Month: January 2023

Source: United States Department of Justice

Four California agricultural companies and their owner have agreed to settle allegations that they violated the False Claims Act (FCA) and the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) by knowingly submitting false information in support of Paycheck Protection Program (PPP) loan applications. Mendota Land Co., Sweetwood Farm Co. LLC, Sweetwood Farm Inc., Seasholtz Co. LLC, and their owner John Seasholtz (collectively, “Seasholtz”) are alleged to have improperly inflated the employee headcount on the companies’ PPP loan applications by impermissibly including non-employee contract workers who were, in fact, employed by other, unrelated entities. The settlement resolves allegations that the inclusion of non-employees caused Seasholtz to receive approximately $1.8 million in excess PPP funds. Seasholtz previously repaid the excess PPP loan funds to the lender, thereby relieving the U.S. Small Business Administration of liability for approximately $1.8 million in loan guarantees. As a part of the settlement announced today, Seasholtz agreed to pay approximately $400,000 in damages and penalties under the FCA and approximately $200,000 in civil penalties under FIRREA.

“PPP loans were intended to provide critical relief to small businesses,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “The department is committed to pursuing those who knowingly obtained PPP or other COVID-19 assistance funds to which they were not entitled.”

“Paycheck Protection Program funds have helped qualified businesses throughout the Central Valley that were negatively impacted by the pandemic,” said Phillip A. Talbert for the Eastern District of California. “The U.S. Attorney’s Office invested significant time and resources in this investigation and will continue to do so to ensure that PPP funds only go to those who are eligible.”

“Providing accurate information when applying for the SBA’s vital disaster relief programs is the individual responsibility of the applicant,” said Special Agent in Charge Weston King of Small Business Administration (SBA) Office of Inspector General (OIG)’s. “This settlement demonstrates that wrongdoing will find its way into the open, and those responsible will be held accountable. I want to thank the U.S. Attorney’s office and our law enforcement partners for their support and dedication to pursuing justice in this case.”

Congress created the PPP in March 2020, as part of the Coronavirus Aid, Relief and Economic Security (CARES) Act, to provide emergency financial support to the millions of Americans suffering economic hardship due to the COVID-19 pandemic. The CARES Act authorized billions of dollars in forgivable loans to small businesses struggling to pay employees and other business expenses. When applying for PPP loans, borrowers were required to certify the truthfulness and accuracy of all information provided in their loan applications, including their number of employees and average monthly payroll.

The settlement resolved a lawsuit filed under the qui tam or whistleblower provision of the False Claims Act, which permits private parties to file suit on behalf of the United States for false claims and share in a portion of the government’s recovery. The qui tam lawsuit was filed by Bell Hill LLC and is captioned United States ex rel. Bell Hill, LLC v. John Seasholtz, et al., No. 1:20-cv-942 (E.D. Cal.). There has been no determination regarding the amount of the recovery to be paid to Bell Hill LLC.

The resolution obtained in this matter was the result of a coordinated effort between the Civil Division’s Commercial Litigation Branch, Fraud Section and the U.S. Attorney’s Office for the Eastern District of California, with assistance from the SBA’s Office of General Counsel and the SBA Office of the Inspector General.

This matter was handled by Trial Attorney Jared S. Wiesner of the Civil Division and Assistant U.S. Attorney Emilia P. E. Morris for the Eastern District of California.

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.

Tips and complaints from all sources about potential fraud affecting COVID-19 government relief programs can be reported by visiting the webpage of the Civil Division’s Fraud Section, which can be found here. Anyone with information about allegations of attempted fraud involving COVID-19 can also 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.

The claims resolved by the settlement are allegations only, and there has been no determination of liability.

Source: United States Department of Justice News

ALEXANDRIA, Va. – A federal jury convicted an El Salvadorian citizen last week on charges of illegal reentry subsequent to an aggravated felony. 

According to court records and evidence presented at trial, Jose Molina, 32, illegally reentered the United States after having been previously deported both in 2015 and in 2017. Molina was most recently deported in July 2017 after pleading guilty and serving a sentence in the Southern District of Texas. Molina was first found in Alexandria in February 2022 after an arrest by local law enforcement on unrelated charges. In a sworn affidavit upon his arrest by Immigrations and Customs Enforcement in October 2022, Molina admitted that he was a citizen of El Salvador, that he had been previously deported, that he reentered the United States in 2018, and that he did not have the permission of the Attorney General or the Secretary of Homeland Security to reapply for admission.

Molina faces a maximum penalty of 20 years in prison when sentenced on April 19. Actual sentences for federal crimes are typically less than the maximum penalties. A federal district court judge will determine any sentence after taking into account the U.S. Sentencing Guidelines and other statutory factors.

Jessica D. Aber, U.S. Attorney for the Eastern District of Virginia made the announcement after U.S. District Judge Rossie D. Alston accepted the verdict.

Special Assistant U.S. Attorney Christina Clark and Assistant U.S. Attorney Zachary Ray are prosecuting the case.

A copy of this press release is located on the website of the U.S. Attorney’s Office for the Eastern District of Virginia. Related court documents and information are located on the website of the District Court for the Eastern District of Virginia or on PACER by searching for Case No. 1:22-cr-209.

Source: United States Department of Justice News

Gang Directed Drug Trafficking Network Through Contraband Cell Phones from State Prison Cells

OKLAHOMA CITY – A multi-year investigation into a prison-based drug trafficking organization has resulted in 69 defendants being convicted across multiple state and federal cases.  The wrap-up of this investigation and prosecution is announced by United States Attorney Robert J. Troester.

Last month, the investigation culminated in the sentencing of Chance Alan Wilson, a/k/a Wolfhead, who was the leader of the Universal Aryan Brotherhood (UAB), a violent criminal organization that is primarily run from inside Oklahoma prisons.  Wilson, who was serving a state sentence of 15 years in the Oklahoma State Penitentiary for Murder was sentenced to serve an additional 360 months in federal prison in December after being found to be primarily responsible for the distribution of hundreds of kilograms of methamphetamine and other drugs over many years.

Wilson and other UAB members relied on a network of individuals operating outside of prison to handle the distribution of the methamphetamine.  Over the course of this investigation, federal, state and local law enforcement identified and targeted these individuals and the drug houses they ran on Wilson’s behalf.  Wilson ran the operation from inside prison using contraband cell phones.

In the end, 69 individuals associated with the UABs operations have been charged and convicted, in both state and federal court. Across those convictions, law enforcement seized 62 firearms, more than 300 pounds of methamphetamine and more than $400,000 in drug proceeds.   Collectively, the individuals charged federally have been sentenced to 418 years in custody of the Federal Bureau of Prisons and 216 years of supervised release.  Crimes for which the defendants were convicted include drug trafficking, drug conspiracy, money laundering, maintaining drug premises and illegal firearms possession.

“This is another wide-spread drug trafficking operation that was primarily directed and controlled by incarcerated gang members using contraband cell phones from their state prison cells,” said United States Attorney Robert J. Troester.  “I am grateful for the outstanding work by law enforcement and prosecutors who have held these defendants accountable, removed deadly poison from the streets, and taken guns out of the hands of criminals.”

“Criminal gangs constitute a significant threat to public safety.  Yet, even while incarcerated, criminal gang members like Chance Wilson and his cohorts continue their money laundering and drug trafficking schemes,” said Robert Melton, Assistant Special Agent in Charge of the HSI Dallas – Oklahoma and Texas Panhandle Division.  “This defendant’s lengthy prison sentence and indictments of 69 other co-conspirators exemplify Homeland Security Investigations and our partner agencies’ commitment to dismantling these criminal gangs and Transnational Criminal Organizations.”

“This multi-agency investigation demonstrates the commitment of law enforcement at all levels to disrupting criminal enterprises operating behind prison walls,” said FBI Oklahoma City Special Agent in Charge Edward J. Gray.  “The citizens of Oklahoma are safer today because of the massive amount of methamphetamine, weapons, and drug proceeds removed from our communities.”

“The financial expertise of IRS Criminal Investigation Special Agents are critical in detecting and tracing money laundering transactions of criminal organizations, exposing their profits,” said Christopher J. Altemus Jr., IRS-CI special agent in charge of the Dallas Field Office. “In this case, CI special agents worked with federal and state agencies to expose the profits of the UAB and depriving them of the funds they needed to operate their criminal organization.  This joint effort demonstrates our resolve to serving our communities by investigating criminal activities that negatively impact everyday Americans”

This investigation was spearheaded by the Homeland Security Investigations, with valuable assistance by numerous other law enforcement partners, including the Federal Bureau of Investigation Oklahoma City Field Office, IRS Criminal Investigation, the Bureau of Alcohol, Tobacco, Firearms and Explosives, the Oklahoma City Police Department, the Oklahoma Bureau of Narcotics, Oklahoma Highway Patrol, the Oklahoma County District Attorneys’ Office, District 2 Drug Task Force, District 6 Drug Task Force and the Oklahoma Department of Corrections.

Assistant U.S. Attorneys Thomas Snyder and Jason Harley prosecuted these cases, with assistance from Paralegal Linda Nixon and Supervisory Paralegal Jennifer Rowe. 

These prosecutions were part of an Organized Crime Drug Enforcement Task Force (OCDETF) investigation.  OCDETF identifies, disrupts, and dismantles the highest-level drug traffickers, money launderers, gangs, and transnational criminal organizations that threaten the United States by using a prosecutor-led, intelligence-driven, multi-agency approach that leverages the strengths of federal, state, and local law enforcement agencies against criminal networks.

Reference is made to public filings for more information.

Source: United States Department of Justice News

NEWARK, N.J. – A Somerset County, New Jersey, man today admitted possessing multiple images and videos of child sexual abuse, U.S. Attorney Philip R. Sellinger announced.

John Schulenburg, 67, of Basking Ridge, New Jersey, pleaded guilty by videoconference before U.S. District Judge John Michael Vazquez in Newark federal court to a superseding information charging him with possession of child pornography.  

According to documents filed in this case and statements made in court:

In July 2019, an undercover law enforcement officer conducted an online session using a publicly available peer-to-peer program, which allows internet users to trade digital files. During this session, a user shared multiple files featuring images of child sexual abuse from an internet address traced to Schulenburg’s residence. On Nov. 6, 2019, law enforcement lawfully obtained a computer from Schulenburg’s residence that contained hundreds of images and videos of child sexual abuse, including images of prepubescent children.

Schulenburg was previously convicted of endangering the welfare of a child/possession of child pornography in Somerset County in 2013. For a repeat offender, the charge of possession of child pornography carries a mandatory minimum term of 10 years in prison, a maximum of 20 years in prison, and a $250,000 fine. Sentencing is scheduled for May 22, 2023.

U.S. Attorney Sellinger credited special agents with the Newark Child Exploitation and Human Trafficking Task Force, under the direction of FBI Special Agent in Charge James E. Dennehy in Newark, with the investigation leading to the guilty plea. He also thanked the Somerset County Prosecutor’s Office for its assistance.

The government is represented by Assistant U.S. Attorney Shawn Barnes of the U.S. Attorney’s Office Criminal Division in Newark.

Source: United States Department of Justice News

John Robert Payne, of Wilmer, was sentenced today to ninety-two months imprisonment for conspiracy to distribute a controlled substance and providing contraband to a federal prisoner. The sentence was handed down by United States District Court Judge Kristi K. DuBose. Payne previously pled guilty to the offenses.

Documents filed with the court established that investigators with the Yazoo City Federal Correctional Complex (YCFCC) in Mississippi discovered that Payne mailed two letters, on two separate dates, to inmates at the prison. The envelopes contained a total of thirty-four Suboxone (Buprenorphine) strips. The first letter was mailed on August 31, 2021, to an inmate and it contained twenty strips of Suboxone. The Suboxone was hidden between two pictures. On September 21, 2021, Payne mailed a second letter into YCFCC to a different inmate containing fourteen Suboxone (Buprenorphine) strips. In this envelope, the Suboxone strips were hidden between a picture and a Walmart receipt. Suboxone (Buprenorphine) is a schedule III synthetic opioid.
 
Investigators also recovered a recorded telephone call from Payne to an inmate at YCFCC in which Payne and the inmate discuss a letter that Payne sent into the prison. During the same conversation, Payne discusses drugs and drug usage at YCFCC with the inmate. At the time Payne mailed the opioids to the inmates he was on supervised release with the federal probation office after serving a federal prison term for possession with the intent to distribute methamphetamine and possession of a firearm in furtherance of drug trafficking.

U.S. Attorney Sean P. Costello praised the outstanding work of the investigators in detecting the opioid drugs and the partnering of multiple investigative agencies to bring the defendant to justice. 

This case was investigated by Investigators at the YCFCC, the United States Postal Inspection Service and the Department of Homeland Security, Homeland Security Investigations (HSI). The case was prosecuted by Assistant United States Attorneys George F. May and Lawrence J. Bullard.