Month: March 2022

Source: United States Department of Justice News

CHICAGO — A man has been sentenced to 25 years in federal prison for violently sex trafficking two children in the Chicago area and Wisconsin.

In late 2019 and early 2020, DAVID L. SMITH took sexually explicit photographs of the children, who at the time were 16 and 17 years old, and posted them in commercial sex advertisements on the websites SkipTheGames and MegaPersonals.  He then arranged for the children to meet customers in hotel rooms, with Smith keeping all of the money that the children received.  On at least one occasion, Smith hit the 17-year-old victim in the face after she mistakenly accepted fake money from a customer.  On another occasion, Smith hit the 16-year-old victim in the face after he learned that the girl had contacted her mother.

Smith, 28, of Milwaukee, Wis., pleaded guilty last year to a federal sex trafficking charge.  In addition to the prison sentence, U.S. District Judge John J. Tharp, Jr., on Friday ordered Smith to pay $50,000 in restitution to each of his victims.

The sentence was announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; and Emmerson Buie, Jr., Special Agent-in-Charge of the Chicago Field Office of the FBI.  Valuable assistance was provided by the Oak Lawn (Ill.) Police Department, FBI Milwaukee Field Office, FBI Kansas City Field Office, FBI St. Louis Field Office, and the Missouri State Highway Patrol.  The government was represented by Assistant U.S. Attorneys Ann Marie E. Ursini and Caitlin S. Walgamuth.

“Defendant caused his minor victims irreparable harm and trauma by causing them to engage in commercial sex on numerous occasions,” Assistant U.S. Attorney Ann Marie E. Ursini argued in the government’s sentencing memorandum.  “These victims will carry the emotional scars of the defendant’s actions for the rest of their lives.”

Source: United States Department of Justice News

The Justice Department and the Federal Trade Commission (FTC) announced that a federal court in Houston, Texas, entered a permanent injunction barring a credit repair company and its CEO from representing that it can repair or improve consumers’ credit scores. The court also entered a preliminary injunction that prohibits the defendants from making large or non-essential expenditures to preserve assets for consumer redress.

In a civil complaint filed March 1 and unsealed on March 14, the Department of Justice alleged that that Alexander V. Miller, 42, of Missouri City, Texas, and his company Turbo Solutions Inc. violated the Credit Repair Organizations Act, the Telemarketing and Consumer Fraud and Abuse Prevention Act, the FTC Act and the FTC’s Telemarketing Sales Rule in connections with defendants’ marketing and sales of credit repair services. On March 4, the court issued a temporary restraining order imposing financial restrictions on defendants, which remained in place through the resolution of the preliminary injunction hearing.

The complaint alleges that the defendants used internet websites and telemarketing to falsely claim that the defendants could improve consumers’ credit scores by removing all negative items from consumers’ credit reports. According to the complaint, the defendants also filed or caused to be filed fake identity theft reports with the FTC. The complaint further alleges that the defendants routinely took prohibited advanced fees for their credit repair services and did not make required disclosures regarding those services. Many consumers allegedly paid defendants a fee ranging from several hundred dollars to $1,500, but did not receive the higher credit scores defendants promised.

“Credit repair scams affect consumers who already are suffering from low credit scores,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “The Department of Justice will use all tools at its disposal to stop credit repair agencies from engaging in unlawful conduct targeting financially vulnerable consumers.”

“IdentityTheft.gov is a resource for consumers, not scammers,” said Director Samuel Levine of the FTC’s Bureau of Consumer Protection. “Those who abuse this resource by filing fake reports can expect to hear from us.”

The government is represented in the civil matter by Trial Attorneys Marcus Smith and Amy Kaplan, Senior Trial Counsel Stephen Tosini, Senior Litigation Counsel Claude Scott, Assistant Director Lisa Hsiao of the Civil Division’s Consumer Protection Branch and Assistant U.S. Attorney Richard Kincheloe of the U.S. Attorney’s Office for the Southern District of Texas. The FTC is represented by Gregory A. Ashe.

For more information about the Consumer Protection Branch and its enforcement efforts, visit its website at https://www.justice.gov/civil/consumer-protection-branch. For more information about the FTC, visit its website at https://www.FTC.gov.  

Source: United States Department of Justice News

Two brothers who operated multiple South Florida addiction treatment facilities were sentenced to prison Friday for a $112 million addiction treatment fraud scheme that included paying kickbacks to patients through patient recruiters and receiving kickbacks from testing laboratories.

“These substance abuse treatment facility operators, through brazen tactics driven by greed, took advantage of vulnerable patients seeking treatment,” said Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division. “These sentences demonstrate the department’s unwavering commitment to protecting patients and prosecuting fraudulent substance abuse treatment facilities through our Sober Homes Initiative.”

Jonathan Markovich, 37, and his brother, Daniel Markovich, 33, both of Bal Harbour, were sentenced in the Southern District of Florida to 188 months and 97 months in prison, respectively.

According to court documents and evidence presented at trial, the defendants conspired to unlawfully bill for approximately $112 million of addiction treatment services that were medically unnecessary and/or never provided, which were procured through illegal kickbacks at two addiction treatment facilities, Second Chance Detox LLC, dba Compass Detox (Compass Detox), an inpatient detox and residential facility, and WAR Network LLC (WAR), a related outpatient treatment program. The defendants obtained patients through patient recruiters who offered illegal kickbacks to patients, including free airline tickets, illegal drugs, and cash payments. The defendants shuffled a core group of patients between Compass Detox and WAR in a cycle of admissions and re-admissions to fraudulently bill for as much as possible. Patient recruiters gave patients illegal drugs prior to admission to Compass Detox to ensure admittance for detox, which was the most expensive kind of addiction treatment offered by the defendants’ facilities. In addition, therapy sessions were billed for but not regularly provided or attended, and excessive, medically unnecessary urinalysis drug tests were ordered, billed for, and paid. Compass Detox patients were given a so-called “Comfort Drink” to sedate them, and to keep them coming back. Patients were also given large and potentially harmful amounts of controlled substances, in addition to the “Comfort Drink,” to keep them compliant and docile, and to ensure they stayed at the facility.

“To manipulate and exploit patients seeking help in their most vulnerable state is unacceptable,” said Assistant Director Luis Quesada of the FBI’s Criminal Investigative Division. “These individuals orchestrated a scheme that sought profits over the well-being of patients, and they will be held accountable for their actions. With the help of our law enforcement partners, the FBI continues to investigate, bring down these criminal enterprises, and protect our citizens.” 

After a seven-week trial in November 2021, both defendants were convicted of conspiracy to commit health care fraud and wire fraud. Jonathan Markovich was convicted of eight counts of health care fraud and Daniel Markovich was convicted of two counts of health care fraud. They were also both convicted of conspiracy to pay and receive kickbacks and two counts of paying and receiving kickbacks. Jonathan Markovich was separately convicted of conspiring to commit money laundering, two counts of concealment money laundering, and six counts of laundering at least $10,000 in proceeds of unlawful activities. He was also convicted of two counts of bank fraud related to fraudulently obtaining PPP loans for both Compass Detox and WAR during the COVID-19 pandemic.

The FBI’s Miami Field Office, Department of Health and Human Services, Office of Inspector General, and the Broward County Sherriff’s Office investigated the case.

Senior Litigation Counsel Jim Hayes and Trial Attorney Jamie de Boer of the Criminal Division’s Fraud Section prosecuted the case.

The National Rapid Response Strike Force, Miami Strike Force, and Los Angeles Strike Force lead the Department of Justice’s Sober Homes Initiative, which was announced in the 2020 National Health Care Fraud Takedown to prosecute defendants who exploit vulnerable patients seeking treatment for drug and/or alcohol addiction.

Source: United States Department of Justice News

United States Attorney Dennis Holmes announced that a Martin, South Dakota, woman convicted of Conspiracy to Distribute a Controlled Substance was sentenced on March 21, 2022, by Chief Judge Roberto A. Lange, U.S. District Court.

Carly Rae Shott, age 23, was sentenced to 60 months in federal prison, four years of supervised release, a special assessment to the Federal Crime Victims Fund in the amount of $100, and forfeiture of a handgun and ammunition.

Shott was indicted by a federal grand jury on September 9, 2020.  She pled guilty on December 20, 2021.

The conviction stemmed from an incident that occurred between August 2018 and August 2019, wherein Shott conspired with others to distribute over 50 grams of methamphetamine in South Dakota.  Further, on August 30, 2019, Shott was arrested in Eagle Butte, South Dakota, with approximately ten grams of methamphetamine, $6,166 in United States currency, and a loaded handgun. 

This case is part of Project Safe Neighborhoods (PSN), 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. 

The investigation was conducted by the Cheyenne River Sioux Tribe Law Enforcement Services, the Northern Plains Safe Trails Drug Enforcement Task Force, and the Bureau of Alcohol, Tobacco, Firearms and Explosives.  Assistant U.S. Attorney Cameron J. Cook prosecuted the case.    

Shott was immediately remanded to the custody of the U.S. Marshals Service.