Month: July 2022

Source: United States Department of Justice News

ATLANTA – Jason Lary, the former Mayor of the City of Stonecrest, has been sentenced for using his elected office to steal hundreds of thousands of dollars in federal COVID-19 relief funds allocated to the city.

“Lary betrayed the trust placed in him by the citizens of Stonecrest by stealing the very funds meant to help his constituents weather the COVID-19 pandemic,” said U.S. Attorney Ryan K. Buchanan.  “The people of Stonecrest deserved better, and corrupt officials can expect severe consequences for using their offices to commit crimes.”

“It is extremely disheartening when an elected official, someone sworn to protect the community they serve, violates that oath by stealing relief funds intended to aid their community”, said Keri Farley, Special Agent in Charge of FBI Atlanta. “This sentencing holds Lary accountable for abusing his position of trust and blatant disrespect for the law.”

According to U.S. Attorney Buchanan, the charges and other information presented in court: In March 2020, the President signed the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act into law in response to the economic fallout of the COVID-19 pandemic.  Under the CARES Act, the federal government distributed COVID-19 relief funds to individual Americans, federal agencies, and state and local governments, including $125 million to DeKalb County.  The federal government permitted DeKalb County to further disburse these relief funds to its municipalities.  In July 2020, the DeKalb County Board of Commissioners voted to disburse some of the relief funds to its municipalities, including a $6.2 million grant to Stonecrest.

Stonecrest was required to spend the relief funds in accordance with the CARES Act.  In general, according to the Department of the Treasury, relief funds could “only be used to cover costs that – [were] necessary expenditures incurred due to the public health emergency . . . . and were incurred during the period that [began] on March 1, 2020, and [ended] on December 30, 2020.”  Examples of eligible expenditures were medical expenses, public health expenses, and grants to small businesses to reimburse the costs of business interruption caused by required closures. 

In September 2020, Jason Lary, then the Mayor of Stonecrest, signed a resolution acknowledging these CARES Act requirements.  The resolution also adopted a funding plan for most of Stonecrest’s relief funds.  The plan provided $1 million to the Stonecrest Cares Program for mask distribution, COVID-19 education and testing, and other purposes.  In practice, the Stonecrest Cares Program directed relief funds to churches and non-profit organizations in and around Stonecrest.  The plan also provided $5 million to the COVID-19 CARES Act Small Business Program (“Small Business Program”).

Stonecrest did not disburse the $6 million allocated to the Stonecrest Cares Program and Small Business Program.  Instead Lary worked behind the scenes to form a private company, Municipal Resource Partners Corporation, Inc. (“MRPC”), recruit its CEO, open its bank accounts, and ensure that Lania Boone, his convicted co-conspirator, would be hired as MRPC’s bookkeeper. Then, Lary caused the city to enter a contract with MPRC to disburse the relief funds as directed by Stonecrest. 

In or about November 2020, Stonecrest published an application on its website for businesses to apply for relief funds under the Small Business Program.  The application included the question, “are you willing to allocate 25% of your grant to marketing your business?”  Hundreds of businesses applied for relief funds, but most of the applicants were rejected.  Ignoring input from the official selection committee, from about November 2020, until about February 2021, Boone signed dozens of checks on behalf of MRPC, directing relief funds to individuals, businesses, churches, and non-profit organizations of Lary’s own choosing.

Lary used three different methods to steal the funds Stonecrest disbursed to MRPC.  First, Lary conspired with Boone to steal relief funds before they were disbursed by MRPC.  In January 2021, Boone used her access to one of MRPC’s bank accounts to wire transfer approximately $108,000 of relief funds to a mortgage servicing company.   Lary and Boone knew the purpose of the transfer was to pay off the mortgage on a lakefront home owned by Lary.  Around the same time, Lary directed approximately $7,600 in stolen relief funds to be used for Boone’s son’s college tuition and rent.

Second, Lary told churches that received relief funds from the Stonecrest Cares Program that they were required to contribute a portion of those funds for purposes identified by Lary.  For example, Lary presented a check for $150,000 in relief funds to “Church 1,” on the condition that $50,000 be given to a company called Real Estate Management Consultants, LLC (“REMC”).   Lary did not tell Church 1 at this time that he actually controlled REMC.  And while Lary falsely stated that the $50,000 would be used to assist with home repairs for people who could not afford them due to COVID-19, in reality he used the money for his own purposes, including to pay off his outstanding federal, state, and local tax liabilities. 

As another example, Lary presented a check from MRPC for $50,000 to “Church 2.”  Later, a person acting on Lary’s behalf told Church 2 to contribute $4,500 of the relief funds to REMC, purportedly for rent assistance.  Instead, Lary spent the money to pay his own property expenses and his dues to the Georgia Campaign Finance Committee.

Third, Lary and others acting on his behalf solicited relief funds from businesses that received grants under the Small Business Program.   Lary and others falsely claimed that the money would be each business’s “contribution” to Stonecrest-related marketing and advertising.  Yet Lary and others asked that these “contributions” be given not to Stonecrest, but to entities called Visit Us, Inc. and Battleground Media, LLC.   Lary did not tell the businesses that he controlled these entities.  In total, businesses were defrauded out of hundreds of thousands of dollars of relief funds.  The relief funds deposited into the Visit Us and Battleground Media accounts were used by Lary to benefit himself and his associates.  For example, Lary used relief funds held by Visit Us to pay for an associate’s political advertising.

Around October 2021, the United States seized approximately $480,000 of fraud proceeds held in the bank accounts of Visit Us and Battleground Media.  

Jason Lary, 60, of Stonecrest, Georgia, has been sentenced to four years and nine months in prison to be followed by three years of supervised release.  He was ordered to pay restitution in the amount of $119,607.69.  Lary pleaded guilty to wire fraud, federal program theft, and conspiracy on January 5, 2022.  Lania Boone, Lary’s co-conspirator, pleaded guilty to conspiracy on February 11, 2022.  She is scheduled to be sentenced on August 15, 2022.

This case was investigated by the Federal Bureau of Investigation.

Assistant U.S. Attorney Trevor C. Wilmot prosecuted the case.

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.

For further information please contact the U.S. Attorney’s Public Affairs Office at USAGAN.PressEmails@usdoj.gov or (404) 581-6016.  The Internet address for the U.S. Attorney’s Office for the Northern District of Georgia is http://www.justice.gov/usao-ndga.

Source: United States Department of Justice News

URBANA, Ill. – A Manteno, Illinois, man, Joseph Longanecker, 42, was sentenced on July 12, 2022, to 96 months in prison for attempted enticement of a minor and use of interstate facilities to attempt to transmit information about a minor.

At the sentencing hearing before United States District Judge Michael M. Mihm, the government presented evidence that on or about February 14 to 15, 2020, Longanecker knowingly attempted to persuade, induce, and entice an individual whom he believed had not attained the age of 18 years to engage in sexual activity. On those same dates, Longanecker also knowingly used a facility and means of interstate commerce, namely, the internet and a cellular telephone, with the intent to transmit the name and address of another individual who had not attained the age of 16, and he did so with the intent to entice, encourage, offer, and solicit that person to engage in sexual activity.

Longanecker was indicted in March 2020 and pleaded guilty in February 2022. He was taken into the custody of the United States Marshals after the sentencing hearing.

The prosecution was the result of an investigation by the Federal Bureau of Investigation, Springfield Office, with the assistance of the Kankakee County Sheriff’s Office; Kankakee Area Metropolitan Enforcement Group, and the Bradley Police Department. Special Assistant U.S. Attorney Shannon O’Brien, also an Assistant Attorney General for the Illinois Attorney General’s Office, represented the government in the prosecution.

The case was brought as part of Project Safe Childhood, a nationwide initiative by the Department of Justice to combat the epidemic of child sexual exploitation and abuse. Led by U.S. Attorneys’ Offices and the Criminal Division’s 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.projectsafechildhood.gov.

Source: United States Department of Justice News

SPRINGFIELD, Ill. – A Springfield, Illinois man, Thalamus Alexander, Jr., 27, of the 2000 block of Bradley Court was sentenced on July 12, 2022, to six months’ home confinement, to be followed by three years of supervised release, and ordered to pay restitution in the amount of $50,000 for wire fraud and theft of government property.

At the sentencing hearing in front of U.S. District Judge Sue E. Myerscough, the government presented evidence that Alexander fraudulently obtained an Economic Injury Disaster Loan (“EIDL”) from the U.S. Small Business Administration (“SBA”). The loans were funded through the CARES Act in response to the global pandemic caused by COVID-19. The EIDL funds were intended to provide low-interest loans to businesses that were unable to cover their fixed costs due to the pandemic. Alexander submitted six applications containing various falsehoods in an effort to obtain EIDL funding. On the application that was accepted and funded, Alexander falsely represented that he owned and operated a clothing and apparel business, Paper Junkie Desiner, that had generated $100,000 in revenue in the 12 months prior to January 31, 2020. Due to the misrepresentations, Alexander was granted a $49,000 loan and a $1,000 advance. Alexander did not have a registered business in the state of Illinois.

Also at the hearing, Judge Myerscough found that Alexander deprived other legitimate businesses of the funds that had been set aside to assist those who had been hit hard by the pandemic. By committing this fraud, Alexander was essentially stealing from small businesses in need.

Alexander was indicted in October 2021 and plead guilty in February 2022.

The statutory penalties for wire fraud are up to 20 years in prison, up to a $250,000 fine, and up to three years of supervised release. The statutory penalties for theft of government property are up to 10 years in prison, up to a $250,000 fine, and up to three years of supervised release.

“Individuals who fraudulently obtained funds through pandemic-related programs took necessary resources from other citizens in need,” said Assistant U.S. Attorney Sierra Senor-Moore. “The EIDL and PPP loans were funded using tax payor money. We all suffer when government programs are defrauded and those who criminally misused funds intended for COVID relief will be prosecuted.”

If members of the public are aware of COVID-19 related loans that they suspect were fraudulently obtained or forgiven, they should report it to the Office of Inspector General for the Small Business 

Administration, 1-800-767-0385, or online at https://sbax.sba.gov/oigcss/.  Reports can be made anonymously.

The Internal Revenue Service, Criminal Investigations, investigated the case. Assistant U.S. Attorney Senor-Moore represented the government in the prosecution.

Source: United States Department of Justice News

A New York couple and their adult son were sentenced to prison today for conspiring to defraud the United States and for tax evasion.

In November 2021, John Zourdos, his wife Helen Zourdos and their son Dimitrios Zourdos, all of Rome, were each convicted by a federal jury of conspiracy to defraud the United States, tax evasion and helping to file false corporate tax returns. U.S. District Court Judge David N. Hurd sentenced John Zourdos to 30 months in prison, Helen Zourdos to 20 months in prison and Dimitrios Zourdos to 10 months in prison.

According to evidence presented at trial and other court documents, John, Helen and  Dimitrios operated three Dippin Donuts coffee and donut shops with locations in Rome and New Hartford. From 2012 to 2017, the defendants concealed from the IRS approximately $4.5 million in cash sales. During that period, they evaded more than $2 million in individual and corporate taxes by, among other things, depositing cash directly into their personal bank accounts instead of into business bank accounts, providing incomplete information to their accountants, causing their accountants to file false individual and corporate tax returns with the IRS, and funding personal expenditures directly with undeposited and unreported cash. They used unreported income to fund a lavish lifestyle that included multiple luxury vehicles, expensive watches, investment accounts and real estate. They also paid some employees “off the books” cash wages for overtime hours, and paid other employees entirely in “off the books” cash.

In addition to the terms of imprisonment, Judge Hurd ordered each defendant to serve three years of supervised release and to pay more than $2 million in restitution to the United States.

Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and U.S. Attorney Carla B. Freedman for the Northern District of New York made the announcement.

IRS-Criminal Investigation investigated the case.

Assistant Chief John N. Kane of the Tax Division and Assistant U.S. Attorney Michael F. Perry for the Northern District of New York prosecuted the case.