Human Services-Office of Inspector General and the FBI. Assistant United States Attorney Dorothy McMurtry is handling the case for the U.S. Attorney’s Office.

As is always the case, charges set forth in an indictment are merely accusations and do not constitute proof of guilt. Every defendant is presumed to be innocent unless and until proven guilty.”

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Douglas McNabb – McNabb Associates, P.C.’s
Federal Criminal Defense Attorneys Videos:

Federal Crimes – Be Careful

Federal Crimes – Be Proactive

Federal Crimes – Federal Indictment

Federal Crimes – Detention Hearing

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To find additional federal criminal news, please read Federal Criminal Defense Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition Defense, OFAC SDN Sanctions Removal, International Criminal Court Defense, and US Seizure of Non-Resident, Foreign-Owned Assets. Because we have experience dealing with INTERPOL, our firm understands the inter-relationship that INTERPOL’s “Red Notice” brings to this equation.

The author of this blog is Douglas C. McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


FBI: “Former Mortgage Broker Indicted for Defrauding First Coweta Bank”

July 19, 2013

The Federal Bureau of Investigation (FBI) on July 18, 2013 released the following:

“GAINESVILLE, GA— Amy B. Williams, 48, of Buford, Georgia, has been indicted by a federal grand jury on charges arising out of a scheme to defraud First Coweta Bank.

“Bank fraud is a critical problem throughout the United States, but it has hit Georgia especially hard,” said United States Attorney Sally Quillian Yates. “Georgia leads the nation in bank failures since 2008, with 78 banks failing—including First Coweta Bank, the bank this defendant is charged with defrauding.”

According to United States Attorney Yates, the indictment, and other information presented in court: Williams was the sole owner of United International Mortgage (UIM) Corporation in Buford, Georgia, and was in the business of arranging construction loans for residential builders.

In April 2007, UIM closed three construction loans for one of its customers, Mainstreet Builders Inc. The loans were intended to finance the cost of constructing three new houses in Suwanee, Georgia. The loans, which totaled more than $1.7 million, were funded by First Coweta Bank.

Williams directed an unindicted co-conspirator to forge signatures on loan documents and caused those documents to be faxed to First Coweta Bank. The bank then wire transferred the loan proceeds to an account controlled by Williams. Williams was required to hold the money in trust for the builder and to disburse the money to the builder on a draw basis, as work on the three houses progressed. Instead, she used more than $1.1 million of this money to pay off her personal debt at another bank and wire transferred $60,000 into her personal checking account. After converting First Coweta Bank’s money to her own use, Williams attempted to cover up her crime by e-mailing false documents and misleading photos to the bank.

Mark F. Giuliano, Special Agent in Charge, FBI Atlanta Field Office, stated, “The actions of Ms. Williams, as alleged in the indictment, directly led to the failure of the First Coweta Bank and, as such, clearly demonstrates the serious nature and impact of those actions. The FBI will continue to coordinate its bank fraud investigations with its various law enforcement partners in an effort to effectively identify, investigate, and present for prosecution those individuals who do so much harm to the banking industry.”

Jason T. Moran, Special Agent in Charge, Federal Deposit Insurance Corporation-Office of Inspector General Southeast Region, said, “The Federal Deposit Insurance Corporation is committed to its partnerships with others in the law enforcement community as we address mortgage fraud and bank fraud cases throughout the country. The American people need to be assured that their government is working to ensure integrity in the financial services and housing industries and that those involved in criminal activities that undermine that integrity will be held accountable.”

Williams was arraigned today before United States Magistrate Judge J. Clay Fuller in Gainesville, Georgia.

The indictment charges one count of conspiracy and six counts of bank fraud. Each count carries a maximum sentence of 30 years in prison and a fine of up to $1,000,000. In determining the actual sentence, the court will consider the United States Sentencing Guidelines, which are not binding but provide appropriate sentencing ranges for most offenders.

Members of the public are reminded that the indictment contains only allegations. A defendant is presumed innocent of the charges, and it will be the government’s burden to prove a defendant’s guilt beyond a reasonable doubt at trial.

This case is being investigated by special agents of the FBI and the FDIC Office of Inspector General.

Assistant United States Attorney Russell Phillips is prosecuting the case.”

Federal Bank Fraud Crimes – 18 U.S.C. § 1344

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Douglas McNabb – McNabb Associates, P.C.’s
Federal Criminal Defense Attorneys Videos:

Federal Crimes – Be Careful

Federal Crimes – Be Proactive

Federal Crimes – Federal Indictment

Federal Crimes – Detention Hearing

Federal Mail Fraud Crimes

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To find additional federal criminal news, please read Federal Criminal Defense Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition Defense, OFAC SDN Sanctions Removal, International Criminal Court Defense, and US Seizure of Non-Resident, Foreign-Owned Assets. Because we have experience dealing with INTERPOL, our firm understands the inter-relationship that INTERPOL’s “Red Notice” brings to this equation.

The author of this blog is Douglas C. McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


Pizza Franchise Owner and Four Others Indicted for Alleged Federal Tax Fraud Crimes

July 17, 2013

The Federal Bureau of Investigation (FBI) on July 16, 2013 released the following:

“WASHINGTON— The Justice Department announced today that Happy Asker, franchise owner of multiple Happy’s Pizza franchises, was indicted by a federal grand jury in Detroit along with Maher Bashi, Tom Yaldo, Arkan Summa, and Tagrid Bashi for multiple tax offenses arising from a conspiracy to underreport taxable income and payroll taxes of nine Happy’s Pizza franchises. All defendants with the exception of Happy Asker were arrested.

A multiple-count indictment was unsealed in the Eastern District of Michigan charging Happy Asker, Maher Bashi, and Tom Yaldo with conspiracy to defraud the United States by keeping fraudulent accounting records and falsely reporting income taxes and payroll taxes due and owing.

The indictment alleges that from approximately June 2004 through April 2011, the defendants conspired with each other to divert business receipts, underreport wages, and understate the true income and expenses of specified Happy’s Pizza franchises. According to the indictment, the scheme resulted in the specified franchises paying more than $2.1 million in unreported wages to employees and shareholders.

Additional charges in the indictment include three counts of filing a false individual income tax return as to Happy Asker; 21 counts of aiding in the filing of false payroll tax returns as to Happy Asker and Maher Bashi; 23 counts of aiding in the filing of false payroll tax returns as to Tom Yaldo on behalf of specified Happy’s Pizza franchises; and 11 counts as to Happy Asker and Maher Bashi for aiding in filing false corporate tax returns on behalf of specified Happy’s Pizza franchises.

Finally, the indictment also charges Happy Asker and Maher Bashi with one count of obstructing the due administration of the internal revenue laws. Arkan Summa and Tagrid Bashi are also charged together in a count of obstructing the due administration of the internal revenue laws and Tom Yaldo is also charged with one count of obstructing the due administration of the internal revenue laws.

An indictment is not a finding of guilt. Individuals charged in indictments are presumed innocent until proven guilty. If convicted of the conspiracy charge, the defendants face up to five years in prison and a $250,000 fine. The charges of filing a false income tax return and aiding or assisting in filing a false return carry a maximum penalty of three years in prison and a fine of $250,000 for each count. The obstruction charge carries a maximum penalty of three years in prison and a fine of $250,000 for each count.

This case was investigated by Internal Revenue Service-Criminal Investigation, the Drug Enforcement Administration, and the FBI and is being prosecuted by Senior Litigation Counsel Corey Smith and Trial Attorney Mark McDonald of the Justice Department’s Tax Division.”

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Douglas McNabb – McNabb Associates, P.C.’s
Federal Criminal Defense Attorneys Videos:

Federal Crimes – Be Careful

Federal Crimes – Be Proactive

Federal Crimes – Federal Indictment

Federal Crimes – Detention Hearing

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To find additional federal criminal news, please read Federal Criminal Defense Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition Defense, OFAC SDN Sanctions Removal, International Criminal Court Defense, and US Seizure of Non-Resident, Foreign-Owned Assets. Because we have experience dealing with INTERPOL, our firm understands the inter-relationship that INTERPOL’s “Red Notice” brings to this equation.

The author of this blog is Douglas C. McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


Tennessee Couple Indicted for Alleged Role in Warzone Contracting Scheme

July 17, 2013

The Federal Bureau of Investigation (FBI) on July 16, 2013 released the following:

Alleged to Have Steered $6.9 Million in Proceeds from Defense Subcontracts in Afghanistan

ALEXANDRIA, VA— Keith Johnson, 46, and Angela Johnson, 44, both of Maryville, Tennessee, were indicted by a federal grand jury today on charges of conspiracy to commit wire fraud and substantive wire fraud for their alleged role in a scheme to steer $6.9 million from Department of Defense (DOD) subcontracts in Afghanistan to shell entities through kickbacks and the use of assumed names.

Neil H. MacBride, United States Attorney for the Eastern District of Virginia; Mythili Raman, Acting Assistant Attorney General of the Justice Department’s Criminal Division; Valerie Parlave, Assistant Director in Charge of the FBI’s Washington Field Office; Robert E. Craig, Defense Criminal Investigative Service (DCIS) Special Agent in Charge of Mid-Atlantic Field Office; John Sopko, Inspector General for Special Inspector General for Afghanistan Reconstruction (SIGAR); and Frank Robey, Director of the U.S. Army Criminal Investigation Command’s Major Procurement Fraud Unit (MPFU), made the announcement following the grand jury’s return of the indictment.

Keith and Angela Johnson face a maximum penalty of 20 years in prison for conspiracy and up to 20 years in prison on each count of wire fraud if convicted.

According to the indictment, between July 2007 and June 2010, Keith and Angela Johnson engaged in a scheme to defraud Company #1, a DOD contractor, relating to two contracts worth more than $269 million. The contracts at issue were to provide vehicle-fleet maintenance for the Afghan National Army (ANA). Keith Johnson worked for Company #1 in Kabul, Afghanistan, as its project manager and procurement manager for the ANA contracts. Johnson fielded requests for vehicle parts from Company #2, a Company #1 subcontractor. Company #1 would then issue purchase orders for those parts to subcontractors after receiving multiple bids. In September 2007, Keith and Angela Johnson formed Company #4 as a Tennessee corporation, but they listed Angela Johnson’s mother and daughter on its corporate documents. Thereafter, Keith Johnson used his position in Company #1 to steer parts-supply purchase orders and other business on the ANA contracts to Company #4. To conceal Keith Johnson’s relationship to Company #4, Angela Johnson used her maiden name when interacting with Company #1 on Company #4’s behalf.

According to the indictment, the Johnsons also agreed with two other individuals at Company #2 to further the scheme. The two Company #2 employees helped steer Company #1 business to the Johnsons through Company #4, and Keith Johnson helped steer Company #1 business to Company #3, an entity operated by the two Company #2 employees using a fictional name. The Company #2 employees allegedly paid kickbacks to the Johnsons through a shell company. As part of the scheme, the Johnsons also allegedly participated in a bid-rigging practice of coordinating inflated bids on behalf of Company #3 or Company #4 to ensure that the other company would receive particular contracts. The conspirators also caused Company #1 to order excess parts that were not yet needed on Company #1’s contracts, and Company #4 did not ultimately supply all parts in compliance with Company #1’s requirements.

According to the indictment, the conspirators obtained $6,933,179.31 in proceeds from the scheme, which they used in part to purchase, among other items, several luxury vehicles and more than $191,000 in jewelry.

This case is being investigated by the Defense Criminal Investigative Service, the Federal Bureau of Investigation, the Special Inspector General for Afghanistan Reconstruction, and the U.S. Army Criminal Investigation Division. The case is being prosecuted by Assistant U.S. Attorney Ryan Faulconer of the U.S. Attorney’s Office for the Eastern District of Virginia and Trial Attorney Daniel Butler of the Criminal Division’s Fraud Section, who is also a Special Assistant U.S. Attorney in the Eastern District of Virginia.

Criminal indictments are only charges and not evidence of guilt. A defendant is presumed to be innocent until and unless proven guilty.”

Federal Wire Fraud Crimes – 18 U.S.C. § 1343

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Douglas McNabb – McNabb Associates, P.C.’s
Federal Criminal Defense Attorneys Videos:

Federal Crimes – Be Careful

Federal Crimes – Be Proactive

Federal Crimes – Federal Indictment

Federal Crimes – Detention Hearing

————————————————————–

To find additional federal criminal news, please read Federal Criminal Defense Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition Defense, OFAC SDN Sanctions Removal, International Criminal Court Defense, and US Seizure of Non-Resident, Foreign-Owned Assets. Because we have experience dealing with INTERPOL, our firm understands the inter-relationship that INTERPOL’s “Red Notice” brings to this equation.

The author of this blog is Douglas C. McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


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