Month: April 2023

Source: United States Department of Justice Criminal Division

The Department of Justice announced today that it has seized virtual currency worth an estimated $112 million linked to cryptocurrency investment scams.

Seizure warrants for six virtual currency accounts were authorized by judges in the District of Arizona, the Central District of California, and the District of Idaho.

According to court documents, the virtual currency accounts were allegedly used to launder proceeds of various cryptocurrency confidence scams. In these schemes, fraudsters cultivate long-term relationships with victims met online, eventually enticing them to make investments in fraudulent cryptocurrency trading platforms. In reality, however, the funds sent by victims for these purported investments were instead funneled to cryptocurrency addresses and accounts controlled by scammers and their co-conspirators.  

“Transnational criminal organizations are combining confidence scams with technological savvy to swindle Americans out of their hard-earned funds,” said Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division. “These particularly vicious frauds – where scammers carefully cultivate relationships with their victims over time – have devastated families and cost individuals their life savings. Now that we have seized this virtual currency, we will seek to swiftly return it to victims. In addition to our tireless efforts to disrupt these schemes, we must also work to raise public awareness and help inform potential victims: be wary of people you meet online; seriously question investment advice, especially about cryptocurrency, from people you have not met in person; and remember, investments that seem too good to be true, usually are.” 

In 2022, investment fraud caused the highest losses of any scam reported by the public to the FBI’s Internet Crimes Complaint Center (IC3), totaling $3.31 billion. Frauds involving cryptocurrency, including pig butchering, represented the majority of these scams, increasing a staggering 183% from 2021 to $2.57 billion in reported losses last year. 

According to the FBI, the highest number of reports came from victims between the ages of 30 and 49. In these schemes, often called “Sha Zhu Pan,” a Chinese phrase that loosely translates to “pig butchering,” scammers often target their victims through social networking and online communications platforms, dating websites, and phone calls and text messages that are meant to appear to have been misdialed. After gaining the trust of their victims – sometimes over a period of months – scammers eventually introduce the idea of trading in cryptocurrency. They then direct victims to cryptocurrency investment platforms or to co-conspirators posing as investment advisors or customer service representatives. Scammers control websites that are built to look similar to legitimate trading platforms, applications that victims download onto their phones, or malicious smart contracts accessed through cryptocurrency wallet software. Once victims make an initial “investment,” the platforms purport to show substantial gains. Sometimes, victims are even allowed to withdraw some of these initial gains to further engender trust in the scheme. It is not until a large investment is made that victims find that they are unable to withdraw their funds. Even when a victim is denied access to their funds, the fraud is often not yet over. Scammers request additional investments, taxes, or fees, promising that these payments will allow victims access to their accounts. These scam operations often continue to steal from their victims and do not stop until they have deprived victims of any remaining savings. 

“Depriving scam organizations of their ill-gotten gains is an important part of our strategy to combat these ruthless schemes,” said Director Eun Young Choi of the Criminal Division’s National Cryptocurrency Enforcement Team (NCET). “We will continue to use all tools at our disposal to disrupt and deter cryptocurrency confidence schemes, including by following the money on the blockchain and seizing cryptocurrency to return funds to victims, and by targeting and taking down online infrastructure used by the scammers. Today’s announcements also demonstrate the value of early notification by victims to law enforcement; we thank those victims who came forward to notify the FBI when they were targeted by this scheme.” 

“Financial fraud schemes like these demonstrate the great lengths criminals will take to swindle innocent victims out of their money,” said Assistant Director Luis Quesada of the FBI’s Criminal Investigative Division. “We continue to see these schemes evolve and provide new avenues for criminals to exploit. Today’s announcement should serve as reminder of the FBI’s unwavering commitment, alongside our federal and international law enforcement partners, to investigating and pursuing criminal actors who seek to defraud the American public. There is no place beyond the reach of the FBI.”

The FBI Phoenix Division is investigating this case.

Assistant U.S. Attorneys Seth Goertz and Ryan Ellersick for the District of Arizona, Daniel Boyle for the Central District of California, and Bill Humphries for the District of Idaho are in charge of the seizures announced today, with significant assistance and coordination by Georgiana MacDonald of the NCET and Tian Huang and Brandon Burkart of the Criminal Division’s Fraud Section. 

If you or someone you know is a victim, visit www.fbi.gov/cryptoguard, contact your local FBI field office, call 1-800-CALL-FBI, or report it to the IC3.gov. In your complaint, please reference, “Pig Butchering PSA.” Include as much information as possible in your complaint including names of investment platforms, cryptocurrency addresses and transaction hashes, bank account information, and names and contact information of suspected scammers. Maintain copies of all communications with scammers and records of financial transactions.

Source: United States Department of Justice News

PROVIDENCE –  The owner and President of a North Kingstown-based trucking company, along with his two corporations, all admitted to a federal judge in Providence today that they conspired together with trucking and diesel vehicle sales and service companies throughout the United States and with a foreign national to violate the Clean Air Act by selling and providing a software program that tampered with on-board computers in order to alter or bypass key features in emission control systems, announced United States Attorney Zachary A. Cunha.

Under the federal Clean Air Act, the Environmental Protection Agency (EPA) has established standards that limit the emission of air pollutants from various types of vehicle engines.  To meet those standards, vehicle manufacturers design and install certain hardware components as part of the systems that manage and treat engine exhaust to reduce multiple types of pollution.

“Our environmental laws are here to protect the clean air that every Rhode Islander deserves to breathe,” said U.S. Attorney Zachary Cunha. “When companies choose to ignore those laws and put profit over their legal duties, and spew diesel soot and contaminants across Rhode Island and New England in the process, this Office will hold them to account.”

“Tampering with diesel vehicles by installing defeat devices increases emissions of smog and soot, both of which contribute to serious health problems that often disproportionately affect families, especially children, living in underserved communities,” stated Tyler Amon, Special Agent in Charge for EPA’s Criminal Investigation Division for New England. “Placing profit over public health in Rhode Island has clear accountability.”

According to court documents, from roughly September of 2014 through approximately August 27, 2019, Michael J. Collins, his North Kingstown company M&D Transportation, Inc.; his now-defunct computer company Diesel Tune-Ups of RI, Inc.; various trucking and diesel vehicle sales and repair companies throughout the United States; and a foreign national all conspired to alter or disable certain functions of the Electronic Control Modules (ECM) and On Board Diagnostic (OBD) monitoring systems of heavy-duty diesel vehicles such as semi-trucks or “big rigs.”  These alterations were referred to in the industry as “tunes.” 

In exchange for a fee, the foreign national would download tuning software through a laptop computer, provided by Collins and his companies, that was then connected to each vehicle.  The tuning business was marketed on Facebook, with claims that it provided increased power and better fuel mileage and offered tuning for “BigRig semi-trucks & engines” including tuning related to emission control equipment. The Facebook page directed interested companies to contact a Rhode Island telephone number associated with Collins, M & D and Diesel Tune-Ups. 

When tuning was done through a laptop computer, Collins instructed the Companies to call the foreign national for further instructions once they had received the laptop.  Through a remote connection, the “tunes” were then downloaded onto each vehicle’s ECM or computer to reprogram the vehicle’s monitoring systems. The tunes tampered with the vehicle’s monitoring systems so that they would not detect malfunctions in the emission control components, thereby allowing vehicles to operate without proper emission controls. As a result, “tuned” vehicles could run with increased horsepower and torque, which can reduce maintenance and repair costs, but which results in significant increases in pollutant emissions. Often, installation of the “tunes” was undertaken in concert with diesel sales and service centers that were making other changes to trucks’ pollution control systems.  Collins also employed the same techniques to circumvent emission controls on some of M & D’s own diesel vehicles.

Customers paid Collins’ companies between $1,700 and $3,650 for each vehicle tuned. Collins and his companies wired a portion of the funds to their foreign co-conspirator and retained a portion of the funds for themselves. From at least March of 2017 through at least June 1, 2018, Collins either deposited or caused to be deposited into the Diesel Tune-Ups bank account fees received from approximately 25 different diesel trucking or repair shops throughout the United States.

According to court documents, diesel exhaust is known to contain a variety of air pollutants identified as hazardous air pollutants under the Clean Air Act. The act of completely removing or disabling a vehicle’s emission control system can increase pollutant emissions, presenting a risk to the environment and public health. More recent testing conducted by EPA indicates that the pollutant increase is even greater when the emission controls are deleted from commercial semi-tractor trailer trucks.

Collins, M&D Transportation, and Diesel Tune Ups of RI pleaded guilty to conspiracy to violate the Clean Air Act. They are scheduled to be sentenced on July 10, 2023. The defendant’s sentence will be determined by United States District Judge Mary S. McElroy after consideration of the U.S. Sentencing Guidelines and other statutory factors.

The case is being prosecuted by Assistant United States Attorney John P. McAdams.

The matter was investigated by the Environmental Protection Agency Criminal Investigation Division – Boston Area Office.

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Source: United States Department of Justice News

A federal jury convicted a Tennessee nurse practitioner last week for illegally prescribing opioids – including oxycodone and fentanyl – from his medical practice.

According to court documents and evidence presented at trial, Jeffrey Young, 49, of Jackson, used his medical practice, Preventagenix, to illegally prescribe more than one million medically unnecessary controlled substance pills to hundreds of patients, including a pregnant woman and women with whom he was having inappropriate physical relationships. Young maintained a party-like atmosphere at his clinic, and prescribed these drugs at least in part to boost his popularity on social media and promote a self-produced reality TV show pilot based on his self-identified persona, the “Rock Doc.”

Young was convicted of conspiracy to unlawfully distribute controlled substances, maintaining a drug-involved premises, and 13 counts of distributing controlled substances, six of which involved distribution to a pregnant woman. He is scheduled to be sentenced on Aug. 3 and faces a maximum penalty of 40 years in prison for each count involving distribution to a pregnant woman, and 20 years in prison for each of the other counts of conviction. 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 Kevin G. Ritz for the Western District of Tennessee, Special Agent in Charge J. Todd Scott of the DEA Louisville Field Division, and Director David Rausch of the Tennessee Bureau of Investigation made the announcement.

The DEA and Tennessee Bureau of Investigation investigated the case, with valuable assistance from the Jackson Police Department.

Assistant Chief Kate Payerle and Trial Attorney Drew Pennebaker of the Criminal Division’s Fraud Section are prosecuting the case with significant assistance from Jillian Willis and Dermot Lynch.

The Fraud Section leads the Appalachian Regional Prescription Opioid (ARPO) Strike Force. Since its inception in late 2018, ARPO has partnered with federal and state law enforcement agencies and U.S. Attorneys’ Offices throughout Alabama, Kentucky, Ohio, Virginia, Tennessee, and West Virginia to prosecute medical professionals and others involved in the illegal prescription and distribution of opioids. Over the past four years, ARPO has charged over 115 defendants, collectively responsible for issuing prescriptions for over 115 million controlled substance dosage units. To date, more than 70 ARPO defendants have been convicted. More information can be found at https://www.justice.gov/criminal-fraud/health-care-fraud-unit.

Source: United States Department of Justice News

SAN ANTONIO – A San Antonio woman pleaded guilty in San Antonio federal court Thursday to distribution of a controlled substance resulting in death.

According to court documents, Claudia Cardenas, 47, provided a man with a sample of fentanyl on May 8, 2022, allowing him to try the substance before committing to future purchases.  The man ingested the fentanyl sample the following day.  He immediately collapsed and was unresponsive.  Two doses of Narcan were administered prior to the arrival of Emergency Medical Services, but the man was declared deceased upon EMS’s arrival.  An autopsy revealed that the victim’s death was the result of toxic effects from Fentanyl and Methamphetamine. 

Cardenas is scheduled to be sentenced on July 13 and faces a penalty of at least 20 years in prison up to life imprisonment. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

U.S. Attorney Jaime Esparza for the Western District of Texas and Special Agent in Charge Daniel Comeaux of the Drug Enforcement Administration made the announcement.

The DEA; the University of Texas at San Antonio Police Department; the San Antonio Police Department; the Texas Department of Public Safety; and the Alamo Heights Police Department are investigating the case.

Assistant U.S. Attorney Amy Hail is prosecuting the case.

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Source: United States Department of Justice News

            WASHINGTON – Linwood Douglas Thorne, 51, of Washington, D.C., was sentenced to 30 years in prison for his role in a large-scale drug trafficking conspiracy that resulted in one of the largest seizures of heroin in the District of Columbia’s history.  The sentence, handed down March 31, 2023, by U.S. District Court Judge Beryl A. Howell, was announced by U.S. Attorney Matthew M. Graves, FBI Special Agent in Charge Wayne A. Jacobs, of the Washington Field Office Criminal and Cyber Divisions, and Acting Special Agent in Charge Michael Weddel, of the Washington Field Division of the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF).

            On March 25, 2022, a jury found Thorne guilty of conspiracy, possession with intent to distribute one kilogram or more of heroin, possession with intent to distribute fentanyl, possession with intent to distribute marijuana, and a firearms charge.

            “This sentence should send a clear message to all those who would even consider operating a large-scale drug network: doing so will result in you possibly spending the rest of your life in jail,” said U.S. Attorney Graves. “We have zero tolerance for those looking to poison our communities with massive amounts of drugs—particularly when the drug trafficking involves firearms.”

            “This joint investigation, which resulted in one of the largest seizures of heroin in our city’s history, is a testament to the strength of our federal and local partnerships,” said FBI Special Agent in Charge Jacobs. “The Washington Field Office’s Safe Streets Task Force remains committed to pursuing criminals who traffic in drugs and guns. Let the defendant’s sentence serve as a reminder of the consequences traffickers face for putting people’s lives in danger.”

            “Today’s announcement sends an accountability message not only to those who traffic deadly drugs and illegal firearms, but to the families of victims as well.  ATF stands with our law enforcement partners to say, violent acts will cost and will be addressed accordingly,” said ATF Acting Special Agent in Charge Weddel. “We reaffirm our commitment to holding those that attempt to destroy our communities responsible for their illegal and dangerous actions.”

            In 2018, the FBI’s Safe Streets Task Force began investigating Thorne, as a major heroin supplier. On Dec. 19, 2018, the FBI and ATF executed simultaneous search warrants on Thorne’s Maryland business and D.C. residence, finding 44 kilograms of heroin laced with fentanyl; 55 pounds of marijuana; five firearms; and significant drug paraphernalia. In addition to the search warrants, the task force’s investigation—which began in July of 2018—has led to the recovery of eight additional firearms, approximately 1.5 additional kilograms of marijuana, 260 additional grams of heroin, and several firearms magazines and accessories.

            During trial, the government presented over a dozen civilian and law enforcement witnesses, along with digital and business records establishing and corroborating the defendant’s guilt.

            In announcing the sentence, U.S. Attorney Graves, Special Agent in Charge Jacobs, and Acting Special Agent in Charge Weddel commended the work of those who investigated the case from the FBI and ATF, as well as those from the Metropolitan Police Department (MPD) who were on the Safe Streets Task Force, and the United States Marshals Service. They also expressed appreciation for the assistance provided by joint law enforcement and prosecution partners, including the U.S. Attorney’s Office for the Middle District of Georgia, the U.S. Attorney’s Office for the Eastern District of Virginia, and the U.S. Attorney’s Office for the District of Maryland. They also acknowledged the efforts of those who handled the case from the U.S. Attorney’s Office, including Assistant U.S. Attorney Gregory Rosen, as well as Paralegal Specialist Alexis Spencer-Anderson of the Capitol Siege and Federal Major Crimes Section, and former Assistant U.S. Attorneys Brandon Regan, Samuel Frey, and Andrea Duvall.