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

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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.


Philadelphia Man Indicted on Alleged Fraud and Identity Theft Charges

May 4, 2012

The Federal Bureau of Investigation (FBI) on May 3, 2012 released the following:

“Darrel Jason Davis, 53, of Philadelphia, Pennsylvania, was charged today by indictment with conspiracy, bank fraud, access device fraud, and aggravated identity theft, announced United States Attorney Zane David Memeger.

If convicted, the defendant faces a maximum possible sentence of 141 years’ imprisonment and a $5,250,000 fine.

The case was investigated by the Federal Bureau of investigation and the United States Secret Service, with the assistance of the Willistown Township Police Department, the Warwick Township Police Department, the Amity Township Police Department, the Lower Makefield Township Police Department, the Newtown Police Department, Springfield Township Police Department, Montgomery Township Police Department, Middletown Township Police Department, and the Pennsylvania State Police. It is being prosecuted by Assistant United States Attorney K.T. Newton.

An indictment or information is an accusation. A defendant is presumed innocent unless and until proven guilty.”

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

Federal Crimes – Be Careful

Federal Crimes – Be Proactive

Federal Crimes – Federal Indictment

Federal Crimes – Detention Hearing

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.


Ten Individuals Charged by a Federal Grand Jury for Alleged Conspiracy to Commit Health Care Fraud

January 19, 2012

The Feral Bureau of Investigation (FBI) on January 19, 2012 released the following:

“Ten Individuals Arrested for Health Care Fraud

SAN JUAN, PR—On January 12, 2012, a federal grand jury returned two indictments against 10 individuals for conspiracy to commit health care fraud, announced Rosa Emilia Rodríguez-Vélez, United States Attorney for the District of Puerto Rico. The investigation was led by the Department of Health and Human Services, Office of the Inspector General (HHS-OIG), with the collaboration of the United States Secret Service (USSS) and the Federal Bureau of Investigation (FBI).

Gilberto Gómez, president of Monte Mar Health Corporation (Monte Mar), PROMEDS Medical Inc. (PROMEDS) and Quality Care Medical Supply (Quality); Yolanda García-Rodríguez, aka “Yolanda Gómez,” wife of Gómez and president of PROMEDS, secretary/treasurer of Monte Mar and an authorized official of Quality; Lissette Acevedo, independent sales coordinator; Doctor Francisco Garrastegui; Luisa Nieves, independent sales coordinator; Glendaly Báez, billing director for Monte Mar, PROMEDS and Quality; Mario Rivera, independent sales coordinator; and Marcos Sarraga, independent sales coordinator, are charged in a 39-count indictment for conspiracy to commit health care fraud and a forfeiture allegation of $1,956,750.54. The government seeks to forfeit two bank accounts, one investment account, and a Gallery Plaza Condominium located in the Condado area in San Juan, Puerto Rico.

The indictment alleges that from on or about November, 2008, until on or about May, 2010, Monte Mar submitted at least 1,518 false and fraudulent claims to Medicare totaling approximately $2,993,127.35 for Durable Medical Equipment (DME) that was not medically necessary, causing Medicare to disburse approximately $1,440,597.65. In March 2010, the indictment further alleges that after Monte Mar had been placed in a pre-payment status by Medicare, defendants Gilberto Gómez and Yolanda García-Rodríguez purchased PROMEDS and submitted false claims to Medicare seeking reimbursement for DME, including power wheelchairs, power pressure reducing air mattresses and knee orthosis. PROMEDS submitted at least 359 fraudulent claims to Medicare totaling approximately $786,368.34, causing Medicare to disburse approximately $335,493.12. In October 2010, the indictment alleges that a third company, Quality, was purchased by Gómez and García-Rodríguez after PROMEDS had been placed in a pre-payment status by Medicare. From on or about October 2010, until May, 2011, Quality submitted at least 115 false claims to Medicare totaling approximately $298,321.26, causing Medicare to disburse approximately $180,659.77. The indictment alleges a total amount of $4,077,816.95 fraudulently billed by using Monte Mar, PROMEDS and Quality, where Medicare disbursed a total of approximately $1,956,750.54.

Doctor Francisco Garrastegui was a physician licensed to practice medicine in Puerto Rico but not a Medicare provider. Garrastegui signed and completed false progress notes, prescriptions, Certificate of Medical Necessity (CMNs) and Statements of Ordering Physician for Medicare beneficiaries that were billed by Monte Mar, PROMEDS and Quality. The doctor was paid kickbacks by the three health corporations for the preparation of these false documents. The other defendants’ participation during the conspiracy involved the creation and submission of the fraudulent claims to Medicare.

The health care fraud scheme charged in the second indictment involves Luz M. Vega, president of Preferred Medical Equipment (PME), Doctor Francisco Garrastegui, Lissette Acevedo, Luisa Nieves and María Elisa Pérez. According to the 60-count indictment, from on or about April 2010, until on or about March 2011, PME submitted false claims to Medicare, seeking reimbursement for Durable Medical Equipment including: power wheelchairs, power pressure reducing air mattresses, wheelchair accessories, lumbar-sacral orthosis, knee orthosis and hospital beds. The co-conspirators submitted at least 95 fraudulent claims totaling approximately $210,223.47, causing Medicare to disburse approximately $107,876.73. Defendants Garrastegui, Acevedo and Nieves also participated in the first conspiracy charged in the previously mentioned indictment. The government seeks to forfeit $107,876.73 and one bank account.

“As part of the nation’s health care system, Medicare serves vulnerable populations,” said United States Attorney, Rosa Emilia Rodríguez-Vélez. “Today’s arrests by HHS-OIG agents and our law enforcement partners show that we will not tolerate criminals who engage in fraudulent schemes which deplete the Medicare program of funds which are destined for our elderly population, in order to enrich themselves.”

“HHS/OIG works diligently to investigate allegations of Medicare fraud. Today’s arrests involving durable medical equipment (DME) fraud demonstrate our resolve to bring these subjects to justice. Furthermore, as seen on the attached chart (DME data), our efforts, along with the U.S. Attorney’s Office and our law enforcement partners, have made a dramatic reduction on the total dollars billed and paid for DME in Puerto Rico.”

“The U.S. Secret Service is committed to investigate any financial fraud crimes to include identity theft along with our partner agencies to safeguard our financial system,” said Pedro Gómez, Special Agent in Charge. We will continue to investigate these types of crimes to the fullest extent of the law and bring to justice these criminals that engage in identity theft to facilitate other criminal activities.”

HHS-OIG, USSS, and the FBI conducted the investigations. The agencies that conducted the arrests were HHS-OIG, USSS, FBI, and the U.S. Marshal Service.

The cases are being prosecuted by Assistant U.S. Attorneys Julia Díaz-Rex, health care fraud coordinator, and Héctor Ramírez-Carbó, and Special Assistant U.S. Attorney Wallace A. Bustelo.

If found guilty, the defendants could face a possible sentence of 10 years in prison for the health care fraud offense with a consecutive term of imprisonment of two years for the aggravated identity theft offense and a fine of up to $250,000. Indictments contain only charges and are not evidence of guilt. Defendants are presumed to be innocent unless and until proven guilty.”

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

Federal Crimes – Be Careful

Federal Crimes – Be Proactive

Federal Crimes – Federal Indictment

Federal Crimes – Detention Hearing

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To find additional federal criminal news, please read Federal 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.


White House shooting suspect to face attempted assassination charge

November 17, 2011

CNN on November 17, 2011 released the following:

“From Carol Cratty, CNN

Pittsburgh (CNN) — An Idaho man arrested in connection with a White House shooting incident will be charged with trying to assassinate President Barack Obama or a member of his staff, a federal prosecutor said Thursday.

The announcement came at the first federal court hearing for Oscar Ramiro Ortega-Hernandez, 21, who allegedly was involved in a shooting last Friday that may be responsible for two bullets found at the White House.

One bullet hit a window and was stopped by bulletproof glass, and another was found on the White House exterior, the Secret Service said. Both bullets were found Tuesday.

Ortega-Hernandez will be charged with attempted assassination, said Assistant U.S. Attorney Jimmy Kitchen. The charge carries a possible maximum penalty of life in prison and a $250,000 fine.

At the brief hearing, Ortega-Hernandez spoke once, answering “yes, ma’am” when Magistrate Cynthia Eddy asked if he understood what his federal defender had said on his behalf.

Eddy agreed with a prosecution request for Ortega-Hernandez to remain in custody. Ortega-Hernandez agreed to be extradited to Washington, D.C., and the federal defender, Christopher Brown, said the defendant reserved his right for a detention and preliminary hearing after the transfer.

The government agreed not to formally indict Ortega-Hernandez until after his transfer, Brown said. It was not immediately clear when the transfer would occur, but it was expected in coming days.

With long, tangled hair and a beard, Ortega-Hernandez wore a white jumpsuit and was handcuffed with legs chained when entering the courtroom guarded by U.S. marshals.

Guards removed the handcuffs for the hearing, but the leg chains remained on as he sat down.

Lt. Brad Shields of the Pennsylvania State Police said Ortega-Hernandez, originally from Idaho, was arrested Wednesday in western Pennsylvania under a U.S. Park Police warrant issued Sunday in Washington “based on a shooting that occurred at the White House on November 11.”

According to Shields, a tip came in Wednesday that the man sought by federal authorities in the Washington shooting was at a Hampton Inn in the town of Indiana, Pennsylvania.

Ortega-Hernandez had stayed at the hotel with another person for a few days before the Friday shooting incident, Shields said.

When Ortega-Hernandez returned to the hotel on Wednesday, staff members recognized him from a photo provided by authorities and notified police, Shields said.

Ortega-Hernandez was arrested without any resistance in the hotel lobby, asking why he was being detained, Shields said. A bag of his was checked by sniffer dogs, but no weapons were found, according to Shields.

The suspect apparently returned to the hotel to locate what Shields called “his friend,” and Shields said the suspect’s companion was not from the area. He provided no further details of the companion’s identity or whereabouts.

In Idaho Falls, Idaho, police spokeswoman Joelyn Hansen said the man — identified there as Oscar Ramiro Ortega — was reported missing October 31. Hansen said Ortega is the same man that the Secret Service is calling Oscar Ramiro Ortega-Hernandez.

The bullets were found on the south side of the White House, a Secret Service official not authorized to speak on the record told CNN.

“A round was stopped by ballistic glass behind the historic exterior glass,” a Secret Service statement said. “One additional round has been found on the exterior of the White House. This damage has not been conclusively connected to Friday’s incident, and an assessment of the exterior of the White House is ongoing,”.

Last Friday night around 9 p.m., U.S. Park Police and the Secret Service investigated after hearing shots fired about 700 to 800 yards from the White House, the Secret Service statement said.

Within five minutes, officers located a vehicle in the 2300 block of Constitution Avenue, according to the statement.

“Evidence in the vehicle led to U.S. Park Police obtaining an arrest warrant for Oscar Ortega -Hernandez,” described as a 21-year-old Hispanic male, 5 feet 11 inches tall and weighing 160 pounds, the Secret Service statement said.

A rifle was found in the car, and federal authorities were testing it to see if it fired the bullets found at the White House.

A law enforcement official told CNN on Thursday than a trace of the weapon did not show Ortega-Hernandez as the purchaser.

The official, who was not authorized to speak about the ongoing investigation, provided no further information on details of the weapon’s purchase.

The Secret Service interviewed people who know Ortega-Hernandez, and determined he had a “direction of interest toward the president and the White House” — a term that does not suggest a direct specific threat.

The FBI, the Bureau of Alcohol, Tobacco, Firearms and Explosives, and the Metropolitan Police Department all took part in the search for Ortega-Hernandez, officials said.

“There’s always an outer perimeter and this was on the very outer perimeter of our security,” the Secret Service official said. “The gun and car were found within several minutes. We have a lot of security — a lot of layered security down there, and the security worked.”

A law enforcement official familiar with the investigation said when the shots were heard Friday night, there were reports of tires screeching and cars racing.”

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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 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.


Kenneth C. Osbourne, Jr. and Sheldon Hylton Indicted by a Federal Grand Jury for Allegedly Committing Conspiracy to Commit Bank Fraud, Aggravated Identity Theft, Bank Fraud, and Aiding and Abetting

September 1, 2011

The Federal Bureau of Investigation (FBI) on August 31, 2011 released the following:

“Two Charged in Identity Theft Scheme

Kenneth C. Osbourne, Jr. and Sheldon Hylton were charged today by indictment, filed on August 25, 2011, with conspiracy to commit bank fraud and aggravated identity theft, bank fraud, aggravated identity theft, and aiding and abetting, announced United States Attorney David Memeger. Hylton is also charged with wire fraud and possession, with intent to use unlawfully, five or more false identification documents. He was arrested this morning.

The charges stem from the defendants’ participation in an identity theft scheme that resulted in the personal identity information of approximately 86 individuals being compromised. According to the indictment, defendant Osbourne used his position as a customer service representative at AmeriHealth Administrators, Inc. to access customers’ personal identity information, including names, dates of birth, Social Security numbers, and bank account numbers, and passed this information along to defendant Hylton. Hylton, in turn, obtained counterfeit checks that were printed using the victims’ names, addresses, and bank account numbers. The indictment alleges that, between October 2009 and January 2010, defendant Hylton and other co-conspirators deposited approximately 48 counterfeit checks totaling approximately $289,846.82 into TD Bank accounts, and subsequently withdrew approximately $189,300 cash from these accounts. According to the indictment, defendant Hylton also used the personal identity information of five victims to access online adult pornography websites. Hylton also was charged with possession of 15 counterfeit Pennsylvania driver’s licenses.

Information Regarding the Defendants

Nams Address Age
Kenneth C. Osbourne, Jr. Philadelphia, PA 35
Sheldon Hylton Philadelphia, PA 22

If convicted, defendant Osbourne faces a maximum possible sentence of 57 years’ imprisonment, including a mandatory term of imprisonment of two years, a $4 million fine, a five-year term of supervised release, and a $1,300 special assessment. Defendant Hylton faces a maximum possible sentence of 82 years’ imprisonment, including a mandatory term of imprisonment of two years, a $4.5 million fine, a five-year term of supervised release, and a $1,500 special assessment

The case was investigated by the Federal Bureau of Investigation and United States Secret Service and is being prosecuted by Assistant United States Attorney Karen M. Klotz.

An indictment or information is an accusation. A defendant is presumed innocent unless and until proven guilty.”

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 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.

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Jeffery Wayne O’Neil and His Son Nathaniel O’Neil Indicted by a Houston Federal Grand Jury with Mail Fraud and Wire Fraud

August 26, 2011

The U.S. Attorney’s Office Southern District of Texas on August 25, 2011 released the following:

“Houston Man and Son Indicted For Fraud

HOUSTON – Jeffery Wayne O’Neil, 63, of Houston, has been arrested following the return of an indictment charging him and his son, Nathaniel Chilo aka Nathaniel O’Neil, 21, with mail and wire fraud, United States Attorney José Angel Moreno announced today.

Jeffrey O’Neil was arrested last night by United States Secret Service agents without incident. He made his initial appearance before U.S. Magistrate Judge Mary Milloy and was released on a $50,000 bond. A warrant remains outstanding for the arrest of Nathaniel O’Neil. Anyone who has information regarding his whereabouts is asked to contact the United States Secret Service at 713-868-2299.

The 10-count indictment, returned under seal on Aug. 11, 2011, was unsealed today following the arrest of Jeffrey O’Neil. The father and son, both of Houston, are charged with six counts of mail fraud and four counts of wire fraud. Jeffery O’Neil operated various debt relief businesses in the Houston area under different names, including but not limited to J. O’Neil/Associates Inc., World Outlook, World Outlook Management and Universal Restoration, none of which were licensed by the Texas Office of Consumer Credit Commissioner, according to the indictment.

The indictment alleges a scheme allegedly perpetrated by the O’Neils between June 2005 and September 2010 which consisted essentially of a plan to obtain money from individuals throughout the United States by representing that in exchange for paying money for entering into various programs they offered, they could provide debt relief in the form of credit card debt, tax liens, mortgage foreclosure, judgments. The O’Neils allegedly used agents in various parts of the United States to solicit, communicate with and receive payments from individuals seeking debt relief and the O’Neils communicated with agents and individuals seeking debt relief by and through e-mails. The defendants allegedly falsely represented and caused others to falsely represent that debt relief would be obtained through the Federal Trade Commission, the Senate Banking Committee, the Office of the Comptroller of the Currency (OCC), through injunctive action, and through a program called the “Debt Reconciliation Program” or “Debt Relief Program,” referred to as “DRP.” According to the indictment, Jeffery O’Neil falsely represented and caused others to falsely represent that he worked with the Financial Crisis Inquiry Commission.

Additionally, the indictment alleges the scheme further involved the sending of emails to include an altered speech by Ben Bernanke, Chairman of the Board of Governors of the Federal Reserve System, which falsely include statements about a debt reconciliation proposal sponsored by World Outlook Management as well as a fraudulent calendar for the Judiciary Committee of U.S. House of Representatives. Also, the O’Neils allegedly created Fair Credit Investigation Company, an entity bearing the initials “FCIC,” the same as the Financial Crisis Inquiry Commission which was falsely represented as a debt relief program. The O’Neils allegedly caused individuals throughout the United States to send checks payable to the FCIC to an address in Houston, to obtain credit card debt relief. When, in actuality, according to the indictment, the majority of the funds were used for the O’Neils’ personal benefit.

The indictment also contains a notice of forfeiture seeking forfeiture of $617,000, the alleged proceeds from the illegal activity alleged in the indictment.

Each count of mail fraud and wire fraud carries a maximum penalty of 20 years imprisonment and a fine up to $250,000.

The case was investigated by the United States Secret Service and is being prosecuted by Assistant United States Attorney John Braddock.

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

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 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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Edwin Jacquet, Peter Romeo, Edwin J. Mansour, Jr., and Denise Hudson Indicted by a Manhattan Federal Grand Jury for Conspiracy to Commit Bank Fraud and Conspiracy to Cause Damage to a Protected Computer

July 26, 2011

The U.S. Attorney’s Office Southern District of New York on July 25, 2011 released the following:

“MANHATTAN U.S. ATTORNEY CHARGES FOUR WITH OPERATING FRAUDULENT SCHEME TO REPAIR POOR CREDIT HISTORY

Scheme Fraudulently Enabled Thousands With Poor Credit To Improve Credit Scores To Obtain Millions Of Dollars In Loans

PREET BHARARA, the United States Attorney for the Southern District of New York, and BRIAN G. PARR, the Special Agent-in-Charge of the United States Secret Service (“USSS”) New York Field Office, announced today the unsealing of an Indictment charging EDWIN JACQUET, PETER ROMEO, EDWIN J. MANSOUR, JR., and DENISE HUDSON in connection with a fraudulent credit repair scheme. As part of the scheme, the defendants falsely reported to credit bureaus inflated credit histories for thousands of individuals, enabling those individuals to get millions of dollars in loans from financial institutions and other lenders.

Manhattan U.S. Attorney PREET BHARARA said: “Banks and other lenders rely on information from credit bureaus in making determinations about the credit-worthiness of consumers. These defendants allegedly subverted the entire reporting process to make a profit, and helped dupe a host of lenders who unwittingly extended millions of dollars in credit to people who were not worthy of the privilege.”

USSS Special Agent-in-Charge BRIAN G. PARR stated: “Schemes such as these adversely impact our nation’s banks and credit agencies, and harm hard-working Americans by eroding the public’s confidence in credit markets. Through the strategic support of our law enforcement partners, the Secret Service continues to effectively focus its investigative efforts on combating these types of financial crimes.”

According to the Indictment unsealed today in Manhattan federal court:

Consumer Reporting Agencies, commonly known as “credit bureaus,” are businesses that provide reports to third parties about the credit-worthiness of consumers. Credit bureaus gather information from many sources, including “furnishers,” which include entities that provide consumers with credit, such as credit card companies, automobile lenders, and department stores. In September and October 2007, Highway Furniture, Inc. (“Highway Furniture”), a Brooklyn-based business, became a furnisher. In July 2008, New York Funding Group Inc. (“New York Funding”), a Hempstead, Long Island-based business, became a furnisher.

From 2007 through 2009, through Highway Furniture and, later, New York Funding, JACQUET, MANSOUR, ROMEO, and HUDSON engaged in a scheme to falsely and fraudulently improve the credit histories and credit scores of thousands of individuals who purportedly were customers of the two entities (the “Purported Customers”). In truth and in fact, however, the individuals had never been customers of Highway Furniture and New York Funding.

As part of the scheme, in exchange for thousands of dollars in fees, the defendants provided credit bureaus with fictitious information showing that Highway Furniture and New York Funding had extended credit to the Purported Customers and that the loans had been or were being repaid. The defendants also falsely and fraudulently improved the credit histories and credit scores of some of the Purported Customers by deleting accurate, but negative, credit information maintained by the credit bureaus. As a result of their fraudulently improved credit histories and credit scores, the Purported Customers obtained millions of dollars of loans from banks and other lenders.

ROMEO, MANSOUR, and HUDSON were arrested this morning and will be arraigned later today in Manhattan federal court. JACQUET remains at large. Each defendant is charged with one count of conspiracy to commit bank fraud (Count One) and one count of conspiracy to cause damage to a protected computer (Count Two). On Count One, the defendants each face a maximum sentence of 30 years in prison and a maximum fine of $1 million, or twice the gross gain or loss from the offense. On Count Two, the defendants each face a maximum sentence of 10 years in prison and a maximum fine of $250,000, or twice the gross gain or loss from the offense.

JACQUET, 38, and ROMEO, 35, reside in Brooklyn, New York. MANSOUR, 43, resides in Staten Island, New York. HUDSON, 47, resides in Roosevelt, New York.

Mr. BHARARA praised the outstanding efforts of the United States Secret Service in the investigation, which he noted is ongoing. He also thanked Experian Information Solutions, Inc., and TransUnion LLC for their assistance in the investigation.

This case is being handled by the Office’s Complex Frauds Unit. Assistant U.S. Attorney DANIEL W. LEVY is in charge of the prosecution.

The charges and allegations contained in the Indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.”

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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