The following examples of money laundering investigations are written from public record documents on file in the court records in the judicial district in which the cases were prosecuted.
Tennessee Market Square Business Owners Sentenced in Drug Trafficking and Money Laundering Case
On April 28, 2009, in Knoxville, Tenn., James Michael West and his wife, Joanne Baker West, were sentenced for their roles in a drug and money laundering investigation. James West was sentenced to 105 months in prison, to be followed by five years of supervised release, and ordered to pay a $200 special assessment. Joanne Baker West was sentenced to four years probation and ordered to pay a $100 special assessment. Co-defendant, Phillip A. Apodaca was sentenced on April 27, 2009 to 144 months in prison, to be followed by five years of supervised release, and ordered to pay $200 special assessment. Another defendant, Christopher James Kortz was sentenced on April 3, 2009 to 36 months in prison, to be followed by three years of supervised release, and ordered to pay a $200 special assessment. All defendants pleaded guilty to money laundering and/or drug charges. According to a July 2006 indictment, from in or about 1995, and continuing up to and including July 11, 2006, James West, aka Mike West, and others intentionally and without authority, agreed with others to distribute and possess with intent to distribute, in excess of 1000 kilograms of a mixture and substance containing a detectable amount of marijuana. The indictment further charges that James Michael West and others conducted financial transactions with proceeds from drug trafficking.
Connecticut Women Sentenced for Operating Illegal Money Remitting Business
On April 28, 2009, in Bridgeport, Conn., Monica Teixeira, of New Milford, was sentenced to 12 months and one day of in prison, followed by two years of supervised release, and ordered to perform 100 hours of community service. In addition, Teixeira was ordered to pay a $2,000 fine. On October 14, 2008, Teixeira pleaded guilty to one count of operating an illegal money remitting business. According to court documents and statements made in court, Teixeira and Renata Amaral operated RM Insurance Services LLC of Danbury, an insurance company that catered to the Brazilian immigrant community. Between March 2006 and March 2008, Teixeira and Amaral, through RM Insurance, also operated a money transmitting business that wire transferred cash to other states and Brazil. However, RM Insurance was not licensed under Connecticut law to operate a money transmitting business. Through this illegal business, Teixeira and Amaral bypassed bank reporting requirements and allowed approximately $9.5 million to be wired. As part of an undercover law enforcement operation, Teixeira and Amaral also arranged to wire cash that was purported to be the proceeds of marijuana trafficking from a bank in Connecticut to a bank in Texas. Amaral has pleaded guilty to the same charge and awaits sentencing.
Louisiana Women Sentenced to 20 Years; Two Corporations Sentenced
On April 15, 2009, in New Orleans, La., Gwendolyn Joseph Moyo was sentenced to 240 months in prison, to be followed by three years of supervised release, and ordered to pay $2,463,807 in restitution. In addition, AA Communication, Inc. and Capital Management Asset Group (CMAG) were each sentenced to one year probation. Moyo was convicted in October 2008 on federal charges of conspiracy to commit mail fraud and wire fraud; mail fraud and aiding and abetting; wire fraud and aiding and abetting; engaging in the business of insurance after having been convicted of a crime involving dishonesty and a breach of trust; conspiracy to commit money laundering; and money laundering and aiding and abetting. AA Communication was convicted of conspiracy to commit mail and wire fraud, mail fraud, wire fraud, conspiracy to commit money laundering, and money laundering. CMAG was also convicted of conspiracy to commit mail and wire fraud, mail fraud, wire fraud, and conspiracy to commit money laundering. The jury further ordered Moyo, AA Communications, and CMAG to forfeit $1,495,521 as to the mail and wire fraud charges and ordered Moyo and AA Communications to forfeit $1,548,246 as to the money laundering charges. According to court documents, Moyo was twice convicted in 1989 and 1991 in the District of Arizona for conspiracy to defraud the United States; making false statements; mail fraud; wire fraud; and fraudulent use of a Social Security number; all felony crimes involving dishonesty and breach of trust. Despite being prohibited from participating in the insurance business because of her prior convictions, Moyo, through her companies, AA Communications and CMAG, marketed construction bonds to contractors and other entities which had difficulty placing coverage in the standard market. Moyo’s clients paid her for worthless performance, payment, or bid bonds and then completed the jobs without realizing they had not been covered. Moyo’s co-defendant, James Zoucha, acted as the President of AA Communications, serving essentially as a “straw man” or nominee for Moyo, generally facilitating the business while keeping Moyo’s name off the legal documentation.
Man Sentenced to Prison for Money Laundering and Drug Trafficking
On April 20, 2009, in Denver, Colo., Edgar Diaz-Calderon was sentenced to 96 months in prison and 60 months of supervised release for conspiracy to launder money and possession with intent to distribute cocaine. According to court documents, Diaz-Calderon was associated with organized gang activity that involved the distribution of more than 150 kilograms of cocaine in the Metro Denver area between 2005 and 2006. Using trusted runners and couriers, the cocaine was purchased in Mexico and transported to Denver. The cash proceeds of the illegal sales were then returned to Mexico to sustain the importation-distribution business cycle. On October 10, 2008, Diaz-Calderon pled guilty to charges in a superseding indictment of conspiracy to launder money and possession with the intent to distribute.
Connecticut Man Sentenced on Violations of Cash Structuring and Illegal Gun Possession
On April 17, 2009, in Hartford, Conn., Angel Rodriguez, aka “Lou Rock,” was sentenced to 24 months in prison, followed by three years of supervised release. Rodriguez pleaded guilty on July 11, 2008, to one count of possession of a firearm by a convicted felon and one count of structuring a cash transaction to evade reporting requirements. Federal law requires that all trades and businesses file a Form 8300 with the IRS upon receipt of more than $10,000 in cash in a single transaction or related transactions during a 12-month period. According to court documents and statements made in court, on April 11, 2007, Rodriguez purchased a 2006 Infiniti from M3 Auto Sales. The total price of the vehicle was $34,600, which Rodriguez purchased for approximately $23,100 in cash. The remaining balance was a trade-in allowance of $11,500 for a 2004 Nissan Maxima that was previously purchased at M3 Auto Sales. Rodriguez informed the dealer that he would be paying for the vehicle in cash, and further requested a discount for paying in this manner. In response, the dealer from M3 Auto Sales told Rodriguez they would “work around it.” Rodriguez understood the dealer to mean that if he paid more than $10,000 in cash that M3 Auto Sales would not file a Form 8300. At the time, Rodriguez was aware of the Form 8300. On December 15, 2007, Rodriguez was found to be in possession of a .40 caliber handgun which was a violation of federal law from a previously conviction.
Six Defendants Sentenced in Interstate Transportation of Stolen Property Conspiracy and Money Laundering Charges
On April 16, 2009, in Miami, Fla., six defendants were sentenced in a multi-million dollar conspiracy involving the interstate transportation of stolen property. Nasir David Khan was sentenced to 87 months in prison, followed by 3 years of supervised release, and agreed to forfeit his right title and interest in $3.2 million of stolen products that were seized pursuant to a search warrant. His brother, Asif Jordan Khan, was sentenced to 57 months in prison, followed by 3 years of supervised release, and also agreed to forfeit his right title and interest in $3.2 million of stolen products that were seized by law enforcement officials. Edward Joseph Smith was sentenced to 57 months’ imprisonment, followed by three years of supervised release. Michael Dagnen was sentenced to 46 months in prison, followed by 3 years of supervised release. James Foy was sentenced to 3 years of probation. Michael Spencer was sentenced to 18 months probation. The defendants were convicted of conspiracy to transport stolen property, interstate transportation of stolen property, possession and receipt of stolen property and conspiracy to commit money laundering. According to court documents and statements made in open court, the defendants bought and sold millions of dollars worth of stolen over-the-counter medications, health and beauty aids that had been stolen from Walgreens, Target, CVS and Rite-Aid. Pharmacare was a wholesaler that often purchased bulk quantities of mixed and damaged stolen products. Pharmacare operated a warehouse to clean and package the merchandise, and to remove store markings and anti-theft devices from the merchandise. All the defendants were Pharmacare employees or individuals who sold stolen merchandise to Pharmacare, including previously convicted defendant Duane Schneider, who is scheduled to be sentenced later this year.
Washington State Man Sentenced to 10 Years in Prison for $2.4 Million Embezzlement from Lumber Mill
On April 10, 2009, in Tacoma, Wash., Brett M. Smith, of Puyallup, Washington, was sentenced to 10 years in prison, three years of supervised release and ordered to pay $2,476,913 in restitution. Smith was the leader of a scheme to embezzle $2.4 million from Manke Lumber Company. Smith and seven other people, including Smith’s brother, Bryan M. Smith, were indicted in June 2008, for mail fraud and conspiracy to commit money laundering. Brett Smith pleaded guilty January 9, 2009. According to the indictment, in September 2004 Brett Smith became a “Scaler” for Manke. A scaler weighs, measures and inspects logs delivered to the lumber mill to determine their grade and value. Based on that information, Manke Lumber would mail checks to those people who were being compensated for the logs. Between November 2004 and July 2006, Smith and others entered into a scheme to create false records that prompted Manke to send checks to conspirators for logs that were never delivered to the mill. In his plea agreement, Smith admits he submitted false paperwork for more than 1,500 loads of logs worth more than $2.5 million. In all, Smith submitted false log intake information in at least twenty different names. More than a dozen additional defendants have been prosecuted and sentenced in connection with the scheme. The majority were charged with tax crimes for failing to report the income they took from the scheme.
Brazilian Citizen Sentenced to Federal Prison for Operating Illegal Money Remitting Business
On April 9, 2009, in Bridgeport, Conn., Andrea DeOliviera, a citizen of Brazil residing in Shelton, Conn., was sentenced to 15 months in prison, followed two years of supervised release, for her role in a multimillion dollar illegal money remitting scheme. DeOliviera pleaded guilty in October 2008 to one count of operating an illegal money remitting business. According to court documents and statements made in court, DeOliviera assisted in the operation of BrazUSA Enterprises LLC, of Bridgeport, which transmitted money from the United States to Brazil on behalf of Brazilian immigrants. However, the business was not licensed under Connecticut law to operate a money transmitting business. A money transmitting business is any person or business that receives money from a customer and then, for a fee paid by the customer, transmits that money to a recipient in a place that the customer designates; usually a foreign country. DeOliviera faces immigration proceedings following service of her term of imprisonment.
Defendant Sentenced to 78 Months After Admitting to Stealing Millions of Dollars Worth of Equipment from Cisco Systems, Inc.
On April 8, 2009, in Portland, Ore., Steven Edward Miller was sentenced to 78 months in prison, followed by three years of supervised release, and ordered to pay $3,713,107 in restitution. Miller previously pleaded guilty on December 9, 2008 to charges of money laundering and mail fraud. According to court records, Miller created PDX USA with the intention of providing telecommunication/internet services for residents. Between approximately August 2004 and November 2006, Miller used the entity names PDX USA, The New CB Shop, and others to interact with Cisco Systems, Inc., a leading manufacturer and seller of computer networking equipment and services based in San Jose, California. Miller rented office space for the two aforementioned entities in downtown Portland, Oregon. Miller devised a scheme to defraud Cisco Systems Inc. of more than $3.7 million in computer equipment and parts. He made false warranty claims to Cisco for replacement parts for computer equipment. Cisco shipped the parts to Miller at the Portland office space and to Miller’s residences in Everett and Marysville, Washington, expecting that Miller would return the defective parts he allegedly had. In reality, Miller did not have any defective Cisco computer parts. Once he obtained the new parts from Cisco, he sold them via the Internet and kept the proceeds for himself.
Michigan Credit Union Manager Sentenced for Embezzlement and Money Laundering
On April 3, 2009, in Grand Rapids, Mich., Ronald Tran, of Plainwell, Michigan, was sentenced to 46 months incarceration and ordered to pay $997,675 in restitution. Tran pleaded guilty in November 2008 to embezzlement from a credit union and money laundering. According to court records, between 2000 and 2004, Tran, while the general manager of the Plainwell Community Federal Credit Union, defrauded the credit union of approximately $1.3 million. Tran caused loans to be issued based on false information concerning the income and assets of applicants for the loans from the credit union. Tran used his position to misapply funds of the credit union for his own use and took funds from the proceeds of fraudulent loans. Tran conducted financial transactions to conceal the true ownership of the funds and the underlying financial institution fraud and embezzlement by issuing additional fraudulent loans to make payments on previously issued fraudulent loans. Plainwell Community Federal Credit Union ceased to exist as an independent entity and was incorporated into Federal Community Credit Union following the discovery of Tran’s fraudulent conduct.
New Jersey Doctor Sentenced for Prescribing Controlled Drugs to Patients and Money Laundering
On March 27, 2009, in Trenton, N.J., Dr. Philip B. Eatough, a physician, was sentenced to 41 months and ordered to pay a $9,000 fine. Eatough already forfeited $120,000 to the government, which represents the amount of money he laundered as part of his crimes. Eatough also paid the IRS back taxes of $302,000, including interest and penalties. In July 2008, Eatough pleaded guilty to two counts of distribution of a controlled substance without a legitimate medical purpose and to a money laundering conspiracy. During the plea hearing, Eatough admitted that in December 2004 he distributed oxycodone under two separate prescriptions to a patient, in dosages that were outside the scope of professional medical practice. As part of the plea agreement, Eatough had to surrender his medical license to the New Jersey Board of Medical Examiners, and any other state in which he was licensed to practice. Eatough also surrendered his DEA registration, which allowed him to dispense controlled substances as a practicing physician.
Minnesota Couple Sentenced for Conspiracy to Defraud Cable Television Service Providers
On March 26, 2009, in St. Paul, Minn., Jon Henry Sweeney and Michelle Ann Sweeney were sentenced to 70 months and 42 month prison terms and were ordered to pay fines of $150,000 and $125,000, respectively, for selling illegal cable television descramblers. The Sweeneys were convicted of conspiracy, unauthorized interception of cable service, aiding and abetting currency structuring and currency structuring. The Sweeneys owned and operated Micro-Star Technology and manufactured and sold illegal cable boxes and circuit boards designed to descramble available cable television channels, including premium and pay-per-view ones, thereby defrauding cable TV companies of revenue. A federal jury found that the Sweeneys structured and assisted in the structuring the purchase of a Chrysler minivan for the purpose of avoiding the filing of a currency transaction report. After negotiating the purchase price of $32,163, Jon Sweeney paid $9,900 in cash and Michelle Sweeney wrote a check for the remaining $22,263. Federal law provides that any financial transaction over $10,000 in currency must be reported to the IRS. The jury also found that Jon Sweeney knowingly and willfully structured the purchase of a Ford Focus. After he negotiated the purchase price of $10,699 and paid a $50 deposit, Sweeney paid $9,900 in cash and wrote a check for the remaining $749. Finally, the jury found that in October 2002, Michelle Sweeney knowingly and willfully structured a financial transaction at the First National Bank of Elk River based on a $9,900 cash withdrawal.
Michigan Woman Gets Six Years for Violating U.S. Embargo on Iraq
On March 25, 2009, in Detroit, Mich., Dawn Hanna, a Rochester, Michigan woman, was sentenced to six years for her role in exporting sensitive equipment to Iraq. Hanna was found guilty on October 2, 2008, on embargo and money laundering charges. The court also entered a money judgment against Hanna for over $1.1 million dollars which represents the profits to her and her business. Hanna was employed by Technology Integration Group (TIGS) as the director of sales and marketing. The evidence at trial showed that Hanna conspired with others to obtain and ship the components for a mobile telecommunications network to Iraq. The shipments and attempted shipments came during the reign of Saddam Hussein in the period leading up to the 2003 invasion by coalition forces. In 1990, an embargo was declared with Iraq, making it illegal to deal in property intended for export to Iraq. The embargo was lifted in May 2003, after the fall of Saddam Hussein. The evidence further showed that the telecommunications equipment contained encryption properties, giving it dual-use military capabilities. In addition, Hanna conspired to launder money in connection with the conspiracy. Hanna received approximately $9.5 million from their dealings, which was used to pay suppliers, a middle man and family members.
Washington State Man Sentenced to 30 Years in Prison for $35 Million “Ponzi” Scheme
On March 20, 2009, in Tacoma, Wash., Charles Nolon Bush was sentenced to 30 years in prison, three years supervised release, and $30 million in restitution. On November 13, 2008, a jury convicted Bush of 27 counts including securities fraud, wire fraud, mail fraud, and money laundering. According to testimony at trial and records filed in the case, Bush took millions of dollars in investor money in a fraudulent high-yield scheme between 1998 and 2002. In 1998, Bush was a resident of Des Moines, Washington, and later Port Orchard, Washington, where he operated various investment entities such as Hulaman Management Services (HMS), Global Dominion Financial Services (GDFS), and Cornerstone Institute. He accepted more than $35 million in investor funds promising high yield investments, when in fact only one-third of investor money was placed into any investments. Bush used the remaining investor money to fund a lavish lifestyle and pay previous investors in the form of a Ponzi scheme.
Pennsylvania Man Sentenced for His Involvement in Million Dollar Mortgage Fraud Scheme
On March 19, 2009, in Erie, Pa., Gregory M. Finney was sentenced to 53 months in prison and ordered to pay $33,188 in restitution on his conviction of conspiracy, mail fraud and money laundering. According to information presented in the court, Finney and others conspired to falsify mortgage loan applications for home buyers who could not have otherwise obtained a mortgage. Finney and others also accompanied prospective home buyers to the buyers' banks and deposited money into the buyer’s accounts to make it appear as if the buyers had higher account balances.
Indiana Man Sentenced to 75 months for Money Laundering
On March 16, 2009, in Fort Wayne, Ind., Woodrow Alan Ormiston, Jr. was sentenced to 75 months in prison, to be followed by four years of supervised release for conspiracy to distribute cocaine and money laundering. According to court records, Ormiston was charged in a five-count indictment with charges related to cocaine possession and distribution. Ormiston later pleaded guilty to one count of the indictment and to a one count information that charged him with money laundering relating to his attempt to refinance his home with more than $10,000 in drug profits. Ormiston agreed to forfeit $66,000 and two Harley motorcycles that were purchased with proceeds from drug trafficking.
Man Sentenced For Embezzling From Investors; Ordered to Pay More than $70 Million in Restitution
On March 13, 2009, in Beaumont, Texas, George D. Hudgins was sentenced to 121 months in prison and ordered to pay almost $71 million in restitution to his victims for perpetrating a commodities Ponzi scheme. Hudgins pleaded guilty in September 2008 to wire fraud, embezzlement and money laundering. According to information presented in court, from 2004 through April 2008, Hudgins solicited and accepted funds from numerous investors for the purpose of investing in commodities futures and stock index futures. To encourage investment, Hudgins provided investors with false and misleading information concerning the pool's historic returns. Instead of operating at the significant profit levels stated by Hudgins, the pool lost large amounts of money. Hudgins actually used monies provided to him by investors to pay "profits" to other investors, thus executing what prosecutors describe as a Ponzi scheme. Hudgins also lived a luxurious lifestyle, purchasing among many items, several classic sports cars, parcels of real estate, two airplanes, and numerous pieces of expensive jewelry.
Third Virginia Man Sentenced for Money Laundering and Harboring Illegal Aliens
On March 13, 2009, in Richmond, Va., Richard Mok Lee was sentenced to 55 months in prison following his guilty plea to conspiracy to commit money laundering. Co-defendant Edwin Velez was sentenced on February 27, 2009, to 48 months in prison following Velez’s guilty plea to conspiracy to commit money laundering and on February 2, 2009, Guillermo Ponce was sentenced to 33 months in prison following his guilty plea to transporting illegal aliens. All three defendants were ordered to serve three years of supervised release following their release from prison. Lee and Velez entered into consent orders of forfeiture for more than $495,000 relating to illegal funds associated with their criminal activities. A fourth co-defendant, Fermin Bolanos Garcia, is still at large. According to court documents, the defendants smuggled illegal aliens into the United States from Mexico and used them as laborers in a commercial janitorial service company owned by Richard Lee known as Lee/Lee Janitorial Service. As part of their guilty pleas, all three defendants admitted their involvement in the conspiracy. Lee admitted being the leader of the conspiracy, as well as the head of Lee/Lee Janitorial, and further admitted paying fees to transport illegal aliens from Mexico into the United States and ultimately to Richmond. Velez admitted his involvement in the conspiracy as Lee’s principal lieutenant. Velez further admitted setting up another janitorial service company, known as Victory Janitorial, which was created to facilitate the transfer of funds from Lee’s various businesses to promote the illegal operation. Ponce, who is an illegal alien from Mexico himself, admitted being a supervisor in the conspiracy. Ponce helped identify individuals in Mexico who would be smuggled to the United States to work for the companies, and also transported the illegal aliens to and from work as their supervisor in Richmond.
Watchmaker Sentenced for Counterfeiting Rolex Watches and Laundering Money
On March 11, 2009, in Philadelphia, Pa., Binh Cam Tran was sentenced to 72 months in prison, to be followed by three years of supervised release, and ordered to pay $2,273,166 in restitution. Tran pleaded guilty in October 2008 to charges of trafficking in counterfeit goods, conspiracy, and money laundering. According to court documents, from approximately January 1997 until April 24, 2003, Tran, a skilled watchmaker, engaged in a conspiracy to import blank watch parts from Hong Kong using false documentation and straw nominees, in order to manufacture counterfeit Rolex watches. From October 2001 through April 2003, Tran manufactured thousands of counterfeit Rolex watches inside his residence in Elkins Park, Pennsylvania, and sold them in New York and elsewhere. He concealed the cash proceeds by purchasing United States postal money orders at different post offices under the currency reporting limit. Tran paid his personal expenses through an American Express account with the structured money orders. He also used the postal money orders and cash to pay import costs of the watch parts under various nominee names. Tran hand-carried gym bags full of cash and postal money orders to Petcon, a Queens, New York, freight forwarding company which, at the defendant’s direction, facilitated the importation of blank watch parts for Tran under his nominee names, including Spintex Corporation, Anh Tuan Bui, and Tri Thuong Tang. Petcon, in turn, transferred the cash and cash equivalents to Hong Kong bank accounts of a Hong Kong shell export company, Super Time, created and controlled by Tran. He then caused the transfer of millions of dollars from Super Time to be directed through bank accounts he controlled in Hong Kong to personal accounts in the United States controlled by Tran or his family members.
Brazilian Citizen Sentenced for Operating Illegal Money Remitting Business
On March 10, 2009, in Bridgeport, Conn., Nilander DeOliviera, a citizen of Brazil, was sentenced to 22 months in prison, followed by three years of supervised release, for his role in a multimillion dollar illegal money remitting scheme. DeOliviera pleaded guilty in October 2008 to one count of operating an illegal money remitting business. According to documents filed with the court and statements made in court, DeOliviera admitted that he wire transferred more than $2.5 million through his business, BrazUSA Enterprises LLC, from bank accounts in his name on behalf of Brazilian immigrants. DeOliviera’s business was not licensed under Connecticut law to operate a money transmitting business. DeOlivera, who has been detained since March 18, 2008, faces deportation following his term of imprisonment.
Arizona Man Sentenced for Laundering Drug Proceeds
On March 10, 2009, in Tucson, Ariz., Adalberto Gallegos III was sentenced to 15 months in prison for money laundering. Gallegos III pleaded guilty to the charge in October 2008. His father, Latin Breed singer Adalberto Gallegos Jr. was sentenced in December 2008 to 15 months for conspiring with other persons to conduct financial transactions involving the proceeds of distributing marijuana. According to the plea agreement, Gallegos III, assisted his father by having $75,000 in drug proceeds laundered. The drug proceeds were deposited into bank accounts in Florida by the persons that were supplied drugs by the defendant’s father as well as by the defendant himself.
Maryland Madam Sentenced to Prison for Money Laundering
On March 6, 2009, Baltimore, Md., Adriana Delcid, of Frederick, Maryland, was sentenced to 15 months in prison, followed by three years of supervised release, for money laundering related to her prostitution business. According to her plea, from January 1, 2006 through May 2008, Delcid was associated with three houses of prostitution in Maryland and Virginia, making over $140,000 per year in unreported income. Delcid set the hours and prices at the brothels and assisted in collecting the money, which she used to help pay rent and utilities at the brothels, pay her mortgage, make payments on the vehicle used to transport the prostitutes, pay sex workers and brothel managers, purchase supplies for her prostitution businesses, and open two businesses in Florida.
Former Texas Bank Official Sentenced For Transporting Stolen Funds Across State Lines and Money Laundering
On February 24, 2009 in Tyler, Texas, former banker Brent Steven Lemons, of Arlington, Texas was sentenced to 75 months in prison and ordered to pay $1.8 million in restitution for money laundering and transporting stolen funds across state lines. According to information presented in court, Lemons worked as the senior vice president of investments and financial advisor at Banc of America Investment Services and as president of the Tyler Market of Bank of America. He withdrew $80,000 of an investor's funds without their knowledge or consent and transported those funds to Louisiana in order to transfer them to Boyd Corporation, which is associated with Sam's Town Casino in Shreveport, Louisiana. Lemons was indicted by a federal grand jury on March 4, 2008. He pleaded guilty on August 20, 2008.
Cocaine Dealer Sentenced to 14 Years in Prison on Drug and Money Laundering Charges
On February 17, 2009, in Pittsburgh, Pa., Jamie Luiz Lightfoot, aka Jammie Luis Arnold, a resident of Donora, Pennsylvania, was sentenced to 168 months imprisonment, followed by six years of supervised release, on his conviction of violating federal narcotics and money laundering laws. According to information presented to the court, on February 9, 2007, Lightfoot sold an ounce of cocaine. At the time, Lighfoot was serving a term of supervised release. Also, on July 17, 2007, Lightfoot used drug money to purchase an $11,797 diamond ring. This investigation was conducted under the Organized Crime and Drug Enforcement Task Force.
Mexican National Sentenced to 15 Years in Federal Prison for Laundering Drug Proceeds
On February 13, 2009, in Denver, Colo., Saul Saucedo, a citizen of Mexico, was sentenced to 180 months in prison and fined $300,000 for money laundering charges related to a drug trafficking organization located in Peyton, Colorado. He was extradited by Mexican authorities to the United States in January 2007, and pleaded guilty to conspiracy to launder money charges in October 2008. According to his plea agreement, as well as the indictment, he used a 500 acre rural ranch as a base of operations to transport large shipments of cocaine and drug proceeds. Saucedo was responsible for the movement of money, as well as running certain cells within several U.S. cities. Once the cocaine was sold, the drug proceeds were collected and often transported back to his Peyton, Colorado ranch. The investigation revealed that up to $2.5 million in cash at a time would be collected and transported by the organization’s couriers. From the ranch, the money was delivered to the kingpins in Mexico. The organization also controlled a residence in El Paso, Texas where the drug proceeds were frequently delivered. Once the drug proceeds reached the El Paso residence, the proceeds would be loaded into vehicles with hidden compartments and then driven from the United States to Mexico. Approximately 2,300 kilograms of cocaine and $11 million in drug proceeds were seized by authorities. The investigation also revealed that one courier alone transported over $43 million to Mexico during a 12 month time period.
Minnesota Mortgage Broker Sentenced for Mortgage Fraud Scheme
On February 12, 2009, in Minneapolis, Minn., Johnny Phong Nguyen was sentenced to 16 months in prison after pleading guilty to mail fraud and money laundering. Nguyen was sentenced in connection with a mortgage fraud scheme involving 14 real estate transactions totaling nearly $7 million in mortgage proceeds and $1 million in fraudulent payments. According to his plea agreement, Nguyen provided fraudulent documentation to lenders, misrepresented the true terms of the proposed transaction, including an overstated purchase price, and misrepresented the financial qualifications of the borrowers. Portions of the mortgage loan proceeds were then diverted to buyers of real properties and other individuals, including himself. Nguyen admitted he worked with a closing agent to execute the scheme by disbursing the funds in a manner other than what was understood by the lender. In some cases, funds were directed to a straw corporation purportedly for the purpose of improvements to the residence in question. However, these funds were fraudulently diverted to Nguyen and others. Nguyen received concealed payments ranging from approximately $13,000 to $70,000 per transaction for his efforts in the scheme. In total, Nguyen received approximately $500,000.
Two Tennessee Businessmen Sentenced on Money Laundering and Other Fraud Charges
On February 11, 2009, in Paducah, Ky., Lloyd Aaron Smith and Neal Gordon Wall were sentenced on charges of bank fraud, mail fraud, and money laundering related to the misuse of loan proceeds obtained from the Citizens Bank of Hickman, Kentucky and the Tennessee Valley Authority (TVA). Smith was sentenced to 30 months in prison; Wall was sentenced to 27 months in prison. Both defendants were ordered to pay $4,104,562 in restitution to Citizens Bank of Hickman, Kentucky, and $420,733 to Tennessee Valley Authority. According to court documents, in September 2003, Smith and Wall obtained a $5 million loan from Citizens Bank, the proceeds of which were to be used strictly for the operation of the textile plant, Hickman Mills. Despite that limitation, Smith and Wall admitted to expending approximately $134,000 of the loan proceeds to pay off a debt owed by an unrelated business venture. This expenditure of funds was facilitated by the defendants causing fraudulent invoices to be issued to the company, Hickman Mills, which further caused checks to be issued on behalf of those invoices. Smith and Wall also admitted to defrauding the TVA in November 2003, by obtaining a $500,000 loan from the agency upon representation that the loan proceeds would be used to buy equipment for the Hickman Mills plant. However, the defendants used the loan proceeds to pay off an overdraft that existed in an unrelated business account. Smith and Wall also pleaded guilty to conducting nine illegal money laundering transactions with the ill-gotten proceeds of the Citizens Bank loan to Hickman Mills. These illegal transactions included the deposit and withdrawal of checks issued from the Hickman Mills account as payment on the fraudulent invoices Smith and Wall caused to have been issued to the company.
Boston-Area Man Sentenced to 7 1/2 Years for Laundering Money to the Dominican Republic and Related Drug Charge
On February 11, 2009, in Boston, Mass., Claudio Tejeda Andujar, aka Jose Rivera, aka Dagoberto Lazocha, was sentenced to 90 months in prison for his role in laundering drug money to the Dominican Republic and selling cocaine in Boston. According to court documents, Andujar was connected with a Jamaica Plain money remitting business known as Boston Envio. Between 2004 and 2006, Boston Envio wire transferred millions of dollars to the Dominican Republic and also received millions of dollars in cash deposits. Andujar pleaded guilty in April 2008 to charges that between September 2004 and March 2006, he and others conspired to launder money that had been represented to them as drug proceeds. In addition, Andujar pleaded guilty to charges alleging that he sold approximately 1 kilogram of cocaine to a cooperating witness on two occasions, December 16, 2004 and March 14, 2005.
Leader of Emperors Club Prostitution Ring Sentenced to 30 Months in Prison
On February 6, 2009, in Manhattan, N.Y., Mark Brener, aka “Michael,” of Cliffside Park, New Jersey, was sentenced to 30 months in prison for his leadership role in the international prostitution and money-laundering ring Emperors Club VIP (Emperors Club). According to the Information and other documents filed in this case, Brener participated, from December 2004 until March 2008, in a conspiracy to promote, manage, and carry on an illegal prostitution business and conspired to launder payments for prostitution services by opening bank accounts in the names of “QAT Consulting, Inc.,” and “QAT International, Inc.” At the time of his arrest, law enforcement officials seized over $1 million in cash proceeds in Brener’s apartment and in the Emperors Club’s bank accounts.
Texas Woman Sentenced for Money Laundering for Boyfriend’s Drug Organization
On February 4, 2009, in Waco, Texas, Rebeca Gomez was sentenced to 24 months in prison, followed by three years of supervised release for money laundering. Gomez pleaded guilty in October 2008 to conspiring with boyfriend Miguel Camarena to use the money generated from the sale of controlled substances to buy property and vehicles. The properties were placed in her name to hide the true ownership of the assets knowing that the proceeds came from the illegal sale of controlled substances. According to the indictment, Camarena used one residence to store and distribute cocaine and methamphetamine. During the term of the conspiracy at least $1.1 in proceeds were generated from the sale of these controlled substances.
Arizona Man Sentenced for His Involvement in a Loan Fraud Ring
On January 30, 2009, in Phoenix, Ariz., Lutrell Maurice Sharpe was sentenced to 88 months in prison for conspiracy, loan fraud, mail fraud, wire fraud, and money laundering. Sharpe and 11 other co-defendants fraudulently obtained loans to buy at least 16 residential properties located in Arizona, Nevada, and California. The indictment also alleges that defendants purchased at least 11 high-end vehicles with fraudulently obtained financing. The defendants established legal entities and businesses in Arizona, Nevada and elsewhere. The “businesses” purported to conduct legitimate operations and employ a highly paid staff. The individuals then claimed on loan applications, annual incomes as high as $400,000. The fictitious incomes were then “verified” by other co-defendants. On occasion, the group refinanced properties using fraudulently obtained financing and sold them to other co-defendants. The co-defendants, purchased the properties, and obtained the funds to do so through fraudulently obtained loans. Sharpe often used aliases in connection with the fraud and conspiracy. Sharpe, who was on federal supervised release during the conspiracy, used his alias, and an improperly obtained social security number, to purchase a Mercedes.
Used Car Dealers Sentenced to Prison for Laundering Money from Drug Dealers
On January 30, and January 15, 2009, in Atlanta, Ga., Stanley Kim, Kevin Chang, Tony Kim, and Yuen Cheol “Don” Chu were sentenced on charges of money laundering and/or failing to report cash transactions of more than $10,000 (structuring cash transactions). Stanley Kim was sentenced to 96 months in prison to be followed by three years of supervised release and 100 hours of community service. On November 15, 2008, Kim pleaded guilty to 17 counts of money laundering and structuring cash transactions. Kevin Chang was sentenced to 24 months in prison to be followed by three years of supervised release. Chang pleaded guilty in May 2009 to money laundering charges. Tony Kim received 18 months in prison to be followed by three years of supervised release for his February 14, 2008, guilty plea to money laundering charges. Yuen Cheol "Don" Chu was sentenced to 12 months and one day in prison to be followed by three years of supervised release. On November 10, 2008, Chu pleaded guilty to structuring more than $100,000 in cash transactions within a 12 month period. According to information presented in court, from December 2003 through April 2007, the defendants, who were all high-ranking employees at the used-car dealership, King Kong Motors, sold luxury vehicles to drug traffickers. The defendants allowed the drug dealers to pay for their vehicles in cash amounts of more than $10,000. They would then purposefully falsify the sales paperwork to make it appear that the dealership had not received more than $10,000 in cash – in an attempt to avoid the IRS reporting requirements. Federal law requires that all trades and businesses, including car dealerships, to file a Form 8300 with the IRS when they receive more than $10,000 in cash. Additionally, certain defendants generated false sales paperwork and liens, in the names of nominee buyers, in an effort to conceal the identity of the drug dealers – and made it seem as though the cars had been purchased by legitimate buyers.
Kentucky Man Sentenced on Money Laundering Charges
On January 29, 2009, in London, Ky., Wayne Reid was sentenced to 194 months in prison, to be followed by two years of supervised release, and ordered to pay an $800 assessment, as well as forfeiture of $1.5 million in assets. Wayne Reid and his wife, Donna Reid, were convicted by a trial jury in September 2008 on charges of money laundering, conspiracy to money launder and harboring a fugitive. Evidence at trial established that between January of 2000 through November of 2005, Wayne and Donna Reid purchased acreage in Clay County, Kentucky and began development of the property, including the construction of homes, the remodel of an existing home, and the construction of a convenience store, to disguise a multi-million dollar marijuana trafficking operation. To perpetuate the scheme, the Reids took out loans and then made large unexplained cash payments to pay off the loans. The development of the property was also funded with unexplained cash. Throughout the conspiracy, the Reids made structured cash deposits at the First National Bank of Manchester that included cash deposits totaling over $470,000 from March through November of 2000. In addition, Wayne Reid purchased over $2 million dollars in heavy construction equipment over the course of the conspiracy. Testimony revealed that in January of 2005, Wayne and Donna Reid deeded 1.57 acres of land to their daughter Marty Reid for no monetary consideration, only to buy it back from her just over a month later for $225,000. In addition, the Reids concealed the location of federal fugitive, Larry Golden Jackson, Jr., their partner in the money laundering scheme.
Indiana Marijuana Dealer Sentenced to 120 Months in Prison
On January 23, 2009 in South Bend, Ind., Randy Reed Lipscomb was sentenced to 10 years in prison for engaging in monetary transactions with the proceeds from illegal marijuana sales and for possession with intent to distribute marijuana. Lipscomb was charged in June 2008, and later pleaded guilty to drug and money laundering charges. According to court records, Lipscomb admitted that he arranged for others to travel to Texas, Arizona and New Mexico and ship marijuana to him via UPS, or he would have it driven back to Michigan City where it was distributed to several customers. Additionally, Lipscomb admitted that four forfeited vehicles were purchased with drug proceeds, or he used them to facilitate his drug trafficking activities, and that he spent more than $10,000 in drug trafficking proceeds to purchase the assets.
Ohio Man Sentenced on Drug and Money Laundering Charges
On January 23, 2009, in Arkon, Ohio, Chevaliee G. Robinson was sentenced to 180 months in prison, to be followed by 10 years of supervised release. Robinson pleaded guilty in September 2008 to conspiracy to commit money laundering and drug charges. According to the Indictment, Robinson and co-defendants procured large amounts of marijuana and conspired to launder monetary instruments. The Indictment sets forth that Robinson took proceeds of marijuana trafficking and used them to purchase and/or lease vehicles, personal property and real estate. The Indictment called for the forfeiture of just over $2,800,000 and other assets which represent proceeds of drug trafficking or property that was used to facilitate drug trafficking.
Physician Sentenced to 30 Month Prison Term for Money Laundering and Distribution of Controlled Substances via Internet
On January 21, 2009, in Dallas, Texas, William Frank McArthur, Jr., a licensed physician, was sentenced to 30 months in prison for money laundering and distribution of controlled substances. McArthur pleaded guilty in November 2007. According to the Indictment, McArthur operated Managing Associates which employed or contracted the services of physicians who consulted with Internet customers and approved drug orders. Rakesh Johar Saran operated approximately 23 pharmacies in North Texas and his pharmacies filled and shipped drug orders from McArthur’s Internet company. Payments for drug orders by Internet customers were processed by McArthur’s company and were deposited into bank accounts in the name of Solandra Group, an Internet Facilitation Center (IFC) in Florida. Solandra Group then wire transferred funds to Managing Associates as payment for the physician-conducted or physician-supervised consultations and the approvals of the Internet customers’ drug orders. Solandra Group also wire transferred funds to Rakesh Johar Saran as payment for filling the drug orders. The Indictment also alleges that Dr. McArthur conspired with others to wire transfer $1.1 million in funds from a bank account in the name of Solandra Group to an account in the name of Managing Associates, at the Merchants and Farmers Bank in Mississippi, which were payments for “consultations.”
Iowa Couple Sentenced in Conspiracy, Wire Fraud, and Money Laundering Scheme
On January 16, 2009, in Davenport, Iowa, Earl Beasley, who worked as the Quad City Times building and maintenance manager, was sentenced to 150 months of imprisonment. His former wife, Julie Beasley, was sentenced to 96 months in prison. Both were ordered to pay $1.4 million in restitution. Julie Beasley was convicted of 53 counts of conspiracy, fraud and money laundering charges in January 2008. Earl Beasley pleaded guilty in November 2007 to conspiracy, mail fraud, mail fraud using a credit card, money laundering in connection with a scheme to defraud the Quad City Times and its parent, corporation, Lee Enterprises. Julie Beasley and her former husband, Earl Beasley created two non-existent corporations, R&E Enterprises and Protech Corporation, and used fictitious letterhead and invoices to bill the Times for enormous amounts of non-existent maintenance supplies. Earl Beasley, in his capacity as maintenance manager, approved the invoices, which caused the Times or Lee Enterprises to cut checks to R&E or Protech. Earl used a Quad City Times credit card account to purchase numerous items for personal use. Evidence showed that Julie Beasley personally maintained bank accounts for the non-existent companies and wrote $400,000 worth of checks to herself or “cash”.
Minnesota Brothers Sentenced for Distributing Cocaine, Crack Cocaine and Money Laundering
On January 13, 2009, in Minneapolis, Minn., Antwoyn Terrell Spencer was sentenced to 324 months in prison for conspiracy to distribute cocaine and crack cocaine, attempted possession with intent to distribute cocaine and money laundering. Spencer’s brother, Derrick Jerome Spencer received a 292 month prison sentence for conspiracy and distribution charges. Both men were indicted in May 2007 and were convicted in September 2007. According to court documents, both men conspired with each other and others to distribute cocaine and crack cocaine from 1998 through May 2007. Antwoyn Spencer was found guilty of money laundering based on his use of $22,900 in drug money to make a down payment on real estate property. He created false documents and ran money through the bank account of another person in order to conceal the nature and source of the money.
Kansas Real Estate Agent Gets 12+ Years in Federal Mortgage Fraud Case
On January 10, 2009, in Kansas City, Kan., David Kostelec was sentenced to 154 months in prison and ordered to pay $1.3 million in restitution for leading a scheme to fraudulently acquire $12 million in home loans. Kostelec pleaded guilty in October 2008 to one count of conspiracy to commit wire fraud and money laundering, one count of wire fraud, one count of providing false information to lenders and one count of aggravated identity theft. In his plea, Kostelec admitted that from 2002 through 2005, he and others conspired to defraud lenders by submitting fraudulent loan applications and false real estate appraisals and attempted to conceal the crimes by laundering the money through accounts at various banks. Kostelec submitted false and fraudulent appraisal reports to lenders containing inflated property values and forged signatures of licensed appraisers. Conspirators stole the identities of licensed appraisers by searching the Internet for information including the appraisers’ state license numbers. After closing, the conspirators used straw entities including Alexandra Enterprises and Hyde Park Development to receive the money from escrow companies. Then they moved the money to personal accounts.
Drug Kingpin Sentenced To 20 Years in Federal Prison
On January 5, 2009, in Phoenix, Ariz., Martin Angel Gonzalez was sentenced to 20 years in prison for operating a large drug trafficking ring out of Phoenix. The judge also imposed a $10 million money judgment against Gonzalez who pleaded guilty on September 12, 2008, to being the leader of a Continuing Criminal Enterprise, conspiracy to possess with the intent to distribute marijuana, conspiracy to commit money laundering and possession with the intent to distribute marijuana. Gonzalez had been charged with various drug trafficking offenses as part of a 70-count superseding indictment related to his leadership of a 12-year conspiracy involving the distribution of over 30,000 kilograms of marijuana worth more than $33 million. Twenty-five other co-conspirators were also charged and have pleaded guilty for their involvement in the conspiracy. Many will be sentenced over the next few months. During the investigation, agents seized approximately 5,000 pounds of marijuana and more than $15 million in organizational assets. These assets included cash, investment accounts, bank accounts, vehicles, jewelry and real estate properties. He distributed marijuana to his associates across the country using commercial trucks, personal vehicles and commercial shipping companies. Gonzalez was arrested in Morelia, Michoacàn, Mexico, with the assistance of Mexican federal law enforcement authorities. He was extradited from Mexico to the United States in 2006.
Tucson Tejano Singer Sentenced For Money Laundering Conviction
On December 22, 2008, in Tucson, Ariz., Latin Breed singer Adalberto C. Gallegos, Jr. was sentenced to 15 months in prison. Gallegos pleaded guilty in May 2008 to one count of conspiring with other persons to conduct financial transactions, involving the proceeds of distributing marijuana from February 2004 to July 2006. The judge also ordered Gallegos to perform 200 hours of community service. According to the indictment, Gallegos, employed by the Tejano musical group Latin Breed, established a bank account at Bank of America in Tampa, Fla. in 2004 which he used to receive approximately $270,100 in drug proceeds. The drug proceeds were deposited in Tampa and later withdrawn by him in Tucson. His son, Adalberto C. Gallegos, III, also pleaded guilty to money laundering charges in the December 2007 indictment. He was sentenced to 15 months in prison in March 2009.
Kentucky Man Sentenced for Assisting in $60 Million Retail Theft Ring
On December 19, 2008, in Lexington, Ky., Abduhl Sulaiman was sentenced to 72 months in prison, to be followed by three years of supervised release, and ordered to pay a $2,300 assessment. According to court documents, Sulaiman who owned the Stop N Shop Discount Food in Lexington used the store to launder more than $60 million primarily for a retail theft ring called Alpha Trading in Louisville. Alpha Trading shoplifted baby formula and health and beauty aids from stores for the purpose of selling the products at a discounted rate. The ring paid Sulaiman approximately $500,000 to cash checks and wire money for members of the crime ring at his grocery store. Sulaiman was convicted in June 2008 on federal charges of money laundering, conspiracy to commit money laundering and failure to file a currency transaction report.
Maryland Restaurant Owner Sentenced in Scheme to Launder Money and Harbor Illegal Aliens; Forfeits $7.2 Million
On December 17, 2008, in Greenbelt, Md., Francisco C. Solano, co-owner of El Pollo Rico Restaurant located in Wheaton, Md., was sentenced to 36 months in prison followed by three years of supervised release for conspiracy to harbor aliens, conspiracy to commit money laundering and structuring bank transactions to evade reporting requirements. Francisco was also ordered to forfeit $7.2 million derived from illegal activities, including 13 bank and investor accounts, seven properties, three vehicles, collectible coins, and jewelry. According to his guilty plea, from January 1999 to July 2007, Francisco Solano concealed illegal aliens in residences and businesses he and his wife owned and rented in Wheaton and Kensington, Maryland. Francisco Solano paid the aliens in cash and accepted rent payments in cash only. Francisco Solano did not prepare Employment Eligibility Verification Forms for those employees. In addition, Francisco laundered the proceeds from the illegal employment of aliens. Francisco and others deposited nearly $7 million from the operation of the restaurant into the El Pollo Rico business account from 2002 to 2007. Transfers were made from the El Pollo Rico business account to business and personal accounts in the names of Francisco and other coconspirators. Funds from those deposits were used to pay for numerous personal assets. Over time, Francisco Solano also transferred money from the his personal and business accounts into the El Pollo Rico business account to promote the business operations he and others used to harbor aliens. Finally, between 2002 and 2006, Francisco Solano structured deposits into the El Pollo Rico business account in amounts less than $10,000 to avoid triggering bank reporting requirements that could reveal criminal conduct. During this time, he deposited over $7,200,000 into the El Pollo Rico business account and other accounts, including his personal account. His wife, Ines Hoyos-Solano pleaded guilty to conspiracy to commit money laundering and was sentenced on November 24, 2008 to 4 months of home detention. According to her guilty plea, she knew that aliens were harbored at El Pollo Rico and with her knowledge and approval allowed her husband to use proceeds from the harboring to purchase a $120,000 life insurance policy in their joint names. She was ordered to forfeit $1,572,218 in cash found in the bedroom of her residence during a search on July 12, 2007. Also sentenced in this case were Consuelo Solano, of Arlington, Virginia to two months in prison and eight months home detention and her brother Juan Faustino Solano was sentenced to 15 months in prison.
Defendant in Multistate Fraud Scheme Sentenced to 54 Months in Prison
On December 16, 2008 in Tacoma, Wash., Yahya Najib Nawabi, aka Alex Nawabi, of Northridge, California, was sentenced to 54 months in prison and three years of supervised release and ordered to pay $324,700 in restitution to the victims of his fraud. Nawabi, originally from Afghanistan, pleaded guilty on September 5, 2008, to conspiracy to commit wire fraud, money laundering and making false statements to law enforcement. His girlfriend, Beena Bedi, pleaded guilty on September 12, 2008, to making false statements to the FBI. According to documents filed in this case, Nawabi, assisted by Bedi, pretended to be “Alex Nawabi” the Chief Executive Officer of AMX Global Funding, Inc. (AMX), a California corporation, which they falsely portrayed as a “global financial powerhouse,” transacting billions of dollars of business. In reality, AMX was nothing more than a false website, a bank account and a post office box. Although the money turned over by the victims was supposed to be used as down payments for loans, or for investment purposes, Nawabi and Bedi converted the money to their own use. They laundered it through transfers among multiple business and personal bank accounts. Nawabi further deceived his victims by representing to them that he owned emeralds worth millions of dollars, and that he would provide the emeralds to the victims as “collateral” for the loans. The emeralds, however, were near-worthless. Once the victims had given their money, Nawabi attempted to prevent them from complaining or reporting the fraud scheme by lulling them with false stories about the continued progress of the supposed business deals, as well as false stories of how the deals were being delayed by supposed legal difficulties suddenly suffered by the AMX corporation. In all, Nawabi defrauded nine victims out of $324,700. Even after learning that they were under investigation by law enforcement, Nawabi and Bedi continued their efforts to defraud additional victims by successfully defrauding two New Zealanders, residing in California, out of $80,000 and $20,000 respectively. Bedi is scheduled to be sentenced in March 2009.
Gambino Family Member and Others Sentenced for Racketeering
On December 16, 2008, in Miami, Fla., Vincent F. Artuso, John Vincent Artuso, Gregory Orr, and Philip Edward Forgione were sentenced following their October 3, 2008 convictions on racketeering charges. Vincent F. Artuso and John Vincent Artuso were each sentenced to108 months in prison, three years of supervised release, and restitution in the amount of $5,814,664. Gregory Orr was sentenced to 87 months, three years of supervised release, and restitution in the amount of $5,814,664. Philip Edward Forgione received to 78 months in prison, three years of supervised release, and restitution in the amount of $4,833,477. All four defendants were ordered to forfeit the proceeds of the fraud, including the four properties, the companies that had been used as fronts in the fraud, and bank accounts. Further proceedings will be conducted regarding the forfeitures. The two Artusos and Orr were convicted on charges of Racketeer Influenced and Corrupt Organizations Act (RICO) conspiracy, mail fraud, wire fraud, money laundering conspiracy, and money laundering. Forgione was convicted of everything except the money laundering charges. According to the evidence presented at trial, Vincent Artuso, a captain of the Gambino Organized Crime Family, supervised and directed members of a south Florida faction of the Family, which included his son, John Vincent Artuso, Orr, Forgione and William Larry Horton, in the commission of various frauds against ADT Security Services, Inc., a subsidiary of Tyco International Ltd. Horton was Vice President of Planning and Implementation at ADT and his employer had directed him to sell several ADT office buildings and lease back the property for ADT. In furtherance of the fraud against ADT, Horton sold three of ADT’s office buildings to companies owned by the Artusos, Orr and Forgione, and a fourth building to companies owned by the Artusos and Orr. Although Horton represented the seller (ADT), he was also a partner with the buyers. Horton sold the multi-million dollar properties to the defendants far below fair market value and then immediately leased them back to ADT at a cost substantially above fair market value. Thereafter, the monthly lease payments made by ADT were paid to the limited liability companies formed by the defendants for the purpose of concealing their ownership interests, including Horton’s ownership interest. In this way, the defendants defrauded ADT of in excess of 6 million dollars over a period of five years.
Former IRS Employee and Wife Sentenced in D.C. Property Tax Refund Fraud Scheme
On December 8, 2008, in Greenbelt, Md., former IRS employee Robert O. Steven was sentenced to 46 months in prison, and his wife, Patricia A. Steven, was sentenced to 70 months for conspiracy to commit money laundering and receipt of stolen property. They were sentenced for their part in a property tax refund scheme in which over $48 million were stolen from the District of Columbia Office of Tax and Revenue. The Stevens’ were ordered to each pay $8.8 million in restitution and to forfeit three Jaguar cars, two residences, jewelry and monies held in four bank accounts. According to the plea agreements, Patricia Steven first met Harriette Walters, a former manager within the District of Columbia Office of Tax and Revenue, in the mid-1970s. By the late 1980's, Harriette Walters proposed that Patricia Steven deposit a check drawn on a District of Columbia government bank account and made payable to Patricia Steven. Walters explained that Steven would be allowed to keep a portion of the proceeds from the check, but would have to return a substantial portion to Walters. Despite knowing that Walters obtained the check fraudulently, Patricia Steven agreed and deposited the first check. Robert and Patricia Steven opened a clothing design business called “Bellarmine Design” that never grossed more than $15,000 in a single year. From 1990 to 2007, Patricia Steven and Harriette Walters made 67 deposits of fraudulently obtained District of Columbia government checks or cash proceeds from the scheme into a Bellarmine Design checking account maintained by Steven and Patricia Steven. The individual checks ranged in amounts from a handful of initial deposits over $4,000 each, to deposits of up to $490,000. Patricia Steven also transferred at least $344,700 to Harriette Walters. Patricia and Robert Steven transferred at least $1,709,500 of these funds into another bank account used primarily by Robert Steven.
Ohio Man Sentenced in Mortgage Fraud Scheme
On December 4, 2008, in Cincinnati, Ohio, Eric Philpot was sentenced to 37 months in prison for a scheme he ran that defrauded mortgage lenders out of more than $200,000. Philpot pleaded guilty on June 17, 2008, to one count of mail fraud and one count of conspiracy to commit money laundering. According to court documents, Philpot solicited people to buy residential properties and helped them secure financing by providing lenders with false information about the buyers’ income, source and scope of the down payments and other information. Additionally, Philpot failed to disclose to the lenders material information about the true nature of the real estate deals so that appropriate business decisions could be made by the lenders. Philpot admitted that, once the loans were approved, he maintained control both of the properties which were often deeded in the names of others and the loan proceeds. Philpot also fraudulently obtained financing for the sale of one property while he knew he was under federal investigation for mortgage fraud. The judge scheduled a hearing in February 2009 to determine the amount of restitution Philpot must pay.
Three Florida Residents Sentenced for Mortgage Fraud
On December 1, 2008, in Miami, Fla., Berry Louidort received a 37 month prison sentence for his participation in a $6.5 million mortgage fraud scheme. His co-defendant, Lauren Jasky, was sentenced to 36 months imprisonment on December 4, 2008. Another co-defendant, Ralph Michel, aka Ralph Duverneau, was sentenced to 30 months imprisonment. The three defendants previously pleaded guilty to conspiracy to commit bank fraud and mail fraud. Michel and Louidort also pleaded guilty to a money laundering charge. According to court documents and court testimony, the Florida Office of Financial Regulation audited 24 sub-prime mortgage loans initiated by Compass Mortgage Service, Inc. (Compass Mortgage), in Boca Raton, Florida. The initial audit revealed that the loans included excessively large fees paid to defendants Louidort and Michel. The fees, ranging from $29,000 to $650,000, were described as marketing and/or assignment fees. However, the fees were kickbacks based on inflated sales prices. The audit also revealed that the majority of the suspect loans were originated by Jasky, who was the company’s senior vice president. The defendants fraudulently bought and sold residential property in Palm Beach County, Florida. Louidort and Michel received large assignment and marketing fees and Jasky received mortgage brokerage fees. The defendants prepared fraudulent loan applications for the purchasers and submitted them to lenders. The applications included false information about the borrowers’ employment verification, income, funds on deposit, and rent history.
Mortgage Fraud Scheme in Texas Results in Prison Term for Florida Man
On November 24, 2008, in Sherman, Texas, Michael Guy Cary, Sr., of Hollywood, Florida, was sentenced to 60 months in prison and ordered to pay $5 million for money laundering, bank fraud and conspiracy to commit mail fraud. Cary and his co-defendant, Richard Kirkpatrick, were convicted earlier for their roles in a mortgage fraud scheme. According to court testimony, Cary’s scheme involved the purchase and sale of 211 homes in Texas involving a variety of fraudulent transactions. Cary purchased the homes directly from home builders and then arranged the transfers of the deeds into names deceptively similar to that of the home builders. Upon completion of the transfers, Cary had real estate appraisers artificially inflate the values of the homes and arranged their subsequent sales to out-of-state investors who believed that they were purchasing the homes directly from the home builders and who qualified for mortgage loans on the inflated amounts based on fraudulent loan applications. Kirkpatrick provided the inflated appraisals on 89 of the 211 homes.
Former Houston Physician Sentenced for Illegally Distributing Prescription Drugs and Money Laundering
On November 20, 2008, in Houston, Texas, Alonzo Peters III, a former physician who practiced in Houston until his license was revoked by the Texas State Board of Medicine, was sentenced to 60 months in prison and fined $10,000 for conspiring to illegally distribute prescription drugs and money laundering. Peters and three local pharmacists, Ansa Hogan, Dennis Martin George and Terry Green, pleaded guilty to various charges in October 2007 arising from their illegal actions to distribute prescription drugs without a legitimate medical purpose and outside the course of professional practice, knowing the drugs were being sold on the streets. Peters and his co-defendants were paid cash for the prescriptions. He directed recipients of the unlawfully issued prescription to go to his co-defendant’s pharmacies to have the prescriptions filled. Each defendant was enriched with large amounts of cash as a result of the illegal distribution of prescription drugs. The cash proceeds provided the basis for money laundering charges against Peters and his conviction. The court also ordered the forfeiture of various assets identified as having been purchased by Peters with the proceeds of the unlawful activity, including two condominium units and a Cadillac Escalade automobile, as well as $6,990 in cash.
Two Men Sentenced in $32 Million Scam that Bilked more than 500 Victims
On November 19, 2008, in Los Angeles, Calif., Pastor Robert Jennings was sentenced to 12 years in prison for his role in an investment scam that led more than 500 victims to lose over $28 million after being told they could make money in coal mines and a gold transaction. A second man involved in the scheme, Arthur Simburg, of Portland, Oregon, was sentenced on November 17, 2008, to nine years in federal prison. The two were ordered to pay $28 million in restitution. While the scheme collected more than $32 million, some of the money was returned to investors as part of the Ponzi scheme. A third defendant involved in the plot, Henry Jones, a record company executive, will be sentenced at a later date. The three men were convicted of bilking more than 500 investors out of more than $32 million. Jennings was found guilty in July following a three-week jury trial. The evidence at trial showed that Jones, Simburg and Jennings solicited investors for a coal mine venture and an alleged international gold transaction that purportedly involved the sale of 20,000 tons of gold between Israel and the United Arab Emirates. They duped investors largely through nightly conference calls in which investors were promised huge rates of return on their investments – as much as 300 percent within 60 days. Most of the conference calls included group prayer, during which investors were told that the gold transaction was “divinely inspired” and that it was God’s will for it to come to fruition. Jones spent more than $21 million of the victims’ money on his own extravagant personal expenses and to fund his music business.
Nine Individuals Sentenced for Conspiracy to Structure over $4.5 Million and to Commit Tobacco Fraud
On November 19, 2008, in Nashville, Tenn., Ronald D. Bowen, of Ayden, North Carolina, was sentenced to 51 months in prison for his role in a conspiracy to structure cash transactions. In October 2007, after a seven-day jury trial, Bowen decided to plead guilty of conspiring to structure over $4.5 million in cash to evade reporting requirements. On November 12, 2008, co-conspirators Christopher L. Sutton and Rennie Turner were also sentenced to prison. Sutton was sentenced to 60 months in prison and ordered to forfeit $4.5 million for conspiring to structure currency, and Turner was sentenced to 51 months in prison and ordered to forfeit $4.5 million for conspiring to structure currency. On November 10, 2008, another co-conspirator, Robert D. Oldham, was sentenced to five years probation, ordered to pay $18,633 in restitution, and ordered to forfeit $4.5 million for conspiring to structure currency, conspiring to make false statements to the U.S. Department of Agriculture (USDA), and money laundering.
Previously, in 2007, five other conspirators in this same case received sentences.
According to the Indictment filed in June 2006, the USDA operated a burley tobacco allotment program. This program established quotas to regulate the amount of burley tobacco that could be grown on any particular farm during the yearly tobacco growing season. To ensure compliance with the USDA quotas, each participating farmer was issued a USDA Burley Marketing Card. This card identified the farm on which the burley tobacco was to be grown. The card also stated the maximum number of pounds of tobacco grown on the farm that could be legally marketed or sold within the particular crop year. The term "excess tobacco" referred to when tobacco was sold on a USDA Burley Marketing Card as if it was grown on the farm related to the card utilized but was actually grown elsewhere. Each defendant was engaged in the tobacco industry. Sutton and Oldham knowingly directed and caused Bowen, Cates, Middaugh, Shirk, Swayne, and Turner to conduct financial transactions of over $4.5 million in increments under $10,000 for the purpose of avoiding the federal reporting requirements. The cash obtained through the structured transactions was used, at least in part, for buying and selling tobacco, including excess tobacco.
Defendant Sentenced to 140 Months on Drug and Money Laundering Charges
On November 14, 2008, in Cleveland, Ohio, Kevin Terrell Tyler was sentenced to 140 months in prison, to be followed by three years of supervised release, and ordered to pay a $700 special assessment. Tyler was one of 17 defendants indicted in December 2007 on violations of narcotics and money laundering charges. Specifically, Tyler was charged with receiving and distributing at least 1,800 kilograms of cocaine between May 2004 and February 2006. Tyler insulated himself from the organization, and thus law enforcement, by using others to deliver cocaine and money to the suppliers. The indictment alleged that Kevin Tyler protected himself by speaking guardedly on the telephone and frequently changing his cellular telephones. Tyler and other members of his family and immediate associates conspired to take drug proceeds and invest them in businesses and bank accounts. In May 2006, Kevin Tyler delivered $99,980 in U.S. currency to a person he believed to be a corrupt banker. That person actually was an agent acting in an undercover capacity as a corrupt banker who would take cash proceeds from illegal activity and infuse the proceeds into the banking system.
Former Dallas Independent School District (DISD) Executive Sentenced to 11 Years in Federal Prison
On November 12, 2008, in Dallas, Texas, Ruben B. Bohuchot, a former Dallas Independent School District (DISD) chief technology officer, was sentenced to 132 months in prison for his role in a bribery and money laundering scheme. Bohuchot’s co-defendant, Frankie Logyang Wong, a Houston businessman, was sentenced on November 13, 2008, to 120 months in prison. They were also ordered to forfeit $1.2 million, which represents the proceeds of their conspiracy to commit bribery and money laundering. Bohuchot and Wong were each convicted in July 2008 of conspiracy to commit bribery concerning a program receiving federal funds and conspiracy to launder monetary instruments. In addition, Bohuchot was convicted on one count of obstruction of justice and two counts of making false statements on tax returns. Wong, co-owner and president of computer reseller Micro Systems Engineering, Inc., (MSE), provided computer products and services to large corporations and school districts. Bohuchot, as chief technology officer at DISD, procured technology contracts for DISD. Bohuchot provided Wong and MSE with inside information that enabled MSE to obtain $120 million in contracts with DISD. Bribes to Bohuchot by Wong and MSE included access to a $305,000 sport-fishing vessel and a second, larger yacht purchased for $800,000. In addition, Wong used MSE’s credit card to pay for Bohuchot’s excessive entertainment expenses. Bohuchot failed to report the income he received from this bribery scheme on his 2004 and 2005 federal income tax returns.
Heroin Supplier Sentenced in Ohio
On November 12, 2008, in Columbus, Ohio, Pedro Montan, a/k/a “Cribby”, of Bronx, New York was sentenced to serve 51 months of incarceration, and three years of supervised release for his role in a heroin distribution ring that brought between one and three kilograms of heroin into Columbus, Ohio. Montan pleaded guilty in February 2008 to charges of money laundering and conspiracy to distribute heroin. According to court documents, investigators encountered several individuals trafficking heroin in the Columbus area, and detected an increase in heroin use in the area. Kevin Grant and Dayrel Billingsley were identified as two of the main heroin distributors in the Columbus area. Evidence was developed through monitored conversations and cooperating witnesses indicating that Grant and Billingsley were obtaining their heroin from suppliers in New York, more specifically, Pedro Montan. Billingsley sent monies owed to Montan for the heroin via Western Union. Montan provided Billingsley with names of individuals to be used on money wires. Billingsley used his brother, brother’s girlfriend and his own girlfriend to send the wires.
California Man Who Sold Old Computers as New Sentenced in Tax and Mail Fraud Scheme
On November 4, 2008, in Los Angeles, Calif., Chul Kyoon Han was sentenced to 36 months in prison and ordered to pay $75,036 in restitution for mail fraud and tax fraud. In a plea agreement filed earlier this year, Han admitted that as owner and operator of Unicyber and other business entities, he sold old or out-dated computers as new equipment. He also admitted that he signed a false tax return, for the 2005 tax year, which he filed with the Internal Revenue Service. Han admitted that the return he filed did not include approximately $94,000 he had received from an associate. The source of the money he received in 2005 was from a larger sum of Unicyber receipts that he diverted into cashier’s checks in nominee names in 2003 in attempts to hide the money from the government and creditors. Han used his Spanish language skills and produced Spanish language commercials and infomercials that ran on Spanish language television networks across the country. The advertisements falsely depicted the delivery of the entire computer system upon receipt of a corresponding payment. Shipments were typically sent C.O.D. (Cash on Delivery) and only upon opening the shipment did the recipient realize it was a partial shipment. Advertisements falsely claimed that the computer systems were new and of the highest quality, although the computers were actually old, substandard, and often malfunctioned, or did not work at all. Han purchased old, out-dated, and/or salvaged computers and caused them to be cannibalized for parts, and then caused the parts to be re-assembled into new computer cases, or shells, so that the computers would appear to be new.
Past President and CFO of California Company Sentenced to Prison for Embezzlement and Tax Evasion
On November 03, 2008, in Sacramento, Calif., Peggy Kaye Witts, of Redding, Calif., was sentenced 46 months in prison and ordered to pay $824,333 in restitution to the Voorwood Company and $199,858 to the IRS for federal wire fraud and tax evasion. Witts pleaded guilty in July 2008 admitting that, as Voorwood’s president, she engaged in a scheme to defraud the company by issuing duplicate paychecks to herself for more than four years and by issuing company checks to herself, family members, and others for her personal expenses. She also admitted to tax evasion based on her failure to report the embezzled money as income and to pay taxes on the money. She was ordered to turn over to the Voorwood Company, in partial satisfaction of her restitution obligation, the proceeds from the sale of her house in Redding, other real estate located in Shasta County, as well as all interest in her Voorwood retirement plan, and a Roth IRA. Additionally, because the company is owned entirely by its Employee Stock Ownership Plan (ESOP) and Witts had been the president of the ESOP board of trustees, she is now prohibited for 13 years from participating in any way with administering an employee benefit plan, acting as an adviser to an employee benefit plan, or serving in any capacity that involves control of the assets of any employee benefit plan. The 13-year term is the statutory debarment period under federal law.
Money Remitter Sentenced to Over Nine Years for Money Laundering Conspiracy and Concealing Terrorist Financing
On November 4, 2008, in Baltimore, Md., Saifullah Anjum Ranjha, a Pakistani national residing in Washington, D.C. and Maryland, was sentenced to 110 months in prison, followed by three years of supervised release, for conspiring to launder money and for concealing terrorist financing. At sentencing, the judge also signed a preliminary order forfeiting $2,208,000 of Ranjha’s assets. According to his guilty plea, Ranjha became a lawful permanent resident of the United States in September 1997. He operated a money remitter business in the District of Columbia known as Hamza, Inc. A cooperating witness, acting at the direction of law enforcement, held himself out to Ranjha and his associates to be involved in large scale international drug trafficking, international smuggling of counterfeit cigarettes and weapons. He also represented that he was providing assistance and financing to members of al Qaeda and its affiliated organizations and their operatives. From October 2003 to September 19, 2007, the cooperating witness gave Ranjha and his associates a total of $2,208,000 in government funds in order to transfer the monies abroad through an informal money transfer system called a “hawala,” using a network of persons and/or businesses to transfer money across domestic and international borders without reliance upon conventional banking systems and regulations. The cooperating witness represented that the monies were the proceeds of, and related to his purported illegal activities and Ranjha laundered these funds believing they were to be used to support those activities. Ranjha was the primary point of contact for the cooperating witness and received the bulk of the monies, for a total of 21 hawala transactions in amounts ranging from $13,000 to $300,000.
Canadian Woman Sentenced for Role in International Narcotics Money Laundering Scheme
On October 31, 2008, in Houston, Texas, Thi Phoung Mai Le, of Ottawa, Ontario, was sentenced to 15 years imprisonment for her role in an international narcotics money laundering scheme. Mai Le pleaded guilty in October 2007 to conspiracy to commit money laundering, violating the money laundering spending statute and conspiring to violate currency transaction reporting requirements. Mai Le facilitated the transfer of millions of dollars in cash from the sale of ecstasy. In some instances, Mai Le had associates smuggle cash in bulk from the U.S. into Canada, while at other times she instructed her associates to purchase cashier’s checks with drug proceeds and surreptitiously mail those checks by hiding them in catalogs and magazines. As drug profits grew and sums of money needing to be laundered reached hundreds of thousands of dollars per month, these methods became impractical and Mai Le utilized the services of a money remittance business to transport the funds first to Vietnam and then on to Canada. Remittance companies are licensed by the IRS and various state agencies and accept cash from individuals in the U.S. for transfer out of the country. Mai Le primarily used U.S. Tours and Remittance (U.S. Tours) in Houston, owned and operated by her co-defendant Dong Dang Huynh (Huynh), of Oakland, Calif. Huynh’s remittance company catered to the Vietnamese community and was exclusively engaged in transferring money from the U.S. to Vietnam. Mai Le, with Huynh’s knowledge and assistance, used U.S. Tours to send drug proceeds to Vietnam under the guise of being legitimate remittance deposits from individuals in the Vietnamese community in Houston and eventually wired the illegal proceeds back to the illicit drug manufacturers in Canada. Between January 2003 and March 2004, Mai Le transmitted more than $7 million in drug proceeds through U.S. Tours in Houston. A final key component of the money laundering operation was Mai Le’s and Huynh’s agreement to violate the federal currency transaction report (CTR) requirements by breaking down the drug deposits, which at times totaled more than $500,000 in a single day, into numerous smaller fictitious deposits. The purpose of this activity was to avoid U.S. Tours having to file a CTR with the IRS for deposits that were more than $10,000 and avoid the collection of customer information as required by Texas law for cash transaction amounts more than $3,000. By circumventing federal and state reporting requirements, Mai Le and Huynh concealed the illegitimate nature of their financial transactions and delayed law enforcement’s efforts to track these large sums of cash.
Former General Services Administration (GSA) Contractor Employee and Four Subcontractors Sentenced in Kickback Scheme
On October 31, 2008, in Washington, DC, Charles Anthony Wehausen, a former General Services Administration (GSA) contractor employee, was sentenced to 33 months in prison, to be followed by three years of supervised release. In addition, Wehausen was also ordered to pay $188,941 in restitution to the GSA and $55,260 for unpaid taxes to the Internal Revenue Service (IRS). The sentence also included an order of forfeiture in the amount of $188,941. Wehausen pleaded guilty in February 2008 to a charge of conspiracy to commit mail fraud and a charge of income tax evasion. According to the government's evidence, from 2000 through mid-2003, Wehausen was a chief engineer and project manager at the Washington, DC office of PM Services, Inc., a building maintenance services company, which provided building maintenance services for the GSA at several federal buildings in Washington, DC. Wehausen's job duties included locating subcontractors to perform more extensive mechanical work outside of the routine maintenance handled by PM Services. He was also responsible for preparing the paperwork necessary to hire and pay the subcontractors. After paying subcontractors for their work, PM Services would obtain reimbursement from GSA. Wehausen conspired with four subcontractors to artificially and fraudulently inflate job costs listed in purchase orders and invoices. These fraudulent documents were sent to the headquarters office of PM Services where company officials sent payments to the subcontractors. The subcontractors, in turn, gave a portion of the payments to Wehausen as kickback payments. The total amount of fraudulent payments as a result of the conspiracy was approximately $384,500, a loss suffered by the GSA. Wehausen also evaded the reporting and payment of Federal income taxes on the payments he received from the subcontractors, resulting in losses to the taxpaying public of $55,260. Earlier in the year, four co-conspirators were sentenced to terms ranging from 60 days in prison to six months home confinement to five years probation. Together they were ordered to pay a total of $198,942 in restitution.
New York Narcotics Trafficker Sentenced to 10 Years in Prison
On October 29, 2008, in Phoenix, Ariz., Frank Nicholas Pellegrino, of Staten Island, N.Y., was sentenced to 10 years in prison, followed by five years of supervised release for marijuana distribution and money laundering. Pellegrino pleaded guilty in August 2008 admitting to arranging for couriers to transport marijuana that he purchased in Arizona. When the drugs arrived in New York, Pellegrino and his associates distributed the drugs in bulk quantity. During a two month period in 2001, Pellegrino shipped more than 3,000 pounds of marijuana into New York. Following those shipments, government agents seized $430,000 from one of his associates.
Bank Fraud Scheme Nets Wisconsin Man 100 Months in Prison
On October 23, 2008, in Madison, Wis., Dennis O. Said was sentenced to 100 months in prison and ordered to pay $3.78 million in restitution to the Federal Deposit Insurance Corporation for bank fraud and money laundering. Said, who operated Trucks-4-U, a used car business, pleaded guilty to engaging in a scheme with Mark R. Hardyman, former president of the First National Bank of Blanchardville (FNBB), to defraud the bank. Said deposited approximately $15 million worth of either insufficient funds or closed account credit card checks into his accounts at FNBB for the purpose of fraudulently reducing substantial overdrafts in the accounts. As a result of the fraud scheme, Said received approximately $6.1 million in fraudulently obtained loans from FNBB and later defaulted on the loans causing a loss to FNBB. Additionally, FNBB lost $250,000 resulting from overdraft Said accounts when FNBB was closed by the Office of the Comptroller of Currency.
Car Dealer Sentenced on Money Laundering Charges
On October 6, 2008, in Rochester, N.Y., Antonio Costa was sentenced to 12 months and one day in prison, to be followed by two years of supervised release. Costa also agreed to forfeit nearly $170,000 in cash and motor vehicles previously seized by the government in connection with the investigation. Costa, a principal owner of Rochester Auto Connection, LLP, pleaded guilty in September 2007 to a felony charge of conspiracy to launder criminal proceeds. According to his plea agreement, Costa admitted that from approximately January 2000 to May 2006, he participated in numerous transactions in which he sold motor vehicles to customers who paid cash for their motor vehicles. The cash Costa received from the customers was derived from criminal activities, including illegal drug trafficking. In entering the plea, Costa admitted that he willfully entered into the transactions and received the cash payments, knowing that the proceeds were in fact derived from unlawful activity. The amount of money laundered by Costa was between $400,000 and $1 million.
Former North Carolina County Sheriff and Co-Defendants Sentenced on Charges of Corruption, Extortion, and Money Laundering
On October 6, 2008, in Asheville, N.C., Bobby Lee Medford, the former sheriff of Buncombe County, was sentenced to 180 months in prison, to be followed by three years of supervised release, and ordered to forfeit $287,776 in proceeds of his criminal activities, and to pay to the court a special assessment of $1,100. Medford was convicted at trial in May 2008 of conspiring to extort money from persons involved in the illegal video poker machine business beginning October 1, 2000 and continuing through December 3, 2006. Medford was convicted of depriving the citizens of Buncombe County of the right to his honest services while employed as sheriff and as a sheriff’s special deputy for Buncombe County. Medford was also convicted of conspiring to obstruct local or state law enforcement and of conspiring to commit money laundering. Also sentenced this week were three of Medford’s codefendants: John David Harrison, Ronnie Eugene Davis, and Guy Kenneth Penland. Harrison, a former lieutenant at the Buncombe County Sheriff’s Office, was sentenced to 30 months in prison, followed by three years of supervised release. Davis was sentenced to 60 months in prison to be followed by three years of supervised release. Penland was sentenced to 60 months in prison to be followed by a three year term of supervised release. Court documents show that Medford and his co-defendants received over $300,000 in bribe payments from various video poker machine operators. According to testimony presented at the trial, the corruption scheme involved multiple methods of extorting cash by Medford and his sheriff’s office co-defendants, including: that companies registering machines in the county pay bribes to get those machines registered; the solicitation of cash payments under the guise that the payers were sponsoring teams at the twice-yearly golf tournaments put on by Medford and his deputies; and more direct demands that the poker operators bring cash in to Medford and his co-defendants. Testimony at trial also established that Medford and several of his deputies engineered a scheme in 2006 to convert cash payments into money orders, in false names, in order to convert these bribes into funds that could be deposited into his re-election campaign account.
Real Estate Developer Sentenced to 14 Years in $50 Million Mortgage Fraud Scam
On October 3, 2008, in Los Angeles, Calif., Charles Elliott Fitzgerald was sentenced to 168 months in prison and ordered to pay $42.7 million in restitution for masterminding a $50 million mortgage fraud scheme. Fitzgerald pleaded guilty in May 2008 to conspiracy to commit bank fraud and loan fraud; bank fraud; organizing, managing, and supervising a continuing financial crimes enterprise; money laundering; and obstruction of justice. Fitzgerald was jailed in December 2006 when he was arrested and deported by authorities in the Independent State of Samoa, a Pacific island nation to which he fled in June 2003 after two victim banks sued him. According to court documents, Fitzgerald and the others were involved in a wide-ranging and sophisticated conspiracy to defraud federally insured mortgage lenders out of tens of millions of dollars. As part of the scam, the co-conspirators obtained inflated mortgage loans on expensive homes in some of California's most exclusive neighborhoods. Court documents charge that the co-conspirators sent false documentation, including bogus purchase contracts and appraisals, to the victim banks to deceive them into unwittingly funding mortgage loans that were hundreds of thousands of dollars higher than the homes actually cost. Lehman Brothers Bank alone was deceived into funding more than 80 such inflated loans from 2000 into 2003, resulting in tens of millions of dollars in losses.
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