Month: October 2024

Source: United States Department of Justice 2

Two accountants were each sentenced today to 20 months in prison for their roles in the promotion and sale of abusive syndicated conservation easement tax shelters.

According to court documents and statements made in court, Victor Smith was a CPA and founding partner of an Atlanta-based accounting firm. Beginning at least in 2014 and through at least 2019, Smith promoted and sold tax deductions to his wealthy clients in the form of units in illegal syndicated conservation easement tax shelters organized and created by co-defendants Jack Fisher, James Sinnott and others. Smith, along with his firm, sold approximately $14 million in false tax deductions to their clients, causing a tax loss to the IRS of about $4.8 million. He earned $491,400 in commissions from Fisher and Sinnott for his role in the scheme.

William Tomasello was a CPA at another accounting firm who, at least in 2015 and through at least 2019, also promoted and sold units to his wealthy clients in these same syndicated conservation easement tax shelters. Tomasello sold approximately $8.5 million in false deductions, causing a tax loss of about $2.3 million. He earned approximately $525,072 in commissions.

The scheme entailed the creation of partnerships that would purchase land and land-owning companies and then donate conservation easements over that land or the land itself. Appraisers would value the land and the partnerships would then claim a charitable contribution tax deduction based on the appraised value of the conservation easement, resulting in tax deductions flowing to the wealthy clients who purchased units in the partnership. Many of these clients joined the tax shelters after the donation of the interest in land and after the close of the relevant tax year.

Smith and Tomasello both knew that, contrary to law, these syndicated conservation easement tax shelters lacked economic substance and that their wealthy clients participated in these sham investments only to obtain a tax deduction and received only a tax benefit for their participation in the tax shelters.  For example, a client who purchased units in a partnership had to “vote” ostensibly on what to do with the partnership’s land. However, Smith and Tomasello knew that the “vote” held by the partnerships each year was just optics and that the land invariably would be donated largely as a conservation easement. Smith and Tomasello also knowingly instructed and caused their clients to falsely backdate documents — such as subscription agreements and checks — related to the illegal tax shelters.

In addition to their prison sentences, U.S. District Court Judge Timothy C. Batten Sr. for the Northern District of Georgia ordered Smith to serve two years of supervised release and to pay $4,878,990.90 in restitution. Judge Batten ordered Tomasello to serve three years of supervised release, to perform 120 hours of community service and to pay $2,386,816.04 in restitution.   

Seven additional defendants have previously pleaded guilty to criminal conduct related to the syndicated conservation easement tax shelter scheme of Fisher and Sinnott (who were convicted after trial). These other defendants include appraiser Walter Douglas “Terry” Roberts, accountant Stein Agee, CPA Corey Agee, CPA Ralph Anderson, CPA James Benkoil, CPA Herbert Lewis and CPA and Attorney Randall Lenz.

Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division, U.S. Attorney Ryan K. Buchanan for the Northern District of Georgia and IRS Criminal Investigation Chief Guy Ficco made the announcement. They also thanked U.S. Attorney Dena J. King for the Western District of North Carolina for her office’s assistance.

IRS Criminal Investigation and the U.S. Postal Inspection Service investigated the case.

Trial Attorneys Richard M. Rolwing, Parker Tobin, Jessica Kraft and Nicholas J. Schilling Jr. of the Tax Division and Assistant U.S. Attorney Christopher Huber, Deputy Chief of the Complex Frauds Section, for the Northern District of Georgia prosecuted the case.

Source: United States Department of Justice Criminal Division

An indictment was unsealed in the Eastern District of North Carolina charging 16 members of two outlaw motorcycle gangs — the Hells Angels Motorcycle Club (HAMC) and the Red Devils Motorcycle Club (RDMC) — for their alleged roles in a criminal enterprise engaging in violent criminal activity in and around Raleigh and Fayetteville, North Carolina. The RDMC is the main support club nationwide for the HAMC.

Five of the defendants are charged with murder in aid of racketeering for allegedly killing a member of the Pagan’s Motorcycle Club (PMC), a rival gang, on Jan. 1, 2023, in Raleigh. Two additional defendants are charged with accessory after the fact for their alleged actions following that murder.

Eight defendants are charged with attempted murder in aid of racketeering and assault with a dangerous weapon in aid of racketeering for their alleged roles in a July 22, 2023, violent assault of PMC members in the parking lot of a Dairy Queen restaurant in Wade, North Carolina.

And one defendant is charged with obstruction for allegedly attempting to dissuade a witness from assisting the criminal investigation of this case.

“According to the indictment, these defendants were leaders, organizers, and members of the Hell’s Angels Motorcycle Club and committed multiple crimes to advance their positions in this violent gang,” said Principal Deputy Assistant Attorney General Nicole M. Argentieri, head of the Justice Department’s Criminal Division. “The gang’s alleged violent acts included the murder of a rival gang member on a public street, and the assault and attempted murder of other rival gang members in a restaurant parking lot. This indictment demonstrates that, along with our local, state, and federal law enforcement partners, the Criminal Division is committed to holding accountable those response for acts of violence that terrorize local communities.”

“Two years ago we launched a Violent Crime Action Plan to partner with local law enforcement to identify the individuals and groups driving violence in North Carolina, especially criminal enterprises that support and encourage violence by their members,” said U.S. Attorney Michael F. Easley Jr. for the Eastern District of North Carolina. “We’ll keep pursuing cases like this one, charging violent crimes in aid of racketeering, to expose patterns of violence and hold gang members and those who enable them accountable.”

“Outlaw motorcycle gangs are notorious for lawless and violent behavior,” said Special Agent in Charge Bennie Mims of the Bureau of Alcohol, Tobacco Firearms and Explosives (ATF) Charlotte Field Division. “These criminal organizations are allegedly responsible for a long list of illegal activities, including firearms trafficking, assault, and homicide, and operate with absolutely no regard for the safety of law enforcement or the community. ATF is proud to stand with our law enforcement partners and be part of an effort to disrupt and disband such a violent and dangerous network.”

“I am proud to stand with my federal, state, and local partners in investigating and disrupting violent organizations which demonstrate a blatant disregard for life and will pursue any method to advance their criminal enterprise in our great city,” said Chief Estella Patterson of the Raleigh Police Department. “The Raleigh Police Department and our community will not tolerate destructive behavior and will work tirelessly with our law enforcement partners to identify those responsible to ensure they are held accountable. I am grateful to U.S. Attorney Michael Easley and his team for their continued dedication and steadfast commitment to public safety. I also thank the ATF, the Fayetteville Police Department, and the Cumberland County Sheriff’s Office for their strong partnership in these cases.”

“Operation Broken Halo has been an ongoing investigation with the Fayetteville Police Department and the ATF into an alleged criminal enterprise connected to an outlaw motorcycle gang,” said Chief Kemberle Braden of the Fayetteville Police Department. “Through collaboration and partnership with the ATF and other supporting agencies, we were able to successfully bring charges against numerous members of this outlaw motorcycle gang and their supporting clubs. The Fayetteville Police Department remains committed to our partnership with federal, state, and local agencies to remove violent criminals from our community.”

“I want to make it clear: violent activity is not tolerated in Cumberland County,” said Sheriff Ennis W. Wright of the Cumberland County Sherriff’s Office. “The Sheriff’s Office is 100% committed to maintaining a safe and peaceful community. We thoroughly investigate all tips, and it’s vital for the community to continue to report what they see because we cannot do it alone. We are grateful for our partnerships with the community, the Justice Department, and federal and local law enforcement agencies. Together, we do and will continue to make a difference.”

Most of the charges are being brought under the Violent Crimes in Aid of Racketeering Activity (VICAR) statute, which makes it illegal to commit certain violent crimes for the purpose of joining, maintaining one’s position with, or moving up in rank within the enterprise. The violent crimes included in this statute include murder, kidnapping, maiming, assault with a dangerous weapon, assault resulting in serious bodily injury, and threatening to commit a crime of violence.

The indictment alleges that all 16 defendants are members or associates of the HAMC, a violent outlaw motorcycle group that allegedly uses violence, threats, and intimidation to carry out its perceived mission and enforce its rules. According to the indictment, RDMC members are subservient to the HAMC and provide support by acting as a source of recruitment for the HAMC and carrying out violent acts to further the HAMC’s interests.

The indictment alleges that HAMC members are under a standing order to attack, injure, and kill members of the PMC. The indictment also alleges that HAMC members commonly commit physical assaults, including murder, threats to injure, and intimidation to keep witnesses to their criminal conduct silent.

The indictment charges the following offenses:

Vidaul Rashaad Reed, 31, also known as Hootie, of Columbus, Mississippi; Anthony Edward Cheever, 34, also known as Rowdy, of Garner, North Carolina; David William Stephens, 26, also known as 007, of Spring Lake, North Carolina; Martinus Jermaine Starks, 43, also known as Tee, of Fayetteville; and Tyler Scott Grissom, 31, also known as Snow, of Warrenton, North Carolina, are all allegedly members of the RDMC and are each charged with one count of murder in aid of racketeering and one count of discharge of a firearm in connection with a crime of violence and, in doing so, causing death related to the alleged murder of a member of the PMC on Jan. 1, 2023. Murder in aid of racketeering carries a mandatory life sentence, if convicted.

Christopher Dylan Manor, 28, of Fayetteville; and Robert Scott Brown, 62, of Cumberland County, North Carolina; are both charged with accessory after the fact to the Jan. 1, 2023, murder. As alleged, Manor was a member of the RDMC at the time of the alleged offense and Brown is a member of the HAMC. Each faces a maximum penalty of 15 years in prison, if convicted.

Jason Lee Hathaway, 47, of Michigan City, Indiana; Fred Joseph Prosperi, 42, also known as Freddy and Snow Boy, of Wheeling, West Virginia; William Scott Gardner, 33, also known as Big Will, of Garner, North Carolina; Terry Lewis Akins Jr., 51, of Palatka, Florida; J.R. Nevarez Darr, 31, of Raleigh; Darrell Dewayne Strickland Jr., 26, of Fayetteville; William Franklin Beasley, 64, of Nashville; and David Lee Woodall, 45, of Fayetteville are charged with attempted murder in aid of racketeering and assault with a deadly weapon in aid of racketeering related to the alleged attempted murder and assault with a dangerous weapon of members of the PMC on July 22, 2023, in the parking lot of a Dairy Queen restaurant in Wade, North Carolina. They were all allegedly members of the HAMC at the time of the offense. If convicted, each faces a maximum penalty 30 years in prison.

Jonathan Michael Robarge, 40, of Orlando, is charged with tampering with a witness, victim or informant by harassment. Robarge allegedly has ties to both the HAMC and the RDMC. If convicted, he faces a maximum penalty three years in prison.

A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

The ATF, Raleigh and Fayetteville Police Departments, and Cumberland County Sheriff’s Office are investigating the case.

Trial Attorney Alyssa Levey-Weinstein and Deputy Chief Kelly Pearson of the Criminal Division’s Violent Crime and Racketeering Section and Assistant U.S. Attorneys Kelly L. Sandling and Robert Dodson for the Eastern District of North Carolina are prosecuting the case.

This investigation was an Organized Crime Drug Enforcement Task Forces (OCDETF) investigation. OCDETF identifies, disrupts, and dismantles the highest-level drug traffickers, money launders, 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.

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

Source: United States Department of Justice Criminal Division

A federal court in the Northern District of Alabama has entered an order requiring the State of Alabama and the Alabama Secretary of State to cease a recently-implemented program to remove voters from Alabama’s voting rolls between now and the Nov. 5 general election. The court further ordered the State to issue guidance to all counties in Alabama to immediately restore deactivated voters unless those voters requested removal or are subject to removal for other reasons.

“This action sends a clear message that the Justice Department will work to ensure that the rights of eligible voters are protected,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “The National Voter Registration Act’s 90 day Quiet Period Provision is an important safeguard to prevent erroneous eleventh-hour efforts that stand to disenfranchise eligible voters. The Justice Department remains steadfast in our resolve to protect voters from unlawful removal from the registration rolls and to ensure that states comply with the mandate of federal law.”

The department filed a lawsuit against the State of Alabama and the Alabama Secretary of State on Sept. 27 alleging that the Alabama Secretary of State’s voter list maintenance program announced on Aug. 13 violated Section 8(c)(2) of the National Voter Registration Act of 1993 (NVRA) by conducting a program intending to systematically remove voters within 90 days of a federal election. The court’s order requires the State of Alabama to facilitate a remedial mailing to each registrant inactivated as part of the voter removal process who has not submitted a request to be removed from the voter rolls and alert these voters that their voter status has since been reactivated.

The injunction also requires the state to work with country registrars to ensure that affected voters are notified that their inclusion in the state’s wayward removal program does not establish their ineligibility to vote or subject them to criminal prosecution for registering to vote or for voting. The injunction further requires the State to facilitate a remedial mailing to each registrant inactivated as part of the voter removal process who did submit a voter removal request advising them that if they are a U.S. citizen and otherwise meet voter qualifications, they have the right to vote. Finally, the court ordered the State to inform the Alabama Attorney General in writing that voters were inaccurately referred to the Attorney General for criminal investigation.

Individuals who are eligible voters and believe that they may have been wrongly removed from the voter rolls as a result of Alabama’s – or any other state’s – systematic removal process should contact the Civil Rights Division’s Voting Section through the internet reporting portal at www.civilrights.justice.gov or by telephone at 1-800-253-3931. More information about voting and elections, including guidance documents on the NVRA and other statutes, is available at www.justice.gov/voting. Learn more about the NVRA and other federal voting laws at www.justice.gov/crt/voting-section. Complaints about possible violations of federal voting rights laws can be submitted at www.civilrights.justice.gov or by telephone at 1-800-253-3931. 

Source: United States Department of Justice Criminal Division

A Connecticut man was sentenced today to one year and one day in prison for evading taxes on income he earned from commercial fishing in Massachusetts.

According to court documents and statements made in court, Brian Kobus, of Durham, worked as a commercial fisherman and deckhand for various fishing companies in Massachusetts. After each fishing trip, the companies paid Kobus by check. Despite receiving over $1.2 million in fishing income between 2011 through 2013, and 2017 through 2021, Kobus never filed a federal income tax return or paid the taxes that he owed. To conceal the source and disposition of his income from the IRS, Kobus regularly cashed his paychecks from the fishing companies and used the cash to fund his personal lifestyle.

In total, Kobus caused a tax loss to the IRS of approximately $377,839.90.

In addition to his prison sentence, U.S. District Court Judge Nathaniel M. Gorton for the District of Massachusetts ordered Kobus to serve one year of supervised release and to pay $377,839.90 in restitution to the United States.

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

IRS Criminal Investigation is investigating the case.

Trial Attorney Matthew L. Cofer of the Tax Division and Assistant U.S. Attorney Victor Wild for the District of Massachusetts prosecuted the case.

Source: United States Department of Justice Criminal Division

Note: View the fifth superseding indictment here.

An indictment was unsealed in the District of Columbia charging leaders of the violent drug trafficking organization known as Los Zetas, and its successor organization, Cartel del Noreste (CDN), with engaging in a continuing criminal enterprise; drug trafficking conspiracy; firearms offenses; and international money laundering conspiracy.

According to the indictment, Miguel Trevino Morales, 51, also known as Z-40, and his brother, Omar Trevino Morales, 48, also known as Z-42, allegedly assumed control of Los Zetas after more than a decade as members of the violent drug trafficking organization. Los Zetas previously served as an armed militaristic wing for the Gulf Cartel to maintain control of drug trafficking routes throughout Mexico. Since becoming leaders of Los Zetas in 2012, which they later renamed the Cartel del Noreste, the defendants have allegedly continued its history and pattern of using extreme violence to control large swaths of Northern Mexico, including along the U.S. border. Based on allegations in the indictment, Miguel and Omar Trevino Morales were incarcerated in Mexico in 2013 and 2015, respectively, but continued to control the CDN through various means, including by installing various family members to run operations at their behest. Miguel and Omar Trevino Morales are alleged to be personally responsible for committing dozens of murders and for directing assassinations, kidnappings, and acts of torture by Los Zetas and CDN members to promote and protect the Cartel’s drug trafficking activities and enrich its members.

“As alleged in the indictment, the defendants ran a transnational drug trafficking organization that was responsible for committing extreme violence and trafficking massive quantities of narcotics into the United States,” said Principal Deputy Assistant Attorney General Nicole Argentieri, head of the Justice Department’s Criminal Division. “The Justice Department is committed to holding cartel leaders like the defendants accountable for poisoning American communities and fueling violence here and abroad. We are also committed to working with our domestic and international colleagues in this effort, and we are grateful to our Mexican law enforcement partners for their ongoing collaboration in this case.”

“This superseding indictment underscores the Justice Department’s commitment to pursuing the leaders of the world’s most dangerous drug cartels, no matter how long it takes,” said U.S. Attorney Breon Peace for the Eastern District of New York. “The defendants’ prolific crimes and extreme acts of violence have wreaked havoc in the Eastern District of New York and across the country, and we look forward to holding the defendants accountable in a U.S. court of law.”

“For decades, these individuals have controlled one of the most violent drug organizations in Mexico, committing and directing the commission of horrible atrocities against our neighbors, the people of Mexico, and also in the United States,” said U.S. Attorney Jaime Esparza for the Western District of Texas. “Nothing is more important than bringing dangerous individuals like this to justice. We look forward to working with the government of Mexico in bringing these brutal Cartel leaders to justice for the numerous crimes they have committed.”

“Homeland Security Investigations (HSI) stands with our partners in the fight against transnational criminal organizations to protect our citizens from their unlawful actions,” said HSI Executive Associate Director Katrina W. Berger. “The harm caused by the Los Zetas cartel reaches well beyond our borders, hurting communities and ruining lives here in the United States.”

“For decades, Los Zetas operated as one of the most violent drug trafficking organizations in the United States and Mexico under the direction of brothers Miguel (Zeta 40) and Omar Trevino Morales (Zeta 42),” said Special Agent in Charge Daniel C. Comeaux of the Drug Enforcement Administration (DEA) Houston Field Division. “The DEA has never wavered from the global fight against this vicious, ruthless cartel which thrived on the devastation they imparted on American communities. Through countless investigations, DEA brought high-ranking members of this destructive organization to justice. These latest indictments will continue to cripple this violent organization and force them to release the stranglehold they have exerted along the southwest border of the United States.”

If convicted, the defendants face a maximum penalty of life in prison. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

The DEA Houston Division investigated the case, with assistance from the DEA Mexico City Country Office. HSI New York contributed substantially to the investigation, as did the following: DEA San Antonio Division, DEA Eagle Pass Division, DEA Del Rio Division, DEA Laredo Division, DEA New York Division, FBI Washington Field Office, FBI El Paso Field Office, FBI San Antonio Field Office, FBI Laredo Field Office, FBI Del Rio Field Office, HSI San Antonio, HSI Del Rio, HSI Laredo, Texas Department of Public Safety, Texas Rangers, San Antonio Police Department, Bexar County Sherriff’s Office, Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) San Antonio Field Division, ATF Laredo Field Division, IRS Criminal Investigation (IRS-CI) San Antonio, IRS-CI Waco, and the U.S. Border Patrol.

The Justice Department’s Office of International Affairs and Criminal Division’s Office of Enforcement Operations provided significant assistance in this case.

Trial Attorneys Kirk Handrich and Tara Arndt of the Criminal Division’s Narcotic and Dangerous Drug Section, numerous prosecutors for the Western District of Texas, and Assistant U.S. Attorney Andrew Wang for the Eastern District of New York are prosecuting the case.

This case is part of an Organized Crime and Drug Enforcement Task Force (OCDETF) operation. 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.

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