Category: Legal Issues

Source: United States Attorneys General 11

Two former employees of the U.S. Department of Veteran’s Affairs entered guilty pleas in a $2.9 million embezzlement scheme, announced U.S. Attorney for the Northern District of Texas Chad E. Meacham.

Randius McGlown, 56, and Charles Gates, 54, both pleaded guilty to theft of government funds. Mr. McGlown entered his plea in October and Mr. Gates entered his on Thursday.

According to plea papers, Mr. McGlown, an inventory manager and acquisition utilization specialist at the Dallas VA Medical Center, entered a company he created, G4 Logistics, into the medical center’s vendor system in 2014.

He and Mr. Gates then generated phony purchase orders for G4 equipment and materials and used a medical center-issued purchase card to pay the bill using the payment processing platform Stripe. G4 never delivered any items.

The VA money paid to G4 was deposited into an account controlled by an individual identified in court documents as J.R. When he was notified of a fake purchase, J.R. would withdraw the money from the account, deliver most of it to Mr. McGlown or Mr. Gates, and keep the remaining amount for himself.

In 2018, Mr. McGlown switched from G4 to another fictious company he named Caprice.

To conceal the scheme, Mr. McGlown created fake invoices and used existing items in the medical center’s inventory to cover up the fact that G4 and Caprice never delivered any materials. 

“Using their official government positions to steal millions of taxpayer dollars is an egregious crime that diverts resources from deserving veterans and erodes public trust. These guilty pleas should send a clear message that the VA Office of Inspector General will diligently investigate those who would misuse their positions to commit fraud,” said Acting Special Agent in Charge Patrick Roche of the VA Office of Inspector General’s South Central Field Office. “The VA OIG thanks the US Attorney’s Office and our law enforcement partners for their efforts in this joint investigation.”

Mr. McGlown and Mr. Gates now face up to 10 years in federal prison.

The Department of Veterans Affairs, Office of Inspector General, conducted the investigation with the assistance of the Federal Bureau of Investigation’s Fort Worth Field Office, and the General Services Administrations, Office of Inspector General. Assistant U.S. Attorney Renee Hunter is prosecuting the case.

Source: United States Attorneys General 11

SHERMAN, Texas – A Plano, Texas, dentist has pleaded guilty to federal violations in the Eastern District of Texas, announced U.S. Attorney Brit Featherston today.

Brian Bui, 42, of Plano, pleaded guilty to wire fraud before U.S. Magistrate Judge Christine L. Stetson on Nov. 17, 2022.

According to court documents, Bui used his dentistry business to obtain at least two Paycheck Protection Program (PPP) loans by submitting materially false application paperwork, including fabricating supporting documentation and lying about the number of employees and monthly payroll expenses.  As a result of his conduct, he obtained approximately $1.89 million in forgivable loans guaranteed by the Small Business Administration (SBA) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.  Bui used the funds in a manner not authorized by the program, including for non-business, personal investments.

Under federal statutes, Bui faces up to 30 years in federal prison. The maximum statutory sentence prescribed by Congress is provided here for information purposes, as the sentencing will be determined by the court based on the advisory sentencing guidelines and other statutory factors. A sentencing hearing will be scheduled after the completion of a presentence investigation by the U.S. Probation Office.

This case is being investigated by the Federal Bureau of Investigation.

On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the Department’s response to the pandemic, please visit https://www.justice.gov/coronavirus.

Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.

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Source: United States Attorneys General 11

TYLER, Texas – A Nevada man and a South Carolina man have been indicted in a cryptocurrency money laundering conspiracy in the Eastern District of Texas, announced U.S. Attorney Brit Featherston.

Randall V. Rule, 71, of Reno, NV, and Gregory C. Nysewander, 64, formerly of Irmo, SC, were named in an indictment returned by a federal grand jury this week, charging them with money laundering conspiracy, money laundering, and a conspiracy to violate the Bank Secrecy Act. 

According to the indictment, Rule and Nysewander are alleged to have conspired with others to launder the proceeds of wire fraud and mail fraud schemes through cryptocurrency.  The defendants converted funds from romance scams, business email compromises, and real estate scams, and other fraudulent schemes into cryptocurrency and sent the cryptocurrency to accounts controlled by foreign and domestic co-conspirators.  The defendants and their co-conspirators made false representations and concealed material facts, in order to avoid discovery of the fraudulent nature of deposits, wires, and transfers, such as providing instructions to co-conspirators and victims to label wire transfers as “loan repayments” and “advertising.”  The defendants also made false representations and concealed material facts when completing account opening documents and when communicating with financial institutions and cryptocurrency exchanges.  During the course of the conspiracy, Rule, Nysewander, and their co-conspirators allegedly laundered more than $2.4 million.  Rule and Nysewander are also charged with willfully violating the money services business requirements of the Bank Secrecy Act.

If convicted, Rule and Nysewander face up to 20 years in federal prison on each money laundering charge and up to 5 years in federal prison on the conspiracy to violate the Bank Secrecy Act charge.  A grand jury indictment is not evidence of guilt.  A defendant is presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

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.

This case is being investigated by the U.S. Secret Service and the U.S. Postal Inspection Service and is being prosecuted by Assistant U.S. Attorney Nathaniel C. Kummerfeld.

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Source: United States Attorneys General 11

PLANO, Texas– Two Los Zetas Cartel leaders has been sentenced to federal prison for drug trafficking violations in the Eastern District of Texas, announced U.S. Attorney Brit Featherston today.

Jose Maria Guizar-Valencia, 43, of Tulare, CA, pleaded guilty on Dec. 20, 2021, to conspiracy to possess with intent to distribute five kilograms or more of cocaine and conspiracy to commit money laundering and was sentenced to 480 months in federal prison on Nov. 15, 2022, by U.S. District Judge Richard A. Schell.

Francisco Hernandez-Garcia, 53, of San Luis Potosi, Mexico, also pleaded guilty on Dec. 20, 2021, to the same charges and was sentenced to 480 months in federal prison on Nov. 15, 2022, by Judge Schell.

According to information presented in court, in approximately January 2010, law enforcement authorities began an investigation into the drug trafficking activities of the Los Zetas Drug Trafficking Cartel.  The investigation revealed that from 2007 to 2014, members of the cartel were involved in numerous crimes including drug trafficking, money laundering, and firearms trafficking in the Eastern District of Texas and elsewhere.  Throughout the investigation, Heriberto Lazcano, a.k.a. “Z-3”, was identified as the leader of the cartel who gave final orders, to include the authorization of killings.

Although Lazcano was identified as the leader of the organization, Miguel Angel Trevino-Morales, a.k.a. “Z-40”, was seen as his equal and controlled the vast majority of the cartel soldiers. Miguel’s brother, Omar Trevino-Morales, a.k.a. “Z-42”, along with Francisco Hernandez-Garcia, a.k.a. “El 2000”, and Jose Maria Guizar-Valencia, a.k.a. “Carlitos” and “Z-43”, were identified as three of the top Los Zetas Cartel leaders.  During the investigation, Guizar-Valencia was identified as one of the top leaders of the cartel who was responsible for overseeing the cartel’s drug distribution, firearms trafficking, and bulk cash smuggling.  As one the organizations leaders, Guizar-Valencia approved criminal activities conducted by members of the cartel. Under Guizar-Valencia’s leadership, the cartel arranged for the importation of cocaine from Central America to Mexico, which was subsequently distributed throughout the United States.  Guizar-Valencia, operating in Guatemala, was responsible for overseeing ton-quantity shipments of cocaine from Guatemala to Mexico and coordinated the transportation of the cocaine from Southern Mexico to Coahuila, Mexico.  Guizar-Valencia also managed the receipt of millions of dollars in United States currency obtained from the sale of cocaine in the United States, which was used to pay for firearms purchased in the United States and for cocaine shipments coordinated out of Guatemala on behalf of the cartel. 

Guizar-Valencia was identified as the principal boss of William DeJesus Torres-Solarzano, a.k.a. “Mario Ruiz Castillo,” “Comandante W,” and “Comandante William”, and he oversaw and directed the activities of Torres-Solorzano and Horst Walther Overdick-Mejia.  Torres-Solorzano and Overdick-Mejia coordinated the cartel’s day-to-day cocaine trafficking operations in Guatemala.  Torres-Solorzano was also identified as a high-ranking member of the cartel and a cartel leader in Guatemala.

The sentencings this week are the latest of high-level members of the Zeta Cartel.  Hugo Cesar Roman Chavarria received a life sentence, William DeJesus Torres Solorzano received 480 months, and Jose Ramirez received 480 months in October of 2022.  

“Amazing effort by law enforcement to bring these dangerous criminals to justice,” said U.S. Attorney Brit Featherston.  “Prosecutors and law enforcement agencies conducted a very long-term investigation and coordinated with our international partners to achieve this outcome, they did an outstanding job.”

“The Zetas were known for their ruthless and violent tactics as they distributed their drugs throughout Mexico and the United States,” said Eduardo A. Chávez, Special Agent in Charge of DEA Dallas.  “These sentences reflect that the DEA and our law enforcement partners are equally known throughout North Texas as holding those criminals accountable for their deeds to the fullest extent of the law.  Good will always prevail and our resolve will never falter.”    

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.

This case was investigated by the Drug Enforcement Administration and Department of Homeland Security Investigations and prosecuted by Assistant U.S. Attorney Ernest Gonzalez.

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Source: United States Attorneys General 11

BEAUMONT, Texas– The owner of Jake’s Fireworks has been sentenced to federal prison for drug trafficking violations in the Eastern District of Texas, announced U.S. Attorney Brit Featherston today.

Jake Ellis Daughtry, 35, of Nederland, pleaded guilty on Jan. 18, 2022, to conspiracy to possess with intent to distribute a date rape drug over the internet to an unauthorized purchaser.  Daughtry was sentenced to 180 months in federal prison today by U.S. District Judge Thad Heartfield. 

According to information presented in court, Jake Daughtry was the owner and operator of Right Price Chemicals, a business located in Nederland that sold chemicals nationwide.  An investigation of the organization began in 2018 when DEA West Palm Beach, Florida intercepted mail parcels of a chemical identified as 1,4 butanediol, commonly referred to as “BDO.”  BDO is a chemical manufactured only for industrial or laboratory use as a floor stripper or vehicle wheel cleaner and is not intended for human consumption.  Investigators determined that when BDO is ingested, it immediately metabolizes into GHB (also known as the date-rape drug) with the same effects, causing potential overdoses, addiction, and death.  At least two people died after consuming BDO sold by Right Price Chemicals. Toxicology analysis determined that a GHB overdose was the cause of death in each case. Additionally, investigators found two additional victims who injured themselves after overdosing on BDO sold by Right Price Chemicals. Nearly 90 percent of the BDO Right Price Chemicals sold went to residential addresses.

DEA traced the seized parcels to their origination point, Right Price Chemicals, a business located on Twin City Highway in Nederland, Texas, and owned by Jake Daughtry.  A seasonal fireworks business called “Jake’s Fireworks” is also operated at that location.  Customers from all over the United States were able to order quantities of BDO from the Right Price Chemicals website in small amounts to use for personal consumption. The Daughtry’s continued to sell BDO even after becoming aware that some customers were ingesting the substance for its’ narcotic effect, rather than using it for its intended commercial purpose.  Agents determined that since 2016, Right Price Chemicals has distributed approximately 7,000 gallons of BDO over thousands of orders, and that those sales generated $4.5 million.  Daughtry and several members of his family who worked for him, were indicted by a federal grand jury on June 3, 2020.

In addition, Jake Daughtry, Joe Daughtry, Sandra Daughtry, and Kip Daughtry agreed to the entry of a permanent injunction that prohibits them, or Right Price Chemicals, to ever sell or distribute BDO to anyone, anywhere, at any point in the future.

“After being notified by Florida law enforcement that this dangerous and lethal chemical was being sold to users for a nefarious purpose, East Texas law enforcement agencies took action to protect the public and prevent others from falling prey to the sale and use of this dangerous substance,” said U.S. Attorney Brit Featherston.  “This was a complicated investigation involving numerous investigative agencies and both the criminal and civil divisions of the U.S. Attorney’s Office.  Their collaborative efforts have made our community and country a safer place to live.”

“This is an important victory for the American public,” said Special Agent in Charge Christopher J. Altemus, Jr, IRS Criminal Investigation, Dallas Field Office. “Not only is a criminal going to jail for his crimes, but we stopped the distribution of BDO through Right Price Chemicals from being used nefariously and getting into the wrong hands.  IRS Criminal Investigation is proud to help protect the public and work alongside our law enforcement partners to bring criminals to justice.”

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.

This case was investigated by the Drug Enforcement Administration West Palm Beach, Florida, and Beaumont; U.S. Postal Service; Internal Revenue Service-Criminal Investigation; Bureau of Alcohol, Tobacco, Firearms and Explosives; and the Jefferson County Sheriff’s Office.  Essential support and coordination was provided by numerous components of DEA headquarters and the Department of Justice’s multi-agency Special Operations Division (SOD).  This case was prosecuted by Assistant U.S. Attorneys Christopher Rapp, Donald Carter and Robert Wells.

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Source: United States Attorneys General 11

SHERMAN, Texas – A federal grand jury has returned an indictment charging an East Texas law enforcement official with federal violations in the Eastern District of Texas.

Kelly Jason Smith, 46, was named in the indictment returned by a federal grand jury on Nov. 10, in Sherman, Texas, charging him with deprivation of rights under color of law.

According to the indictment, on July 25, Smith, the Wood County Precinct 2 Constable, directed his police dog to bite a suspect who did not pose a threat that warranted use of the police dog. These actions resulted in unnecessary bodily injury to the suspect. 

If convicted, Smith faces up to 10 years in federal prison.

Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division, U.S. Attorney Brit Featherston for the Eastern District of Texas and FBI Acting Special Agent in Charge James J. Dwyer made the announcement.

The FBI Dallas Field Office is investigating the case and the case is being prosecuted by Assistant U.S. Attorney Tracey Batson for the Eastern District of Texas.

 A grand jury indictment is merely an allegation. 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

BEAUMONT, Texas – A Lumberton man has been sentenced to 40 years in federal prison for child pornography violations in the Eastern District of Texas, announced U.S. Attorney Brit Featherston today.

Stephen John Pieper, 26, pleaded guilty on Dec. 9, 2021, to three counts of production of child pornography and was sentenced to 480 months in federal prison today by U.S. District Judge Marcia A. Crone.

According to court documents, an investigation into claims that Pieper had sexually exploited teen girls revealed Pieper had engaged in sexual activity with three victims, aged 15 and 16-years old.  As part of the sexual contact with the victims, Pieper used his own cellular phone to record the minors engaged in sexually explicit conduct.  Pieper admitted to uploading the videos and images he captured of the victims into Snapchat accounts.  Pieper’s exploitation of the three victims spanned 2016 through 2018, during which time Pieper was an adult who was more than 5 years older than his victims.  There is evidence that Pieper engaged in sexual activity with at least 11 other minor girls.  Pieper was indicted by a federal grand jury on April 7, 2021. 

“If this press release does not stop you in your tracks, something is wrong,” said U.S. Attorney Brit Featherston.  “26-year-old Pieper will spend the next 40 years in federal prison for the evil crimes he committed.  We must all takes steps to protect our most vulnerable population and keep an eye out for child sex abuse.  It is our responsibility as citizens, parents, friends and family members to report abuse when it is suspected.  The failure to do so is reprehensible.”

This case is part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse.  Led by U.S. Attorneys’ Offices and the Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims.  For more information about Project Safe Childhood, please visit www.justice.gov/psc.

This case was investigated by Homeland Security Investigations and the Texas Attorney General’s Office and prosecuted by Assistant U.S. Attorney Rachel Grove.

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Source: United States Attorneys General 11

BEAUMONT, Texas– A Bridge City man has been sentenced to federal prison for drug trafficking and firearms violations in the Eastern District of Texas, announced U.S. Attorney Brit Featherston today.

Rian Blayke Savoy, 32, pleaded guilty on June 14, 2022, to possession with intent to distribute five grams or more of methamphetamine and possession of a firearm in furtherance of a drug trafficking crime.  Savoy was sentenced to 137 months in federal prison for the drug trafficking violation and 60 months in federal prison for the firearms violation today by U.S. District Judge Marcia A. Crone.  He sentences were ordered to served consecutively for a total of 197 months in federal prison.  

According to information presented in court, in the early morning hours of Jan. 30, 2022, Savoy led officers from multiple Orange County, Texas law enforcement agencies on a high-speed chase for several miles through Orange County before eventually being pulled over near the border of Orange and Newton Counties. During the chase, law enforcement officers observed Savoy discarding several objects out of the window of the vehicle as he was driving.  Officers were dispatched to the area where Savoy was observed to have thrown objects out of the vehicle during the police pursuit and discovered plastic baggies containing methamphetamine and a firearm. Savoy was indicted by a federal grand jury on April 6, 2022.

This case was prosecuted as part of the joint federal, state, and local Project Safe Neighborhoods (PSN) Program, the centerpiece of the Department of Justice’s violent crime reduction efforts.  PSN is an evidence-based program proven to be effective at reducing violent crime.  Through PSN, a broad spectrum of stakeholders work together to identify the most pressing violent crime problems in the community and develop comprehensive solutions to address them.  As part of this strategy, PSN focuses enforcement efforts on the most violent offenders and partners with locally based prevention and reentry programs for lasting reductions in crime.

This case was investigated by the Bridge City Police Department, the Orange Police Department, the Pinehurst Police Department, the West Orange Police Department, the Orange County Sheriff’s Office, and the Bureau of Alcohol, Tobacco, Firearms and Explosives and prosecuted by Assistant U.S. Attorney Joseph R. Batte.

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Source: United States Attorneys General 11

BEAUMONT, Texas – A Port Arthur man has pleaded guilty to federal firearms violations in the Eastern District of Texas, announced U.S. Attorney Brit Featherston today.

Frankie Malik Cunningham, 23, pleaded guilty to possession of a machine gun and possession of a firearm in furtherance of a drug trafficking crime.  Cunningham entered his guilty plea today before U.S. District Judge Marcia A. Crone.

According to information presented in court, on May 17, 2022, law enforcement officers arrived at a Port Arthur residence where Cunningham was located to serve an outstanding felony warrant.  They received consent to search from the owner of the residence and located Cunningham in a bedroom.  In the bedroom with Cunningham, they also located two Glock pistols, a rifle with a drum magazine, a pound of suspected marijuana, and several Hydrocodone pills.  One of the pistols was outfitted with a “Glock Switch.” A Glock Switch is a device used to convert a standard, legal handgun into a fully automatic machine gun.

At the time, Cunningham was under felony indictment for possession of a controlled substance.  Federal law prohibits the possession of a firearm or ammunition while under felony indictment.

Cunningham was indicted by a federal grand jury on July 6, 2022.  He faces up to 15 years in federal prison.  The maximum statutory sentence prescribed by Congress is provided here for information purposes, as the sentencing will be determined by the court based on the advisory sentencing guidelines and other statutory factors.  A sentencing hearing will be scheduled after the completion of a presentence investigation by the U.S. Probation Office.

This case is being investigated by the Port Arthur Police Department, the Bureau of Alcohol, Tobacco, Firearms, and Explosives, the U.S. Marshals Service and the Jefferson County Sheriff’s Office.  This case is being prosecuted by Special Assistant U.S. Attorney Tommy Coleman with assistance from the Jefferson County District’s Attorney’s Office.

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Source: United States Attorneys General 11

BEAUMONT, Texas – A Houston man has pleaded guilty to federal violations in the Eastern District of Texas, announced U.S. Attorney Brit Featherston today. 

Davien Phillip Turner, also known as Davien Phillip Mayo, 44, pleaded guilty to owning or operating a drone that is not registered, today before U.S. District Judge Marica A. Crone.

Prisons around the country have faced the problem of individuals using drones to fly over prison complexes and drop contraband items to the prison population.  According to information presented in court, on May 19, 2022, law enforcement officials in Jefferson County, Texas were alerted that a person was operating a drone on the property of the Federal Correctional Complex in Beaumont.  Law enforcement officers responded and eventually found Turner in the area where the drone was being operated.  Near Turner, officers discovered a DJI Matrice 600 Pro Drone.  Law enforcement officers also discovered several bags near the drone that Turner had planned to drop into the prison complex via the drone.  Inside those bags were tobacco, cell phones, cell phone chargers, various tools, vape pens, and other items.  Those items were to be sold by inmates within the prison.  Under federal law, this type of drone was required to be registered with the Federal Aviation Administration, and Turner had failed to do so.  Furthermore, to operate a drone under these circumstances, a certificate was needed, which Turner also had not obtained. 

Turner was indicted by a federal grand jury on July 12, 2022.  He faces up to three years in federal prison at sentencing.  The maximum statutory sentence prescribed by Congress is provided here for information purposes, as the sentencing will be determined by the court based on the advisory sentencing guidelines and other statutory factors.  A sentencing hearing will be scheduled after the completion of a presentence investigation by the U.S. Probation Office.

This case is being investigated by the FBI, the Bureau of Prisons, the Jefferson County Sheriff’s Office, and the Federal Aviation Administration.  This case is being prosecuted by Assistant U.S. Attorney Russell James.

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