Month: April 2023

Source: United States Department of Justice News

SAN JUAN, Puerto Rico – W. Stephen Muldrow, U.S. Attorney for the District of Puerto Rico, announced the indictment of six individuals for a multi-million-dollar fraudulent scheme to illegally obtain federal recovery funds under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The Grand Jury charged the defendants with multiple counts of wire fraud, money laundering, Paycheck Protection Program (PPP) fraud, and Economic Injury Disaster Loan (EIDL) fraud. The charging documents claim that from April 2020 through April 2023, the defendants and their co-conspirators caused the submission of at least 272 EIDL and PPP loan applications seeking the illegal disbursement of at least $9,020,590.33 in federal recovery funds from the U.S. Small Business Administration (SBA) and Bank 1.

“This case demonstrates the brazenness with which the defendants took advantage of federal programs meant to help businesses that were severely affected by the COVID-19 pandemic. The U.S. Attorney’s Office will continue to work together with our law enforcement partners to find and prosecute those who have fraudulently stolen taxpayer money that was meant to help our citizens,” said U.S. Attorney Muldrow.

The United States Secret Service, Small Business Administration Office of the Inspector General, Treasury Inspector General for Tax Administration, and Internal Revenue Service Criminal Investigations conducted the investigation with the collaboration of the Puerto Rico Treasury Department, Puerto Rico Bureau of Special Investigations, Puerto Rico Police Bureau, and Guaynabo Municipal Police.

According to court documents, Manfred A. Pentzke Lemus, a.k.a. “Man/Contable/El Gestor”; Rodolpho R. Pagesy Roussel, a.k.a. “El Banquero”; Augusto A. Lemus Berríos, a.k.a. “Primo”; Jonatan Ben David Prieto Ruiz De Val, a.k.a. “Johnny Millones”; Ligia María Lemus De Pentzke, a.k.a. “Ligia Lemus Lanuza”; and Carlos Manfredo Pentzke Chamorro, a.k.a. “El Doctor”, knowingly devised a scheme to defraud the SBA and Bank 1 to obtain federal money and property by means of materially false and fraudulent  pretenses, representations, and promises submitted through applications for EIDL and PPP loans made available to help small businesses recover from the impact of the pandemic through the CARES Act.

The CARES Act authorized federal assistance through the issuance of SBA loans to small businesses and non-profit entities that experienced revenue loss due to the COVID-19 worldwide pandemic. The EIDL program was one such loan assistance program for small businesses. To procure the loan, applicants had to fill out an online application detailing operational information for the 12‑month period prior to the COVID-19 pandemic, such as the number of employees in the business, the gross business revenues realized, and the cost of goods sold. The applicant also had to certify that the information provided in the application was true and correct under penalty of perjury and applicable criminal statutes. The information submitted by the applicant was then used by the SBA to calculate the amount of money to be made available to the applicant for economic relief.

Non-profit applicants and non-agricultural for-profit applicants were both generally eligible to receive an EIDL loan of up to $150,000, with a 30-year scheduled repayment, deferred for 12 months. Some applicants were also eligible for advance funds of up to $15,000. Pursuant to the provisions governing the EIDL program, loan proceeds could only be used by the affected business receiving EIDL loans to pay fixed debts, payroll, accounts payable, and other bills that could have been paid had the COVID-19 disaster not occurred.

Another form of assistance provided by the CARES Act was the authorization of United States taxpayer funds in forgivable loans to small businesses for job retention and certain other expenses, such as interest on mortgages, rent and utilities, through the Paycheck Protection Program (PPP). To procure a PPP loan, the small business was required to submit an application, through its authorized representative, where it provided, among other things, its average monthly payroll expenses, and number of employees. These figures were used to calculate the amount of money the small business was eligible to receive under a PPP loan. The PPP allowed the interest and principal on the PPP loan to be entirely forgiven if the business spent a certain percentage of the PPP loan proceeds to satisfy payroll expenses and the remainder of the loan proceeds on allowable expenses within a designated period.

The indictment alleges that the defendants and their co-conspirators submitted at least 272 fraudulent EIDL and PPP loan applications containing materially false and fraudulent information and false documents, including false and fictitious tax documents, payroll records, bank records, and identification documents, to procure the disbursement of EIDL and PPP assistance loans by Bank 1. The indictment further alleges that the defendants and their co-conspirators directed the recipients of the fraudulently obtained PPP and EIDL loans to remit a portion of the proceeds of the loans to the defendants and their co-conspirators and used the loan proceeds to benefit themselves and others, and to pay for expenses prohibited under the requirements of the EIDL and PPP programs.

The court documents claim that defendant Manfred A. Pentzke Lemus was the principal organizer of the fraudulent scheme to obtain the federally subsidized loans and the efforts to launder the proceeds; defendant Rodolpho R. Pagesy Roussel worked at Bank 1 in San Juan, Puerto Rico and used his position to obtain the approval of fraudulent PPP applications by Bank 1; defendant Augusto A. Lemus Berríos assisted in the preparation of fraudulent PPP applications by, amongst other things, preparing false documents to submit to the bank; defendant Jonatan Ben David Prieto Ruiz De Val acted as a money courier and coordinated the delivery of “kickback” payments to further the fraudulent scheme to obtain PPP and EIDL loans; defendant Ligia María Lemus De Pentzke received “kickback” payments from proceeds of the fraudulent scheme and forwarded them to her co‑conspirators; and defendant Carlos Manfredo Pentzke Chamorro received fraudulent PPP and EIDL loans in furtherance of the conspiracy. The defendants are also alleged to have recruited other un-indicted co-conspirators to obtain the EIDL and PPP loans under false pretenses. 

The United States seized approximately $848,957.96 in proceeds of this scheme from Bank 1, which are currently subject to forfeiture.

If convicted, the defendants are facing up to 30 years in prison for the wire fraud counts; and up to 20 years of imprisonment for the money laundering count. 

This case is being prosecuted by Assistant U.S. Attorneys Timothy R. Henwood, Daniel J. Olinghouse and María L. Montañez Concepción. 

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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Source: United States Department of Justice News

            WASHINGTON – Rico Griffin, 34, of Washington, D.C., was sentenced today to 66 months in prison for his role in a drug trafficking network based in Southeast Washington that sold cocaine, crack cocaine, Fentanyl, PCP, and marijuana, announced United States Attorney Matthew M. Graves, FBI Special Agent in Charge Wayne A. Jacobs, of the Washington Field Office Criminal and Cyber Crime Division, and Chief Robert J. Contee, III, of the Metropolitan Police Department (MPD).

            Griffin pleaded guilty on January 25, 2023, to conspiracy to distribute and possess with the intent to distribute cocaine base. Griffin was indicted with 16 co-defendants (listed below). All but two of the seventeen defendants have pleaded guilty and received prison terms ranging from 24 months to 114 months based on their criminal conduct and criminal histories.  

            The case stems from an investigation by the MPD Narcotics and Special Investigations Division and the FBI into the “MLK Crew” – a group of individuals who were operating an open-air drug market in and around the 2900 block of Martin Luther King Jr. Avenue, SE, Washington D.C. The investigation began in response to numerous citizen complaints about rampant drug trafficking and accompanying incidents of violence in the area. In addition to numerous citizen complaints, MPD targeted this area as one of the most notorious in the city in terms of recent shootings and shots fired, as well as for the area’s high numbers of arrests—particularly offenses involving drugs and firearms.

            “Our Office, the Metropolitan Police Department, and the FBI are focused on the couple dozen blocks across our District that are magnets for violence,” said US Attorney Graves. “There is no doubt that the blocks in which the MLK Mellon Crew operated were among the most dangerous. We know that drug trafficking attracts violence and we saw, after dismantling this crew, a substantial decrease in shooting incidents in the months after the incident. Temporarily breaking the cycle of violence offers a valuable window to restore order and to provide the community the support it needs to heal.”

            “The defendants wreaked havoc on the residents of Congress Heights by running an open-air drug market built on violence, often commandeering local businesses to conduct illegal sales,” said SAC Jacobs. “As this case demonstrates, the FBI through its commitment to partnerships will aggressively pursue data-driven intelligence and public tips to dismantle the violent gangs terrorizing our communities.”

            “There is no excuse for the fear that the MLK Mellon Crew spread across our community,” said Chief Contee. “Their drug trafficking and violence has impacted our entire city. Now, thanks to the tireless work of our officers, detectives, and law enforcement partners, our community can rest easier knowing that these individuals are being held accountable.”

            As part of its investigation, MPD and FBI began conducting surveillance, obtaining search warrants, and making controlled buys of narcotics from suspected members of the conspiracy.

            The investigation revealed that MLK Crew members openly engaged in the sale of various drugs (including PCP, crack, fentanyl, and marijuana) and took over the area and, effectively, some of the neighborhood’s businesses. MLK Crew members would often go into the neighborhood businesses to complete sales and constantly loitered outside of these businesses to engage in sales. As part of its investigation, MPD and FBI obtained video of defendants openly conducting narcotics transactions in these businesses and even displaying firearms. Throughout the case, law enforcement seized at least 10 firearms (many of which were privately manufactured firearms or “ghost guns”) from MLK crew members and/or stash houses and a sizeable quantity of various narcotics. The MLK Crew’s drug trafficking contributed to numerous incidents of drug-related violence in and around the 2900 Block of MLK Avenue, including multiple assaults, shootings, robberies, and murders—most notably, the murder of a six-year-old girl who was the daughter of one of the co-defendants in this case. 

            In July of 2021, a few months after opening the investigation, MPD and FBI arrested 11 initial defendants and seized 10 firearms, along with PCP, crack cocaine, powder cocaine, heroin, pills, and over $2,500 in cash. The additional six defendants were charged in September 2021 and were arrested shortly thereafter; however, Rico Griffin, remained a fugitive until January 3, 2023. After his arrest, Rico Griffin quickly pleaded guilty and was sentenced today.

            The prosecutions followed a joint investigation by the FBI Washington Field Office’s Cross Border Safe Streets Task Force in partnership with MPD’s Narcotics and Special Investigations (NSID) Violence Reduction Unit (VRU). This partnership targets the most egregious and violent street crews operating in the District of Columbia. Assistance was provided by the U.S. Drug Enforcement Administration, the U.S. Park Police, and the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF). The case is being prosecuted by Assistant U.S. Attorneys David Henek and Andy Wang of the of the Violence Reduction and Trafficking Offenses (VRTO) Section of the U.S. Attorney’s Office for the District of Columbia.

            The investigation had the sponsorship and support of the federal Organized Crime Drug Enforcement Task Force (OCDETF). OCDETF specializes in the investigation and prosecution of drug trafficking and money laundering organizations and related criminal enterprises.

DEFENDANT	STATUS
Ricky Lyles, 42, Accokeek, MD	sentenced to 114 months for conspiracy to distribute 16.8-22.4 grams of crack cocaine and possessing a firearm
Nico Griffin, 32, Washington, DC	sentenced to 37 months for conspiracy to distribute 22.4-28 grams of crack cocaine
Dandre Shorter, 28, Washington, DC	sentenced to 37 months for conspiracy to distribute 22.4-28 grams of crack cocaine
Wesley Leake, 32, Washington, DC	sentenced to 40 months for conspiracy to distribute 22.4-28 grams of crack cocaine
Leon Lindsay, 37, Washington, DC	sentenced to 57 months for conspiracy to distribute 22.4-28 grams of crack cocaine
Dezmond Cunningham, 28, Washington, DC	sentenced to 48 months conspiracy to distribute 22.4-28 grams of crack cocaine
Divine Chappell, 26, Washington, DC	sentenced to 76 months for possession of a firearm in furtherance of drug trafficking and conspiracy to distribute crack cocaine
Shawn Wooden, 40, Washington, DC	trial scheduled for October 16
Barry Tyson, 20, Washington, DC	sentenced to 73 months of incarceration for possession of a firearm in furtherance of drug trafficking and conspiracy to distribute crack cocaine
Delonta Chappell, 35, Washington, DC	sentenced to 48 months for conspiracy to distribute 28-112 grams of crack cocaine
Anthony Graves, 32, Washington, DC	sentenced to 27 months for conspiracy to distribute 22.4-28 grams of crack cocaine
Deshawn Loggins, 21, Temple Hills, MD	sentenced to 42 months for conspiracy to distribute 28-112 grams of crack cocaine
Kevonte Randall, 25, Washington, DC	sentenced to 46 months for conspiracy to distribute 22.4-28 grams of crack cocaine and possessing a firearm
Corenzo Mobery, 40, Washington, DC	trial scheduled for October 16th.
Rico Griffin, 34, Washington, DC	66 months in prison for conspiracy to distribute 22.4-28 grams of crack cocaine
Shahborne Scales, 32, Washington, DC	sentenced to 66 months for conspiracy to distribute 22.4-28 grams of crack cocaine
Luther McDuffie, 35, Washington, DC	sentenced to 24 months for conspiracy to distribute 22.4-28 grams of crack cocaine

Source: United States Department of Justice News

ANCHORAGE – A former city treasurer was arrested this week after a federal grand jury returned an indictment charging him with wire fraud, money laundering, and tax evasion.

The indictment charges that from 2015 to 2022, Jess George Adams of Willow embezzled more than $1.16 million from the City of Houston in Alaska and from a Wasilla-based equipment company.

The indictment alleges that from 2015 through 2018, Adams was the Treasurer for the City of Houston, entrusted with bookkeeping responsibilities and administrative access to the City’s accounting records and software. Adams allegedly used this access to direct electronic transfers of funds from the City’s bank account to his personal account, maintained by Adams to hide the embezzled funds. It is further alleged that Adams used fictitious entries in the City’s accounting software to make it appear as though these payments were made for legitimate business expenses.

In October 2018, the City of Houston allegedly placed Adams on administrative leave, and he resigned his position in November 2018. A year later, Adams allegedly was employed as a bookkeeper by an equipment company, where he exercised control over the company’s accounting records and software. The indictment charges that, using this access, Adams directed electronic transfers of funds from the company’s bank account to his other personal accounts at multiple banks, maintained by Adams to hide the embezzled funds. To conceal his activity, Adams allegedly used fictitious entries in the company’s accounting software to make it appear as though these funds were transferred for the payment of legitimate business expenses.

Adams allegedly laundered the embezzled money he obtained from the equipment company by making several wire transfers from his personal bank account to other accounts, each at a value greater than $10,000.

The indictment further charges that in another attempt to conceal his embezzlement and evade the assessment of income taxes, Adams filed false individual income tax returns for tax years 2016 through 2021, which did not disclose the additional income he diverted to himself.  According to the indictment, Adams was a former seasonal tax return preparer for a national tax advisory company.

Adams is scheduled to make his initial court appearance today before U.S. Magistrate Judge Kyle F. Reardon of the U.S. District Court for the District of Alaska. If convicted, he faces a maximum penalty of 20 years in prison for each wire fraud count, 10 years in prison for each money laundering count, 5 years in prison for each tax evasion count. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

U.S. Attorney S. Lane Tucker for the District of Alaska and Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division made the announcement.

IRS-Criminal Investigation is investigating the case with substantial assistance from the Alaska State Troopers.

Assistant U.S. Attorney George Tran for the District of Alaska and Trial Attorney Boris Bourget of the Justice Department’s Tax Division are prosecuting the case.

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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usao/ak/23-024

Source: United States Department of Justice Criminal Division

A California man pleaded guilty today to submitting fraudulent claims to Medicare for prescription drugs that were never dispensed to patients.

According to court documents, Paul Mansour, 55, of Sierra Madre, was a pharmacist at a Sierra Madre-based pharmacy, Mansour Partners Inc., doing business as Best Buy Drugs, which he also co-owned. Mansour created fake patient profiles in the pharmacy’s digital filing system and added fraudulent prescription medication entries to these fictitious patient files that duplicated prescriptions for medications provided to real patients of the pharmacy. Mansour then submitted false and fraudulent claims for the drugs added in the fictitious patient files that had never been dispensed, billing Medicare for the fraudulent prescriptions in the names of real patients of the pharmacy. Between January 2017 and June 2022, Mansour caused Medicare to pay the pharmacy between approximately $600,000 and over $1 million as a result of the submission of false and fraudulent claims.

Mansour pleaded guilty to one count of health care fraud. He is scheduled to be sentenced on June 28 and faces a maximum penalty of 10 years in prison. 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, U.S. Attorney Martin Estrada for the Central District of California, Assistant Director Luis Quesada of the FBI’s Criminal Investigative Division, Assistant Director in Charge Donald Alway of the FBI Los Angeles Field Office, and Deputy Inspector General for Investigations Christian J. Schrank of the Department of Health and Human Services Office of Inspector General (HHS-OIG) made the announcement.

The FBI Los Angeles Field Office and HHS-OIG investigated the case.

Trial Attorney Helen H. Lee of the Criminal Division’s Fraud Section is prosecuting the case.

The Fraud Section leads the Criminal Division’s efforts to combat health care fraud through the Health Care Fraud Strike Force Program. Since March 2007, this program, comprised of 15 strike forces operating in 25 federal districts, has charged more than 5,000 defendants who collectively have billed federal health care programs and private insurers more than $24 billion. In addition, the Centers for Medicare & Medicaid Services, working in conjunction with the Office of the Inspector General for the Department of Health and Human Services, are taking steps to hold providers accountable for their involvement in health care fraud schemes. More information can be found at https://www.justice.gov/criminal-fraud/health-care-fraud-unit.