FBI probes Foothills Regional Airport

June 13, 2012

Winston-Salem Journal on June 13, 2012 released the following:

“By: Sharon McBrayer and Julie N. Chang | Media General News Service

MORGANTON —
The FBI is investigating Foothills Regional Airport and two of its employees have been suspended without pay.

A news release Tuesday from Foothills Regional Airport Authority said a federal criminal investigation involves two employees of the airport, Alex Nelson and Brad Adkins. Nelson was the airport manager but Adkins did not hold a management position, according to airport officials.

“The Airport continues normal operations without interruption,” the statement said. “Brent Brinkley, a long time employee, has been appointed as acting administrator.”

FBI Public Affairs Specialist Shelley Lynch said, “As a matter of Department of Justice policy, the FBI can neither confirm nor deny the existence of investigations.”

According to the FBI’s website, it investigates public corruption, major white-collar crime, significant violent crime, civil rights violations and transnational/national criminal organizations and enterprises and cyber-based attacks and high-technology crimes, along with national security threats.

Airport Authority Chairman and Burke County Commissioner Chair Wayne Abele said Tuesday no one has been charged with anything and federal investigators haven’t given them any information about the investigation.

“All I know is it’s an ongoing investigation,” Abele said.

Abele said about 10 FBI personnel showed up at the airport last Tuesday, accompanied by Caldwell County Sheriff’s deputies, and seized records and computers.

“The FBI, they don’t charge people unless they have a concrete case,” Abele said.

The public airport, located on NC 18, receives funding from Burke and Caldwell counties and the cities of Morganton and Lenoir. The funding the airport received in the 2011-12 budgets of the two counties and two cities were:

  • Caldwell County — $48,254, which includes money for capital improvements; and $30,017 in property taxes the county collects on planes, said Stan Kiser, Caldwell County manager.
  • Burke County — $36,246 for operating expenses; $4,166 in capital improvement money; and $4,100 from property taxes paid on planes, said Paul Ijames, Burke County finance director and assistant county manager. He said more planes are kept on the Caldwell County side. He said even though $4,100 was budgeted for taxes, only $3,300 has been collected so far in property taxes on the 20 planes listed for the Burke County side.
  • City of Morganton — $38,088 for operating expenses and $4,166 in capital funding, said City Manager Sally Sandy.
  • City of Lenoir — $42,320 total for operating and capital expenses, said Kaye Reynolds, communications and resource director for the city of Lenoir.

None of the boards of the four governments has voted on their individual budgets for next year.

Each one of the four has a representative on the Airport Authority, which alerted the two counties and two cities about the investigation, according to the release from city of Morganton Attorney Louis Vinay. Vinay also is acting as the authority’s attorney after its previous one retired, Kiser said.

Cuts to the airport’s budget from the four member entities resulted in a $42,000 revenue shortfall on the operations side, Nelson recently told the Burke County Board of Commissioners. The airport made internal cuts, shortened operational hours and skipped on mowing to cut that amount down to about $24,000, Nelson said at the time.

The airport planned on asking each entity for additional money for this fiscal year, Nelson said.

During that recent meeting, Burke County Commissioner Maynard Taylor questioned why the airport needed more money and why it isn’t self-supporting. He also questioned what the average county resident received from the airport.

“We’re spending more money than we have every year to keep this thing above ground so to speak, but the average citizen in Burke – what are they getting for that,” Taylor said in previous reports.

The airport’s condition has improved since the authority took over, Abele said at the meeting.

At the time, Nelson said the airport is a “tourism magnet,” adding that area colleges recruiting athletes use the airport.

Burke County commissioners have put off the funding request.”

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

Federal Crimes – Be Careful

Federal Crimes – Be Proactive

Federal Crimes – Federal Indictment

Federal Crimes – Detention Hearing

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

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

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


Former Council Chairman Kwame R. Brown Pleads Guilty to Bank Fraud and Campaign Finance Violation

June 11, 2012

7thSpace.com on June 9, 2012 released the following:

“WASHINGTON— Kwame R Brown, the former Chairman of the Council of the District of Columbia, pled guilty today to a federal charge of bank fraud and a second criminal charge involving a violation of the District of Columbia’s campaign finance laws.

The guilty pleas were announced by United States Attorney Ronald C Machen Jr; Ronald T Hosko, Special Agent in Charge of the FBI Washington Field Office’s Criminal Division; and Rick A Raven, Special Agent in Charge of the Washington Field Office of the Internal Revenue Service-Criminal Investigation (IRS-CI).

Brown, 41, pled guilty to the bank fraud charge in the United States District Court for the District of Columbia. In a separate proceeding, he pled guilty in the Superior Court of the District of Columbia to the campaign finance violation. As part of the plea agreement, he agreed to submit his immediate resignation from the District of Columbia Council. Brown also has agreed to cooperate as the investigation continues.

The Honorable Richard J Leon scheduled sentencing in the federal case for 11 AM on September 20, 2012.

The Honorable Juliet McKenna scheduled sentencing in the campaign finance case for 2:30 PM on the same date.

The bank fraud charge carries up to 30 years in prison. Under federal sentencing guidelines, the parties have agreed that the applicable range for this offense would be up to six months in prison and a possible fine of up to $5,000. The campaign finance charge carries a maximum of six months of incarceration and a possible fine of up to $5,000.

Brown is the second member of the Council of the District of Columbia to plead guilty to criminal charges this year. In January, in a separate and unrelated case, Harry L Thomas, Jr pled guilty to federal theft and tax charges.

Thomas, who resigned as part of his plea agreement, has since been sentenced to a prison term of 38 months. Thomas was the first sitting member of the DC. Council to be charged with and convicted of a felony.

The charges against Kwame Brown involve two separate matters. In one case, Brown admitted providing false documentation to secure two personal loans, totaling more than $220,000.

In the other, Brown admitted aiding and abetting another individual, a relative, to make a cash payment of $1,500 to a campaign worker for the 2008 council campaign. The relative was a signatory on the campaign’s bank accounts; Brown also admitted failing to disclose the relative’s identity to the District of Columbia Office of Campaign Finance.

“For the second time this year, a member of the DC. Council has pled guilty to a felony offense and been forced to resign,” said United States Attorney Machen. “While sitting on the council, Kwame Brown repeatedly falsified and forged documents to deceive the bank into giving him money, even faxing one of the fraudulent documents from his council office.

Brown also gave a family member free license to make illegal and untraceable cash expenditures from his 2008 campaign in violation of DC. law. The people of the District of Columbia deserve better from their elected officials. Today’s pleas take us one step closer to a culture of integrity and accountability that will not tolerate politicians engaging in dishonesty and self dealing.”

“This week, Mr Brown admitted to forging bank documents and withholding information about his re-election campaign finances,” said Special Agent in Charge Hosko.

“This investigation and today’s guilty pleas demonstrate that the FBI and our law enforcement partners will pursue all allegations of illegal conduct that clouds the judgment of our elected officials and deprives our citizens of the honest government to which they are entitled.”

“No matter what your position, it is unacceptable to submit false information to a financial institution in an effort to secure a loan,” said Special Agent in Charge Raven. “IRS-Criminal Investigation will make every effort to aggressively investigate financial fraud of any kind and not give a free pass to anyone who blatantly fails to comply with the law.”

Brown was elected as an at-large member of the District of Columbia Council in 2004 and took office in January 2005. He was re-elected in 2008, and then, in 2010, he was elected chairman. He took office in that position in January 2011.

According to a statement of offense signed by the government as well as the defendant, Brown submitted false information in securing a $166,000 home equity loan, as well as a $55,335 loan that he used to purchase a boat.

Both loans were issued by Industrial Bank, NA.

In paperwork for the home equity loan, which Brown sent by facsimile from his council office on September 26, 2005, Brown provided a Verification of Employment Form. In it, he falsely wrote that he held the position of “Vice President of Strategy” in an unnamed company; that he earned $3,000 per month; that his probability of continued employment was “great”; that he was projected to earn a $10,000 pay increase on January 3, 2006; and that he was a full-time employee. At the bottom of this form, Brown forged the name and signature of a friend from college who was purportedly the president of the company. In fact, Brown did not have his friend’s permission to sign this form, and his friend was never Brown’s employer.

Brown filed and submitted this form to overstate his annual income in an effort to win approval of his loan application, believing that, without artificially inflating his income, his request would be rejected.

Based on Brown’s purported income, Industrial Bank issued a loan to Brown on October 12, 2005, in the amount of $166,000.

Brown submitted the second loan application on July 25, 2007, this time seeking money for the purpose of purchasing a boat. As part of the application, he submitted an Internal Revenue Service form, purporting to be from a company for which he had worked as a consultant. The form that Brown submitted showed his 2006 income from the company to be $85,000. In fact, Brown’s income from the firm that year totaled $35,000.

Before submitting the form, Brown had altered the “3” on the document to an “8,” so that it appeared he earned $85,000, not $35,000.

As with the 2005 loan, Brown believed that this loan would not be approved without artificially inflating his income. Based on Brown’s purported income, Industrial Bank issued a loan to Brown on August 30, 2007, in the amount of $55,335.

In the campaign finance case, Brown admitted aiding and abetting an unlawful cash campaign expenditure, in excess of the $50 limit imposed on individual cash transactions. According to a statement of offense in that matter, signed by the government as well as the defendant, the “Committee to Re-Elect Kwame Brown” was formed for Brown’s 2008 re-election campaign for the at-large seat on the council.

In or around April 2007, Brown allowed a relative to be a signatory on the committee’s bank account, which was held at Industrial Bank. The relative and the committee’s treasurer jointly opened the account.

In his Statement of Candidacy, filed with the Office of Campaign Finance, Brown listed this account as the committee’s sole bank account. He failed, however, to disclose that his relative was a signatory on the account.

In August 2008, with Brown’s knowledge and permission, the relative opened a second bank account at Industrial Bank, called the “side account,” purportedly to pay for “get-out-the-vote” campaign activities. Brown authorized the relative to make withdrawals on behalf of the committee from the side account. However, he failed to amend his Statement of Candidacy to disclose the existence of the second account.

Later, on or about September 11, 2009, Brown’s relative paid an expense in the amount of $1,500 related to the 2008 re-election campaign, using cash withdrawn from the side account.

This case was investigated by the FBI’s Washington Field Office and the Washington Field Office of IRS-Criminal Investigation.

In announcing the guilty pleas, United States Attorney Machen, Special Agent in Charge Hosko, and Special Agent in Charge Raven commended those who investigated the case for the FBI and IRS-CI.

They also acknowledged the efforts of Assistant United States Attorneys David S Johnson, Maia L Miller, Matt Graves, Ellen Chubin Epstein, and Daniel Butler of the Fraud and Public Corruption Section of the United States Attorney’s Office; Assistant United States Attorney Anthony Saler of the Asset Forfeiture and Money Laundering Section of the United States Attorney’s Office; and Trial Attorney Peter Mason of the Public Integrity Section of the Department of Justice’s Criminal Division, who have prosecuted the case.

Finally, they expressed appreciation to Forensic Accountant Crystal Boodoo; Paralegal Specialists Diane Hayes, Lenisse Edloe, Tasha Harris, Shanna Hays, and Sarah Reis; Legal Assistants Krishawn Graham, Nicole Wattelet, and Christopher Samson; former Legal Assistant Jared Forney; Criminal Investigators Matthew Kutz and Duncan Templeton; Litigation Support Services Specialist Thomas Royal; Information Technology Specialist Kimberly Austin; Victim-Witness Coordinator Dawn Tolson-Hightower; former Student Law Clerks Carl Barnes, Iris Postelnicu, and Danielle Rosborough; and Intelligence Specialist Lawrence Grasso, all of the United States Attorney’s Office for the District of Columbia.

Reported by: FBI”

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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.


Tax Crimes Least Likely To Be Prosecuted At U.S. Attorney’s Office In Los Angeles

April 16, 2012

Huffington Post on April 16, 2012 released the following:

“By Kendall Taggart

The U.S. attorney’s office in Los Angeles is less likely to prosecute criminal cases referred by the Internal Revenue Service than its counterparts in the rest of the state, according to a California Watch analysis of five years of data.

The eastern district, which includes Sacramento and Fresno, was the most likely to prosecute IRS referrals, the data shows. But the U.S. attorney in Los Angeles was the only office in the state that fell slightly below the national average of prosecuting criminal IRS cases.

Each U.S. attorney has broad discretion over the priorities for his or her district. They determine which criminal cases referred to them by other law enforcement agencies they want to pursue and which cases to close without prosecuting.

It is difficult to determine why the Los Angeles office lagged behind its peers.

“It’s definitely puzzling,” said Terree Bowers, a former U.S. attorney. Since leaving the Los Angeles office, Bowers said he brought a fraud case to the office’s attention and was surprised that it didn’t act on the case.

The agency did not comment specifically on the findings, but Bruce Riordan, a U.S. attorney’s office spokesman, said: “I have been associated with the Department of Justice and the Central District of California for more 20 years, and based on my experience, the Central District has a longstanding and well-deserved reputation, both locally and nationally, for vigorously and successfully prosecuting criminal tax violations.”

The IRS investigates and refers cases about tax fraud, money laundering, narcotics trafficking, organized crime and public corruption.

Compared with the volume of cases it handles, the IRS refers only a small percentage for federal prosecution. Syracuse University’s Transactional Records Access Clearinghouse, which compiled the data analyzed by California Watch, estimated that the odds of having the IRS refer a case to a federal prosecutor were about 12 per million nationwide last year.

In California, the IRS referred about 540 cases to federal prosecutors in the last fiscal year. When adjusted for population, the odds of having a case referred to a federal prosecutor in the state are 15 per million, slightly higher than the national average.

When they do receive cases from the IRS, three of the state’s four U.S. attorneys prosecute alleged offenders at a rate above the national average, the data shows.

Across the country, close to 54 percent of all IRS referrals are prosecuted. In the eastern district covering Sacramento, that prosecution rate is about 62 percent. For the northern San Francisco and the southern San Diego districts, the prosecution rate is the same: 57.8 percent. For Los Angeles, the rate falls to 51.4 percent.

The IRS has several ways of enforcing tax law, including audits and civil charges.

“The heavy gun of the IRS is criminal enforcement, but it’s a much less frequent event,” said David Burnham, a co-director of the Transactional Records Access Clearinghouse.

The federal tax filing deadline is tomorrow. But in the months leading up to that day, U.S. attorneys sometimes file several tax fraud indictments as a deterrent, Bowers said.

Since January, the U.S. attorney’s eastern district office has announced more than six fraud cases, including charges against three Sacramento women who are accused of trying to claim more than $1.3 million in fraudulent tax refunds. The scheme involved more than 280 false tax returns and numerous identify-theft victims.

According the the U.S. attorney’s office, the women filed fraudulent returns through TurboTax and obtained the tax service’s Green Dot debit cards “loaded with the tax return money.” The actual loss to the IRS was $962,079, out of the $1.3 million claimed by the women using various identities.

And late last month, the Los Angeles office announced that a former Los Angeles Dodgers pitcher, William S. Bene, had signed a plea agreement admitting that he did not pay taxes for an illegal business selling karaoke machines. The U.S. attorney’s office said Bene sold counterfeit karaoke jukeboxes and failed to report $600,000 in sales to the IRS.

As part of his plea agreement, the U.S. attorney said, Bene admitted he had illegally copied and sold karaoke songs on hard drives that each carried about 122,000 songs.

“Intellectual Property crimes are not victimless,” U.S. Attorney André Birotte Jr. said in a statement last month. “As this federal case shows, these crimes of stealth hurt the small businesses that do play by the rules, and they also deprive the federal government of tax revenue that could be put to beneficial use.””

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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 and OFAC SDN Sanctions Removal.

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.


U.S. Sentencing Commission Promulgates Amendment to the Federal Sentencing Guidelines Responding to the Dodd-Frank Act

April 13, 2012

U.S. Sentencing Commission on April 13, 2012 released the following:

U.S. SENTENCING COMMISSION PROMULGATES AMENDMENT TO THE FEDERAL SENTENCING GUIDELINES RESPONDING TO THE DODD-FRANK ACT

Also promulgates amendments regarding human rights, drug, and other offenses

WASHINGTON, D.C.― Today the United States Sentencing Commission promulgated amendments to the federal sentencing guidelines responding to the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) regarding securities fraud, mortgage fraud, human rights offenses, drug offenses, and other offenses.

The Dodd-Frank Act contained directives to the Commission to review the fraud guideline with respect to securities fraud, fraud on financial institutions, and mortgage fraud. Judge Patti B. Saris, chair of the Commission, noted “Fraud offenses represent almost ten percent of the federal criminal docket annually, and have been the focus of congressional attention as evidenced by the directives to the Commission.” Judge Saris explained, “The Commission’s action today increases penalties for insider trading cases and ensures that no defendant will receive a reduced penalty because of a federal intervention, such as a bailout. The Commission also adopted presumptive rules governing the calculation of loss in mortgage and securities fraud cases.”

“This is the first step in a multi-year review of the fraud guideline,” stated Judge Saris. “We have received feedback from a number of stakeholders that broader review of the operation of the fraud guideline should be undertaken. Specifically, we have heard from the courts, defense attorneys, and prosecutors that the interaction of the loss attributed to an offense and the number of victims in an offense (the loss and victims tables in the guidelines), particularly in high-loss fraud cases, may result in disproportionate or disparate sentences. This is an area of the guidelines that the Commission must continue to review in a comprehensive manner.” More than 30 other federal sentencing guidelines (such as those covering money laundering, public corruption and identity theft offenses) either reference the fraud guideline or have a proportional relationship with it. Therefore, any change to the loss or victims calculations in the fraud guidelines must be undertaken comprehensively.

The Commission also promulgated an amendment to the federal sentencing guidelines to cover substantive human rights violations. First, the Commission promulgated new sentencing enhancements that would apply to a defendant convicted of committing a serious human rights offense, including genocide, torture, war crimes, and the use or recruitment of child soldiers. Second, the Commission promulgated an amendment to the guideline covering immigration offenses to provide a penalty enhancement if a defendant committed the instant offense to conceal or attempt to conceal their role in a serious human rights offense. “These amendments will ensure appropriate penalties for those who commit serious human rights offenses,” explained Judge Saris. “Human rights violations are an important issue to Congress and the Commission shares this concern.”

The Commission also promulgated an amendment to the federal sentencing guidelines to address the growing number of federal drug cases involving the stimulant “BZP.” BZP is a Schedule I stimulant used both alone and in combination with other chemicals to produce effects that mimic those of the drug “Ecstasy,” and promoted as such to the youth population, particularly for use during all night “raves.” The proposed amendment adds BZP to the list of chemicals covered by the federal sentencing guidelines in a manner consistent with available scientific literature. Judge Saris noted, “The Second Circuit Court of Appeals brought this important matter to our attention. The Commission is pleased to have addressed concerns about the growing prevalence of this drug in the Second Circuit and elsewhere by providing appropriate coverage under the federal sentencing guidelines.” The Commission also promulgated an amendment that provides a sentence reduction under the guidelines for certain low-level, non-violent offenders convicted of offenses involving precursor chemicals, which parallels provisions already in the federal sentencing guidelines for low-level, non-violent drug offenders who meet certain criteria.

The Commission also resolved a circuit conflict by confirming that for purposes of calculating a defendant’s criminal history under the federal sentencing guidelines, driving while intoxicated, driving under the influence and similar offenses are, without exception, always counted. The Commission’s actions today also resulted in amendments to the guidelines covering contraband cell phones in prison, cigarette offenses, trafficking in fake Indian goods, and animal crush videos.

The Commission must submit its 2011-2012 amendment package to Congress by May 1, 2012. Congress has 180-days to review the amendments submitted by the Commission. The amendments have a designated effective date of November 1, 2012, unless Congress affirmatively acts to modify or disapprove them.

More information on the amendments promulgated today may be found on the Commission’s website, http://www.ussc.gov.

The United States Sentencing Commission, an independent agency in the judicial branch of the federal government, was organized in 1985 to develop national sentencing policy. The resulting federal sentencing guidelines provide the starting point for the court’s consideration of a sentence and help ensure that similar offenders who commit similar offenses receive similar sentences.”

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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 Mail Fraud Crimes

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To find additional federal criminal news, please read Federal Crimes Watch 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 and OFAC SDN Sanctions Removal.

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.


D.C. taxi official turned FBI informant recalls role in corruption probe

April 3, 2012

Washington Post on April 2, 2012 released the following:

“By Del Quentin Wilber,

Leon Swain Jr. double-checked his recording device and then stepped from his black sport-utility vehicle into an overcast September Friday with one simple, yet potentially dangerous, task: to see if his cover had been blown.

“It’s showtime,” he thought.

For the past hour, Swain, a D.C. taxi official turned FBI informant in a public corruption probe, had been mulling over how to keep the investigation going, if only for one more week. He knew it would not be easy: That morning’s newspapers had been filled with headlines trumpeting the arrest of a D.C. Council aide, and his FBI handlers were nervous that their targets might suspect Swain was an informant.

Clad in a dark suit that hung loosely from his rotund frame, the taxi commission chairman took a deep breath and then lumbered across the parking lot to meet one of the targets sitting in an idling gold Mercedes-Benz.

In a city where federal authorities are investigating the campaigns of the mayor and the chairman of the D.C. Council, where a council member was forced to resign in January after pleading guilty to corruption charges and where lower-level officials seem to be indicted all too frequently, Swain not only turned down a substantial bribe but also became an FBI informant. He willingly wore a wire, accepted about $250,000 in payoffs from corrupt businessmen trying to control the D.C. taxi industry and spent two years looking over his shoulder wondering if anyone was onto him.

What did he get for his work? The voluble former D.C. police officer, a bespectacled 59-year-old retiree who shuffles because he has two wrecked knees, received not a dime, nor even a mention in self-congratulatory press releases issued by federal authorities. Stress wrecked his sleep, binge eating hoisted 60 pounds onto his considerable build, and his close-cropped hair and mustache turned increasingly gray. When his boss lost reelection, he was pushed out of his job.

Now, with the key figures recently sentenced, Swain is finally free to talk — about being an informant and what it was like to wonder whether the man in the Mercedes might put a bullet in his head.

To think it all started in a produce aisle.

The bribe

Swain was pushing his cart through a supermarket in College Park on the warm Saturday of Labor Day weekend in 2007 when Yitbarek Syume materialized at his side. A powerful figure in the D.C. cab industry, Syume had called 30 minutes earlier to demand a meeting with Swain, the newly installed chairman of the D.C. Taxicab Commission.

Syume — a diminutive and soft-spoken Ethio­pian American who had driven a cab before becoming a local taxi tycoon — had something important he needed to discuss, he told Swain over the phone. Immediately. The taxi commissioner, not wanting to offend Syume, suggested meeting while he shopped. Minutes later, Syume was throwing vegetables into Swain’s cart, extolling the importance of proper nutrition.

“What do you want, Yitbarek?” Swain finally asked, cutting short the small talk.

He and others in the taxi industry wanted to give Swain $20,000 to help him build “community support,” Syume replied. And with that, he left the supermarket, but not before promising to appear at Swain’s office Tuesday with the cash.

The taxi commissioner finished his errand in a fog and felt sick to his stomach. As he drove to his home in Southeast Washington, his mind roiled. Had he just been offered a bribe? What did Syume want for the money? He had met with Syume before and heard him and some of his associates talk about their visions for the industry and how they thought they could profit from a controversial switch from the zone fare system to taxi meters. Did that, Swain thought, have something to do with the promise of money?

Swain also wondered why Syume would offer him cash when the businessman knew he had spent 17 years as a D.C. police officer. He had even gained a modicum of fame on the force: In 1981, he drove John W. Hinckley to D.C. police headquarters moments after President Ronald Reagan was nearly killed by the would-be assassin, and he enlisted Sugar Ray Leonard in 1987 to persuade a kidnapper to turn over an 18-month-old girl.

Swain, a lifelong city resident who has connections in the D.C. political community and has weighed runs for the D.C. Council, was on his second tour on the taxi commission.

Within days of taking office in 2007 and having heard rumors about corruption in the cab industry, he told a group of taxi drivers: “I don’t want your money; I don’t want your liquor; and I don’t want women. There is nothing you have that I want.” For a brief moment, Swain wondered if Syume’s ham-handed approach bore the hallmarks of an FBI sting.

This account of Swain’s involvement in the taxi cab case was built on interviews with Swain, current and former federal authorities and lawyers familiar with the case, and a review of court records.

That night, Swain decided to report Syume to an adviser to then-Mayor Adrian M. Fenty (D), who had tapped him to be chairman of the commission. Then Swain spoke with D.C. Police Chief Cathy L. Lanier, who told him that she would send detectives to speak with him.

By Tuesday, the taxi commissioner was meeting with Syume in his Southeast office, which two D.C. police detectives had wired with recording devices before stationing themselves in a cramped adjoining bathroom.

Syume wasted little time in handing Swain an envelope stuffed with $14,000 in cash, telling him that he wanted to purchase licenses to operate cab companies. The next day, he gave Swain $8,000, explaining that he wanted to expedite the licensing process. He also said he thought the certificates would become increasingly valuable if the city limited the number of cab companies as expected.

Over the next two years, in exchange for licenses he didn’t realize were fictitious, Syume passed the taxi commissioner more than $200,000 in cash in folded newspapers, envelopes, shopping bags and even a pillow case — so much money, Swain says, that he remembers the payoffs as “just a blur.”

The role

Not long after the first bribe, the FBI took the lead. And it soon became clear to agents and federal prosecutors that Swain seemed to relish his role, perhaps revisiting glory days on the police force. He strapped a pistol to his hip (as a former D.C. police officer he is allowed to carry one). And drawing on his lengthy experience as a vice officer, he provided a stream of advice about techniques, didn’t always take instructions well and criticized agents when he thought they made mistakes. Once, he chastised an agent for repeatedly driving through his meeting place in a conspicuous Ford Crown Victoria.

“I was a pain,” Swain concedes.

Despite the commissioner’s bluster, law enforcement officials say Swain played the role of corrupt official to near-perfection — prodding and cajoling his targets while capturing every bribe and incriminating word on tape.

“Get the money straight,” he told one of Syume’s associates in a recorded conversation. “If you’re not going to get me the money, tell me. But don’t tell me you’re going to give me the money, then don’t show up with it.”

The undercover work and the stresses of his day job — implementing the meter system, for instance, sparked lawsuits and angry confrontations with taxi drivers — eventually wore him down.

He grew apprehensive that Syume and his financial backers, always nebulous in his mind, might resort to violence. Concerned that bystanders might get hurt in potential crossfire, Swain quit his church choir.

Twice divorced with three grown children, Swain removed every photograph and personal item — including a grandson’s hand-drawn birthday card — from his office because he worried Syume might target his family if things went sour. He even asked the FBI to buy him an expensive guard dog, a request that was denied.

“He did not look good,” LaVerne Swain-Thompson, one of Swain’s five siblings, recalled after seeing her brother in 2008 or 2009. “I could tell something was wrong. I asked him about it, and he just told me, ‘There’s something going on, but I can’t tell you about it.’ ”

Unable to talk to friends or family members — Swain was mostly a loner anyway — he came to increasingly rely on his D.C. police handler, Detective Joseph Sopata, a veteran officer who remained on the case with the FBI. Nearly every day, Sopata called Swain to measure his mood and keep him calm with reassurances and jokes.

One way Sopata reduced the tension was to wager that Swain could not slip non-sequiturs into his recorded conversations. When Swain uttered one such phrase, “the Great Gazoo,” during a meeting in his office, Sopata later told the taxi commissioner that he nearly burst out laughing in the nearby bathroom. (Sopata declined to comment.)

“Joe knew what I was going through,” Swain said. “Without him, I would have put an end to it. It was just overwhelming. He helped me through a very tough period.”

Swain also came to depend heavily on the District’s then-Attorney General, Peter Nickles. Known for his brusque demeanor, Nickles surprised Swain by calling at least twice a week to check on him, always expressing earnest concern.

“His effort was heroic,” Nickles recalled recently. “The roughest part was that it never seemed to end. The FBI would tell him it will be over in a week, then two weeks would pass and then a month would pass and they would have him accept more cash. . . . I asked him a couple of times if it was too much and I had to pull the plug, and he would say: ‘No, I love the city. I love my job. I’m determined to see it to its end.’ ”

‘I hear rumors’

As the investigation wore on, Swain met with more people suspected of being involved in the scam, including Abdul Kamus, an advocate for Ethiopian taxi drivers and a close associate of Syume’s. Swain accepted $20,100 from Kamus for taxi licenses, and the FBI soon confronted the suspect and persuaded him to also become an informant. While wearing a recording device, Kamus handed $1,500 to Ted Loza, a top staffer to the influential council member Jim Graham (D-Ward-1).

When Loza was arrested on a Thursday in late September 2009 and word spread that Kamus was an informant, Swain was told by a taxi driver that Syume was gunning for him. Then he got a call from an FBI agent who said that Syume was sitting in his gold Mercedes in a parking lot near the Taxicab Commission offices.

Swain and an undercover FBI agent were worried that Syume knew the taxi commissioner was an informant. Maybe he was waiting there to silence him, Swain thought.

Still, Swain and the agents wanted to keep the operation going until they could arrest Syume and several dozen taxi drivers on charges of bribing Swain to obtain individual operator’s licenses.

As he got out of his truck and shuffled toward the Mercedes, Syume was getting out of the car. Swain’s mind whipped through ways to handle Syume. As they converged, Swain decided to be bold, hoping to push Syume off balance.

“What the —- happened,” Swain barked before a bit of probing: “I hear rumors you were pissed at me and you were going to take me out.”

“Oh, no, trust me,” Syume said — though it quickly became clear that he would not be forgiving Kamus.

“The one [Kamus] will be eliminated,” Syume said. “You’ll see . . . eliminated soon. . . . Permanently eliminated.”

Despite the heat, Swain persuaded the businessman to continue with the scheme. The next week, authorities nabbed Syume and 36 taxi drivers at the D.C. police academy when they showed up to take their tests and obtain their certificates. The major players, including Syume and Loza, would all eventually receive prison terms.

In the weeks after the arrests, Swain didn’t celebrate. Instead, he checked himself into a hospital to be treated for fatigue. “I had to be taught how to sleep again,” he 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

————————————————————–

To find additional federal criminal news, please read Federal Crimes Watch 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 and OFAC SDN Sanctions Removal.

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.


Denver FBI office investigating more cases of public corruption

January 22, 2012

Denver Post on January 22, 2012 released the following:

“By Felisa Cardona
The Denver Post

The Denver FBI is investigating more than a dozen cases of public corruption in Colorado, Wyoming and Indian country.

The number of investigations is up from three years ago, when agents in the public-corruption unit launched a special hotline urging people to come forward with information.

At the time, the FBI said either no public corruption existed in the region, which was unlikely, or it was underreported. But things have changed.

“We are very busy right now,” said Supervising Special Agent Brian Schmitt. “I don’t know if it is a result of the down economy or if there are more avenues to report.”

Public corruption is defined as an abuse of public office or position within the government for personal gain.

Agents won’t provide details about pending cases but say theft and mishandling of stimulus funds, legislative corruption and law enforcement corruption are the types of crimes they look into.

White-collar crimes such as bribery, fraud, extortion, embezzlement, insider trading and influence peddling take a long time to investigate and require agents who have special skills.

In 2010, the FBI opened an investigation into a Denver driving-school instructor who was taking bribes in exchange for passing tests.

Criminal charges haven’t been filed against Sikiru Fadeyi, the owner of Ola’s Driving School, but undercover agents infiltrated his business and recorded him accepting bribes, court records show.

The reason charges have not materialized against Fadeyi — who was an agent of the state because he was licensed to administer tests — is because of the complex nature of the investigation. Leads from that case extend to other states as far away as New York and Hawaii.

For now, Fadeyi’s license is suspended and he is not allowed to operate the driving school.

FBI agents routinely work cases with local law enforcement, but when it comes to corruption investigations, the agents tackle them alone. They don’t want local officers with ties to a particular city or agency in conflict with the investigation.

Public-corruption cases — such as the charges against former Democratic Illinois Gov. Rod Blagojevich — receive intense coverage by the media and are followed closely by the public, which can complicate investigations for the FBI.

Witnesses are less likely to come forward when there is too much attention on a case, Schmitt said.

Also, agents and federal prosecutors are aware that the targets of white-collar investigations typically hire top-notch defense lawyers to fight the charges.

“The cases we put together have to be rock solid,” he said.

Schmitt said corruption in the region isn’t rampant as it is in places such as Detroit and New Orleans, but that doesn’t mean it doesn’t exist.

“Anywhere you have money and power, corruption follows,” he 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

————————————————————–

To find additional federal criminal news, please read Federal Crimes Watch 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 and OFAC SDN Sanctions Removal.

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


Blagojevich Asks For New Trial, Cites Judicial Bias

July 26, 2011

Chicago Tribune on July 26, 2011 released the following:

“Former Gov. Rod Blagojevich, convicted last month of wire fraud, bribery, attempted extortion and conspiracy in his second federal public corruption trial, filed a motion late Monday for another retrial, citing numerous instances of alleged judicial bias and error that helped the prosecution “strip away the effective aspects of the defense case.”

“Virtually every error in this trial stemmed from the fact that this Court deprived Blagojevich of the presumption of innocence and exhibited bias against the defense,” the motion asserted. “The Court formed a closed mind to the evidence and made findings of fact.”

The motion said that “the government did not only benefit from the first trial, it used every opportunity to strip away the effective aspects of the defense case. … The Court rubber-stamped the government’s requests.”

The litany of criticisms in the 158-page document touched on everything from jury selection to Blagojevich’s attorneys’ long-held argument that more of the secretly-recorded phone calls that were at the heart of the government case should be played.

The motion also noted that U.S. District Judge James Zagel ruled against Blagojevich at nearly every turn.

His attorneys also zeroed in on Blagojevich’s decision to testify at the second trial — arguing that while Zagel had assured Blagojevich’s defense team that taking the stand would allow Blagojevich the chance to explain his behavior, his rulings during the testimony prevented that.

Blagojevich did not testify during his first trial last year in which a jury convicted him of one of 24 counts against him — that he lied to the FBI. The jury deadlocked on the rest of the charges, leading to the second trial and his sweeping conviction last month on an additional 17 counts.

As a part of the defense motion for a new trial filed Monday, his attorneys included an affidavit signed July 25 by Blagojevich in which he says that he decided to testify the second time around after conferring with his attorneys about statements Zagel made during a May 20 sidebar. According to the affidavit, Zagel said that Blagojevich would be allowed to testify to the fact that he didn’t think anything he was doing was illegal and that none of the people he spoke with told him differently.

In the motion filed Monday, though, Blagojevich’s attorneys said Zagel’s rulings during Blagojevich’s several days of testimony did not allow him to get that point across.

“The Court explicitly told defense counsel that the only path to acquittal was through Blagojevich’s testimony,” the filing reads. “Yet when Blagojevich finally took the stand, he was bamboozled by the Court’s rulings and assertions throughout the trial.”

The ruling noted that the government was allowed to address details of the calls “ad nauseum” with witnesses but that Blagojevich was not allowed to offer up explanations for certain aspects of the calls.

The government is expected to respond to the motion next month.”

To find additional federal criminal news, please read The Federal Crimes Watch Daily.

Douglas McNabb and other members of the U.S. law firm practice and write extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition and OFAC SDN List Removal.

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

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