Category: Legal Issues

Source: United States Attorneys General 12

ELKINS, WEST VIRGINIA – Two Petersburg, West Virginia, residents have been sentenced for creating and distributing sexual images of a minor under the age of 12.

Christine Shook, age 34, was sentenced today to 240 months in prison. Jasper E. Shook, age 35, was sentenced in February to 365 months. Both defendants pleaded guilty in 2022 to child pornography charges.

Jasper Shook messaged an undercover FBI agent using the KIK app, bragging about sexual contact with a minor and sending sexually explicit images of the child. A search warrant was later executed at the Shook home, where officers seized electronic devices that contained child pornography, with some of the images also identifying Jasper Shook and Christine Shook.

The Federal Bureau of Investigation and the West Virginia State Police investigated.  

Assistant U.S. Attorney Kimberley D. Crockett prosecuted the case on behalf of the government.

This case was prosecuted as part of Project Safe Childhood, a nationwide initiative designed to protect children from online exploitation and abuse. For more information about Project Safe Childhood, please visit http://www.justice.gov/psc/.

Chief U.S. District Judge Thomas S. Kleeh presided.

Source: United States Attorneys General 11

TEXARKANA, Texas– A Cleveland, Texas man and woman have been sentenced to federal prison for wire fraud violations in the Eastern District of Texas, announced U.S. Attorney Brit Featherston today.

Clifton Pape, 47, and Sally Jung, 59, each pleaded guilty on May 6, 2022 to wire fraud violations and were sentenced to federal prison today by U.S. District Judge Robert W. Schroeder III.  Pape was sentenced to 121 months in federal prison and Jung received a sentence of 66 months in federal prison.  They were also ordered to forfeit $680,710.31 and pay more than $3.7 million in monetary penalties.

According to court documents, Pape and Jung operated a sophisticated telemarketing scheme under the name My Buddy Loans from a house in Cleveland, Texas. In exchange for a fee, My Buddy Loans took personal identifying information from victims and promised to file an application for an agricultural grant, which they said was available to those who owned as little as one acre of land. Instead, Pape and Jung actually filed fraudulent EIDL applications with the SBA that contained the victims’ personal identification information. Based on these fraudulent applications, the SBA issued more than $1.56 million in EIDL Advances to people who were not eligible. Pape and Jung also submitted applications for an additional $1.44 million in EIDL Advances that were not funded because–among other reasons–the congressionally appropriated funds for the EILD Advance program were exhausted.

Pape and Jung used Square’s credit and debit card processing service to charge third parties the fee. Pape and Jung completed at least 700 successful charges, obtaining at least $700,000 in fees. Pape and Jung then transferred the proceeds of the fraud scheme into a bank account they controlled.  On one occasion, Pape used the fraud proceeds to pay a traffic ticket.  On another occasion, Pape and Jung used more than $3600 from the fraud scheme to pay for a stay at La Cantera Resort in San Antonio.  A picture from that stay shows Pape and Jung celebrating over sparkling wine and other beverages.

“This investigation closed down one of the largest COVID fraud schemes in the country in terms of the number of fraudulent EIDL applications,” said U.S. Attorney Brit Featherston. “Well intended and needed economic assistance (taxpayer dollars) was brazenly stolen from legitimate deserving applicants. We are asking those with information about the My Buddy Loan fraud scheme, including those who believe they may be victims, to call the Department of Justice’s National Center for Disaster Fraud Hotline at 866-720-5721 or file a complaint using the NCDF Web Complaint Form at https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.”

“The Small Business Administration’s Economic Injury Disaster Loan program (EIDL) was designed to help businesses adversely affected by the pandemic,” said Resident Special Agent in Charge William Mack of the U.S. Secret Service Tyler Resident Office.  “Clifton Pape and Sally Jung, however, viewed the government’s direct response to the unprecedented size and scope of pandemic relief fraud as an opportunity to illicitly line their own pockets.  As this sentencing illustrates, the Secret Service, along with its law enforcement partners, is committed to holding these criminals accountable for their fraudulent activities.”  

“Conspiring to defraud SBA’s programs is a flagrant attempt to rob the nation’s small businesses of vital funds that are used to assist in building the economy,” said SBA OIG’s Central Region Special Agent in Charge Sharon Johnson. “OIG is focused on rooting out bad actors in these vital SBA programs.  I want to thank the Department of Justice and our law enforcement partners for their dedication to justice.”   

The CARES Act is a federal law enacted in March 2020, designed to provide emergency financial assistance to the millions of Americans who are suffering the economic effects caused by the COVID-19 pandemic.  One source of relief provided by the CARES Act was the authorization or EIDL advances and low-interest loans to small businesses to meet financial obligations and operating expenses that could have been met had the disaster not occurred. Under the EIDL program applicants were eligible for a forgivable advance of up to $10,000 if the applicant had ten or more employees.

This case was investigated by the U.S. Secret Service and the Small Business Administration-Office of Inspector General and prosecuted by Assistant U.S. Attorney Jonathan R. Hornok.

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Source: United States Attorneys General 12

WHEELING, WEST VIRGINIA – Civil rights enforcement and education will be expanded in West Virginia in 2023, to include proactive efforts to ensure that people with disabilities have a full and equal opportunity to vote.

United States Attorney William Ihlenfeld announced that his office has developed a formal plan pursuant to the Americans with Disabilities Act (ADA) to ensure that public entities don’t discriminate against voters based upon disability. The ADA applies to all aspects of voting, to include registration, site selection, and the casting of ballots, whether on Election Day or during early voting.

“Voting is a hallmark of our democracy, and we want to make sure that no one is denied this fundamental right due to a disability,” said U.S. Attorney Ihlenfeld.

Ihlenfeld also announced that his office will host four community events this year to raise awareness about federal civil rights, with a special focus on the ADA, the Fair Housing Act, hate crimes, and environmental justice. These educational sessions will be held in Hancock, Ohio, Hampshire, and Harrison counties, with the first event scheduled for April 20, 2023, at 9 a.m. at the Millsop Community Center in Weirton.

Assistant U.S. Attorney Carly Nogay is the District’s Civil Rights Coordinator and is leading the community outreach efforts. Assistant U.S. Attorneys Chris Prezioso, Jarod Douglas, and Max Nogay are also assisting with the initiative.

To learn more about the district’s civil rights work, or to report a civil rights violation, go to https://www.justice.gov/usao-ndwv/civil-rights-program.

Source: United States Attorneys General 11

PLANO, Texas – A Dallas man has been indicted for federal drug trafficking violations in the Eastern District of Texas, announced U.S. Attorney Brit Featherston today. 

Brian Demarcus Davis, also known as “Tink”, 37, was named in a four-count indictment returned by a federal grand jury on Nov. 9, 2022 in the Eastern District of Texas.  The indictment charges Davis with multiple federal violations including conspiracy to distribute fentanyl, heroin, and methamphetamine, and possession of a firearm in furtherance of narcotics trafficking.  Davis made his initial appearance on Nov. 21, 2022, before U.S. Magistrate Judge Kimberly C. Priest Johnson.   

According to the indictment, in September 2022, the North Texas OCDETF Strike Force 2 (SF2), with the assistance of the Dallas Police Department and the Collin County Sheriff’s Office, began investigating Dallas-based drug traffickers selling fentanyl and fentanyl-laced heroin. Deconfliction efforts found that Dallas PD had previously executed a search warrant on a “trap” house run by the targets of the SF2 investigation, resulting in the recovery of kilograms of methamphetamine, a half kilogram of raw powdered fentanyl, firearms, and body armor.  Davis was identified as a possible fentanyl & heroin source of supply and ultimately alleged to be responsible for an overdose death in Collin County.

If convicted, Davis faces up to life in federal prison.

This case is being investigated by the U.S. Postal Inspection Service; U.S. Marshals Service; IRS-Criminal Investigations; Dallas Police Department; Collin County Sheriff’s Office; and Drug Enforcement Administration.  The case is being prosecuted by Assistant U.S. Attorney Heather Rattan.

This effort is part of an Organized Crime Drug Enforcement Task Forces (OCDETF) operation. OCDETF identifies, disrupts, and dismantles the highest-level criminal organizations that threaten the United States using a prosecutor-led, intelligence-driven, multi-agency approach. Additional information about the OCDETF Program can be found at https://www.justice.gov/OCDETF.

A grand jury indictment is not evidence of guilt.  All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

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Source: United States Attorneys General 11

NASHVILLE – A Florida man was sentenced today in U.S. District Court in Nashville, Tennessee, to 57 months in federal prison for his role in a bank fraud conspiracy, while using methods associated with the tactics of what is commonly known as the Felony Lane Gang (FLG), announced U.S. Attorney Mark H. Wildasin for the Middle District of Tennessee. 

Melvin Brooks, 40, of Fort Lauderdale, was charged in November 2021 with conspiracy to commit bank fraud, bank fraud, and aggravated identity theft.  He pleaded guilty to all charges in January.

The FLG typically is a group of thieves from Florida who travel the country and target unoccupied vehicles for “smash and grab” thefts, stealing purses and using stolen identification documents and credit cards to commit financial crimes.  When cashing stolen checks, they typically use the drive-thru lane farthest from the bank in an attempt to avoid detection. 

According to Court documents, Brooks conspired with Bobbie Lynn Riley, 39, of Dickson, Tenn., to obtain identification documents and checks stolen from others, to fraudulently obtain more than $30,000 in cash and gift cards from area banks and businesses.  While travelling interstate, the pair used stolen license plates to mask the identity of rental cars used during the commission of these crimes, also a tactic of the FLG. 

Riley was charged in 2019 and was sentenced to 22 months in prison in 2020 after pleading guilty to conspiracy and bank fraud.

This case was investigated by the FBI; the Franklin Police Department; The Brentwood Police Department; and the Williamson County Sheriff’s Department.  The 21^st Judicial District Attorney General’s Office was instrumental in obtaining the forfeiture of more than $29,000 which was seized from Brooks upon his arrest and will be used as restitution to the victims of his crimes.  Assistant U.S. Attorney Taylor J. Phillips is prosecuting the case. 

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Source: United States Attorneys General 12

Tacoma – An unlicensed “investment advisor” from Vancouver, Washington, was sentenced today in U.S. District Court in Tacoma to 75 months in prison for mail fraud in connection with his scheme to defraud investors, including friends and family members, out of more than $4 million, announced U.S. Attorney Nick Brown. Charles Richard Burgess, 67, originally tried to blame the COVID-19 pandemic for the loss of victim funds. But in fact, Burgess had lost the bulk of investors’ money many years earlier and had concealed the losses from them. At the sentencing hearing Chief U.S. District Judge David Estudillo noted the “long-lasting effects of the crime on the victims.” Chief Judge Estudillo told Burgess, “To lie, to cheat, to steal seem to be the values you were living by.”

“It is heartbreaking to read the victim statements describing how their lives have been dramatically altered – no retirement, no funds to care for disabled children, in one instance a victim’s home placed at risk of foreclosure,” said U.S. Attorney Nick Brown. “From the mid-1990s until 2021, Mr. Burgess led his victims – mostly friends and family members — to believe that he was successfully investing their funds for retirement. He sent fake statements showing significant gains. In truth, since at least 2013, the investment fund was insolvent and losing value, and Mr. Burgess took more than $1 million in fees for his own benefit.”

According to records filed in the case, in the mid-1990s Burgess began selling investments in an unregistered investment vehicle that Burgess called “the pool.” Burgess never became a registered or licensed investment advisor. But between January 1995 and April 2021, he convinced 64 people to invest $13.4 million in “the pool.” He sought investments from friends, family members, and others with whom he had a trusting relationship. Burgess did nothing to screen the investors to see what type of risk they could tolerate, and often did not provide them with written materials about the nature of the investments.

Burgess told investors he would collect fees only if the fund made money and told some he would personally absorb any trading losses. Burgess provided the investors with statements indicating their account balances had grown substantially over time. However, those statements were false. For example, in 2016 Burgess sent investors statements indicating their investments had grown about 10 percent that year. In fact, the investments lost money.

As early as 2013, Burgess was not able to repay all the investors’ principal, let alone the profits he was falsely telling them they had earned. In December 2013, Burgess told investors that the value of the investor accounts exceeded $4.2 million. In fact, at that time the pool’s assets were only about $711,000. By the end of December 2015, it was even worse: Burgess told investors their accounts totaled over $5.2 million, when the true value was only about $365,000. By the end of 2020, Burgess represented in year-end statements that the collective value of victims’ accounts exceeded $10.3 million. In fact, the Pool’s assets totaled only $113,000. 

As the financial picture worsened, Burgess paid off earlier investors with money from new investors –a classic Ponzi scheme.

Speaking in court today, one victim said Burgess is a “pathological liar.” Another wrote to the court “He is a con, nothing more than that in my eyes.” A 91-year-old victim wrote “He needs to be held accountable for the many lives he has shattered.”

In all, 32 investors lost $4.3 million in principal payments that they had made to Burgess. Burgess was ordered to pay $4,383,617 to the victim investors. 

While I’m glad Mr. Burgess accepted responsibility for his actions, the amount stolen from his victims warrants a lengthy sentence,” said Richard A. Collodi, Special Agent in Charge of the FBI’s Seattle field office. “Crimes like these traumatize victims who lose their entire life’s savings. I applaud the work of our investigators and partners with the state who worked to bring this scheme to an end.”

The case was investigated by the FBI and the Washington State Department of Financial Institutions (DFI).

The case is being prosecuted by Assistant United States Attorney Seth Wilkinson.

Source: United States Attorneys General 11

NASHVILLE – The owners of Franklin Gun Shop pleaded guilty today in U.S. District Court to obstruction of justice and making false entries regarding the disposition of firearms, announced U.S. Attorney Mark H. Wildasin for the Middle District of Tennessee. 

Alan Hassler, 49, Brian Hassler, 52, and Michael Hassler, 45, all of Franklin, Tennessee, and co-  owners of Franklin Gun Shop, a Federal Firearms Licensee (FFL) in Williamson County, Tennessee, were charged in September following a federal regulatory inspection by the Bureau of Alcohol, Tobacco, Firearms & Explosives (ATF).

“Proper record keeping is an essential requirement of all Federal Firearms Licensees,” said U.S. Attorney Wildasin.  “When the firearms record-keeping process breaks down, the resulting implications can be disastrous and hinder law enforcement’s ability to properly investigate gun crimes or keep firearms out of the hands of violent criminals and disqualified persons.  I commend the ATF for their vigorous attention to this matter.”

Court documents reflect that in 2016, the ATF performed a compliance inspection of the Franklin Gun Shop and numerous violations of applicable federal regulations regarding record keeping were found.   A follow-up inspection by the ATF in 2020 found that hundreds of firearms, out of the more than 10,000 firearms in Franklin Gun Shop’s inventory, were unaccounted for in the business’s internal records.  Over the course of the following year, hundreds of the previously unaccounted-for firearms were located within the business, but as of July 2021, approximately 144 firearms could not be located. 

The Hasslers later provided fraudulent documentation to the ATF in an attempt to account for the missing firearms.  In many cases, the Hasslers would take a completed, legitimate 4473 form —from a prior purchase — and would add one or more of the missing firearms to the form to make it appear to regulators that these firearms had been purchased as part of that original transaction.  The goal was to deceive the ATF into believing that the firearms were not missing but had been sold. Subsequent interviews by the ATF with multiple customers identified on these fraudulent forms established that these customers had not purchased the firearms attributed to them. Several of these customers produced original receipts showing that the missing firearms had not been purchased as the falsified forms indicated. 

“ATF’s core mission is to protect the public from violent crime, particularly crimes involving the use of firearms,” said Marcus Watson, Special Agent in Charge of ATF’s Nashville Division.  “An essential part of this mission is ensuring that federal firearms licensees comply with applicable federal laws and regulations, particularly the implementing regulations of the Gun Control Act.  This FFL committed numerous violations with the intentional disregard of their known legal duty and with plain indifference to their legal obligations. The ATF remains committed to ensuring public safety and compliance and enhancing the traceability of firearms.”

If the plea agreements are accepted by the Court, the Hasslers have agreed to a term of three months of home detention and two years of supervised release.  The Hasslers have also surrendered their Federal Firearms License and will complete the audit in progress by the ATF.

Sentencing is scheduled for May 25, 2023.

This case is being investigated by the ATF and prosecuted by Assistant U.S. Attorney Robert E. McGuire.

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Source: United States Attorneys General 12

Seattle – A 54-year-old Brooklyn, New York resident was convicted today in U.S. District Court in Seattle of conspiracy to distribute more than 1,000 kilos of processed marijuana, announced U.S. Attorney Nick Brown. Chee Choong Ng was arrested in October 2020, when eleven people were indicted for a coast-to-coast illegal marijuana trafficking scheme. The jury deliberated about four hours following the two-day trial. U.S. District Judge John C. Coughenour scheduled sentencing for April 4, 2023.

According to records filed in the case and testimony at trial, the investigation culminated in October 2020 with the search of more than 35 locations in Washington, Oregon, and New York. Many of the sites searched were illegal marijuana grow houses. Over the course of the investigation, law enforcement determined marijuana was being grown on the west coast and was shipped to New York, New Jersey, Pennsylvania, Massachusetts, Connecticut, Illinois, Kentucky, Georgia, and Missouri. 

Chee Choong Ng served as a distributor on the east coast, picking up large loads of marijuana that had been shipped from west coast members of the conspiracy. Once received, Ng coordinated with other co-conspirators to further distribute the marijuana—including to Public Storage units in Pennsylvania, a stash house in Staten Island, and various locations in Brooklyn. Prosecutors introduced hundreds of messages—sent using the social media application “WeChat”—between Ng and another co-conspirator that showed Ng’s sustained and knowing involvement in the conspiracy. When arrested, Ng had five different cell phones and a false identification that he began using after he was stopped with a load of marijuana in the summer of 2020. Prosecutors also introduced financial records showing Ng had taken in more than $140,000 in cash over the course of the conspiracy.

The other defendants in the case have pleaded guilty and have been sentenced to prison terms of up to 60 months.

This prosecution is part of an Organized Crime Drug Enforcement Task Forces (OCDETF) investigation. OCDETF identifies, disrupts, and dismantles the highest-level drug traffickers, money launderers, gangs, and transnational criminal organizations that threaten the United States by using a prosecutor-led, intelligence-driven, multi-agency approach that leverages the strengths of federal, state, and local law enforcement agencies against criminal networks. The case was  investigated by the U.S. Postal Inspection Service (USPIS) Seattle and Newark offices and the King County Sheriff’s Office, with assistance from the Internal Revenue Service Criminal Investigation.

The case is being prosecuted by Assistant United States Attorneys Joseph Silvio and Michelle Jensen.

Source: United States Attorneys General 11

NASHVILLE – A federal jury yesterday convicted a Clarksville, Tennessee man of filing false tax returns that omitted income he earned from his business, announced U.S. Attorney Mark H. Wildasin for the Middle District of Tennessee and Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division.

According to court documents and evidence presented at trial, David Haley, 65, of Clarksville, owned Haley & Associates Mechanical Contractors, a heating and plumbing business. From 2014 through 2017, Haley & Associates was hired as the subcontractor on commercial projects in middle Tennessee and was paid more than $1,000,000 for each year. Generally, the contractors that hired Haley & Associates paid via check and reported the payments to the IRS via Forms 1099-MISC as non-employee compensation. Even though Haley personally received a portion of the company’s earnings as business income and nonemployee compensation, Haley reported earning no income on his 2014-2017 tax returns.  Haley’s failure to report that income on his tax returns for tax years 2015 through 2017 caused the IRS a loss of approximately $186,290.

Haley was convicted of three counts of filing false tax returns for tax years 2015, 2016, and 2017.  The jury acquitted Haley of one count of filing a false tax return relating to his 2014 tax filing.

Haley will be sentenced at a later date. He faces a maximum penalty of three years in prison for each count of filing false tax returns. U.S. District Judge William L. Campbell, Jr. will determine any sentence after consideration of  the U.S. Sentencing Guidelines and other statutory factors.

IRS-Criminal Investigation investigated the case.

Assistant U.S. Attorney Kathryn W. Booth and Trial Attorney Mitchell T. Galloway of the Justice Department’s Tax Division are prosecuting the case.

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Source: United States Attorneys General 12

Seattle – The wife of the former long-time Commissioner of an East King County drainage district was sentenced today in U.S. District Court in Seattle to three years in prison and three years of supervised release for multiple federal felonies connected to a scheme to steal tax dollars intended for flood control, announced U.S. Attorney Nick Brown.  Joann Thomas, 67, was convicted of 15 federal felonies in May 2022:  conspiracy; four counts each of wire fraud and mail fraud, two counts of aggravated identity theft and four counts of money laundering.   Because the attorney for Allan Thomas, 70, claimed he was unable to adequately represent his client due to illness,  the sentencing  for Allan Thomas  on ten federal felonies was postponed until February 3, 2023.

At sentencing U.S. District Judge Richard A. Jones noted that the Thomases were involved in a seven-year fraud scheme, “This was not isolated conduct, it involved regular and ongoing requests for funds.” Judge Jones also noted that Joann Thomas had not been truthful saying, “You chose to get on the witness stand and you chose to lie to this court.”

“Allan and Joann Thomas didn’t just defraud their neighbors by stealing tax dollars, they abused a position of public trust, eroding faith in government,” said U.S. Attorney Nick Brown.  “The Thomas’ theft caused some 700 neighbors in Enumclaw to pay higher property taxes, which many can ill afford, and for which they got no services.   Mr. Thomas also needs to be held accountable at his sentencing next month.”

According to records in the case and testimony at trial, Allan B. Thomas served as Commissioner for Drainage District 5 and 5A in King County for more than 35 years.  As a commissioner, Thomas was involved in estimating the costs of drainage maintenance for the district so that the county auditor could set and assess the appropriate taxes. The Commissioners then authorized payment to service providers who were supposed to do maintenance work on the drainage system.

As early as 2012, Joann Thomas set up a joint bank account with Allan Thomas’ son from a previous marriage.  The account was a business account for a company called A C Services.  Over the next six years, Allan Thomas had $413,323 of local tax dollars paid to A C Services claiming it was for drainage ditch maintenance.  However, Thomas’ son testified that other than two small jobs performed in 2012, he did not perform any drainage ditch work. At trial, a current drainage district commissioner testified that he saw no work done on the ditches during that time period, and that when he took on the commissioner job, it was clear the ditch network had had little maintenance for many years.

Financial records admitted at trial show that over those six years (2012-2017), shortly after the tax dollars were deposited into A C Services’ account, the money was quickly transferred to other accounts belonging to the Thomases or was used to pay their expenses for such things as hay, mortgage payments, or property taxes.  More than $68,000 was withdrawn as cash.

Allan and Joann Thomas worked together on the scheme.  Both were involved in submitting false documents by mail and wire (the mail fraud and wire fraud counts) and the funds that were fraudulently obtained were then moved through various bank accounts (money laundering).  Joann Thomas forged the signatures of Allan Thomas’ son and a second drainage commissioner on various records and checks.  Allan Thomas was convicted of participating in the forgeries.  The forgeries constitute Aggravated Identity Theft.  Those counts carry a mandatory two-year sentence that must run consecutive to any sentence imposed on the other counts of conviction.

In 2018, after the couple became aware of an investigation into their conduct, they began funneling the tax dollars through another company: City Biz.  The couple submitted warrants for City Biz to be paid for drainage maintenance work and within days of the funds arriving in City Biz bank accounts, nearly all the money was transferred directly to Allan Thomas or the Thomases’ dairy farm.  The Thomases’ friend who agreed to help with the City Biz fraud, now also has a federal felony conviction for repeatedly lying to the FBI.

In all, the couple defrauded taxpayers of $468,165.  Judge Jones has asked for briefing on the amount of restitution and has scheduled a hearing to set the amount in early March 2023.

The IRS Criminal Investigation (IRS:CI) and the FBI led the investigation with assistance from the Enumclaw Police Department.  The Enumclaw City Attorney initiated the review of the district finances.   The Washington State Auditor’s Office also conducted an audit of the district in 2019.    The King County Prosecuting Attorney’s Office, in consultation with the U.S. Attorney’s Office, determined the case was appropriate for federal prosecution.

The case is being prosecuted by Assistant United States Attorneys Justin Arnold and Andrew Friedman.