Month: February 2023

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Nine Arrested for Illegally Distributing 1.5 Million Opioid Pills

Source: United States Department of Justice Criminal Division

Nine Texas individuals were arrested this week in Houston on criminal charges related to their alleged involvement in the unlawful distribution of 1.5 million opioid pills and other controlled substances.

According to court documents, Kent Lyons, 52, of Houston; Roquel Turner, 47, of Manvel; and Traunce Alfred, 43, of Baytown, are charged with illegally distributing controlled substances, including oxycodone and hydrocodone. From August 2017 until late 2022, Lyons and Turner allegedly operated pill-mill pharmacies as fronts to obtain opioids in their highest-strength and immediate-release pill form. They then allegedly sold the drugs on the black market – without the involvement of patients, prescriptions, or doctors – to drug traffickers like Alfred. Lyons and Turner allegedly concealed the drug proceeds using numerous bank accounts and real estate transactions. Lyons also allegedly used some of the proceeds to purchase luxury items, including a Rolls Royce, a Ford F-250, and a Mercedes Maybach.

According to court documents, starting around December 2020, Dwain Ross, 52, and Delores Mackey-Ross, 43, both of Pearland, along with licensed pharmacist Ann Nguyen, 30, of Stafford, allegedly used pharmacies to illegally distribute and dispense nearly half a million pills of oxycodone and hydrocodone. Dwain Ross and Mackey-Ross, along with David Ross, 53, of Houston; Kevin Peterson, 56, of Pearland; and Eleanor Marsh, 56, of Fulshear, also allegedly illegally ordered the opioid potentiators alprazolam, carisoprodol, promethazine with codeine – which are reported to enhance the high from opioids – from a pharmaceutical wholesaler and a pharmaceutical sales representative then allegedly illegally distributed the opioid potentiators in bulk. Dwain Ross and Mackey-Ross allegedly used numerous bank accounts and real estate transactions to conceal their ill-gotten gains. Dwain Ross also allegedly used some of the drug proceeds to purchase a Lamborghini.

The pharmacies alleged in the indictments to have been controlled by the defendants’ drug trafficking organizations are K Med Pharmacy, Nex Gen Pharmacy, TX United Pharmacy, Power Center Pharmacy #2, DR Pharmacy, and Nu Care Pharmacy. Several other pharmacies, including P&A Pharmacy and Pearland Holistic Pharmacy, voluntarily surrendered their DEA Registration numbers, which a pharmacy needs to legally purchase pharmaceutical opioids and other controlled substances.

Lyons, Turner, Alfred, Dwain Ross, Mackey-Ross, and Nguyen are each charged with illegal distribution of Schedule II opioids. Dwain Ross, Mackey-Ross, David Ross, Peterson, and Marsh are each charged with the illegal distribution of Schedule IV drugs. Lyons, Turner, Dwain Ross, and Mackey-Ross are also charged with money laundering crimes.  If convicted, Lyons, Turner, Alfred, Dwain Ross, Mackey-Ross, and Nguyen face up to 20 years on the top counts. David Ross and Peterson each face up to five years. Marsh faces up to 10 years if convicted. Court documents allege that over 15 bank accounts, four real properties, and several luxury vehicles – including a Rolls Royce, a Bentley, and a Lamborghini – were involved in, or acquired with proceeds from, the scheme, and are subject to forfeiture if the defendants are convicted. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division, DEA Administrator Anne Milgram, Special Agent in Charge James H. Smith III of the FBI Houston Field Office, Chief William Marlowe of the Texas Attorney General’s Medicaid Fraud Control Unit (MFCU), Acting Special Agent in Charge Scott Pierce of the U.S. Postal Service Office of Inspector General (USPS-OIG), and Acting Inspector in Charge Dana Carter of the U.S. Postal Inspection Service (USPIS) Houston Division made the announcement.

The DEA, FBI, MFCU, USPS-OIG, and USPIS are investigating the cases.

Trial Attorney Drew Pennebaker of the Criminal Division’s Fraud Section is prosecuting the cases.

An indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

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Former Employee Of Technology Company Pleads Guilty To Stealing Confidential Data And Extorting Company For Ransom

Source: United States Department of Justice News

Defendant Also Caused the Publication of Misleading News Articles About the Company’s Handling of the Breach the Defendant Perpetrated, Resulting in Loss of Over $4 Billion in Company’s Market Capitalization

Damian Williams, the United States Attorney for the Southern District of New York, announced that NICKOLAS SHARP pled guilty today in Manhattan federal court to multiple federal crimes in connection with a scheme he perpetrated to secretly steal gigabytes of confidential files from a public New York-based technology company where he was employed (“Company‑1”).  While purportedly working to remediate the security breach for Company-1, SHARP extorted the company for nearly $2 million for the return of the files and the identification of a remaining purported vulnerability.  SHARP subsequently re-victimized his employer by causing the publication of misleading news articles about the company’s handling of the breach that he perpetrated, which were followed by the loss of over $4 billion in Company-1’s market capitalization.  SHARP pled guilty to intentionally damaging a protected computer, wire fraud, and making false statements to the Federal Bureau of Investigation (“FBI”) before U.S. District Judge Katherine Polk Failla.

U.S. Attorney Damian Williams said: “Nickolas Sharp’s company entrusted him with confidential information that he exploited and held for ransom.  Adding insult to injury, when Sharp wasn’t given his ransom demands, he retaliated by causing false news stories to be published about the company, which resulted in his company’s market capitalization plummeting by over $4 billion.  Sharp’s guilty plea today ensures that he will face the consequences of his destructive actions.”

As alleged in the Indictment and based on statements and filings made in court:

At all times relevant to the Indictment, Company-1 was a technology company headquartered in New York that manufactured and sold wireless communications products and whose shares were traded on the New York Stock Exchange.  NICKOLAS SHARP was employed by Company-1 from in or about August 2018 through on or about April 1, 2021.  SHARP was a senior developer who had access to credentials for Company-1’s Amazon Web Services (“AWS”) and GitHub Inc. (“GitHub”) servers.

In about December 2020, SHARP repeatedly misused his administrative access to download gigabytes of confidential data from his employer.  For the majority of this cybersecurity incident (the “Incident”), SHARP used a virtual private network (“VPN”) service that he subscribed to from a company named Surfshark to mask his Internet Protocol (“IP”) address when he accessed Company-1’s AWS and GitHub infrastructure without authorization.  At one point during the exfiltration of Company-1 data, SHARP’s home IP address became unmasked following a temporary internet outage at SHARP’s home.

During the course of the Incident, SHARP caused damage to Company-1’s computer systems by altering log retention policies and other files in order to conceal his unauthorized activity on the network.  In or about January 2021, while working on a team remediating the effects of the Incident, SHARP sent a ransom note to Company-1, posing as an anonymous attacker who claimed to have obtained unauthorized access to Company-1’s computer networks.  The ransom note sought 50 Bitcoin, a cryptocurrency — which was the equivalent of approximately $1.9 million, based on the prevailing exchange rate at the time — in exchange for the return of the stolen data and the identification of a purported “backdoor,” or vulnerability, to Company-1’s computer systems.  After Company-1 refused the demand, SHARP published a portion of the stolen files on a publicly accessible online platform.

On or about March 24, 2021, FBI agents executed a search warrant at SHARP’s residence in Portland, Oregon, and seized certain electronic devices belonging to SHARP.  During the execution of that search, SHARP made numerous false statements to FBI agents, including, among other things, in substance, that he was not the perpetrator of the Incident and that he had not used Surfshark VPN prior to the discovery of the Incident.  When confronted with records demonstrating that SHARP purchased the Surfshark VPN service in July 2020, approximately six months prior to the Incident, SHARP falsely stated, in part and substance, that someone else must have used his PayPal account to make the purchase.

Several days after the FBI executed the search warrant at SHARP’s residence, SHARP caused false news stories to be published about the Incident and Company-1’s response to the Incident and related disclosures.  In those stories, SHARP identified himself as an anonymous whistleblower within Company-1 who had worked on remediating the Incident.  In particular, SHARP falsely claimed that Company-1 had been hacked by an unidentified perpetrator who maliciously acquired root administrator access to Company-1’s AWS accounts.  In fact, as SHARP well knew, SHARP had taken Company-1’s data using credentials to which he had access in his role as Company‑1’s AWS cloud administrator, and SHARP had used that data in a failed attempt to extort Company-1 for millions of dollars.

Following the publication of these articles, between March 30, 2021, and March 31, 2021, Company-1’s stock price fell approximately 20%, losing over $4 billion in market capitalization.

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SHARP, 37, of Portland, Oregon, pled guilty today to one count of transmitting a program to a protected computer that intentionally caused damage, one count of wire fraud, and one count of making false statements to the FBI.  These offenses carry a total maximum sentence of 35 years in prison. 

The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.  SHARP is scheduled to be sentenced by Judge Failla on May 10, 2023, at 3:00 p.m.

Mr. Williams praised the outstanding investigative work of the FBI.

This case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorneys Vladislav Vainberg and Andrew K. Chan are in charge of the prosecution.

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Accountant Pleads Guilty to Misappropriating Funds from New Orleans Band

Source: United States Department of Justice News

NEW ORLEANS – U.S. Attorney Duane A. Evans announced that ALICE C. “SHANNON” CHABAUD, age 80, of New Orleans, pled guilty on February 1, 2023 to access device fraud in violation of Title 18, United States Code, Sections 1029(a)(2) and (c)(1)(A)(i), in relation to her theft from her former accounting client, a New Orleans-based band named as “Band A.”

According to documents filed in federal court, CHABAUD illegally accessed Band A’s bank accounts after she was terminated as the band’s accountant in 2015. From the time of her firing in September 2015 until May 2020, she misappropriated $207, 607.95 from Band A without band members’ knowledge or permission.

CHABAUD faces a maximum penalty of 10 years imprisonment, a up to a $250,000.00 fine or the greater of twice the gross gain to the defendant or twice the gross loss to any person under Title 18, United States Code, Section 3571, followed by up to three (3) years of supervised release, and a mandatory $100 special assessment fee.

U.S. Attorney Evans praised the work of the FBI New Orleans Field Office in investigating this matter. Assistant U.S. Attorney Matthew R. Payne is in charge of the prosecution.

 

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Three Individuals Charged with Operating Multimillion-Dollar Elder Fraud Scheme

Source: United States Department of Justice News

A federal grand jury in Las Vegas returned an indictment yesterday charging three individuals with operating a mail fraud scheme that defrauded thousands of U.S. victims, many of whom were elderly and vulnerable.

According to court documents, Kimberly Stamps, 46, of Gilbert, Arizona; John Kyle Muller, 56, of Boulder, Colorado; and Barbara Trickle, 78, of Las Vegas, conspired to operate a fraudulent mass-mailing scheme that deceived thousands of consumers into paying fees for falsely promised prizes. The indictment alleges that, from 2012 to 2018, the defendants mailed millions of prize notices that led victims to believe they were specially chosen to receive a large cash prize and would receive the prize if they paid a small fee. Victims who paid the requested fee, however, did not receive the promised cash prize. Although the notices appeared to be personalized correspondence, they were merely mass-produced form letters that were bulk-mailed to recipients whose names and addresses appeared on mailing lists purchased and rented by the defendants.

“The department is committed to investigating and prosecuting mass-market schemes that harm seniors and other vulnerable persons,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “We devote substantial resources to these investigations and prosecutions, in furtherance of our commitment to protecting the financial security of all Americans.”

“Today’s indictment reflects the commitment of Postal Inspectors to protect older Americans from scams that prey on the vulnerable,” said Inspector in Charge Eric Shen of the United States Postal Inspection Service (USPIS) Criminal Investigations Group. “These individuals took advantage of the euphoria of winning a prize to bilk victims out of their money, when in fact they knew there was no prize waiting; all while violating a previous cease and desist order to stop their fraudulent behavior. Now they have been brought to justice for their crimes and will face their comeuppance for their illegal activity.”

The indictment alleges that Stamps and Muller selected and edited the prize-notice mailings, set the mailing schedules, and collected and processed victim payments. Trickle – aware of the deceptive nature of the mailings and that victims were in fact deceived – produced the physical mailings, introduced them to the U.S. Mail, and assisted with managing the data that Stamps and Muller used to target consumers for repeated victimization. 

According to the indictment, Stamps, Muller, and Trickle continued to operate their fraudulent mass-mailing scheme in violation of a United States Postal Service cease-and-desist agreement and consent order reached in 2012. The agreement and order had permanently barred Stamps and anyone working with her from mailing fraudulent prize notices.

The indictment charges each of the three defendants with conspiracy to commit mail and wire fraud, along with multiple counts of mail fraud and wire fraud. The defendants are expected to make their initial appearances on Feb. 15 before a U.S. magistrate judge in the U.S. District Court for the District of Nevada. Each charge in this case carries a statutory maximum sentence of 20 years in prison, and a statutory maximum fine of $250,000 or twice the gross gain or gross loss from the offense. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

The USPIS investigated the case.

Trial Attorneys Carolyn Rice and Charles Dunn of the Department of Justice Civil Division’s Consumer Protection Branch prosecuted this case, with assistance from the U.S. Attorney’s Office for the District of Nevada.

The department’s extensive and broad-based efforts to combat elder fraud seeks to halt the widespread losses seniors suffer from fraud schemes. The best method for prevention, however, is by sharing information about the various types of elder fraud schemes with relatives, friends, neighbors, and other seniors who can use that information to protect themselves.

If you or someone you know is age 60 or older and has been a victim of financial fraud, help is standing by at the National Elder Fraud Hotline: 1-833-FRAUD-11 (1-833-372-8311). This U.S. Department of Justice hotline, managed by the Office for Victims of Crime, is staffed by experienced professionals who provide personalized support to callers by assessing the needs of the victim and identifying relevant next steps. Case managers will identify appropriate reporting agencies, provide information to callers to assist them in reporting, connect callers directly with appropriate agencies, and provide resources and referrals, on a case-by-case basis. Reporting is the first step. Reporting can help authorities identify those who commit fraud and reporting certain financial losses due to fraud as soon as possible can increase the likelihood of recovering losses. The hotline is staffed seven days a week from 6:00 a.m. to 11:00 p.m. eastern time. English, Spanish, and other languages are available.

For more information about the Consumer Protection Branch, visit its website at www.justice.gov/civil/consumer-protection-branch. For more information about the U.S. Attorney’s Office for the District of Nevada visit their websites at www.justice.gov/usao-nv.

An indictment is merely an allegation, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

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New Orleans Man Pleads Guilty to Federal Drug Offense

Source: United States Department of Justice News

NEW ORLEANS, LOUISIANA – U.S. Attorney Duane A. Evans announced today that SOLOMON BURKE, age 36, a resident of New Orleans, Louisiana, pled guilty on February 1, 2023 before U.S. District Court Judge Jane Triche Milazzo to a violation of the Federal Controlled Substances Act.

Specifically, SOLOMON BURKE pled guilty to count one of a superseding bill of information, charging him with possession with the intent to distribute a mixture or substance containing a detectable amount of heroin and marijuana, in violation of Title 21 U.S.C. §§ 841(a)(1), (b)(1)(C), (b)(1)(D), and 18 U.S.C. § 2.

As to count one, BURKE faces a maximum sentence of 20 years imprisonment, a fine of up to $1,000,000.00, and at least three years supervised release, as to the heroin, and a maximum sentence of 5 years imprisonment, a fine up to $250,000.00, and at least two years supervised release, as to the marijuana.  BURKE also faces a $100 mandatory special assessment fee. BURKE’S sentencing is scheduled for April 25, 2023.

This case is part of Project Safe Neighborhoods (PSN), a program bringing together all levels of law enforcement and the communities they serve to reduce violent crime and gun violence, and to make our neighborhoods safer for everyone. On May 26, 2021, the Department launched a violent crime reduction strategy strengthening PSN based on these core principles: fostering trust and legitimacy in our communities, supporting community-based organizations that help prevent violence from occurring in the first place, setting focused and strategic enforcement priorities, and measuring the results.

The case was investigated by the Federal Bureau of Investigation and the New Orleans Police Department.  It is being prosecuted by Unit Chief Elizabeth Privitera of the Violent Crime/Gang Unit and Assistant Unit States Attorney Maurice E. Landrieu Jr. of the Narcotics Unit.

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