“Exclusive: IRS manual detailed DEA’s use of hidden intel evidence”

August 8, 2013

Reuters on August 7, 2013 released the following:

By John Shiffman and David Ingram

“(Reuters) – Details of a U.S. Drug Enforcement Administration program that feeds tips to federal agents and then instructs them to alter the investigative trail were published in a manual used by agents of the Internal Revenue Service for two years.

The practice of recreating the investigative trail, highly criticized by former prosecutors and defense lawyers after Reuters reported it this week, is now under review by the Justice Department. Two high-profile Republicans have also raised questions about the procedure.

A 350-word entry in the Internal Revenue Manual instructed agents of the U.S. tax agency to omit any reference to tips supplied by the DEA’s Special Operations Division, especially from affidavits, court proceedings or investigative files. The entry was published and posted online in 2005 and 2006, and was removed in early 2007. The IRS is among two dozen arms of the government working with the Special Operations Division, including the Federal Bureau of Investigation, the National Security Agency and the Central Intelligence Agency.

An IRS spokesman had no comment on the entry or on why it was removed from the manual. Reuters recovered the previous editions from the archives of the Westlaw legal database, which is owned by Thomson Reuters Corp, the parent of this news agency.

As Reuters reported Monday, the Special Operations Division of the DEA funnels information from overseas NSA intercepts, domestic wiretaps, informants and a large DEA database of telephone records to authorities nationwide to help them launch criminal investigations of Americans. The DEA phone database is distinct from a NSA database disclosed by former NSA contractor Edward Snowden.

Monday’s Reuters report cited internal government documents that show that law enforcement agents have been trained to conceal how such investigations truly begin – to “recreate” the investigative trail to effectively cover up the original source of the information.

DEA officials said the practice is legal and has been in near-daily use since the 1990s. They have said that its purpose is to protect sources and methods, not to withhold evidence.

NEW DETAIL

Defense attorneys and some former judges and prosecutors say that systematically hiding potential evidence from defendants violates the U.S. Constitution. According to documents and interviews, agents use a procedure they call “parallel construction” to recreate the investigative trail, stating in affidavits or in court, for example, that an investigation began with a traffic infraction rather than an SOD tip.

The IRS document offers further detail on the parallel construction program.

“Special Operations Division has the ability to collect, collate, analyze, evaluate, and disseminate information and intelligence derived from worldwide multi-agency sources, including classified projects,” the IRS document says. “SOD converts extremely sensitive information into usable leads and tips which are then passed to the field offices for real-time enforcement activity against major international drug trafficking organizations.”

The 2005 IRS document focuses on SOD tips that are classified and notes that the Justice Department “closely guards the information provided by SOD with strict oversight.” While the IRS document says that SOD information may only be used for drug investigations, DEA officials said the SOD role has recently expanded to organized crime and money laundering.

According to the document, IRS agents are directed to use the tips to find new, “independent” evidence: “Usable information regarding these leads must be developed from such independent sources as investigative files, subscriber and toll requests, physical surveillance, wire intercepts, and confidential source information. Information obtained from SOD in response to a search or query request cannot be used directly in any investigation (i.e. cannot be used in affidavits, court proceedings or maintained in investigative files).”

The IRS document makes no reference to SOD’s sources of information, which include a large DEA telephone and Internet database.

CONCERN IN CONGRESS

House Intelligence Committee Chairman Mike Rogers, R-Michigan, expressed concern with the concept of parallel construction as a method to hide the origin of an investigation. His comments came on the Mike Huckabee Show radio program.

“If they’re recreating a trail, that’s wrong and we’re going to have to do something about it,” said Rogers, a former FBI agent. “We’re working with the DEA and intelligence organizations to try to find out exactly what that story is.”

Spokespeople for the DEA and the Department of Justice declined to comment.

Sen. Rand Paul, R-Kentucky, a member of the Homeland Security and Government Affairs Committee, said he was troubled that DEA agents have been “trying to cover up a program that investigates Americans.”

“National security is one of government’s most important functions. So is protecting individual liberty,” Paul said. “If the Constitution still has any sway, a government that is constantly overreaching on security while completely neglecting liberty is in grave violation of our founding doctrine.”

Officials have stressed that the NSA and DEA telephone databases are distinct. The NSA database, disclosed by Snowden, includes data about every telephone call placed inside the United States. An NSA official said that database is not used for domestic criminal law enforcement.

The DEA database, called DICE, consists largely of phone log and Internet data gathered legally by the DEA through subpoenas, arrests and search warrants nationwide. DICE includes about 1 billion records, and they are kept for about a year and then purged, DEA officials said.”

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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

Federal Crimes – Appeal

————————————————————–

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.


Justice Department reviewing DEA’s shielding of sources

August 6, 2013

USA Today on August 5, 2013 released the following:

By Kevin Johnson, USA TODAY

“WASHINGTON — The Justice Department is reviewing law enforcement techniques used by the Drug Enforcement Administration that shield some initial sources for criminal investigations from being disclosed in court, White House spokesman Jay Carney said Monday.

The review, prompted by a Monday Reuters news agency report, centers on the activities of the DEA’s Special Operations Division (SOD).

Citing undated training documents, the report states that federal agents have been directed in some cases to conceal sensitive information — triggering the start of inquiries — from disclosure to defense attorneys and, in some instances, prosecutors and judges.

“I would refer you to the Department of Justice on this,” Carney said. “And beyond that, I can tell that it’s my understanding … that the Department of Justice is looking at some of the issues raised in the story.”

The documents, according to the report, instruct agents on a technique known as “parallel construction,” which effectively shields the actual source of the information that leads investigators to potential criminal activity and possible suspects.

Jerry Cox, president of the National Association of Criminal Defense Lawyers, said the practice represents “perjury.”

“When you lie about something, you are giving a parallel story,” Cox said. “If you did it or I did it, we would be punished for perjury.”

“These latest reports are particularly troubling for accused persons who cannot vindicate fundamental constitutional rights without access to accurate and complete information,” Cox said. “This puts liberty at risk of being lost without due process of law, which is an affront to the Constitution.”

The SOD, according to a 2007 report by the Justice Department’s inspector general, is “integral in the coordination of major DEA cases” and was initially created to target major drug cartels.

“The SOD is a repository for phone numbers used or called by persons who are part of a DEA investigation,” the inspector general’s report stated. “The SOD uses a database to collect these phone numbers and can connect cases with hits on the same phone numbers. This allows the DEA to link cases investigated by different offices across the country and throughout the world.”

“According to DEA foreign and domestic personnel whom we interviewed, the SOD’s activities are critical to the DEA attacking the command and control structures of major drug trafficking organizations,” the inspector general’s report stated.

A DEA official defended the techniques Monday, saying “They have gone on for many years and have been briefed, approved, endorsed and supported across the government.”

The official, who is not authorized to discuss the subject publicly and spoke on condition of anonymity, said the strategy is used to protect sources or methods that could be compromised if they were disclosed.

“We do not instruct anyone to lie,” the official said. “It’s building an investigation another way to confirm a tip or lead” based on a source or method that cannot be disclosed.

DEA agents are actively creating fake investigative trails to disguise where the information originated, a scheme that prosecutors, defense attorneys, judges and others are arguing has robbed defendants of their right to a fair trial. Hundreds or thousands of cases could be affected.

The Drug Policy Alliance, which advocates for the legalization of marijuana and supports treatment rather than incarceration for drug offenders, said the DEA’s actions have effectively “robbed defendants” of their rights to fair trials.

“The DEA increasingly qualifies as a rogue agency – one that Congress needs to immediately investigate,” said Ethan Nadelmann, the alliance’s executive director.”

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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

Federal Crimes – Appeal

————————————————————–

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.


Shannon Richardson Charged By the Feds With Allegedly Mailing Ricin Letters

June 10, 2013

Huffington Post on June 8, 2013 released the following:

By NOMAAN MERCHANT and DANNY ROBBINS AP

Shannon Richardson Tried To Frame Husband Nathaniel Richardson For Ricin Letters: FBI

TEXARKANA, Texas — Shannon Richardson had been married to her husband less than two years when she went to authorities and told them her suspicions: He was the one who had mailed ricin-laced letters to President Barack Obama and New York Mayor Michael Bloomberg threatening violence against gun-control advocates.

When investigators looked closer, they reached a different conclusion: It was the 35-year-old pregnant actress who had sent the letters, and she tried to frame her estranged husband in a bizarre case of marital conflict crossing with bioterrorism.

Those allegations are detailed in court documents filed Friday as Richardson was arrested and charged with mailing a threatening communication to the president. The federal charge carries up to 10 years in prison, U.S. attorney’s office spokeswoman Davilyn Walston said.

Richardson, a mother of five who has played bit roles on television and in movies, is accused of mailing the ricin-laced letters to the White House, to Bloomberg and to the mayor’s Washington gun-control group last month.

Richardson’s court-appointed attorney, Tonda Curry, said there was no intention to harm anyone and noted that it’s common knowledge that mail is checked before it reaches the person to whom these letters were addressed.

“From what I can say, based on what evidence I’ve seen, whoever did this crime never intended for ricin to reach the people to which the letters were addressed,” Curry said.

According to an FBI affidavit, Richardson contacted authorities on May 30 and implicated her husband, Nathaniel Richardson. She described finding small, brown beans with white speckles – a description matching the key ingredient in ricin, castor beans – at the couple’s home in New Boston, Texas. She also told investigators that she had found a sticky note on her husband’s desk with addresses for Bloomberg and Obama, the affidavit said.

But she later failed a polygraph test, the document said, and investigators looking into her story found numerous inconsistencies. Among them: Nathaniel Richardson would have been at work when Internet searches tied to the letters were made on the couple’s laptop and when the envelopes containing the letters were postmarked.

Finally, the affidavit says, in an interview with authorities on Thursday, Shannon Richardson admitted that she had received syringes and lye – a caustic chemical used in making ricin – in the mail; that she had printed the labels for the letters; and that she mailed them. However, she insisted her husband typed them and “made her” print and send them, the affidavit says.

No charges have been filed against her husband. His attorney, John Delk, told The Associated Press on Friday that his client was pleased with his wife’s arrest and was working with authorities to prove his innocence.

Delk previously told the AP that the couple is going through a divorce and that the 33-year-old Army veteran may have been “set up” by his wife. In divorce papers filed Thursday, Nathanial Richardson said the marriage had become “insupportable because of discord or conflict of personalities.”

FBI agents wearing hazardous material suits were seen going in and out of the Richardsons’ house on Wednesday in nearby New Boston, about 150 miles northeast of Dallas near the Arkansas and Oklahoma borders. Authorities conducted a similar search on May 31.

The house is now under quarantine for “environmental or toxic agents,” according to a posting at the residence. Multiple samples taken from the couples’ home tested positive for ricin, according to the affidavit. Federal agents also found castor beans along with syringes and other items that could be used to extract the lethal poison, the affidavit says.

Bloomberg issued a statement Friday thanking local and federal law enforcement agencies “for their outstanding work in apprehending a suspect,” saying they worked collaboratively from the outset “and will continue to do so as the investigation continues.”

Shannon Richardson appears in movies and on TV under the name Shannon Guess. Her resume on the Internet movie database IMDb said she has had small television roles in “The Vampire Diaries” and “The Walking Dead.” She had a minor role in the movie “The Blind Side” and appeared in an Avis commercial, according to the resume.

Delk said the Richardsons were expecting their first child in October. Shannon Richardson also has five children ranging in age from 4 to 19 from other relationships, four of whom had been living with the couple in the New Boston home, the attorney said.

Nathaniel Richardson works as a mechanic at the Red River Army Depot near Texarkana, Texas, a facility that repairs tanks, Humvees and other mobile military equipment. He and Shannon were married in October 2011.

A detention hearing for Shannon Richardson is scheduled for next Friday, court records show, and the government is requesting that she be held without bond.

The FBI is investigating at least three cases over the past two months in which ricin was mailed to Obama and other public figures. Ricin has been sent to officials sporadically over the years, but experts say that there seems to be a recent uptick and that copycat attacks – made possible by the relative ease of extracting the poison – may be the reason.

If inhaled, ricin can cause respiratory failure, among other symptoms. If swallowed, it can shut down the liver and other organs, resulting in death. The amount of ricin that can fit on the head of a pin is said to be enough to kill an adult if properly prepared. No antidote is available, though researchers are trying to develop one.”

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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.


Federal Agents Arrest Six People Across Alabama Charged with an Alleged State Inmate in Tax Refund Scheme

June 7, 2013

The Federal Bureau of Investigation (FBI) on June 6, 2013 released the following:

“BIRMINGHAM—Federal agents today arrested six people in four cities across Alabama who are charged in connection with a five-year federal tax fraud conspiracy directed from inside an Alabama state prison, announced U.S. Attorney Joyce White Vance, Internal Revenue Service-Criminal Investigation Division Special Agent in Charge Veronica Hyman-Pillot, and FBI Special Agent in Charge Richard D. Schwein, Jr.

The man charged as the leader of the conspiracy, Shermaine “Shade” German, 56, now incarcerated in Bibb County Correctional Facility in Brent, was an inmate at Donaldson Correctional Facility in Bessemer at the time of the conspiracy. He is charged with orchestrating the far-reaching tax fraud scheme from Donaldson, where he obtained the names, birth dates, and Social Security numbers of other people, often fellow inmates, including prisoners on death row and those serving sentences of life without parole. He used their information to create false income tax returns that contained fabricated amounts of tax withholdings, according to the indictment unsealed following the arrests.

German also created false power of attorney forms, which he mailed out of the prison along with the false income tax returns, according to the indictment. Various other members of the conspiracy notarized the power of attorney forms and used them to cash or deposit income tax refund checks received as part of the scheme, according to the indictment.

Six of seven people charged in the conspiracy with German were arrested today in Huntsville, Montgomery, Eufaula, and Mobile.

“Schemes such as this involve millions of dollars stolen from legitimate taxpayers and the U.S. Treasury,” Vance said. “Thanks to the diligent and cooperative efforts of law enforcement, we were able to shut down this long-term fraud.”

“Individuals who commit refund fraud and identity theft with this degree of trickery, dishonesty, and deceit deserve to be punished to the fullest extent of the law,” Hyman-Pillot said. “We, along with the United States Attorney’s Office, continue to do our part in protecting the sanctity and integrity of the tax system.”

“This case, as others our office and our law enforcement partners have investigated, shows that a person’s identity and identification numbers have become a valuable commodity to today’s criminal and should be guarded diligently by their owners,” Schwein said.

The 20-count May indictment filed in U.S. District Court charges that German and his co-defendants conspired from January 2008 through May 2013 to obtain payment of false claims for refunds from the Internal Revenue Service by filing fraudulent federal income tax returns in other people’s names.

Charged along with German in the conspiracy are: Ronald Webster, 55; Brenda Joyce McDonald, 55; and Yvette Berry Pinckney, 48, all of Montgomery; Marlo Yvette Miller, 46; and Irene King Douglas, 58, both of Huntsville; Cynthia Dianne Ware, 49, of Eufaula; and Barbara Ann Grimes, 62, of Mobile.

McDonald is the one defendant not yet in custody.

Further details of the scheme, as outlined in count one of the indictment, are as follows:

Douglas sent blank tax return forms to German in prison. Douglas also received and cashed or deposited proceeds from tax refund checks using power of attorney forms she had someone else notarize.

German used two addresses in Montgomery and one in Mobile as return addresses where tax refunds should be delivered. One of the addresses was a Montgomery P.O. Box owned by Webster; one was the Montgomery apartment address of McDonald on Bonaparte Boulevard; and the third was a Mobile P.O. Box from which Grimes collected refund checks and power of attorney forms.

Webster collected IRS refund checks mailed to his P.O. Box and provided the checks and power of attorney forms to other co-conspirators, including Miller and Ware in Huntsville and Pinckney in Montgomery. Pinckney notarized power of attorney forms and, along with other co-conspirators, used the forms to cash or deposit fraudulent refund checks. Proceeds from the scheme were deposited into Pinckney’s Regions Bank account. Pinckney communicated with German on a contraband telephone he had in prison.

Miller cashed or deposited the fraudulent refund checks she received from Webster into Regions Bank or Redstone Federal Credit Union.

McDonald collected fraudulent refund checks mailed to her Montgomery apartment and provided them to Webster.

Grimes received fraudulent refund checks and power of attorney forms at the Mobile P.O. Box, had the power of attorney forms notarized, and then used them to cash or deposit the checks.

Counts two through nine of the indictment charge German and Webster with making false claims to the IRS.

Counts 10 through 15 charge German with mail fraud for causing or aiding others in causing the U.S. Postal Service to deliver fraudulent refund checks to the Montgomery and Mobile addresses.

Count 16 charges German, Webster, McDonald, and Grimes with conspiracy to commit mail fraud against the U.S. Department of Treasury.

Counts 17 through 20 are aggravated identity fraud charges against German and Webster for using other people’s identifying information to create and file false tax returns.

The conspiracy to defraud the government and false claims charges both carry a maximum penalty of 10 years in prison and a $250,000 fine. Mail fraud and conspiracy to commit mail fraud both carry a maximum penalty of 20 years in prison and a $250,000 fine. Aggravated identity fraud carries a two-year minimum mandatory prison sentence that must be served consecutively to any other sentence imposed in the crime.

The IRS and FBI investigated the case. Assistant U.S. Attorney Russell E. Penfield is prosecuting the case.

The public is reminded that an indictment is only a charge. A defendant is presumed innocent, and it will be the government’s responsibility to prove guilt beyond a shadow of a doubt at trial.”

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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

————————————————————–

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.


Father and Son Allegedly Linked to Separate Federal Fraud Schemes Arrested at LAX as They Prepared to Leave U.S. with One-Way Plane Tickets to Russia

May 11, 2013

The Federal Bureau of Investigation (FBI) on May 10, 2013 released the following:

“LOS ANGELES— A father and son were arrested yesterday afternoon as they were about to board a plane to Moscow on federal fraud charges that include allegations that the older man sent tens of thousands of bogus “invoices” to small business owners in California in a shakedown scheme that caused at least 5,000 victims to send $225 to a fake company that purported to be a state agency.

The men—Viktor Ryzhkin, 45, of the Little Armenia section of Los Angeles; and his son, Evgenii Ryzhkin, 22, who lived with his father—were arrested late yesterday afternoon at Los Angeles International Airport by federal agents as they prepared to board a Transaero Airlines flight to Russia. The Ryzhkins, both of whom are Russian nationals, and two other family members, all had one-way tickets to Moscow that had been purchased on Monday.

According to a criminal complaint filed Thursday afternoon in United States District Court, Viktor Ryzhkin targeted more than 170,000 California small business owners in a mail fraud scheme that would have brought in nearly $40 million had all of the potential victims complied with demands to send payments to “Corporate Business Filings,” a Beverly Hills company set up and controlled by Viktor Ryzhkin.

The small business owners targeted in this scheme received invoices that appeared to be from the state of California, notifying them that they each owed $225 to the state and directing them to fill out certain forms related to their businesses. The letters sent to the victims—all of which were sent over the course of several days at the end of March and beginning of April—each listed the correct, publicly available California Small Business Administration entity number assigned to the particular small business. The business owners were told in the letters that they would face $250 penalties if they did not remit payment by April 15, 2013, and did not fill out the forms as directed. The letters and invoices that appeared to be from the state of California were completely bogus.

Investigators believe that Viktor Ryzhkin became aware of the investigation into his scheme in late last month. Viktor and Evgenii Ryzhkin, accompanied by the two family members, were about to board a plane at 4:00 p.m. yesterday, when they were arrested by United States Postal Inspectors.

Evgenii Ryzhkin was charged in a separate criminal complaint filed yesterday in United States District Court. Evgenii Ryzhkin is charged with participating in a conspiracy to take over home equity lines of credit in a scheme that caused at least $1.2 million in losses. According to the affidavit in support of the criminal complaint against Eygenii Ryzhkin, he was caught on surveillance video depositing a stolen check linked to a hijacked HELOC account.

Both Ryzhkins are expected to make their initial court appearances this afternoon in United States District Court.

Viktor Ryzhkin is charged in a criminal complaint with mail fraud, which carries a statutory maximum sentence of 20 years in federal prison.

Evgenii Ryzhkin is charged in a separate criminal complaint with bank fraud and conspiracy to commit bank fraud, each of which carries a statutory maximum sentence of sentence of 30 years in federal prison.

A criminal complaint contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until proven guilty in court.

This two cases against the Ryzhkins are being investigated by the United States Postal Inspection Service. The Federal Bureau of Investigations and U.S. Customs and Border Protection assisted during yesterday’s arrests.”

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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.


“Federal prosecutor to announce dozens of violent crime arrests Friday”

May 10, 2013

The Kansas City Star on May 10, 2013 released the following:

“BY MARK MORRIS
The Kansas City Star

A 10-month Kansas City undercover investigation culminated this week in the arrests of dozens of criminal suspects in one of the largest violent crime sweeps in western Missouri history, authorities said.

U.S. Attorney Tammy Dickinson is expected to announce today the indictment of 61 people, most already convicted felons, on a host of weapon and drug charges. State authorities are considering whether to prosecute in state court up to a dozen more cases generated by the federal operation, officials said.

The investigation, which involved up to 50 officers and agents each day, began in late June and focused exclusively on “violent individuals using firearms,” said Marino F. Vidoli, special agent in charge of the Bureau of Alcohol, Tobacco, Firearms and Explosives’ Kansas City office.

“We know who the violent individuals are in this community,” Vidoli said in a recent interview. “We know their backgrounds and it helps us target our law enforcement resources.”

Federal grand juries recently returned the indictments under seal. About 150 Kansas City police officers, federal agents and deputy U.S. marshals began making the arrests Tuesday.

Dickinson said the arrests and prosecutions are closely linked to work of the Kansas City No Violence Alliance, known as KC NoVa, that is designed to reduce shootings and killings in the city.

The NoVa effort has begun to identify individuals and groups most likely to commit violent crimes. Authorities offer social services, such as substance abuse treatment or job training, and promise swift prosecution if they do not leave the criminal life.

“This is shock and awe,” Dickinson said. “We’re sending a signal to the NoVa network that we’re going to come get you if you turn your back on us.”

As of late Thursday, authorities had arrested 28 people. Nineteer others already were in state or federal custody. Agents and officers continued to search for 14 fugitives, officials said.

Investigators recovered 222 firearms during the investigation, Vidoli said, including handguns, sawed-off shotguns, long guns and assault rifles. Some had been stolen; others had been defaced by having serial numbers filed off, he said.

And, after investigators ran ballistics evidence from the guns through an ATF database, they linked some of the weapons to other violent crimes, including homicides, Dickinson said.

Law enforcement records obtained by The Kansas City Star during the investigation showed that agents and police set up an undercover base in a high-crime area where they purchased drugs and guns.

The undercover location was equipped for audio and video recording, according to the records.

Throughout the summer, fall and winter, suspects offered to sell the undercover officers firearms, some of which turned out to have been stolen, court records said. About two-thirds of the sellers already had been convicted of felony crimes, investigators learned.

About half still were on probation or parole.

Others allegedly violated lesser known weapons charges, such as being illegal drug users or illegal aliens in possession of firearms.

One defendant purportedly possessed a .380-caliber pistol while facing a Jackson County burglary charge.

The investigation’s most serious charges have been laid against six men arrested as part of an ATF operation aimed at stopping deadly home invasions.

According to ATF records obtained by The Star during the investigation, the suspects agreed to participate in a robbery of a drug stash house and met several times with undercover agents to plan the heist.

An undercover ATF agent said recently that no stash house actually existed.

All six suspects face drug and robbery conspiracy charges and a firearms count, and could receive maximum life sentences if convicted.

The extensive planning behind the investigation extended to preparations for this week’s arrests and prosecutions. Just after taking office in January, Dickinson warned that prosecutors in units other than the Violent Crimes Strike Force should count on helping out with an expected influx of gun cases.

Judges, pretrial officers and even detention centers were warned about a surge of new defendants.

Court records show that at least three separate grand juries, meeting in April and early May, began churning out secret indictments, which remained under seal until this week.

Starting Tuesday morning, those arrested were herded through magistrate courtrooms in the federal courthouse for first appearances before judges. Prosecutors asked that about 95 percent of the new defendants be jailed without bond pending trial, Dickinson said.

“That has taken a huge amount of coordination with the courts, with the marshals and with federal probation and parole,” Dickinson said. “We were pleased with the cooperation and were welcomed with open arms.”

Following the news conference today, Dickinson and Vidoli plan to join Kansas City Police Chief Darryl Forte and Jackson County Prosecutor Jean Peters Baker for individual meetings with targets of the NoVa initiative who did not appear at an April meeting to hear an offer of social services.

Organizers had invited 120 people to the meeting, but only about three dozen appeared.

“We’re going out to speak to individuals and let them know they’re on our radar screens,” Dickinson said. “This (investigation) helps drive home the point.””

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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.