Month: November 2024

Source: United States Department of Justice Criminal Division

A Florida man pleaded guilty today for his role in a scheme that generated over $7 million in fraudulent Environmental Protection Agency (EPA) renewable fuels credits and sought over $6 million in fraudulent tax credits connected to the purported production of biodiesel.

According to court documents, Royce Gillham was the general manager of a biofuel company based in Fort Pierce, Florida, that produced and sold renewable fuel and fuel credits and claimed to turn various feedstocks into biodiesel. When reporting the number of gallons produced to the IRS and EPA, Gillham and his employer vastly overstated their production volume in an effort to generate more credits. When auditors sought more information from the company, Gillham and his co-conspirators provided false information about their fuel production and customers.

Gillham pleaded guilty to conspiring to commit wire fraud and to filing false claims. A sentencing date has not yet been scheduled. He faces a maximum penalty of five years in prison and a $250,000 fine for the conspiracy count. A federal district court judge will determine whether to accept the plea agreement after considering the U.S. Sentencing Guidelines and other statutory factors.

Assistant Attorney General Todd Kim of the Justice Department’s Environment and Natural Resources Division, U.S. Attorney Markenzy Lapointe for the Southern District of Florida, Special Agent in Charge Stefanie Hipkins of IRS Criminal Investigation (IRS-CI)’s Miami field office and Acting Special Agent in Charge Leslie Carroll of the EPA’s Criminal Investigation Division (EPA-CID) made the announcement.

EPA-CID and IRS-CI investigated the case.

Senior Trial Attorney Adam Cullman of the Environment and Natural Resources Division’s Environmental Crimes Section and Assistant U.S. Attorney Daniel Funk for the Southern District of Florida are prosecuting the case.

Source: United States Department of Justice Criminal Division

Ilya Khan, 66, a national of the United States, Israel, and Russia, pleaded guilty today to conspiracy to violate the Export Control Reform Act for his role in a transnational, multi-million-dollar scheme to secure and illegally export dual-use semiconductors and other sensitive technology to Joint Stock Company Research and Development Center ELVEES (Elvees) and other entities in Russia. Elvees, one of the leading Russian developers of microchips, was sanctioned by the U.S. government in 2022 for contributing to Russia’s security services, military, and defense sectors. Kahn also pleaded guilty to attempted tax evasion for failing to pay taxes on the illicit income he earned from the scheme.

“Today’s guilty plea is another step towards stopping the illicit flow of technology to support the Russian war machine,” said Assistant Attorney General Matthew G. Olsen of the Justice Department’s National Security Division. “The department will continue to do all that we can to disrupt the illegal export of sensitive dual-use electronics to our adversaries and protect our national security.”

“Kahn’s brazen, multi-million dollar scheme to illegally supply semiconductors to companies tied to Russia’s intelligence service and military was doomed to fail, due to the exemplary investigative work of U.S. law enforcement,” said Assistant Secretary for Export Enforcement Matthew S. Axelrod of the Department of Commerce, Bureau of Industry and Security (BIS).  “The Department of Commerce and our partners remain laser-focused on disrupting the illicit procurement networks used to acquire the technology needed to power the Russian war machine.”

“The illegal export of goods and technology to Russia is a threat to U.S. economic and national security,” said Executive Assistant Director Robert Wells of the FBI’s National Security Branch. “Whether it’s commercial goods or military-use technology, illegal exports have the potential to cause significant harm. Ilya Khan’s conviction demonstrates the resolve of the FBI and its partners to protect our citizens and our country.”

“Semiconductors and other advanced electronics are the lifeblood of Russia’s war machine, and Kahn’s circumvention of U.S. export controls was critical to Russia’s chip design and manufacturing capacity,” said U.S. Attorney Breon Peace for the Eastern District of New York. “Today’s plea marks a significant step in protecting the national security of the U.S. and our allies and partners abroad. We will continue to use all our law enforcement and national security tools to hold individuals and corporations accountable for flouting the law to aid sanctioned entities in Russia and elsewhere.”

“Kahn’s multi-million dollar business threatened the national and financial security of our country,” said Chief Guy Ficco of IRS Criminal Investigation (IRS-CI). “In addition to illegally exporting sensitive technology to entities in Russia, he circumvented our tax laws by not reporting his income or paying taxes on his ill-gotten gains. Uncovering financial crimes, especially those that look to weaken the stability of our country will continue to be a priority for our agency.”

Kahn is the owner of Senesys Incorporated and Sensor Design Association, which operated in California and Brooklyn, New York. Kahn operated these businesses — ostensibly involved in “security software development” and the testing of silicon wafers for military, avionics and space users — as fronts for a years’ long conspiracy to acquire and export sensitive and sophisticated, dual-use electronics from the United States to Elvees in Russia. Many of these items required an export license due to national security and anti-terrorism reasons, which Kahn did not obtain.

Kahn also arranged for Elvees to continue to fabricate and import semiconductors after Russia’s February 2022 invasion of Ukraine. These semiconductors can be used for, among other things, communications systems, GPS receivers, and equipment for military unmanned aerial vehicles, also known as drones. In doing so, Kahn utilized a transnational network of front companies and bank accounts to ship those semiconductors to Russia following the invasion of Ukraine, often arranging for the semiconductors to be sent to the U.S. and then re-exported to Russia via China and other locations around the world.

In March 2022, the Commerce Department added Elvees to the Entity List, imposing a license requirement to export any item subject to the Export Administration Regulations to Elvees, and stating that it would review license applications under a policy of denial. Despite these sanctions, Kahn continued to work with Elvees. For example, in May 2022, Kahn emailed a Taiwanese manufacturer design guidance for an Elvees-branded microchip. Subsequently, Kahn shipped thousands of units of this microchip to a Hong Kong-based shipping company, and then to a company located in the mainland of the People’s Republic of China. Kahn noted in communications with the Hong Kong shipping company that he received a “call from Russia” about the PRC business to which he was directing the goods.

Kahn’s export activity for the benefit of Elvees dates to at least 2012, and accounts under his control received more than $50 million from Elvees and related entities between 2012 and 2022. Of that money, Kahn channeled nearly $5 million for his personal use, which he did not report to the IRS and on which he did not pay income taxes. As part of his plea, Kahn agreed to forfeit $4,923,548.94 in ill-gotten gains and to pay an additional $1,892,816.00 in restitution to the IRS.

Khan faces a maximum penalty of 20 years in prison.

The FBI Los Angeles Field Office investigated the case.

Assistant U.S. Attorneys Artie McConnell and Matthew Skurnik for the Eastern District of New York and Trial Attorney Scott Claffee of the National Security Division’s Counterintelligence and Export Control Section are prosecuting the case. The U.S. Attorney’s Office for the Central District of California assisted in the prosecution.

Today’s actions were coordinated through the Justice and Commerce Departments’ Disruptive Technology Strike Force and the Justice Department’s Task Force KleptoCapture. The Disruptive Technology Strike Force is an interagency law enforcement strike force co-led by the Departments of Justice and Commerce designed to target illicit actors, protect supply chains, and prevent critical technology from being acquired by authoritarian regimes and hostile nation states. Task Force KleptoCapture is an interagency law enforcement task force dedicated to enforcing the sweeping sanctions, export restrictions and economic countermeasures that the United States has imposed, along with its allies and partners, in response to Russia’s unprovoked military invasion of Ukraine.

Source: United States Department of Justice Criminal Division

A Maryland man pleaded guilty today for his role in a bribery scheme to give kickbacks to a U.S. Customs and Border Protection (CBP) official in exchange for the official’s efforts to influence the award of lucrative federal contracts.

According to court documents, Christopher “Mac” Cassity, 51, of Glenwood, was charged in a single-count criminal information with honest services wire fraud, pursuant to a written plea agreement. As part of the plea agreement, Cassity admitted that, between July 29, 2019, and Dec. 29, 2022, he and Public Official A, an information system security officer residing in Pharr, Texas, devised and executed a bribery scheme in which Cassity paid Public Official A kickbacks in exchange for Public Official A taking official action to influence the award of CBP contracts to businesses that would subcontract with Cassity’s business, IVV Solutions. Specifically, Public Official A directed and pressured CBP contracting officials to select contractors, who bid on contracts to upgrade CBP’s information security system in various CBP facilities, from a list of contractors that Public Official A knew would then subcontract with IVV Solutions to provide “independent verification and validation services.”

According to court documents, Cassity’s business received approximately $814,570 in payments related to CBP contracts during the bribery scheme. In return, Cassity made approximately 58 kickback payments to Public Official A, totaling approximately $443,125. To conceal the scheme, Cassity transmitted the kickback payments by wire from IVV Solutions’ bank accounts to bank accounts in the name of conduits of Public Official A, which were controlled and used by Public Official A.

Cassity is scheduled to be sentenced on Feb. 10, 2025, and faces a maximum penalty of 20 years in prison. A federal district court judge will determine any sentence after considering 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 Alamdar S. Hamdani for the Southern District of Texas; and Assistant Commissioner Matthew Klein of CBP’s Office of Professional Responsibility (OPR) made the announcement.

CBP OPR is investigating the case.

Trial Attorney Demetrius D. Sumner of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Steven Schammel for the Southern District of Texas are prosecuting the case.

Source: United States Department of Justice Criminal Division

An indictment was unsealed today in the Southern District of Mississippi charging Hinds County District Attorney, Jody E. Owens II, 43; Mayor of Jackson, Mississippi, Chokwe Antar Lumumba, 41; and former President and current member of the Jackson City Council, Aaron Banks, 47, all of Jackson, with participating in a bribery scheme to enrich themselves. Owens, Lumumba, and Banks are scheduled to make their initial court appearances today before U.S. Magistrate Judge LaKeysha Greer Isaac in Jackson.

“The indictment alleges that Jackson’s mayor, the district attorney in Jackson, and members of Jackson’s city council conspired to accept bribes in exchange for official acts benefiting purported real estate developers,” said Principal Deputy Assistant Attorney General Nicole M. Argentieri, head of the Justice Department’s Criminal Division. “Officials who abuse their positions of authority to enrich themselves undermine public confidence in government. The Justice Department is committed to restoring that confidence by working with its law enforcement partners to investigate and prosecute public corruption.”

“Leaders who are awarded the public’s trust should be focusing on the needs of the Jackson community, not looking to line their own pockets and benefit themselves,” said U.S. Attorney Todd Gee for the Southern District of Mississippi. “As alleged in the indictment, from campaign donations generated through laundered money to stacks of cash bribes, the members of this conspiracy allegedly offered and accepted bribes in exchange for official acts. The Justice Department is committed to investigating and prosecuting bribery and other forms of public corruption.”

“Our citizens are entitled to decisions based on the best interests of the public, not corrupt public officials,” said Assistant Director Chad Yarbrough of the FBI Criminal Investigative Division. “No one is above the law, and the FBI is committed to ensuring that those who cross the line and violate the public’s trust are held accountable for their unlawful actions.”

As alleged in the indictment, between approximately October 2023 and May 2024, Owens facilitated bribe payments to public officials in Jackson on behalf of two FBI undercover employees posing as real estate developers (the Developers) in exchange for at least $115,000 and the promise of future financial benefit. Owens instructed the Developers that, for their project to succeed, they needed to secure the support of certain public officials in Jackson through bribery. Those public officials included Mayor Lumumba, Councilman Banks, and former Jackson City Councilwoman Angelique Lee. Owens instructed the Developers how much, where, and when to bribe those officials.

As part of the scheme, Mayor Lumumba accepted a bribe payment of $50,000 from the Developers in exchange for exerting his influence and taking official action relating to the Developers’ proposed project in downtown Jackson. As directed by Owens and Lumumba, the bribe payments were concealed as five $10,000 campaign-donation checks from third-party entities and individuals, including Owens. Lumumba then laundered that money through his campaign account before cashing out a portion of the payment.

The indictment also alleges that, as part of the scheme, Councilman Banks solicited a $50,000 bribe in exchange for his votes in support of the Developers’ proposed project in downtown Jackson. Banks accepted an initial payment of $10,000 in cash, along with a promise to provide funding for the employment of a family member and a protective detail service.

As part of the scheme, former Councilwoman Lee allegedly accepted a $10,000 debt repayment, $3,000 in cash, and a shopping trip worth approximately $6,000 in luxury goods in exchange for her votes in support of the Developers’ proposed development project in downtown Jackson.

Additionally, the indictment alleges that, on May 22, an FBI agent approached Owens, identified himself as an FBI agent, and asked Owens about his involvement in the bribery scheme. During the interview, Owens made material false statements to the FBI agent.

Owens is charged with one count of conspiracy to commit federal program bribery, honest services wire fraud, and money laundering, and, if convicted, faces a maximum penalty of five years in prison for the charge; three counts of federal program bribery, and faces a maximum penalty of 10 years in prison for each charge; one count of using a facility in interstate commerce in furtherance of unlawful activity, and faces a maximum penalty of 20 years in prison for the charge; one count of honest services wire fraud, and faces a maximum penalty of 20 years in prison for the charge; one count of money laundering, and faces a maximum penalty of 20 years in prison for the charge; and one count of lying to federal officers, and faces a maximum penalty of five years in prison for the charge.

Lumumba is charged with one count of conspiracy to commit federal program bribery, honest services wire fraud, and money laundering, and, if convicted, faces a maximum penalty of five years in prison for the charge; one count of federal program bribery, and faces a maximum penalty of 10 years in prison for the charge; one count of using a facility in interstate commerce in furtherance of unlawful activity, and faces a maximum penalty of 20 years in prison for the charge; one count of honest services wire fraud, and faces a maximum penalty of 20 years in prison for the charge; and one count of money laundering, and faces a maximum penalty of 20 years in prison for the charge.

Banks is charged with one count of conspiracy to commit federal program bribery, honest services wire fraud, and money laundering, and, if convicted, faces a maximum penalty of five years in prison for the charge, and one count of federal program bribery, and faces a maximum penalty of 10 years in prison for the charge. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

The FBI is investigating the case.

Trial Attorneys Nicholas W. Cannon and Madison H. Mumma of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorneys Charles W. Kirkham and Kimberly T. Purdie for the Southern District of Mississippi are prosecuting the case.

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

Richard Anthony Reyna Densmore, 47, of Kaleva, Michigan, was sentenced to 30 years in prison for sexually exploiting a child. Densmore pleaded guilty to sexual exploitation of a child, part of a broader indictment that charged him with other child exploitation offenses.

“Richard Densmore will spend the next 30 years in federal prison for sexually exploiting a child and for his role in creating 764’s online networks that coerced children into recording themselves engaging in self-harm, sexually explicit acts, and violence” said Attorney General Merrick B. Garland. “No child should have to experience this heinous abuse. The Justice Department will ensure that criminals engaged in this depraved conduct are held accountable in a court of law.”

“This defendant orchestrated a community to target children through online gaming sites and used extortion and blackmail to force his minor victims to record themselves committing acts of self-harm and violence,” said FBI Director Christopher Wray. “If you prey on children online, you can’t hide behind a keyboard. The FBI will use all our resources and authorities to arrest you and hold you accountable.”

“This case represents a new and depraved threat against our kids and our communities: violent online extremists who manipulate their minor victims to commit self-harm and create sexually explicit images,” said U.S. Attorney Mark Totten for the Western District of Michigan. “While we will always fight to hold criminals like Richard Densmore accountable, we want to prevent this crime as much as possible. Parents: please talk with your children about this threat; monitor their social media use; and let them know they can always come to you if they mess up.”

Densmore is a member of 764, a network of violent extremists who seek to normalize the production, sharing, and possession of child pornography and gore material to desensitize and corrupt youth toward future acts of violence. Members of 764 gain notoriety by systematically targeting, grooming, and extorting victims through online social media platforms. Members demand that victims engage in and share media of self-mutilation, sexual acts, harm to animals, acts of random violence, suicide, and murder, all for the purpose of accelerating chaos and disrupting society and the world order.

Densmore, known as “Rabid,” became notorious in the 764 network by creating online “Sewer” communities on Discord where members recruited children – including by infiltrating online gaming sites that children frequent – to cut themselves and engage in graphic sexual acts. Densmore boosted membership in “Sewer” by advertising livestreams of children engaging in self-mutilation (cutshows) and sexually explicit activity “on cam.” He threatened victims to cut themselves by telling them, “I have all your information. I own you. . . . You do what I say now kitten.”  Densmore kept child pornography and bloody images of “Rabid,” “Sewer,” and “764” carved into victims’ limbs, in some cases with razor blades and boxcutters nearby.

Densmore also sexually exploited children. In October 2022, Densmore unsuccessfully tried to persuade a minor girl, Jane Doe, to send him an explicit picture with “Rabid” written on her bare chest. When she expressed discomfort with that request, Densmore contacted another Discord user and paid him Nitro, a form of Discord currency, to help secure a sexually explicit picture of Jane Doe. Densmore’s efforts were successful and Jane Doe, at the request of the other Discord user, sent Densmore and the user a nude video of herself with “Rabid” written on her chest.

The Justice Department and FBI reminds parents and caregivers to understand and monitor their children’s online activities. They should also look for unexpected packages, as members of these abuse and extortion networks are known to send children razor blades, sexual devices, gifts, and other materials to use in creating online content. The FBI further advised the public to take a number of precautionary steps, including:

• Looking for fresh cuts, bruises, wounds, and scars in unusual patterns;
• Looking for sudden behavior and appearance changes;
• Being attentive to children wearing long sleeves or pants in unusual circumstances;
• Monitoring children’s online activity and discussing the risks of sharing information and content; and
• Running frequent online searches of family and children’s information to help identify and prevent the spread of personal information on the internet.

If you are worried about someone who might be self-harming or is at risk of suicide, please consult a health care professional or call 911 in the event of an immediate threat.

FBI investigated this case.

Assistant U.S. Attorney Adam Townshend for the Western District of Michigan prosecuted the case, with valuable assistance from Trial Attorneys Justin Sher and James Donnelly of the National Security Division’s Counterterrorism Section.

This case is part of Project Safe Childhood, a nationwide initiative designed to protect children from online exploitation and abuse. The U.S. Attorney’s Office, county prosecutor’s offices, the Internet Crimes Against Children task force (ICAC), federal, state, tribal, and local law enforcement are working closely together to locate, apprehend, and prosecute individuals who exploit children. The partners in Project Safe Childhood work to educate local communities about the dangers of online child exploitation, and to teach children how to protect themselves. For more information about Project Safe Childhood, visit www.projectsafechildhood.gov. Individuals with information or concerns about possible child exploitation should contact local law enforcement officials.