Source: United States Attorneys General

Headline: Former CEO and Executive Management of Defense Contractor, Wellco Enterprises, Inc., Pleads Guilty to $8.1 Million “Made In The USA” Marketing Scheme and Government Contract Fraud

GREENEVILLE, Tenn. – On February 15, 2018, the former President and Chief Executive Officer of Wellco Enterprises, Inc. (Wellco) and Tactical Holdings Operations, Inc. (Tactical Holdings), Vincent Lee Ferguson, 66, of Knoxville, Tennessee, pleaded guilty to conspiracy to commit wire fraud.  Wellco’s former Senior Vice President of Sales, Matthew Lee Ferguson, 41, of Geneva, Illinois, and former Director of Marketing and Communications, Kerry Joseph Ferguson, 36, of Houston, Texas, also pleaded guilty to conspiracy to commit wire fraud. 

Wellco’s former Vice President of Government Contracting, Neil Streeter, 55, of Warren, Massachusetts, and former Operations Manager, Stephanie Lynn (Ferguson) Kaemmerer, 45, of Knoxville, Tennessee, pleaded guilty to smuggling goods into the United States. 

Sentencing has been set for Vincent Lee Ferguson, Matthew Lee Ferguson, and Kerry Joseph Ferguson for June 6, 2018, before the Honorable J. Ronnie Greer, U.S. District Judge.  Sentencing for Neil Streeter and Stephanie Lynn Kaemmerer is set for June 11, 2018, also before Judge Greer.  Conspiracy to commit wire fraud and smuggling goods into the United States both carry a maximum penalty of 20 years in prison and a fine of up to $250,000.  Each defendant was released pending sentencing.

According to information on file with the U.S. District Court, Wellco was a leading manufacturer and supplier of military footwear to the U.S. Department of Defense (DoD) and to civilian (commercial) customers for over 70 years.  From 2006 through 2012, DoD alone paid in excess of $138 million to Wellco for the supply of combat boots.  Wellco pioneered and patented the first practical method for molding and attaching a rubber sole to a shoe upper in a single operation.  During the Vietnam War, the U.S. Army adopted Wellco technology for the manufacture of its hot-weather boots for the jungles of Vietnam, a boot that became known as the “Vietnam Boot” or the “jungle boot.”   In May, 2007, in a deal involving approximately $22 million, Wellco was acquired by two investment firms, Golden Gate Private Equity, Inc. and Integrity Brands, Inc.  Wellco became a wholly owned subsidiary of Golden Gate’s portfolio company, Tactical Holdings.

In March 2006, Vincent Lee Ferguson was made President and CEO of Wellco.  At that time, he discussed with Wellco’s Board of Directors, his turnaround plan for the company to increase commercial sales and “aggressively pursue” sales to the U.S. government.  From December 2008 through August 2012, he conspired with his executive team to import military-style boots that were made in China into the United States and then deceptively market and sell those boots to DoD (and other federal departments and agencies), government contractors, and the general public as “Made in the USA” and as compliant with the Berry Amendment and the Trade Agreements Act (TAA).   The Berry Amendment prohibits DoD from buying clothing that is not grown, reprocessed, reused or produced in the United States.  The purpose of the Berry Amendment is to protect the viability of America’s textile and clothing production base.  The TAA provides that the government may acquire only “U.S.-made or designated country end products” and requires government contractors to certify that each “end product” meets applicable requirements.  

By December 2008, Wellco was manufacturing certain military boot model uppers and insoles in China.  In order to conceal this fact, the conspirators required the Chinese manufacturing facility to include the American flag and “USA” on labels of certain boot uppers.  After two shipments of these deceptively marked boots were detained and seized by the U.S. Department of Homeland Security’s Customs and Border Protection, the conspirators ordered the Chinese facility to stitch tear-away “Made in China” labels in Wellco boot uppers.  After importation, the conspirators instructed Wellco factory workers in Morristown, Tennessee to tear out the “Made in China” tags prior to shipping the boots to government and commercial purchasers. 

The defendants marketed and sold these Chinese-made Wellco boots as “Made in the USA.”  They also submitted false certifications to DoD and other federal agencies, and to government contractors that these boots complied with the Berry Amendment and TAA and met certain safety standards, including electrical hazard and blood-borne pathogen protections for U.S. troops.  For example, on August 15, 2012, the defendants submitted a signed “Certificate of Conformance” to a government contractor, representing that Wellco’s boot model S161 was “100% Berry Compliant” and “fully protective against Electrical Hazard,” even though the model was imported from China and not safety tested.  The boots were then supplied to troops stationed at Sheppard Air Force Base in Wichita Falls, Texas.   In total, Wellco sold at least $8.1 million of fraudulent boots.

This case was investigated by Homeland Security Investigations, Defense Criminal Investigative Service, Air Force Office of Special Investigations, General Services Administration Office of Inspector General, and Defense Contract Audit Agency.  Assistant U.S. Attorneys David L. Gunn and Timothy C. Harker represented the United States.

###

Source: United States Attorneys General

Headline: Federal Jury Returns Guilty Verdicts for Former Pilot Flying J President, Vice President, and Customer Account Representative

CHATTANOOGA, Tenn. – On February 15, 2018, following a multi-month trial in U.S. District Court, Chattanooga, before the Honorable Curtis L. Collier, Senior U.S. District Judge, a jury returned guilty verdicts against Mark Hazelwood, 59, of Knoxville, Tennessee; Scott “Scooter” Wombold, 58, of Gallatin, Tennessee; and Heather Jones, 47, of Knoxville, Tennessee. 

Hazelwood, former president of Pilot Flying J, was convicted of conspiracy to commit mail fraud and wire fraud as charged in count 1 of the indictment, wire fraud as charged in count 8 of the indictment, and witness tampering as charged in count 14 of the indictment.   Wombold, former vice president of Pilot Flying J, was convicted of wire fraud as charged in count 2 of the indictment.   Jones, a former customer account representative for Pilot Flying J, was convicted of conspiracy to commit mail fraud and wire fraud as charged in count 1 of the indictment.

Evidence presented at trial proved a scheme to defraud certain Pilot Flying J trucking company customers through false and fraudulent representations and promises of diesel fuel discounts that were intended to induce victim customers to purchase diesel fuel from Pilot Flying J rather than a competitor.  The scheme resulted in victim customers being cheated out of their promised diesel fuel discounts.  The evidence at trial showed that the scheme’s goals were to increase Pilot’s market share of diesel fuel sales over its competitors, maximize Pilot’s profits, and maximize the scheme-participants’ potential for profit- and commission-based compensation from trucking companies targeted through the scheme to defraud.

Before trial, 14 other former Pilot Flying J executives and employees had already pleaded guilty to conspiracy charges related to the same scheme to defraud.  They are awaiting sentencing.  In July 2014, Pilot Flying J entered into a Criminal Enforcement Agreement with the United States in which the company agreed that some of its employees in its Direct Sales group engaged in fraudulent conduct in the payment of diesel fuel discounts for certain targeted Pilot customers.  Pilot Flying J agreed that the conduct of those employees resulted in $56 million in loss to affected customers.  In accordance with that agreement, Pilot Flying J agreed to pay full restitution to all victim customers in addition to paying a $92 million monetary penalty.  Additionally, according to the terms of the Criminal Enforcement Agreement, this federal investigation not only resulted in the payment of full restitution to the scheme’s victims, but also created protection for trucking companies going forward through greater transparency in their future fuel pricing arrangements with Pilot Flying J.

Sentencing has been set for June 27, 2018, in U.S. District Court, Chattanooga.  Hazelwood, Wombold, and Jones each face a sentence of up to 20 years in prison for their convictions.

Law enforcement agencies participating in this joint investigation included the FBI and IRS- Criminal Investigation.  Assistant U.S. Attorneys F.M. (Trey) Hamilton III and David P. Lewen, Jr. represented the United States at trial.

###

Source: United States Attorneys General

Headline: Five Cincinnati Individuals Plead Guilty to Roles in Armed Bank Robberies

CINCINNATI – Five individuals pleaded guilty in U.S. District Court for their roles in three armed bank robberies in the Cincinnati area in May and June 2017.

Benjamin C. Glassman, United States Attorney for the Southern District of Ohio, Angela L. Byers, Special Agent in Charge, Federal Bureau of Investigation (FBI), Cincinnati Division, and Cincinnati Police Chief Eliot K. Isaac announced the pleas.

Malcolm Lorenzo Jones, 21, pleaded guilty to armed bank robbery and discharge of a firearm during and in relation to a crime of violence.

According to statements of facts, Malcolm Lorenzo Jones brandished a black revolver while ordering bank employees and customers to the ground at the Key Bank on Springdale Road in Cincinnati on May 22, 2017. Jones then went to the front door and opened it for co-defendant Nelson Jones, 26 to enter.

When Nelson Jones entered the bank, an off-duty police officer entered immediately behind him. The off-duty officer pulled his firearm and demanded that both defendants get on the ground, but as Malcolm Lorenzo Jones moved to the ground, he raised his firearm and fired a shot at the officer. A gunfight ensued, and Malcolm Lorenzo Jones jumped over the bank counter in an attempt to dodge the shots from the officer while exchanging return fire.

Malcolm Jones was struck with at least one bullet, yet both defendants managed to flee the bank on foot, stealing approximately $3,480.

Nelson Jones also brandished a firearm while robbing North Side Bank and Trust on St. Gregory St. in Cincinnati on May 13, 2017. Co-defendant Hope Tolbert, 21, assisted in the robbery by collecting nearly $6,000 from the bank’s cash drawers.

Nelson Jones pleaded guilty to two counts related to the using and discharging a firearm during a crime of violence. Tolbert pleaded guilty to one count of armed bank robbery.

On June 20, 2017, Nelson Jones and Marquez Peterson, 22, – who was armed with a pistol – robbed the Wes Banco Bank on Vine Street in Cincinnati. Joy Favors, 23, rode in the car with Jones and Peterson to the bank. Favors exited the car and went inside to case the bank minutes before the robbery.  Favors returned to the car and informed Jones and Peterson of what to expect upon entering the bank. Nearly $10,700 was stolen. Peterson pleaded guilty to one count of armed bank robbery and one count of using a firearm during a crime of violence. Favors also pleaded guilty to one count of conspiracy to use a firearm during and in relation to a crime of violence.

Armed bank robbery is a federal crime punishable by up to 25 years in prison. Conspiracy to use a firearm during and in relation to a crime of violence is a federal crime punishable by up to 20 years in prison.

Discharging a firearm during and in relation to a crime of violence carries a potential sentence of 10 years to life in prison, to be served consecutive to any other sentence. If charged with a second subsequent count of this crime, a defendant faces a sentence range of 25 years to life in prison to be imposed consecutive to all other sentences imposed.

U.S. Attorney Glassman commended the investigation of these cases by the FBI and Cincinnati Police Department, as well as Assistant United States Attorney Anthony Springer who is prosecuting the case.

# # #

Source: United States Attorneys General

Headline: Armed Robber Pleads Guilty To Murder

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that DWAINE COLLYMORE, a/k/a “Twin,” pled guilty yesterday to murdering Carlos Vargas, and shooting at a second man, during an attempted robbery on April 28, 2016, inside 2466 Marion Avenue in the Bronx, New York.  COLLYMORE faces a maximum term of life in prison, and will be sentenced before Chief United States District Judge Colleen McMahon.

U.S. Attorney Geoffrey S. Berman said:  “Dwaine Collymore has admitted to murdering Carlos Vargas during a botched robbery.  We will continue to work with our law enforcement partners to ensure that murderers are held to account for their crimes.”

According to the Indictment and other documents filed in the case, as well as statements made during the plea proceeding, on April 28, 2016, COLLYMORE and another man attempted to rob the occupants of an apartment located at 2466 Marion Avenue in the Bronx, where Carlos Vargas and others were engaged in selling small quantities of marijuana.  The victims resisted, and in the ensuing struggle COLLYMORE stunned Vargas and knocked him to the ground.   COLLYMORE then fired a shot at a second victim (“Victim-2”).  Victim-2 was not struck, but fell to the ground and played dead.  Believing he had already killed Victim-2, COLLYMORE then leaned over Vargas and fired a single shot into Vargas’s head at close range, killing him.

*                      *                     *

Mr. Berman praised the outstanding work of the investigators of the United States Attorney’s Office for the Southern District of New York, the New York City Police Department’s 46th Precinct Detective Squad, and the United States Marshals Service.  

This case is being handled by the Office’s Violent and Organized Crime Unit.  Assistant United States Attorneys Jared Lenow and Hagan Scotten are in charge of the prosecution.

Source: United States Attorneys General

Headline: Meth Dealer Who Possessed Firearms to Serve 15 Years in Federal Prison

A man who possessed methamphetamine with the intent to distribute and who possessed several firearms in furtherance of his drug trafficking crime, including an AR-15 rifle, was sentenced February 12, 2018, to 15 years in federal prison.

Travis Daniel Counsell, 48, from Rockford, Iowa, received the prison term after a July 6, 2017, guilty plea to possession with intent to distribute methamphetamine and possession of firearms in furtherance of a drug trafficking crime.

Information provided by the United States at the sentencing and change of plea hearings showed that on February 7, 2017, law enforcement was called to Mercy Medical Center North Iowa to investigate a subject that presented himself in the emergency room with a gunshot to the foot.  Counsell reported he had shot himself in the foot with an AR-15 rifle.  Counsell was a convicted felon, and not able to legally possess firearms.  A search warrant was obtained for Counsell’s residence.  Located during the search warrant was the loaded AR-15, a loaded .45 caliber handgun, and approximately two pounds of high purity methamphetamine.  Counsell knowingly possessed the guns in furtherance of the drug trafficking crime.

Counsell was sentenced in Cedar Rapids by United States District Court Judge Linda R. Reade.  Counsell was sentenced to 120 months’ imprisonment on the drug count and to 60 months’ imprisonment on the gun count, to be served consecutively.  A special assessment of $200 was imposed.  He must also serve a 5-year term of supervised release after the prison term.  There is no parole in the federal system.

Counsell is being held in the United States Marshal’s custody until he can be transported to a federal prison.

The case was prosecuted by Assistant United States Attorney Jack Lammers and investigated by the North Central Iowa Narcotics Task Force, Cerro Gordo County Sheriff’s Office, and the Division of Narcotics Enforcement (DNE),

Court file information at https://ecf.iand.uscourts.gov/cgi-bin/login.pl. 

The case file number is 17-3015.  Follow us on Twitter @USAO_NDIA.

Source: United States Attorneys General

Headline: Kanawha Repeat Offender Sentenced to Federal Prison for Cerro Gordo County Meth Conspiracy

A man who conspired to manufacture methamphetamine was sentenced February 12, 2018, to 15 years in federal prison.

Todd Edward Daniels, 49, from Kanawha, Iowa, received the prison term after an August 9, 2017, guilty plea to conspiracy to manufacture methamphetamine.  Daniels was previously convicted of conspiracy to manufacture and distribute methamphetamine in 2005.

At the guilty plea, Daniels admitted his involvement in a conspiracy that manufactured more than 50 grams of actual (pure) methamphetamine between the fall of 2016 and May, 2017.  The investigation monitored Daniels’ activities, and purchases of pills containing pseudoephedrine by users/associates of Daniels.  Daniels knew the pseudoephedrine pills he and his friends/associates purchased would be used to manufacture methamphetamine.  A search warrant at Daniels residence revealed multiple items used in clandestine methamphetamine laboratories.

Daniels was sentenced in Cedar Rapids by United States District Court Judge Linda R. Reade.  Daniels was sentenced to 180 months’ imprisonment.  A special assessment of $100 was imposed.  He must also serve a 10-year term of supervised release after the prison term.  There is no parole in the federal system.

Daniels is being held in the United States Marshal’s custody until he can be transported to a federal prison.

The case was prosecuted by Assistant United States Attorney Jack Lammers and investigated by the Division of Narcotics Enforcement (DNE), the North Central Iowa Narcotics Task Force and the Britt Police Department.

Court file information at https://ecf.iand.uscourts.gov/cgi-bin/login.pl. 

The case file number is 16-3021.  Follow us on Twitter @USAO_NDIA.

Source: United States Attorneys General

Headline: Chicago Man Sentenced to Federal Prison for String of Retail Thefts

A Chicago man who stole more than $36,000 worth of merchandise from various home improvement stores across four states was sentenced on February 14, 2018, to eight months in federal prison.

Paris Lawrence, age 29, from Chicago, Illinois, received the prison term after a September 28, 2017, guilty plea to conspiracy to transport stolen property in interstate commerce.

In a plea agreement, Lawrence admitted that between February 2016 and May 2016, he participated in over 25 thefts from various home improvement stores in Iowa, Illinois, Michigan, Wisconsin, and Indiana.  Lawrence and his co-conspirators would enter a store, steal various items, and later return the items for store credit.  During the course of the conspiracy, Lawrence stole more than $36,000 worth of merchandise.   

Lawrence was sentenced in Cedar Rapids by United States District Court Judge Linda R. Reade.  Lawrence was sentenced to eight months’ imprisonment.  A special assessment of $100 was imposed, and he was ordered to make $36,438.33 in restitution to Lowe’s Home Improvement.  He must also serve a three-year term of supervised release after the prison term.  There is no parole in the federal system.  Lawrence is being held in the United States Marshal’s custody until he can be transported to a federal prison.

The case was prosecuted by Assistant United States Attorney Ravi T. Narayan and investigated by the Dubuque Police Department.    Court file information at https://ecf.iand.uscourts.gov/cgi-bin/login.pl.  The case file number is 16-CR-1020.

Follow us on Twitter @USAO_NDIA.

Source: United States Attorneys General

Headline: Mexican Woman Sentenced to Prison for Using a Fraudulent Social Security Card to Get a Job

A Mexican woman who aided and abetted her husband in absconding from justice in Nebraska and assumed a new identity in Iowa was sentenced on February 14, 2018, to three months in federal prison.

Rosa Nevarez-Fallad, age 60, a citizen of Mexico and lawful permanent resident of the United States residing in Fremont, Nebraska, received the prison term after a September 28, 2017, guilty plea to one count of unlawful use of an identification document.

At the guilty plea, Nevarez-Fallad admitted she used a Social Security card knowing that the card was forged or unlawfully obtained.  In 2016, Nevarez-Fallad’s husband, Fernando Nevarez-Carreon, faked a heart attack and fled Nebraska to avoid sentencing in federal court for conspiracy to distribute counterfeit documents and aggravated identity theft.  In July 2016, Nevarez-Fallad and Nevarez-Carreon both completed employment paperwork in Farley, Iowa, to obtain jobs under false names and used identification cards bearing the names and Social Security Numbers of United States citizens.  Nevarez-Carreon avoided apprehension by law enforcement until March 2017, when he was arrested at his place of employment in Farley.  Nevarez-Carreon was sentenced to more than six years in prison in the United States District Court for the District of Nebraska in June 2017 and is awaiting sentencing in the Northern District of Iowa for one count of unlawful use of an identification document.

Nevarez-Fallad was sentenced in Cedar Rapids by United States District Court Judge Linda R. Reade.  Nevarez-Fallad was sentenced to three months’ imprisonment.  She must also serve a three-year term of supervised release after the prison term.  There is no parole in the federal system.

Nevarez-Fallad is being held in the United States Marshal’s custody until she can be transported to a federal prison.

The case was prosecuted by Assistant United States Attorney Daniel C. Tvedt and investigated by the Social Security Administration, Office of Inspector General, and the Department of Homeland Security, Immigration and Customs Enforcement, Homeland Security Investigations. 

Court file information at https://ecf.iand.uscourts.gov/cgi-bin/login.pl. 

The case file number is 17-CR-1026-LRR.

Follow us on Twitter @USAO_NDIA.

Source: United States Attorneys General

Headline: Verbena Man Facing Life in Prison Following Federal Drug Trafficking and Firearms Convictions

       Montgomery, Ala. – James Calvin Talley, Jr., 37, of Verbena, Alabama, was convicted by a federal jury yesterday of possession with intent to distribute 50 grams or more of methamphetamine,  possession with intent to distribute marijuana,  using a phone to facilitate a drug crime, and being a felon in possession of a firearm, announced U.S. Attorney Louis V. Franklin, Sr.    Talley, who has two prior felony drug convictions, faces a mandatory life sentence in prison for the methamphetamine conviction. 

       On December 3, 2016, a drug courier delivered more than 100 pounds of marijuana to Talley’s home in Verbena.  The drug courier had been arrested in Texas and agreed to work with law enforcement and deliver the marijuana to Talley.  When the courier arrived at Talley’s home, he got out of the car and Talley drove the car alone to another house in Marbury, Alabama.  There, Talley backed the car up to the front door of the house and opened the trunk.  The police, who had followed Talley from his home, turned on their emergency lights, and Talley ran into the home.  He was caught by police as he was running out of the backdoor shortly thereafter.  Inside the house, which belonged to Richie Dale Murphy, DEA agents and local law enforcement found two pistols, more than 3 pounds of methamphetamine, over $20,000 in cash, marijuana, and drug paraphernalia used for packaging and selling narcotics.

       Following the search at Murphy’s house, law enforcement officers searched Talley’s home and found two pistols in a safe under a bed, along with more than $50,000 in cash, a currency counter, drug ledgers and receipts for wire transfers of large amounts of money.  Murphy, who earlier pled guilty to possession with intent to distribute marijuana, possession with intent to distribute methamphetamine, and possessing a firearm in furtherance of a drug trafficking crime, testified against Talley.  Specifically, Murphy told the jury that he and Talley were in business together, and that Talley used Murphy’s home as his stash house for marijuana and methamphetamine.

       Murphy is scheduled to be sentenced on March 19, 2018.  Talley’s sentencing date has not been set.  As stated earlier, Talley is facing a life sentence for the methamphetamine conviction.  The marijuana and felon in possession charges carry a possible 10-year sentence.  The using a phone to facilitate a drug crime count comes with a potential 4-year prison sentence.   Murphy is facing at least 15 years in prison for his charges.

       The case was investigated by the Drug Enforcement Administration (DEA), the Autauga County Sheriff’s Office, and the Chilton County Sheriff’s Office.  The Alabama Attorney General’s Office, Millbrook Police Department, Montgomery Police Department, and Prattville Police Department all assisted with this case.  The case was prosecuted by Assistant U.S. Attorneys John Geer and Kevin Davidson.