Month: March 2022

Source: United States Department of Justice News

A drug trafficker was sentenced March 25, 2022, to a total of 29 years in federal prison.

Curtis James Johnson, age 36, from Talladega, Alabama, received the prison term after a July 30, 2021 guilty plea to possession with intent to distribute a controlled substance and an August 16, 2021 guilty plea to possessing a firearm in furtherance of a drug trafficking crime.

Johnson sold methamphetamine to another individual in May 2021.  Law enforcement’s subsequent searches of two homes led to the discovery of methamphetamine and a loaded firearm at a relative’s residence and a loaded firearm at another residence associated with Johnson.  This all occurred in the Cedar Rapids, Iowa, area.  Johnson was arrested after the searches.

Following his arrest, Johnson called his mother using another inmate’s phone account in the jail and discussed paying a witness to not attend Johnson’s upcoming trial.  Prior to the current conduct, Johnson had amassed a lengthy criminal history, including convictions for battery causing bodily injury and assault causing bodily injury.  Johnson was also previously convicted of burglary and felony drug trafficking offenses.  Evidence at sentencing showed Johnson was also involved in making “hooch” while in jail.

Johnson was sentenced in Cedar Rapids by United States District Court Judge C.J. Williams.  Johnson was sentenced to 288 months’ imprisonment for the drug count and 60 months for the firearm count for a total of 348 months’ imprisonment.  He must also serve a five-year term of supervised release after the prison term.  There is no parole in the federal system.

Johnson 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 Emily K. Nydle and investigated by the Cedar Rapids Police Department and the Drug Enforcement Administration.

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

The case file number is 21-cr-28.

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Source: United States Department of Justice News

Damian Williams, the United States Attorney for the Southern District of New York, announced today that ERIN VERESPY was sentenced to 66 months in prison for her participation in a widespread, $33 million scheme to misappropriate client healthcare funds and defraud multiple lenders through her role as the Chief Financial Officer of Employee Benefit Solutions LLC (“EBS”), an insurance firm located in Wilton, Connecticut. VERESPY previously pled guilty before U.S. District Judge Cathy Seibel, who imposed today’s sentence.

U.S. Attorney Damian Williams said:  “For nearly two years, Erin Verespy helped manage a sophisticated, widespread scheme to steal millions of dollars of client healthcare funds, including with false and inflated invoices. As part of that scheme, Verespy also defrauded lenders out of millions. In doing so, she abused a position of trust as a fiduciary of client money that was meant to pay for important healthcare expenses. Thanks to the coordinated and tireless efforts of our law enforcement partners to untangle this fraud, Verespy will now serve a significant sentence in federal prison.”

According to the Information, the Complaint, other court filings, and statements made during court proceedings:

From at least July 2017 and continuing through 2019, ERIN VERESPY served as the CFO of EBS, which offered a variety of healthcare insurance-related services to clients. EBS, among other things, provided third party healthcare claims administration (“TPA”) services to clients that elected to “self-fund” (or self-insure) their employee healthcare plans. As a TPA, EBS would purportedly administer, process, and pay healthcare claims for its clients’ employees in exchange for an administrative fee.

Between at least 2015 and continuing through 2019, EBS represented an automobile dealership chain (“Company-1”) headquartered in Westchester County, New York. During this time period, EBS served as a TPA for Company-1’s self-funded employee healthcare program and purported to process and pay claims to medical providers that treated Company-1’s employees. To do this, EBS generated bimonthly “check register” invoices for Company-1 that listed all employee healthcare expenses from healthcare providers during that two-week period.  EBS also administered a bank account on Company-1’s behalf for the express purpose of paying Company-1 healthcare claims. Company-1 would fund each check register by paying the invoiced amount, expecting that EBS would promptly pay the claims to the healthcare providers.  During this time period, Company-1 transferred approximately $26 million to EBS for the payment of healthcare claims.

In reality, a significant amount of purported checks listed on the EBS “check register” invoices were never actually deposited by the healthcare providers. Instead, approximately $17.87 million in Company-1 healthcare payments were misappropriated, with the overwhelming majority simply transferred by EBS into its own operating account, where they were used for non-healthcare expenses by the managers and owners of EBS. For example, a review of bank records indicates that Company-1 healthcare funds were used by VERESPY’s co-conspirators to pay their home mortgage expenses, as well as a personal credit card account with expenses relating to boating, luxury cars, and golf. VERESPY personally made over one million dollars from her participation in the fraudulent scheme.

EBS, through VERESPY and her co-conspirators, made decisions on what few Company-1 healthcare claims they did pay based on which healthcare providers were likely to complain if they did not receive payment, or if the claims were connected to Company-1 executives. VERESPY, for example, discussed the timing of payments for Company-1 “VIPs” as well as a “Not VIP” claim that was nonetheless the subject of complaining phone calls.

The “check registers” sent to Company-1 also contained millions of dollars in fraudulent or inflated healthcare claims that were eventually paid by Company-1. EBS routinely inflated the Company-1 check registers at the direction of VERESPY and her co-conspirators. Such efforts were typically accomplished through VERESPY and her co-conspirators instructing others to manually create fraudulent entries in the EBS claims processing software, including fake claims under the name of a business controlled by VERESPY’s co-conspirators. VERESPY and her co-conspirators also took steps to conceal their fraud from Company-1 by creating and sending manipulated and fabricated bank statements and checks to create the appearance that healthcare claims were being paid by EBS, when in reality they were not.   

By mid-2017, as EBS buckled under mounting outstanding fiduciary obligations, VERESPY and her co-conspirators began an elaborate effort to conceal and perpetuate the ongoing fraud on Company-1 by applying for multiple fraudulent bank loans and merchant cash advances designed in part to pay various fiduciary obligations that EBS owed to Company-1. VERESPY and her co-conspirators fraudulently applied for and received millions of dollars in loans under the auspices of financing the purchase of upgraded billing software for EBS, which included VERESPY and her co-conspirators submitting fabricated invoices from a fake company that supposedly sold the billing software.

In addition to the prison term, ERIN VERESPY, 50, of Trumbull, Connecticut, was sentenced to 5 years of supervised release. The Court also ordered VERESPY to pay $16,053,508.19 in restitution and forfeit $1,066,038.02. On April 14, 2021, VERESPY pled guilty to one count of conspiracy to commit wire fraud and bank fraud, in violation of Title 18, United States Code, Section 1349. 

Mr. Williams praised the outstanding investigative work of the U.S. Postal Inspection Service and the Special Agents of the United States Attorney’s Office. Mr. Williams also thanked the U.S. Department of Labor, Employee Benefits Security Administration; the U.S. Department of Labor, Office of Inspector General; and the United States Secret Service, which are assisting in the investigation, as well as the U.S. Attorney’s Office for the District of Connecticut.

The prosecution is being handled by the Office’s White Plains Division.  Assistant United States Attorney Nicholas S. Bradley is in charge of the prosecution.

Source: United States Department of Justice News

WILLIAMSPORT -The United States Attorney’s Office for the Middle District of Pennsylvania announced that on March 24, 2022, Linda Tarlecki, age 60, of Aristes, Pennsylvania, was indicted by a federal grand jury on charges of tax evasion, bank fraud, and aggravated identity theft.

According to United States Attorney John C. Gurganus, the indictment alleges that from 2013 through 2017 while she was as an employee and Township Supervisor of Conyngham Township, Tarlecki embezzled approximately $160,000 of township funds.  The embezzlement was accomplished in part by Tarlecki writing unauthorized checks to herself from the township’s bank account and forging the signatures of other township supervisors on these checks.  Tarlecki then failed to report the embezzled funds as income on her income tax returns.

The case was investigated by the Internal Revenue Service and the Pennsylvania State Police.  Assistant U.S. Attorney Geoffrey W. MacArthur is prosecuting the case.

If convicted, the maximum penalty under federal law for each tax count is 5 years of imprisonment, a term of supervised release following imprisonment, and a fine.  The maximum penalty for bank fraud is 30 years of imprisonment. A sentence following a finding of guilt is imposed by the Judge after consideration of the applicable federal sentencing statutes and the Federal Sentencing Guidelines.

Indictments are only allegations. All persons charged are presumed to be innocent unless and until found guilty in court.

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Source: United States Department of Justice News

HARRISBURG—The United States Attorney’s Office for the Middle District of Pennsylvania announced that on March 24, 2022, Kwane Henderson, age 42, formerly of East Stroudsburg, Pennsylvania, was sentenced today by U.S. District Court Judge Jennifer P. Wilson to two years’ imprisonment for aggravated identity theft. 

According to United States Attorney John C. Gurganus, Henderson previously admitted to making fraudulent purchases at Boscov’s stores in Cumberland, Dauphin, and York Counties in February 2019.  Henderson made the purchases by using credit card numbers that belonged to other individuals.  Henderson’s conduct in the Middle District of Pennsylvania was part of a larger scheme in which he made fraudulent purchases at Boscov’s stores in Delaware, New Jersey, and elsewhere in Pennsylvania.  The fraudulent purchases totaled over $28,000.

The case was investigated by the United States Secret Service and the Springettsbury Township Police Department.  Assistant U.S. Attorney Carlo D. Marchioli prosecuted the case.

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