Security News: Miami Tax Return Preparer Agrees to Permanent Injunction and Disgorgement

Source: United States Department of Justice 2

The U.S. District Court for the Southern District of Florida issued a permanent injunction today against Miami tax return preparer Richard Louis, which bars him from preparing federal income tax returns, working for or having any ownership stake in any tax preparation business, assisting others (including family members) prepare tax returns or set up business as a preparer and transferring or assigning customer lists to any other person or entity. The court also ordered Louis to disgorge $390,000 in ill-gotten gains he received from his return preparation business. Louis agreed to both the injunction and ordered disgorgement.

In June, the Court enjoined seven independent contractors who worked with Louis — Harold Bornelous, Romeo Davis, Teddy Davis, Joseph Garrett, Demetrius Knowles, Daniel Oku and Marlyne Wah — from preparing returns for others, but allowed the seven defendants to apply for reinstatement as return preparers after two years if they successfully complete the IRS’ Annual Filing Season Program. The independent contractors agreed to the injunctions entered against them.

The complaint alleged that Louis and the independent contractors prepared returns for customers that claimed various false or fabricated deductions and credits, including fabricated residential energy credits, false and exaggerated itemized deductions and fictitious and inflated business expenses. According to the complaint, Louis marketed himself as Taxman and he, acting in concert with the seven independent contractors, prepared thousands of tax returns for customers over the past ten years.

Deputy Assistant Attorney General David A. Hubbert of the Justice Department’s Tax Division made the announcement.

Taxpayers seeking a return preparer should remain vigilant against unscrupulous tax preparers. The IRS has information on its website for choosing a tax return preparer and has launched a free directory of federal tax preparers. The IRS also offers guidance on the credentials and qualifications that taxpayers should seek from their return preparer.

In the past decade, the Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers. Information about these cases is available on the Justice Department’s website. An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found this page. If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details.

Defense News: Harry S. Truman CSG Completes Joint Force’s Most Complex Training Event

Source: United States Navy

 

The exercise represents the Department of the Navy’s commitment to deliver highly capable, integrated naval forces to promote our nation’s prosperity and security, deter aggression, and provide tailorable options to our nation’s leaders.

COMPTUEX also allows the Navy to assess all aspects of prior readiness generation activities, which provides leaders information needed for process and resource allocation decisions for future warfighting development.

COMPTUEX emphasizes a carrier strike group’s ability to deliver combat power wherever the nation’s leadership requires, and is informed by U.S. Navy Fleet Commander requirments and assessment of ongoing operations around the globe.

“CSG 8 brings together a strike package that is world-class. The ability to deploy these units into harm’s way — in the Mediterranean, Red Sea, Gulf of Aden, [and throughout the world]— it is going to be an impressive combat package,” said Adm. Daryl Caudle, commander, U.S. Fleet Forces Command. “From subsea to the surface to air, CSG 8 is able to conduct combat operations in all those domains — synchronize those in real time and meet all the needs of combatant commanders in those different areas of responsibilities — it’s really impressive.”

At its core, COMPTUEX assesses the strike group’s ability to seamlessly integrate its various components – a Nimitz-class aircraft carrier, Destroyer Squadron (DESRON), Carrier Air Wing (CVW), guided-missile cruiser, and Information Warfare team – into a cohesive fighting force capable of executing each of its warfare areas.

“Our mission is incredibly important,” said Rear Adm. Max McCoy, commander, CSG 4. “We train and mentor deploying carrier strike groups to be ready for all contingencies anywhere in the world. We know the ultimate metric of success is winning in combat.”

 COMPTUEX assesses and enhances carrier strike group proficiency to execute complex tactical maneuvers, effective communication in a pressurized environment, and decisive responses to a realistic threat environment. The approximately 10,000 Sailors of the HSTCSG participated in live, virtual, and constructive training opportunities during at-sea operations, resulting in CSG 4 deployment certification recommendations for U.S. Fleet Forces Command.

“I am impressed with how well our team came together,” said Rear Adm. Sean Bailey, commander, CSG 8. “While we all have individual roles and missions, together we are able to train and operate at a much higher level. U.S. Navy carrier strike groups deliver flexibility and capabilities for the fleet commander to use as a means to deliver combat power and maintain a competitive advantage throughout theater.”

This COMPTUEX allowed HSTCSG to enhance warfighting capabilities while strengthening relations with Allies. Exercising alongside the Italian Navy Carlo Bergamini-class frigate ITS Carabiniere (F 593) – a clear demonstration of the Navy’s unwavering commitment to operating alongside NATO Allies. This commitment not only strengthens the collective force but also promotes security, stability, freedom of navigation, and the free flow of commerce.

“The importance of having Carabiniere with us during COMPTUEX cannot be understated,” said Bailey. “That ability to take a NATO ally like Italy and seamlessly integrate them into our operations demonstrates our dedication to fostering cooperation and integrating advanced capabilities with our Allies. Once we deploy forward, our integration with them will be smoother and more effective for NATO’s collective defense having completed this scenario.”

 During the COMPTUEX, in addition to the Fleet Forces, U.S. Second Fleet, and Task Force 80 Commanders’ visiting to observe the exercise and meet with Sailors, the ship welcomed visitors from the Harry S. Truman Library and Institute. Namesake visits are an important part of the Navy’s connection with the American people, and this visit was no different.

“Every Sailor aboard this ship – regardless of what command or unit they belong to – has worked hard over the last several weeks and months to refine their warfighting skillsets such that when we go on deployment in the not too distant future, we will be ready for combat operations if and when called upon to do so,” said Capt. Dave Snowden, commanding officer, USS Harry S. Truman (CVN 75). “It was awesome to have guests aboard from the Harry S. Truman Library and Institute. Truman Sailors embody the grit, courage, and humility our namesake is known for, and it was special to share that.”

Truman has deployed 10 times since its commissioning in 1998. During its deployment to the Mediterranean Sea in 2022, Truman provided air support to Allies in response to Russian’s invasion of Ukraine. The carrier’s embarked air wing flew missions to enforce a no-fly zone and deter further aggression, illustrating the Navy’s role in supporting global power projection and collective defense.

“The Sailors onboard Truman are special. It was immediately obvious to me when I got onboard that the culture and climate and the feeling that this team has already built was really impressive,” said Caudle. “Folks from all walks of life, from every state in the union, and perhaps different countries have come together to prepare Truman for what’s going to be an epic deployment.”

 HSTCSG consists of the flagship USS Harry S. Truman (CVN 75); Carrier Air Wing (CVW) 1 with eight embarked aviation squadrons; staffs from CSG-8, CVW-1, and Destroyer Squadron (DESRON) 28; the Ticonderoga-class cruiser USS Gettysburg (CG 64); and two Arleigh Burke-class guided-missile destroyers, USS The Sullivans (DDG 68) and USS Oscar Austin (DDG 79).

Carrier Strike Group 8’s mission is to conduct prompt and sustained combat, incident to operations at sea, by building and employing a trained, ready Carrier Strike Group prepared when called upon to achieve the warfighting objectives of the assigned Joint Force or Fleet Commander. You can find them on DVIDS at https://www.dvidshub.net/unit/CSG-8.

Carrier Strike Group 4’s mission is to train, mentor, and assess carrier strike groups, amphibious ready groups, and independent deployers for global combat against peer competitors. You can find them on LinkedIn, Twitter (@CSG_4), and DVIDS at https://www.dvidshub.net/unit/CSG4.

Three Owners of Notorious Prostitution Website Backpage Sentenced

Source: United States Department of Justice Criminal Division

A federal judge in Phoenix today sentenced the three owners of Backpage.com, a prostitution website, for offenses arising from their promotion of and associated money laundering.

Michael Lacey, 76, of Paradise Valley, Arizona, was sentenced to five years in prison and three years of supervised release; Scott Spear, 73, of Phoenix, was sentenced to 10 years in prison and three years of supervised release; and John “Jed” Brunst, 72, of Phoenix, was sentenced to 10 years in prison and three years of supervised release. The Court also ordered that all defendants turn themselves in to the U.S. Marshals Service by noon on Sept. 11.

“The defendants and their conspirators obtained more than $500 million from operating an online forum that facilitated the sexual exploitation of countless victims,” said Principal Deputy Assistant Attorney General Nicole M. Argentieri, head of the Justice Department’s Criminal Division. “The defendants thought they could hide their illicit proceeds by laundering the funds through shell companies in foreign countries. But they were wrong. Their sentences should serve as a stark reminder that the Criminal Division and its law enforcement partners are committed to protecting victims and following the money to unmask those who exploit human beings for financial gain.”

“These convictions hold accountable three C-Suite executives who controlled an enterprise and its illicit profits,” said U.S. Attorney Gary Restaino for the District of Arizona. “The courage of the victims of Backpage’s criminal activities is vindicated by the sentences imposed by the Court, to include the loss of liberty for each defendant as well as the additional large fine imposed on defendant Lacey, which will inure to the benefit of the Crime Victims Fund and crime victims everywhere.”

According to court documents and evidence presented at trial, Lacey, Spear, and Brunst owned Backpage.com. From September 2010 through its seizure by the United States in April 2018, Backpage.com was the internet’s leading forum for prostitution ads. Evidence at trial showed that the conspirators knowingly promoted prostitution via various marketing strategies. For example, the conspirators engaged in a reciprocal link program with an independent web forum that permitted “johns” to post reviews of prostitution acts with specific women. Additionally, the conspirators used an automated filter and human moderators to remove terms known to indicate sex-for-money, while still allowing the ads to be posted. Through this attempt to sanitize the ads, the conspirators sought “plausible deniability” for what the conspirators knew to be ads promoting prostitution. Over the life of the conspiracy, the conspirators earned more than $500 million. In an effort to preserve the money earned, Lacey, Spear, and Brunst laundered the money through numerous shell companies they created in multiple foreign countries.

In November 2023, a federal jury in Phoenix convicted Lacey of one count of international concealment money laundering; Spear of conspiracy to violate the Travel Act, 17 counts of violating the Travel Act, money laundering conspiracy, and 10 counts of concealment money laundering; and Brunst of conspiracy to violate the Travel Act, money laundering conspiracy, 10 counts of concealment money laundering, and five counts of international promotional money laundering.

Today’s sentences follow prior convictions of Backpage leadership and corporate entities:

  • In April 2018, Carl Ferrer, 57, of Frisco, Texas, who was Backpage’s co-founder and CEO, pleaded guilty to conspiracy to facilitate prostitution using a facility in interstate or foreign commerce and to engage in money laundering.
  • In August 2018, Dan Hyer, 54, of Dallas, who was Backpage’s Sales & Marketing Director, pleaded guilty to conspiracy to facilitate prostitution using a facility in interstate or foreign commerce.
  • In April 2018, several Backpage-related corporate entities, including Backpage.com LLC, pleaded guilty to conspiracy to engage in money laundering.

Co-conspirator James Larkin, 73, died on July 31, 2023, before trial began.

Principal Deputy Assistant Attorney General Nicole M. Argentieri of the Justice Department’s Criminal Division, U.S. Attorney Gary M. Restaino for the District of Arizona, Special Agent in Charge Carissa Messick of the IRS Criminal Investigation (CI) Phoenix Field Office, Acting Assistant Director Jodi Cohen of the FBI’s Criminal Investigative Division, Special Agent in Charge Jose A. Perez of the FBI Phoenix Division, and Acting Inspector in Charge Matthew Shields of the U.S. Postal Inspection Service (USPIS) Los Angeles Division made the announcement.

Assistant U.S. Attorneys Kevin Rapp, Margaret Perlmeter, and Peter Kozinets for the District of Arizona and Trial Attorney Austin M. Berry of the Criminal Division’s Child Exploitation and Obscenity Section are prosecuting the case, with significant assistance from the U.S. Attorney’s Office for the Central District of California, Office of the California Attorney General, and Office of the Texas Attorney General. Assistant U.S. Attorney Joseph Bozdech for the District of Arizona is handling the asset forfeiture aspects of the case.

Three Owners of Notorious Prostitution Website Backpage.com Sentenced

Source: United States Department of Justice Criminal Division

A federal judge in Phoenix today sentenced the three owners of Backpage.com, a prostitution website, for offenses arising from their promotion of and associated money laundering.

Michael Lacey, 76, of Paradise Valley, Arizona, was sentenced to five years in prison and three years of supervised release; Scott Spear, 73, of Phoenix, was sentenced to 10 years in prison and three years of supervised release; and John “Jed” Brunst, 72, of Phoenix, was sentenced to 10 years in prison and three years of supervised release. The Court also ordered that all defendants turn themselves in to the U.S. Marshals Service by noon on Sept. 11.

“The defendants and their conspirators obtained more than $500 million from operating an online forum that facilitated the sexual exploitation of countless victims,” said Principal Deputy Assistant Attorney General Nicole M. Argentieri, head of the Justice Department’s Criminal Division. “The defendants thought they could hide their illicit proceeds by laundering the funds through shell companies in foreign countries. But they were wrong. Their sentences should serve as a stark reminder that the Criminal Division and its law enforcement partners are committed to protecting victims and following the money to unmask those who exploit human beings for financial gain.”

“These convictions hold accountable three C-Suite executives who controlled an enterprise and its illicit profits,” said U.S. Attorney Gary Restaino for the District of Arizona. “The courage of the victims of Backpage’s criminal activities is vindicated by the sentences imposed by the Court, to include the loss of liberty for each defendant as well as the additional large fine imposed on defendant Lacey, which will inure to the benefit of the Crime Victims Fund and crime victims everywhere.”

According to court documents and evidence presented at trial, Lacey, Spear, and Brunst owned Backpage.com. From September 2010 through its seizure by the United States in April 2018, Backpage.com was the internet’s leading forum for prostitution ads. Evidence at trial showed that the conspirators knowingly promoted prostitution via various marketing strategies. For example, the conspirators engaged in a reciprocal link program with an independent web forum that permitted “johns” to post reviews of prostitution acts with specific women. Additionally, the conspirators used an automated filter and human moderators to remove terms known to indicate sex-for-money, while still allowing the ads to be posted. Through this attempt to sanitize the ads, the conspirators sought “plausible deniability” for what the conspirators knew to be ads promoting prostitution. Over the life of the conspiracy, the conspirators earned more than $500 million. In an effort to preserve the money earned, Lacey, Spear, and Brunst laundered the money through numerous shell companies they created in multiple foreign countries.

In November 2023, a federal jury in Phoenix convicted Lacey of one count of international concealment money laundering; Spear of conspiracy to violate the Travel Act, 17 counts of violating the Travel Act, money laundering conspiracy, and 10 counts of concealment money laundering; and Brunst of conspiracy to violate the Travel Act, money laundering conspiracy, 10 counts of concealment money laundering, and five counts of international promotional money laundering.

Today’s sentences follow prior convictions of Backpage leadership and corporate entities:

  • In April 2018, Carl Ferrer, 57, of Frisco, Texas, who was Backpage’s co-founder and CEO, pleaded guilty to conspiracy to facilitate prostitution using a facility in interstate or foreign commerce and to engage in money laundering.
  • In August 2018, Dan Hyer, 54, of Dallas, who was Backpage’s Sales & Marketing Director, pleaded guilty to conspiracy to facilitate prostitution using a facility in interstate or foreign commerce.
  • In April 2018, several Backpage-related corporate entities, including Backpage.com LLC, pleaded guilty to conspiracy to engage in money laundering.

Co-conspirator James Larkin, 73, died on July 31, 2023, before trial began.

Principal Deputy Assistant Attorney General Nicole M. Argentieri of the Justice Department’s Criminal Division, U.S. Attorney Gary M. Restaino for the District of Arizona, Special Agent in Charge Carissa Messick of the IRS Criminal Investigation (CI) Phoenix Field Office, Acting Assistant Director Jodi Cohen of the FBI’s Criminal Investigative Division, Special Agent in Charge Jose A. Perez of the FBI Phoenix Division, and Acting Inspector in Charge Matthew Shields of the U.S. Postal Inspection Service (USPIS) Los Angeles Division made the announcement.

Assistant U.S. Attorneys Kevin Rapp, Margaret Perlmeter, and Peter Kozinets for the District of Arizona and Trial Attorney Austin M. Berry of the Criminal Division’s Child Exploitation and Obscenity Section are prosecuting the case, with significant assistance from the U.S. Attorney’s Office for the Central District of California, Office of the California Attorney General, and Office of the Texas Attorney General. Assistant U.S. Attorney Joseph Bozdech for the District of Arizona is handling the asset forfeiture aspects of the case.

California Man Pleads Guilty to Defrauding CARES Act Programs and Commercial Lenders

Source: United States Department of Justice Criminal Division

A California man pleaded guilty today in the Eastern District of Virginia to wire fraud for defrauding Coronavirus Aid, Relief, and Economic Security Act programs, including the Paycheck Protection Program (PPP) and the Main Street Lending Program (MSLP), of more than $10 million.

Craig David Davis, 49, of Venice, was the owner of Bright Vanguard LLC., which he held out as a computer hardware retailer and storage space provider. According to court documents, in 2020, Davis submitted at least two PPP loan applications and one MSLP loan application on behalf of Bright Vanguard. In those applications, Davis falsely claimed Bright Vanguard had substantial sales and as many as 17 employees. In reality, Bright Vanguard had no employees and no legitimate revenue. To substantiate his claims, Davis presented fraudulent tax returns, payroll documents, and financial statements to at least three different banks.

Davis also admitted to participating in a years-long scheme to defraud commercial equipment lenders using fraudulent invoices. Davis directed business owners to submit loan applications to banks to purchase computer equipment evidenced on invoices they received from companies such as Bright Vanguard. The lenders approved the loans and submitted the proceeds to accounts controlled by Davis or his co-conspirators. Davis and his co-conspirators then remitted the majority of the proceeds to applicant borrowers, keeping a portion for themselves, without providing the equipment shown on the invoices. This scheme caused more than $60 million of fraudulently induced lending across more than 350 separate loans.

Davis is scheduled to be sentenced on Dec. 12. He faces a maximum penalty of 20 years in prison. A federal district court judge will determine any sentence after taking into account the U.S. Sentencing Guidelines and other statutory factors.

Principal Deputy Assistant Attorney General Nicole M. Argentieri, head of the Justice Department’s Criminal Division, U.S. Attorney Jessica D. Aber for the Eastern District of Virginia, Special Agent in Charge Jeffrey D. Pittano of the Federal Deposit Insurance Corporation Office of Inspector General (FDIC OIG) Mid-Atlantic Region and Chief Guy Ficco of IRS Criminal Investigation (IRS-CI) made the announcement.

The Department of the Treasury’s Special Inspector General for Pandemic Recovery, IRS-CI and FDIC OIG investigated the case.

Trial Attorney David A. Peters of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Drew Bradylyons and Katherine Robeson for the Eastern District of Virginia are prosecuting the case, with substantial assistance from the U.S. Attorney’s Office for the District of Maryland.

If you believe you are a victim in this case, please contact the Fraud Section’s Victim Witness Unit toll-free at (888) 549-3945 or by email at victimassistance.fraud@usdoj.gov.