“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

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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.


Cocaine Trafficking Charges Filed Against 72 People for Alleged Conspiracy Focused on East Side of Cleveland

June 12, 2012

The Federal Bureau of Investigation (FBI) on June 12, 2012 released the following:

“CLEVELAND— Seventy-two people were indicted in federal court in the Northern District of Ohio for their roles in a conspiracy to bring powder and crack cocaine in from Georgia and Kentucky and sell it throughout Greater Cleveland, law enforcement officials announced today.

Four of those indicted are also accused of taking part in the shooting and robbery of a Euclid, Ohio man in January 2012. That shooting led to a manhunt throughout Euclid and Cleveland.

An additional 14 people were indicted in Cuyahoga County, Ohio, Common Pleas Court on state drug charges.

The indictment is believed to be the largest ever filed in the U.S. District Court for the Northern District of Ohio, in terms of number of defendants.

“The criminal activity laid out in this indictment shows the lengths people will go to sell drugs, but it should also underscore our commitment to fighting back,” said Steven M. Dettelbach, U.S. Attorney for the Northern District of Ohio.

“This investigation and 97-count indictment represent a top-to-bottom dismantlement of a violent criminal organization intent on polluting our neighborhoods with drugs,” said Stephen D. Anthony, Special Agent in Charge of the FBI’s Cleveland Field Office. “As evidenced by the results of this investigation, the Northern Ohio Law Enforcement Task Force and its community partners will work tirelessly to target and eliminate the most significant threats to our communities.”

Cleveland Police Chief Michael McGrath said, “With these 86 indictments, a major blow has been dealt to drug trafficking in this area. This is another example of what can be accomplished when our law enforcement partners work together to identify and arrest those individuals responsible for selling drugs in our communities. Along with our law enforcement partners and the community, we will continue to work together to stop the sale of illegal drugs in our neighborhoods.”

The drug conspiracy took place between 2011 and May 2012, according to the 97-count federal indictment.

Walter Williams obtained kilogram amounts of cocaine in Georgia and elsewhere and transported the drugs to Cleveland, where he sold the cocaine to Edward Martin and others. Martin, in turn, sold large amounts of cocaine to Deante Rogers, Thomas McDonald, Aaron Strange, Andy Gray, Jamar Pennyman, T’Andre Buchanan, Irin Green, David Paige, Demtrius Duvall, Dennis Edwards, Shaughn Hubbard, Richard Wilson, and others in the Greater Cleveland area, according to the indictment.

Chase Downey, John Campbell, Javier Garza, and Francisco Rodriguez, all of Kentucky, traveled to the Cleveland area and sold kilograms of cocaine to Charles Smith, Randy Jackson, Deante Rogers, Thomas McDonald, and others, according to the indictment.

Deante Rogers used his Cleveland residence to sell, process, and store cocaine and crack cocaine, according to the indictment.

Charles Smith used a Euclid residence to sell, process, and store cocaine and crack cocaine, according to the indictment.

Rogers and Smith would then sell cocaine and crack cocaine to dozens of other people, according to the indictment.

On January 6, 2012, John Campbell, Chase Downey, Francisco Rodriguez, and R.D. (a person known to the grand jury but not charged herein) met Charles Smith at the residence in Euclid and offered to sell him a kilogram of cocaine for $30,000, according to the indictment.

During the meeting, Rodriguez shot Smith twice and Campbell, Downey, and Rodriguez and took nearly 900 grams of cocaine, 300 grams of crack cocaine, and $30,000, according to the indictment.

Cuyahoga County prosecutors have charged Rodriguez, Downey, Campbell, and R.D. for those acts, as well as for the shootout with police that followed.

Federal prosecutors are also seeking to forfeit assets obtained directly or indirectly as a result of the violations or used to commit or facilitate the commission of the violations, including but not limited to, more than $93,000 in cash; nine firearms; a watch; jewelry; a Ford F150; and three homes.

“By following the money trail, special agents of IRS-Criminal Investigation help to disrupt and dismantle major drug trafficking organizations that attempt to conceal the true source of their money from the government,” said Darryl Williams, Special Agent in Charge, Internal Revenue Service (IRS)-Criminal Investigation.

If convicted, the defendants’ sentences will be determined by the court after review of factors unique to this case, including the defendants’ prior criminal record, if any; the defendants’ role in the offense; and the characteristics of the violation. In all cases, the sentences will not exceed the statutory maximum, and in most cases, they will be less than the minimum.

This case is being prosecuted by Assistant U.S. Attorneys Joseph M. Pinjuh and Adam Hollingsworth following an investigation by the Northern Ohio Law Enforcement Task Force (NOLETF).

The NOLETF is a long standing multi-agency task force comprised of investigators from the FBI; Cuyahoga Metropolitan Housing Authority; Drug Enforcement Administration; IRS; Immigration and Customs Enforcement; U.S. Coast Guard Investigative Service; Cleveland Division of Police; Cleveland Heights, Ohio Police Department; Cuyahoga County Sheriff’s Office; Euclid Police Department; Regional Transit Authority Police Department; Strongsville, Ohio Police Department; Westlake, Ohio Police Department; and Shaker Heights, Ohio Police Department. The NOLETF is also one of the initial Ohio High Intensity Drug Trafficking Area (HIDTA) initiatives. The HIDTA Program supports and helps coordinate numerous Ohio drug task forces in their efforts to eliminate or reduce drug-trafficking in Ohio.

An indictment is only a charge and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.”

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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.


Lauryn Hill Faces Federal Tax Charges Over $1.6M Income

June 7, 2012

Huffington Post on June 7, 2012 released the following:

By SAMANTHA HENRY AP

“NEWARK, N.J. — Five-time Grammy winner Lauryn Hill has been charged with failing to file income tax returns for several years with the IRS, the U.S. attorney’s office in New Jersey announced Thursday.

Hill earned more than $1.6 million during 2005, 2006 and 2007, the three years that she failed to file returns, federal prosecutors said. Hill’s primary source of income is royalties from the recording and film industries, prosecutors said. She also owns and operates four corporations: Creations Music Inc., Boogie Tours Inc., L.H. Productions 2001 Inc. and Studio 22 Inc., according to court papers.

Messages left Thursday for her California-based attorney, Nathan J. Hochman, and an email sent to her publicist weren’t immediately returned.

The 37-year-old Hill got her start with The Fugees and began her solo career in 1998 with the critically acclaimed album “The Miseducation of Lauryn Hill.”

The album, praised by critics for its incisive lyrics and synthesis of rap and soul, sold 8 million copies. Hill was pronounced the face of “The Hip-Hop Nation” by Time magazine.

She then largely disappeared from public view to raise her six children, five of whom she had with Rohan Marley, the son of famed reggae singer Bob Marley.

Hill lives in South Orange, a suburb just west of Newark, and attended Columbia High School in Maplewood.

She is scheduled to appear before a federal magistrate on June 29. She could face a maximum penalty of a year in prison and $100,000 fine on each charge.”

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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.


Southern District of Florida Securities and Investment Fraud Initiative Results in Charges Against 15 Individuals in 12 Separate Cases

June 5, 2012

The Federal Bureau of Investigation (FBI) on June 4, 2012 released the following:

“To Date, 85 Defendants Have Been Charged as Part of the Initiative

Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida; John V. Gillies, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office; Eric I. Bustillo, Regional Director, Securities and Exchange Commission (SEC), Southeast Region; and Linda Charity, Interim Commissioner, State of Florida’s Office of Financial Regulation (OFR), announced the most recent results of the Southern District of Florida Securities and Investment Fraud Initiative (the Initiative), first announced in December 2010 and designed to combat securities and investment fraud and protect the interests of the investing public.

The Initiative was established to address the increase in securities and investment fraud schemes in the Southern District of Florida. In addition to the U.S. Attorney’s Office, FBI, SEC, and OFR, other participating agencies in the Initiative include the Internal Revenue Service, Criminal Investigation Division (IRS-CID), U.S. Secret Service (USSS), U.S. Postal Inspection Service, Federal Deposit Insurance Corporation, Office of Inspector General (FDIC-OIG), U.S. Commodity Futures Trading Commission (CFTC), and the Federal Trade Commission (FTC) Southeast Region. These law enforcement and regulatory agencies have shared intelligence and combined their resources to combat securities and investment fraud, including Ponzi schemes, affinity fraud schemes, prime bank/high-yield investment scams, business opportunity fraud, promoter/micro-cap/“pump and dump” schemes, foreign exchange (FOREX) frauds, false bankruptcy petitions, and other schemes to defraud individual investors. Among the goals of the Initiative are to alert the public about the prevalence of these types of schemes, to educate the public on how to avoid falling prey to these schemes, and to highlight the law enforcement response to the problem.

The Southern District of Florida ranks second in the nation in securities and investment fraud investigations and prosecutions. Using the strike force model successfully developed in the health care and mortgage fraud areas, the Securities and Investment Fraud Initiative has yielded similar success. Since its inception in December 2010, the Initiative has resulted in charges against 85 defendants in the Southern District of Florida, resulting in more than $1.5 billion in restitution ordered. Today, we are announcing charges against 15 individuals in 12 separate cases.

U.S. Attorney Wifredo A. Ferrer stated, “Our primary goal in creating the Securities and Investment Fraud Initiative was to protect investors from fraud and to restore the integrity of the securities market. Too often, we hear from victims who have lost their entire lives’ savings or their retirement nest egg to one of these unscrupulous schemers. Today, we hope to educate the public about the need to be alert and to verify before trusting and investing. If something sounds too good to be true, it usually is.”

“The fraud from these stock market manipulation schemes could have defrauded numerous innocent investors out of millions of dollars. Because the FBI and our partners were able to disrupt these schemes early on through our undercover operations, the investing public was protected,” said John V. Gillies, Special Agent in Charge of the FBI’s Miami Field Office. “The law enforcement efforts announced today also serve to send a message that the FBI and its partners will continue to target those who would chip away at the trust and confidence in the securities markets.”

Eric I. Bustillo, Director of the SEC’s Miami Regional Office, said, “This Initiative is a testament to our allegiance to investors and our commitment to prosecute those who seek to defraud them. When we say we’re determined to stamp out microcap fraud, that’s not a slogan. That’s a pledge.”

“I commend the hard work of investigators from the Florida Office of Financial Regulation, as well as other state and federal regulatory and law enforcement agencies,” said Linda Charity, Interim OFR Commissioner. “These partnerships are essential to effectively combat securities fraud and help protect Florida’s investors.”

Below is a summary of the cases being announced today. These cases involve a variety of frauds, including fraudulent Federal Reserve notes, illegal kickback schemes, market manipulation schemes, and more traditional Ponzi schemes.

Fraudulent Federal Reserve Notes:

U.S. vs. Cleland Ayison, 12-80056-CR-DIMITROULEAS

Ayison, 32, of Tampa, was arrested today on charges of possessing a fraudulent $500,000,000 Federal Reserve Note.

Illegal Kickback Schemes:

U.S. vs. Michael Cimino and Joseph Repko, 12-2733-MJ-GARBER

Cimino, 59, of Philadelphia, Pennsylvania, the director and chairman of the board for Sure Trace Security Corporation (SSTY), and Repko, 63, of Hobe Sound, Florida, SSTY’s chief financial officer and president, were arrested today on a criminal complaint charging them with conspiring to commit mail fraud by paying kickbacks to a pension fund fiduciary to induce the fiduciary to misappropriate money from a pension fund in order to buy restricted common stock at inflated prices. SSTY, a Utah corporation, was purportedly involved in the anti-counterfeiting technology business.

U.S. vs. Ryan Coblin, 11-80159-CR-RYSKAMP

Coblin, 41, of Boca Raton, was the president of Delivery Technology Solutions Inc., a domestic and international delivery company catering to corporations. Coblin was charged by information in September 2011 and pled guilty on March 8, 2012 to engaging in a scheme to pay kickbacks to a hedge fund fiduciary to induce the fiduciary to misappropriate money from a hedge fund in order to buy restricted common stock at inflated prices. Sentencing is scheduled for July 13, 2012.

Market Manipulation Schemes:

U.S. vs. Kevin Brennan, Donald Huggins, and Marc Seaver Page, 12-60064-CR-COHN

Today, charges were unsealed against defendants Brennan, 60, of Pittsburgh, Pennsylvania, the CEO of Optimized Transportation Management Inc. (OPTZ), a Delaware freight transportation company; Huggins, 64 of St. Petersburg, Florida, an investor in OPTZ; and Marc Seaver Page, 50, of Tiburon, California. The defendants are charged with engaging in a scheme to manipulate the publicly quoted share price and trading volume of OPTZ common stock.

U.S. vs. Douglas Hague, 12-60124-CR-WILLIAMS

Hague, 65, of Boca Raton, was the President of Clean Coal Technologies Inc., a corporation that purportedly converted low-grade coal to high-grade clean-burning coal. He was charged by information on June 1, 2012 with engaging in a scheme to pay kickbacks to a pension fund fiduciary to induce the fiduciary to misappropriate money from a pension fund in order to buy restricted common stock at inflated prices.

U.S. vs. Harold Steven Bonenberger, 12-60125-CR-COHN

Bonenberger, 56, of Carlsbad, California, was CEO of Angel Acquisition Corp. (AGEL), a Nevada corporation that purportedly managed assets. Bonenberger was charged by information on June 1, 2012 with engaging in a scheme to manipulate the publicly quoted share price and trading volume of AGEL common stock.

U.S. vs. Robert Cotton, 12-60126-CR-DIMITROULEAS

Cotton, 61 of Houston, Texas, was the President of Cotton and Western Mining Inc. (CWRN), a Nevada corporation that purportedly exported and mined iron minerals. Cotton was charged by information on June 1, 2012 with engaging in a scheme to manipulate the publicly quoted share price and trading volume of CWRN common stock.

U.S. vs. Matthew A. Connor, 12-2732-MJ-GARBER

Connor, 36, of Amherst, Virginia, a shareholder of and consultant for KCM Holdings Corporation (KCMH) was arrested today on a criminal complaint charging him with engaging in a scheme to manipulate the publicly quoted share price and trading volume of KCMH stock, in violation of the wire fraud statute. KCMH was purportedly in the business of providing strategic consulting services to clients.

U.S. vs. Scott Haire, 12-2734-MJ-GARBER

Haire, 42, of Coral Springs, President of Wound Management Technologies Inc. (WNDM), a Texas corporation that purportedly developed advanced wound care products. Haire was charged by criminal complaint with engaging in a scheme to manipulate the publicly quoted share price and trading volume of WNDM common stock. Haire is expected to surrender on June 6, 2012.

Ponzi Schemes:

U.S. vs. Juan Carlos Rodriguez, 12-20148-CR-DIMITROULEAS

Rodriguez, 49, of Miami, was indicted on March 6, 2012 for committing wire fraud in the execution of a Ponzi scheme. According to the indictment, Rodriguez was the sole officer and director of MDN Financial Group Inc., a Miami company that solicited approximately $5.2 million from investors with promises that the company would invest in stocks, bonds, and precious metals. Rodriguez would recruit colleagues and friends to invest in MDN Financial, promising them 20, 30, 40, and even 50 percent returns. In fact, Rodriguez did not invest the money he was given by investors. Instead, he used more than $1 million of the money to pay for personal expenses like credit card bills. A calendar call is scheduled for July 20, 2012.

U.S. vs. George Elia, 12-60077-CR-WILLIAMS

Elia, 68, formerly of Fort Lauderdale, is scheduled to be arraigned on June 6, 2012 on charges of operating a Ponzi scheme in which he recruited investors by making false claims about the potential returns on investments. Elia was the president of International Consultants & Investment Group LC., a corporation based in Broward County.

U.S. vs. Aner Menendez, 12-20389-CR-SCOLA

Menendez was arrested today on charges of mail and wire fraud. Menendez was the sole member and manager of De Forcade and recruited investors by claiming he was a skilled foreign currencies trader. Through a series of misrepresentations, he exploited social relationships to convince his victims to invest their savings with him. After receiving their money, Menendez made no investments for victims, instead spending their savings on himself and others.

In addition to the 12 criminal cases announced above, the SEC has filed nine separate civil injunctive actions against 12 individuals and eight microcap companies, charging them with violations of the antifraud provisions of the federal securities laws and seeking, among other relief, permanent injunctions, disgorgement, and financial penalties. These defendants, including several CEOs and their companies and three penny stock promoters, are charged with securities fraud for their roles in various illicit kickback and market manipulation schemes.

Regarding the continued results of the Initiative, other members stated as follows:

IRS Special Agent in Charge José A. Gonzalez stated, “IRS-Criminal Investigation Division is pleased to lend our forensic financial expertise to uncover financial wrongdoings by those who commit investment fraud. Make no mistake, whether on Wall Street or Main Street, swindlers will be thoroughly investigated and swiftly brought to justice.”

U.S. Postal Inspector in Charge Henry Gutierrez stated, “The U.S. Postal Inspection Service is committed to working with its law enforcement partners to stop investment fraud. We are particularly focused on fraud committed against often-targeted pension funds, in which victims have deposited their hard-earned money.”

Cindy Liebes, Director of the Federal Trade Commission Southeast Region, stated, “The Federal Trade Commission is also working to stop investment fraud and has filed several actions. Most recently, the FTC has sued Sterling Precious Metals LLC, Matthew Meyer, Francis Ryan Zofay, and Kerry Marshall for operating an investment scheme that allegedly took in almost $10 million by targeting elderly consumers and conning them into buying precious metals on credit without clearly disclosing significant costs and risks. In March, the FTC brought a similar action against Anthony J. Columbo, Premier Precious Metals Inc., Rushmore Consulting Group Inc., and PPM Credit Inc.”

Other Recent Cases Resulting from the Initiative

In addition to the cases announced above, the Initiative boasts a number of other recent cases, a few of which are highlighted below:

U.S. vs. Anthony Zito, 12-20030-CR-WILLIAMS

Zito, 64, of Naples, Florida, was charged in connection with a $7.5 million investment scheme. Zito owned and operated a firm named Gladius Investments (Gladius). Zito founded Gladius in 2004 and acted as the company’s officer, director, and president. Gladius purported to invest in silver on the commodities market on behalf of investors who entrusted Gladius with their money. On June 8, 2010, for example, Gladius’ internal database showed that the company had approximately 130 investors, that Gladius had invested in 1,271,500 ounces of silver on behalf of its investors, and that the total value of that silver was $19,708,250. In fact, however, Gladius’ actual trading account statement showed that Gladius had no more than 50,000 ounces of silver investments that month and that the total value of the trading account was about $672,000. The investors in Gladius lost approximately $7.5 million as a result of Zito’s fraud. On March 30, 2012, Zito was sentenced to five years in prison for conspiring to commit wire fraud in connection with the fraudulent investment scheme. In addition, Zito was ordered to pay $7.5 million in restitution to the victims of his crime. The court also ordered the forfeiture of half the value of Zito’s house, as well as his cars and bank accounts.

U.S. vs. Douglas Newton, 11-60150-CR-COOKE

On May 9, 2012, Newton was convicted after trial of two counts of mail fraud, four counts of securities fraud, and one count of conspiring to commit securities fraud. Sentencing is scheduled for August 29, 2012. According to evidence presented during the trial, Newton operated Billy Martin’s USA, a retail company that was delinquent with its lease payments at the Trump Plaza in New York City. In need of funding, Newton turned to a cooperating defendant who arranged a meeting with an undercover FBI agent. Newton attended a meeting in Broward County, Florida, where he agreed on video to bribe a pension fund manager to invest the pension fund investors’ money in Real American Brands. In addition, to hide the illegal bribes, the defendant entered into a fraudulent consulting agreement and sent fictitious e-mails to the undercover FBI agent. Newton also claimed in the recorded meetings to have business relationships with Jeffrey Sebelia, the winner of the “Project Runway TV” contest, and country singer Carrie Underwood. In total, Newton paid $12,000 in bribes to the purported pension fund and received a total of $40,000 from the fund. The defendant used the money to pay for his golf club, home owner fees, and his utilities.

U.S. vs. Yan Skwara, 11-60294-CR-WILLIAMS

Skwara, 47, of San Diego, California, was the president of U.S. Farms, Inc., a Nevada corporation that promoted wellness-based products. Skwara pled guilty on April 20, 2012 to engaging in a scheme to pay kickbacks to a pension fund fiduciary to induce the fiduciary to misappropriate money from a pension fund in order to buy restricted common stock at inflated prices. Sentencing is scheduled for July 3, 2012.

U.S. vs. Gaston E. Cantens, 12-20005-CR-WILLIAMS

On April 4, 2012, Gaston E. Cantens, 73, of Miami, was sentenced to five years in prison for conspiring to commit mail and wire fraud in connection with a fraud committed at Royal West Properties Inc. (Royal West). According to documents filed with the court and statements made during the sentencing hearing, Cantens was the president of Royal West Properties Inc. and recruited individuals to invest in Royal West by promising investors a fixed rate of return and that their investments would be guaranteed by properties or mortgages that acted as collateral. Cantens used his extensive ties to the South Florida community, including his ties to Belen Jesuit Preparatory School, to recruit investors to the fraud. Cantens told investors that their money were collateralized by individual properties but failed to inform them that the collateralized properties had previously been assigned to other investors. Cantens received moneys from investors based on these misrepresentations, and used the moneys for his personal benefit and to further the fraud scheme.

An indictment or information is merely an accusation and defendants are presumed innocent 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

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.


Feds seized more than 23m documents from Gray donor

June 5, 2012

Washington Examiner on June 4, 2012 released the following:

By Alan Blinder

“Federal agents investigating the activities of Jeffrey Thompson, a major city contractor and a prolific contributor to political campaigns in the District, seized more than 23 million electronic pages of records when they raided his home and offices in March, court records show.

Although federal prosecutors have been mum about their probe of Thompson, U.S. District Judge Royce Lamberth revealed details of the searches in an opinion issued last month. The Legal Times first reported the ruling Monday.

Although Thompson has not been charged with any wrongdoing, his lawyers sought to curtail the government’s ability to review the records that investigators seized as a part of their criminal probe.

Thompson’s team argued that some of the documents are protected by, among other legally protected privileges, attorney-client privilege.

But Lamberth ruled that federal prosecutors have taken appropriate precautions to safeguard the applicable privileges, clearing the way for investigators to review the electronic records, as well as more than 60 boxes of physical documents.

As of May 3, Lamberth wrote, the government had not reviewed any of the records, signaling the investigation into Thompson could be far from complete. Brendan Sullivan, Thompson’s lawyer, did not respond Monday to a request for comment.

Thompson has been in the spotlight since agents from the FBI and the Internal Revenue Service descended on his home and 15th Street offices in March. Federal authorities also searched locations linked to Jeanne Clark Harris, a campaign consultant to D.C. Mayor Vincent Gray, the same night.

Soon after the raids, Thompson’s accounting firm, which has long done business with the District, acknowledged the searches were in connection with a probe of campaign finance practices in D.C.

Thompson and a network of family members and friends have contributed hundreds of thousands of dollars through the years to District politicians, including at least 11 sitting members of the D.C Council and Gray. Several lawmakers acknowledged they had received subpoenas from federal prosecutors demanding documents about their links to Thompson.

Thompson’s most meaningful tie to city government, though, hasn’t been through his political giving or his accounting work. Chartered Health Plan, Thompson’s managed care company, helped to run the city’s Medicaid program for years, under a deal worth $322 million annually, the District’s single largest contract.”

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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.


Four Indicted in Alleged Mortgage Fraud Scheme

June 4, 2012

The Federal Bureau of Investigation (FBI) on June 1, 2012 released the following:

“Defendants Allegedly Exploited Immigrant Straw Buyers to Defraud Multiple Banks

Four Seattle-area residents were arrested today on a 21-count indictment charging them with conspiracy, bank fraud, wire fraud, and mail fraud, announced U.S. Attorney Jenny A. Durkan. The mortgage fraud scheme ran from 2006 to 2008 and defrauded more than 10 banks, financial institutions, and mortgage lenders of more than $8.6 million. More than 50 mortgages were involved on properties in a variety of communities around Puget Sound including Medina, Renton, South Seattle, Bellevue, Redmond, and Kirkland. Jonathan Mendoza Martinez, 34, of Bellevue, Washington; his sister, Jazmin Villalba Martinez=, 30, of Seattle, Washington; Celia Perez Morales, 35, of Kirkland, Washington; and Jorge Castrejon Pichardo, 41, of Mountlake Terrace, Washington, made their initial appearances in U.S. District Court in Seattle today.

According to the indictment, three of the defendants worked at Emerald City Escrow and at Nationwide Home Mortgage and conspired to use straw buyers to defraud banks. The fourth defendant worked at a tax preparation business and provided some of the false documentation submitted with the loan applications. The conspirators submitted false financial, employment, and tax information to apply for residential mortgage loans. They falsely inflated the sale price of the properties. After the lenders funded the loans, the conspirators kept the excess proceeds, and the straw buyers quickly defaulted on the mortgages. The victim banks included Washington Mutual (now JPM Chase), Bank of America, American Sterling Bank, ING Bank, IndyMac Bank, and Merrill Lynch & Co. Inc., among others. Documents in the scheme were submitted via mail and wire. In all, the defendants secured, or aided and abetted in securing, through unqualified buyers, at least 50 mortgage loans, representing approximately $22,396,660 in loan proceeds, based on false and fraudulent representations, resulting in a loss to financial institutions and mortgage lenders totaling approximately $8,672,330.

Each count in the indictment is punishable by up to 30 years in prison and a $1 million fine.

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

The case is being investigated by the Internal Revenue Service Criminal Investigation (IRS-CI), the U.S. Postal Inspection Service (USPIS), and the Federal Bureau of Investigation (FBI). The case is being prosecuted by Assistant United States Attorneys Mike Lang and James Oesterle.”

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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.


Prosecutors: Former NFL player admits failing to file federal tax returns for several years

May 24, 2012

The Washington Post on May 23, 2012 released the following:

“By Associated Press,

CAMDEN, N.J. — Federal prosecutors in New Jersey say a former NFL player admitted that he intentionally failed to file federal income tax returns for several years.

William James of Woodland Park faces up to a year in prison and a $100,000 fine after pleading guilty Wednesday to a complaint charging him with willful failure to file tax returns from 2005-09. He’s due to be sentenced Sept. 21.

The 32-year–old James played for several teams during his 10-year NFL career, including the New York Giants and Philadelphia Eagles. Prosecutors say he earned approximately $9.2 million during the years he didn’t file tax returns.

During that time, James repeatedly ignored notices from the IRS and warnings from his financial adviser and accountant that he was obligated to pay taxes and file returns.”

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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

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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.