Former CEO and Former CFO of ArthroCare Corp. Charged with Allegedly Orchestrating a $400 Million Securities Fraud Scheme

July 17, 2013

The U.S. Department of Justice’s Office of Public Affairs on July 17, 2013 released the following:

“The former chief executive officer and former chief financial officer of ArthroCare Corp., a publicly traded medical device company based in Austin, Texas, were charged for their alleged leading roles in a $400 million scheme to defraud the company’s shareholders and members of the investing public by falsely inflating ArthroCare’s earnings by tens of millions of dollars, announced Acting Assistant Attorney Mythili Raman of the Department of Justice’s Criminal Division and U.S. Attorney Robert Pitman of the Western District of Texas.

A 17-count indictment was unsealed today in the U.S. District Court for the Western District of Texas against Michael Baker, the former chief executive officer and director of ArthroCare, and Michael Gluk, the former chief financial officer of ArthroCare. Both defendants surrendered to authorities this morning.

The indictment, which was returned on July 16, 2013, charges Baker and Gluk with one count of conspiracy to commit wire and securities fraud, 11 counts of wire fraud, and two counts of securities fraud; it charges Baker alone with three counts of false statements. The indictment also seeks forfeiture of assets held by Baker and Gluk.

“Truthful corporate earnings reports are critical to the soundness of our financial system,” said Acting Assistant Attorney General Raman. “Today’s indictment alleges that those at the top of ArthroCare deceived investors and regulators by manipulating the company’s reports to inflate its stock, ultimately causing hundreds of millions in losses in shareholder value. The Criminal Division will continue to aggressively pursue corporate executives who undermine our financial markets for personal gain.”

According to the indictment, from at least December 2005 through December 2008, Baker, Gluk and other senior executives and employees of ArthroCare allegedly falsely inflated ArthroCare’s sales and revenue through a series of end-of-quarter transactions involving several of ArthroCare’s distributors. According to court documents, Baker, Gluk and other ArthroCare employees determined the type and amount of product to be shipped to distributors based on ArthroCare’s need to meet Wall Street analyst forecasts, rather than distributors’ actual orders. Baker, Gluk and others then allegedly caused ArthroCare to “park” millions of dollars worth of ArthroCare’s medical devices at its distributors at the end of each relevant quarter. ArthroCare would then report these shipments as sales in its quarterly and annual filings at the time of the shipment, enabling the company to meet or exceed internal and external earnings forecasts.

The indictment alleges that ArthroCare’s distributors agreed to accept shipment of millions of dollars of product in exchange for substantial, upfront cash commissions, extended payment terms and the ability to return product, as well as other special conditions, allowing ArthroCare to falsely inflate its revenue by tens of millions of dollars.

Baker, Gluk and others allegedly used DiscoCare, a privately owned Delaware corporation, as one of the distributors to cover shortfalls in ArthroCare’s revenue. According to the indictment, at Baker and Gluk’s direction, ArthroCare shipped product to DiscoCare that far exceeded DiscoCare’s needs.

In addition, Baker, Gluk and others allegedly lied to investors and analysts about ArthroCare’s relationships with its distributors, including its largest distributor, DiscoCare. According to the indictment, Baker and Gluk caused ArthroCare to acquire DiscoCare specifically to conceal from the investing public the nature and financial significance of ArthroCare’s relationship with DiscoCare.

The indictment further alleges that when Baker was deposed by the U.S. Securities and Exchange Commission about the DiscoCare relationship in November 2009, he lied again on multiple occasions.

According to court documents, between December 2005 and December 2008, ArthroCare’s shareholders held more than 25 million shares of ArthroCare stock. On July 21, 2008, after ArthroCare announced publicly that it would be restating its previously reported financial results from the third quarter 2006 through the first quarter 2008 to reflect the results of an internal investigation, the price of ArthroCare shares dropped from $40.03 to $23.21 per share. The drop in ArthroCare’s share price caused an immediate loss in shareholder value of more than $400 million.

If convicted, Baker and Gluk would face a maximum prison sentence of 25 years for the conspiracy charge, 20 years for each count of wire fraud, and 25 years for each securities fraud count. Baker faces five years for each count of false statements.

An indictment is merely a charge, and the defendants are presumed innocent until proven guilty.

This case was investigated by the FBI’s Austin office. The case is being prosecuted by Deputy Chief Benjamin D. Singer and Trial Attorneys Henry P. Van Dyck and William Chang of the Criminal Division’s Fraud Section. The Department recognizes the substantial assistance of the U.S. Securities and Exchange Commission.”

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

Federal Crimes – Be Careful

Federal Crimes – Be Proactive

Federal Crimes – Federal Indictment

Federal Crimes – Detention Hearing

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

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

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


FBI Says Cartel Used Bank of America to Launder Money

July 9, 2012

Bloomberg Business Week on July 9, 2012 released the following:

“By Joe Schneider

The brother of the alleged leader of a Mexican cocaine-trafficking cartel used Bank of America Corp. (BAC) accounts to invest the organization’s drug proceeds in U.S. racehorses, a FBI agent said.

Jose Trevino-Morales, one of 14 people indicted by a federal grand jury in Texas on June 12, used a personal account and a business account under the name of Tremor Enterprises LLC to buy and sell horses using money generated from cocaine trafficking, extortion and bribery, Jason Preece, a special agent with the Federal Bureau of Investigation, said in a June 11 sworn statement filed in federal court in Dallas.

“The ultimate goal of this money laundering operation was to provide Jose Trevino with apparent legitimate assets purchased and maintained by illegally obtained money,” Preece said. Bank of America isn’t accused of any wrongdoing in the agent’s statement.

Details of the transactions were revealed in a probe of the Los Zetas drug cartel, which according to the filing, funnels thousands of kilograms of cocaine into the U.S. each year. Los Zetas is the biggest drug cartel in Mexico, in geographical presence, and controls 11 states in the country, generating millions of dollars of revenue, Preece said in the statement filed in a bid to gain a search warrant for Trevino’s property.

Strong Procedures
“We have strong anti-money-laundering procedures and work closely with the authorities when suspicious activity is discovered,” Larry Di Rita, a spokesman at Charlotte, North Carolina-based Bank of America, said in a phone interview today.

The bank doesn’t comment on any specific legal and customer cases, he said.

Preece filed the statement to support his request for court permission to search Trevino’s property in Balch Springs, Texas, a Dallas suburb, where he said investigators were likely to find horse ownership records, bank statements and cellular phones used to communicate with Los Zetas.

Trevino, who earned $29,000 in 2009 from Texas Stone and Tile LLC, had expenses of $200,000 a month the following year to support his horses, according to an FBI informant who isn’t named in the filing. The drug cartel had bought at least $4.2 million worth of quarter horses, which are used in short- distance races, over a four-year period, according to the indictment.

The two most well-known horses Trevino had were Tempting Dash and Mr. Piloto, according to the filing.

Mr. Piloto won the All American Futurity race in 2010 at Ruidoso Downs Race Track, with Tremor Enterprises’ bank account being credited with $968,440 as a result, Preece said.

Miguel Angel Trevino Morales, 38, leader of the Los Zetas drug cartel, and his brother Oscar Omar Trevino Morales were also indicted by the grand jury.

The defendants are charged in the May 30 indictment with conspiracy to launder monetary instruments. The crime carries a maximum penalty of 20 years in prison.

The criminal case is U.S. v. Morales, A-12-cr-210-SS, U.S. District Court, Western District of Texas (San Antonio). The application and affidavit for search warrant is 3:12-mj-255, U.S. District Court, Northern District of Texas (Dallas.)”

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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.


ICEgate? High ranking intel officials linked to Palestinian money laundering

May 15, 2012

Examiner.com on May 7, 2012 released the following:

By Jim Kouri

“What at first appeared to be government officials involved in embezzlement to the tune of more than a half-billion dollars now appears to be also connected to a Palestinian money-laundering operation, according to several Law Enforcement Examiner sources.

A top U.S. intelligence chief pleaded guilty last week as a result of a far-reaching federal fraud investigation that nabbed a total of five members of the Department of Homeland Security and may be connected to funnel money to a Palestinian ring, according to a report obtained by the National Association of Chiefs of Police and the Law Enforcement Examiner.

James M. Woosley, the acting director of intelligence for DHS’s Immigration and Customs Enforcement (ICE) pleaded guilty to defrauding the government of more than $180,000 in a scheme involving fraudulent travel vouchers, and time and attendance claims, according to court documents.

The 48-year old former resident of Tucson, Arizona, pleaded guilty in the U.S. District Court for the District of Columbia to a charge of conversion of government money, according to the Department of Justice.

Four other suspects pleaded guilty to charges related to the Woosley case: Ahmed Adil Abdallat, 64, an ICE supervisory intelligence research specialist, pleaded guilty in October 2011; William J. Korn, 53, an ICE intelligence research specialist, pleaded guilty in December 2011; Stephen E. Henderson, 61, a former contractor doing work for ICE, pleaded guilty in January 2012; and Lateisha M. Rollerson, 38, an assistant to Woosley, pleaded guilty in March 2012. Abdallat pleaded guilty in the Western District of Texas, and the others pleaded guilty in the District of Columbia.

Between February 2009 and September 2010, ICE Supervisory Intelligence Research Specialist Ahmed Adil Abdallat also traveled from El Paso, Texas to Washington, D.C. more than ten times, according to records submitted to DHS. Abdallat did so at the recommendation of the ICE Supervisor, and Abdallat submitted fraudulent travel vouchers for expenses that he did not incur, so that he could kick back money to the ICE Supervisor, according to former U.S. Congressman Tom Trancredo, who remains active in monitoring U.S. immigration policy and agencies in the United States.

As a result of the fraudulent travel vouchers, ICE reimbursed Abdallat a total of approximately $116,392.84. Abdallat kept some of the money, but kicked back approximately $58,550 to the ICE Supervisor, Rollerson and another individual, according to court records.

Ahmed Adil Abdallat was sentenced to a mere 12 months in prison for illegal use of a diplomatic passport and submitting fake travel receipts to ICE. According to federal sentencing guidelines, he should have received up to 10 years in federal prison for his unlawful use of a diplomatic passport.

All told, the actions of the various defendants cost taxpayers upwards of $600,000.

“[On May 2] James Woosley became the fifth – and highest-ranking – individual to plead guilty as part of a series of fraud schemes among rogue employees and contractors at ICE,” said U.S. Attorney Ronald C. Machen Jr., District of Columbia.

“He abused his sensitive position of trust to fleece the government by submitting phony paperwork for and taking kickbacks from subordinates who were also on the take. This ongoing investigation demonstrates our dedication to protecting the taxpayer from corrupt government employees and contractors,” Machen added.

According to the government’s evidence, with which Woosley agreed, between May 2008 and January 2011, Woosley participated in fraudulent activity involving travel vouchers, and time and attendance claims. In addition, from June 2008 until February 2011, Woosley was aware of or willfully overlooked fraudulent activity of ICE employees or contract employees under his supervision, such as Palestinian Ahmed Adil Abdallat, a supervisory intelligence specialist.

The other employees included Rollerson, who he met in or about 2007, while he was deputy director for ICE’s Office of Intelligence. Woosley and Rollerson developed a close, personal relationship. In or about May 2008, Rollerson was hired as an intelligence reports writer for a company that did contract work for ICE. Later that year, she was hired by ICE as an intelligence research specialist.

This placed her first in the chain of command under Woosley, and she later became Woosley’s personal assistant. Rollerson’s official duty station was in Washington, D.C., and she lived in Virginia, with Woosley.

Rollerson helped Woosley and the other participants with the paperwork to support the fraudulent payments they later received.

A Palestinian Connection?

According to investigative journalist and radio commentator Debbie Schlussel, suspect Ahmed Adil Abdallat, a Palestinian, served as an intelligence analyst for ICE. And his boss Woosley, the ICE Intelligence chief, could not say anything about it because he is a co-conspirator with Abdallat in submitting phony expense documents to ICE for reimbursement.

“The money, stolen from American taxpayers who paid it to fund this country’s national security, is probably going to fund Islamic terrorism and is definitely going to a multi-million dollar Palestinian money-laundering ring and its bank accounts in Jordan. The Muslim ICE official [had] a US-government-issued diplomatic passport, which he misuse[d] for eight personal trips to Jordan to see Muslim brothers” wrote Schlussel.

“Homeland Security and the Justice Department are minimizing these parts of the story and are succeeding. But the truth is that this is a major national security breach and a gargantuan example of the failure of political correctness and pan-Muslim affirmative action in federal law enforcement agencies” Schlussel stated.

U.S. District Judge Amy Berman Jackson, appointed to the court in 2011 by President Barack Obama, scheduled sentencing of Woosley for July 13, 2012. Under federal guidelines, Woosley faces a likely sentence of 18 to 27 months in prison as well as a potential fine.

In addition, as part of his plea agreement, he agreed to forfeiture of the money he wrongfully obtained. This case was investigated by the DHS Office of Inspector General, the FBI’s Washington Field Office and the ICE’s Office of Professional Responsibility.

“The fact that the investigation was handled by the Homeland Security Department and its components instead of by the FBI or other federal investigators is highly suspicious to me. These were high-ranking U.S. intelligence officials who were stealing larges sums of money without the slightest hesitation. Could not these same officials compromise national security or worse?” asks former military intelligence officer and police detective Sid Franes.

“Are Americans getting the whole story? Or are we once again facing yet another political agenda?” he asks.”

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

Federal Crimes – Be Careful

Federal Crimes – Be Proactive

Federal Crimes – Federal Indictment

Federal Crimes – Detention Hearing

Federal Mail Fraud Crimes

Federal Crimes – Appeal

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

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

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


Texas federal grand jury indicts Sinaloa cartel leaders

April 25, 2012

CNN on April 24, 2012 released the following:

“By the CNN Wire Staff

(CNN) — A U.S. federal grand jury in Texas has indicted the suspected top leaders of Mexico’s Sinaloa cartel.

Joaquin “El Chapo” Guzman Loera and Ismael “El Mayo” Zambada Garcia face murder and conspiracy charges connected with drug trafficking, money laundering and organized crime.

The indictment, returned April 11 and unsealed Tuesday, also charges 22 other people who prosecutors allege are connected with the cartel.

It is one of several U.S. federal indictments charging Guzman, who is widely known as Mexico’s most wanted fugitive and has made Forbes magazine’s list of the world’s most powerful people.

“It’s a reminder we’re right behind him, that he can’t live out in the open. We need to get them apprehended,” Assistant U.S. Attorney Tony Franco said Tuesday.

This month’s indictment in western Texas detailed two acts of violence prosecutors said were committed by members of the cartel, including the 2010 kidnapping of an American citizen and two members of his family during a wedding ceremony in Ciudad Juarez, Mexico, because of their ties with the rival Juarez cartel.

The target was the groom and a resident of Columbus, New Mexico, the U.S. Attorney’s Office for the Western District of Texas said in a statement.

Police found the bodies of the groom, his brother and his uncle three days after the wedding in the bed of a pickup truck, according to the indictment.

The indictment also describes the 2009 kidnapping, killing and mutilation of a Texas resident “to answer for the loss of a 670-pound load of marijuana seized by the Border Patrol,” prosecutors said.

Investigators found the Texas resident’s body in Ciudad Juarez, according to the indictment.

“He had been beaten and strangled and his hands had been severed above the wrists and placed on his chest, to serve as a warning to those who might attempt to steal from the cartel,” the indictment says.

Guzman and Zambada have been indicted on drug trafficking and organized crime charges in a number of U.S. federal courts. U.S. officials have offered a $5 million reward for information leading to their capture.

Guzman was arrested in 1993 on homicide and drug charges but escaped in 2001, reportedly by bribing prison guards to smuggle him out in a laundry truck. A Mexican federal investigation led to the arrest of more than 70 prison officials.

Forbes magazine has placed him on its list of the world’s most powerful people, reporting his net worth of $1 billion as of March.

Rumors regularly surge about his whereabouts.

Franco declined to comment on whether there was new information regarding Guzman’s location.

He described Guzman as “a man who has unlimited means, more money than most people in Mexico.”

“It affords him the ability to hide,” Franco added.

The Sinaloa Cartel, named after the Mexican state where the gang was formed, is one of the most powerful drug-trafficking groups in the nation.”

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

Federal Crimes – Federal Indictment

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

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


Extradited businessman Christopher Tappin granted US bail

April 24, 2012

News Shopper on April 23, 2012 released the following:

“A RETIRED businessman extradited to the USA over arms dealing charges has been granted bail and will be released later this week, his lawyer said.

Christopher Tappin, 65, of Larch Dene, Farnborough Park, will be released from the Otero County detention centre in New Mexico either tomorrow or Wednesday (April 25), his US lawyer Kent Schaffer said.

Judge David Briones set the bond at one million US dollars (£620,527) and Tappin’s family must pay 50,000 dollars (£31,026) before he can be released, documents filed at the US district court in the Western District of Texas show.

Tappin, the former president of the Kent Golf Union, was told last month that he must remain in custody while he awaits trial over the state border in El Paso, Texas.

He could now be freed tomorrow, but will have to remain in Texas.

Tappin, who faces up to 35 years in jail if convicted of trying to sell batteries for surface-to-air missiles to Iran, originally spent 23 hours a day locked in his cell before being moved to a shared cell.

He denies the charges.

The case fuelled the row over the fairness of the extradition treaty between the UK and the US.

Attorney General Dominic Grieve QC said Tappin’s extradition highlighted problems with the treaty which were not “readily curable”, warning that many Britons were left uneasy when faced with the seemingly harsh and disproportionate sentences in the American justice system.

Other critics of the 2003 treaty, including Deputy Prime Minister Nick Clegg, have described it as “one-sided”, but an independent review by retired Court of Appeal judge Sir Scott Baker last year found it was both balanced and fair.”

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

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 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.


Federal Contractors Accused of $6.5M Fraud

November 7, 2011

Courthouse News Service on November 7, 2011 released the following:

“By DAVID LEE

(CN) – A federal grand jury in San Antonio accused three government contractors of conspiring to defraud the Air Force of $6.5 million through false invoices. Donald Dean Brewer, 62, of Clovis, N.M., his wife, Sherri Lynn Brewer, 62, and James McKinney, 60, of San Antonio, were named in a 17-count indictment.

They are charged with one count of conspiracy to defraud the United States, 12 counts of wire fraud and four counts of major fraud against the United States, the U.S. Attorney for the Western District of Texas said.

The Brewers and McKinney are accused of creating a sham subcontracting business, Enterprise and Deployment LLC, to insert it as an extra subcontractor between prime contractors and Ark Systems, a company for which McKinney worked for as vice president of government systems.

By submitting false invoices, the defendants allegedly caused prime contractors to overcharge the Air Force by including Enterprise and Deployment’s fraudulent charges in the prime contractor invoices.

The indictment claims that from July 2002 through 2008, the obtained about $33.5 million in subcontracts for Enterprise and Deployment, enriching themselves by almost $6.5 million.

Donald Brewer worked for KARTA Technologies, as medical systems infrastructure modernization program manager at Brooks City Base in San Antonio. Both KARTA and Ark contracted with the Air Force. KARTA provided engineers and analysts to evaluate projects and proposals and Ark installed electronics at government medical facilities.

“Allegedly, the taxpayers were overcharged $6 million by a company created by the defendants,” General Services Administration Inspector General Brian D. Miller said in a statement. “This is why we need ethics laws for federal contractors who can in effect steer taxpayer dollars to their own pockets.”

The conspiracy charge carries a statutory maximum penalty of 5 years in federal prison. Each wire fraud charge is punishable by up to 20 years in federal prison and each major fraud charge by up to 10 years.”

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

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 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.


Nearly 40 Members and Associates of Bandido Outlaw Motorcycle Gang Charged in Three Districts for Alleged Drug and Firearm Offenses

September 28, 2011

The Federal Bureau of Investigation (FBI) on September 27, 2011 released the following:

“WASHINGTON— Nearly 40 members and associates of the Bandido Outlaw Motorcycle Gang (BOMG) were arrested yesterday and today on various firearms and drug-related charges in three judicial districts as part of a coordinated law enforcement effort, announced the Department of Justice and the FBI.

Twenty-eight individuals were charged in the Northern District of Texas in six complaints unsealed today in Dallas with conspiracy to possess and to distribute heroin, methamphetamine and cocaine. One of the defendants was charged with possession of a machine gun. All of the defendants were arrested around the Dallas area, except for one individual, who was arrested in San Francisco today. The defendants will make initial appearances tomorrow in U.S. federal court.

In addition, eight individuals who are members or associates of the BOMG were charged in the District of Colorado with conspiracy and knowingly possessing with intent to distribute 50 grams or more of methamphetamine and five kilograms or more of cocaine. Six of the individuals were arrested today in the Denver area, while one defendant was already in state custody and one is at large. According to court documents filed in U.S. District Court in Denver, the BOMG is a self styled “outlaw” motorcycle organization comprised of more than 2,000 members and associates with more than 90 chapters in the United States, Canada, Europe, and elsewhere.

Yesterday, FBI agents and local authorities arrested three San Antonio residents in the Western District of Texas as part of the coordinated takedown. San Antonio BOMG Sergeant-At-Arms Gerardo Gomez Jr., 29, aka “Bandido Junior Ray;” San Antonio BOMG member Jason Earl Morris, 33, aka “Sarge;” and Angel Cevallos, 40, were arrested on one charged count of possession with intent to distribute more than 500 grams of cocaine. According to the complaint and supporting affidavit filed in San Antonio, yesterday the defendants were engaged in a drug transaction with undercover agents in which the defendants agreed to sell five kilograms of cocaine for $100,000. The three defendants were arrested by FBI agents after initially fleeing the scene by car. They remain in federal custody.

Indictments and complaints are merely charging documents. Defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

The charge of possession with intent to distribute more than 500 grams of cocaine carries a mandatory minimum prison sentence of five years and a maximum prison sentence of 40 years, as well as a maximum $5 million fine. The charge of possessing a machine gun carries a maximum penalty of 10 years in prison and a $250,000 fine. If convicted of knowingly possessing with intent to distribute methamphetamine or cocaine, those defendants face a mandatory minimum prison term of 10 years, and a maximum of life in federal prison, as well as up to a $4 million fine.

The Dallas charges are the result of a multi-year investigation into the illicit distribution of drugs and firearms by the BOMG and its affiliated support clubs. The investigation was led by the FBI and the Drug Enforcement Administration (DEA).

The Colorado case is being investigated by the FBI and the Denver Metro Gang Task Force.

The San Antonio case is being investigated by the FBI; the DEA; the Bureau of Alcohol, Tobacco, Firearms, and Explosives; the Texas Department of Public Safety, the Arlington, Texas, Police Department; the Austin, Texas, Police Department; and the Fort Worth, Texas, Police Department. The San Antonio Police Department also assisted in yesterday’s arrests.

The cases are being prosecuted by Assistant U.S. Attorneys from the Northern District of Texas, the Western District of Texas and the District of Colorado.”

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.

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