U.S. Trustee Program Prevails on Motion to Dismiss Nine Related Cases for Lack of Good Faith

Source: United States Department of Justice Criminal Division

The United States Trustee Program (USTP) recently obtained dismissal of nine related bankruptcy cases involving a chain of fitness businesses that lacked a good-faith basis for seeking bankruptcy relief.

On October 2, the Bankruptcy Court for the District of Kansas entered an order dismissing the cases of Blush Bootcamp LLC and eight affiliates based on a motion filed by the USTP’s office in Wichita, Kansas. The debtors and their owners engaged in a tangled web of transfers both before and after bankruptcy, using some of the companies’ income to cover others’ debts and commingling funds across multiple accounts without regard to corporate formalities. Some of the companies had stopped operating, leaving no business to rehabilitate. Some entities lacked insurance to protect their assets, and none had workers’ compensation coverage. And the owners—a married couple—each drew a monthly salary of $12,500 out of the bankrupt companies even though they also operated two cash-positive entities that did not file for bankruptcy.

The debtors filed their cases under the streamlined provisions of subchapter V, which provides eligible small businesses with a more flexible, efficient and cost-effective path through chapter 11. The USTP plays an integral role in administering subchapter V cases in accordance with the Bankruptcy Code. This includes seeking dismissal or conversion of cases to chapter 7 liquidations when warranted, and raising objections to eligibility and confirmation of a plan of reorganization when appropriate.

“Subchapter V was designed to help debtors remain in business, so long as they abide by the Bankruptcy Code’s requirements,” said Director Tara Twomey of the Executive Office for U.S. Trustees. “Unfortunately, these entities did not follow the requirements and there was no reasonable likelihood of rehabilitation.”

The USTP’s mission is to promote the integrity and efficiency of the bankruptcy system for the benefit of all stakeholders – debtors, creditors and the public. The USTP consists of 21 regions with 89 field offices nationwide and an Executive Office in Washington, D.C. Learn more about the USTP at www.justice.gov/ust

Defense News: Navy Launches Military Sealift Command Workforce Initiative

Source: United States Navy

MSC consists of 5,500 civil service mariners and 1,500 contracted mariners operating 140 logistics supply ships that support the replenishment and transport of military cargo and supplies for U.S. forces and partners. The command’s new workforce initiative addresses civil service mariner recruitment and retention challenges by restoring the health of the MSC workforce for the next several decades. 

The initiative will also include crew reassignments to higher priority vessels and the placement of some MSC logistics support ships into extended maintenance periods.  Rotating crews to higher priority vessels will minimize overdue reliefs and provide a more predictable work environment for civil service mariners.

“Our civil service mariners play invaluable roles providing continuous logistics support to our deployed naval forces, and they are working overtime to sustain that mission globally,” said Secretary Del Toro. “This initiative will not only address operational logistics challenges we face now, it will ensure that Military Sealift Command has policies, programs and incentives it needs to recruit and retain future generations of civil service mariners.”

Nationally, the U.S. merchant marine workforce is facing a shortage of personnel to fill positions at sea, as it has become more challenging to attract interested Americans, impacting mariners employed by MSC. MSC has also assumed broader logistics responsibilities and experienced higher mission demand for Navy operations in recent years, increasing the strain on the workforce and contributing to recruiting and retention challenges.

“Addressing the recruiting and retention challenges in MSC’s civil service mariner workforce will take time,” said Rear Adm. Philip Sobeck, MSC’s commander.

The types of ships for the workforce initiative include Fleet Replenishment Oilers (T-AO), Dry Cargo/Ammunition Ships (T-AKE), Expeditionary Fast Transports (T-EPF), and Expeditionary Sea Bases (ESB).

The MSC workforce initiative advances Secretary Del Toro’s vision for a new Maritime Statecraft to revitalize the naval, industrial and commercial aspects of America’s maritime power in an era of strategic competition. These investments will increase MSC’s operational readiness and support its civil service workforce, both of which strengthen maritime dominance. 

Federal Jury Convicts Minnesota Man of Advertising and Distributing Child Sexual Abuse Material Over the Dark Web

Source: United States Department of Justice Criminal Division

WASHINGTON — A federal jury convicted a Minnesota man yesterday for advertising, distributing, and possessing material depicting the sexual abuse of children.

According to court documents and evidence presented at trial, Craig James Myran, 47, of Bemidji, was an active participant on a website on the dark web that was dedicated to discussing and trafficking in child sexual abuse material. For years, Myran used an account with a unique username to make over a thousand posts on this site, including at least one post in which he requested specific files of child sexual abuse material from other users, and another post in which he distributed files of child sexual abuse material to other users. FBI special agents executed a search warrant on Myran’s apartment in Bemidji on Dec. 8, 2022, where they found numerous hard drives and a cell phone. A forensic examination of these devices uncovered evidence tying Myran to his unique account on the dark web site — including files of the child sexual abuse material that he shared and requested on the website, as well as a message directed to his unique alias — and thousands of other images of child sexual abuse material.

A federal jury found Myran guilty after a three-day trial on two counts of advertising child pornography, one count of distributing child pornography, and one count of possessing child pornography. Myran faces a minimum penalty of 15 years in prison and a maximum penalty of 30 years in prison on each count of advertising child pornography, a minimum penalty of five years in prison and a maximum penalty of 20 years in prison on the count of distributing child pornography, and a maximum penalty of 20 years in prison on the count of possessing child pornography. 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 Andrew M. Luger for the District of Minnesota; and Special Agent in Charge Alvin M. Winston Sr. of the FBI Minneapolis Field Office made the announcement.

The FBI Minneapolis Field Office is investigating the case.

Trial Attorney William G. Clayman of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS) and Assistant U.S. Attorney David Green for the District of Minnesota are prosecuting the case.

This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Justice Department. Led by U.S. Attorneys’ Offices and CEOS, Project Safe Childhood marshals federal, state, and local resources to better locate, apprehend, and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.justice.gov/psc.

High-Ranking Mexican Cartel Leader Arrested on Charges of International Drug Trafficking and Money Laundering After Faking Own Death to Live in California Under Assumed Identity

Source: United States Department of Justice Criminal Division

A federal court in the Central District of California unsealed a criminal complaint yesterday charging Cristian Fernando Gutierrez-Ochoa — a high-ranking member of the Cártel de Jalisco Nueva Generación (CJNG) and the son-in-law of the CJNG’s leader, Nemesio Oseguera Cervantes, also known as El Mencho — with international drug trafficking and money laundering offenses. Gutierrez-Ochoa was arrested in Riverside, California, on Nov. 19.

“The Jalisco Cartel — one of the world’s most violent and prolific drug trafficking organizations — is weaker today because of the tenacious efforts of law enforcement to track down and arrest a cartel leader who allegedly faked his own death and assumed a false identity to evade justice and live a life of luxury in California,” said Deputy Attorney General Lisa Monaco. “As these charges allege, Gutierrez-Ochoa directed the trafficking of lethal narcotics, causing untold destruction in our communities. To those seeking to harm Americans and to profit from their pain, this arrest should serve as a reminder — we will find you and bring you to justice.”

“Over the last decade, Cristian Gutierrez-Ochoa, a close associate of CJNG’s top leader, allegedly directed the importation of tons of methamphetamine and cocaine into the United States and engaged in violence to aid the cartel’s criminal activities,” said Principal Deputy Assistant Attorney General Nicole M. Argentieri, head of the Justice Department’s Criminal Division. “The Criminal Division is committed to disrupting and dismantling Mexican drug trafficking organizations. Tuesday’s arrest sends a powerful message to cartel leadership: we will work tirelessly with our domestic and international law enforcement partners to hold them accountable.”

“Defeating the two cartels responsible for the deadly drug crisis in the United States is the Drug Enforcement Administration (DEA)’s top operational priority, and with the arrest of Cristian Fernando Gutierrez-Ochoa, we are much closer,” said DEA Administrator Anne Milgram. “We allege that Gutierrez-Ochoa, a high-ranking member of the CJNG and the son-in-law of El Mencho, conspired to import thousands of kilograms of cocaine and methamphetamine into the United States on behalf of the Jalisco Cartel. The Jalisco Cartel is responsible for unprecedented violence in Mexico and helping to fuel the deadly drug crisis in the United States. The DEA is relentlessly committed to defeating the Jalisco Cartel, and we will exhaust every tool in the justice system to fight back, to save American lives, and to bring this cartel to justice.”

According to court documents, Gutierrez-Ochoa, 37, is alleged to have started working for the CJNG, one of the most violent drug cartels in Mexico, in around 2014, and to have personally coordinated the transportation and distribution of approximately 40,000 kilograms of methamphetamine and approximately 2,000 kilograms of cocaine in Mexico, all destined for the United States.

Gutierrez-Ochoa allegedly furthered CJNG’s drug trafficking and money laundering activities through violence. In around November 2021, Gutierrez-Ochoa allegedly kidnapped two members of the Mexican Navy in an attempt to secure the release of El Mencho’s wife, who had been arrested by Mexican authorities. After being sought by Mexican authorities, Gutierrez-Ochoa allegedly fled into the United States, assumed a fictitious identity, and resided in a luxury residence in Riverside, California, purchased by CJNG’s money laundering operatives with drug trafficking proceeds.

According to court documents, El Mencho may have assisted Gutierrez-Ochoa in his scheme to fake his own death by telling associates that El Mencho murdered Gutierrez-Ochoa for lying. This helped Gutierrez-Ochoa sneak into the United States to be with El Mencho’s daughter. The Justice Department returned a superseding indictment  against El Mencho in April 2022, charging him with leading a continuing criminal enterprise to manufacture and distribute fentanyl for importation into the United States. The U.S. Department of State is offering a reward of up to $10 million for information leading to his arrest and/or conviction. El Mencho remains a fugitive.

Gutierrez-Ochoa is charged with conspiracy to distribute five kilograms or more of cocaine and 500 grams or more of methamphetamine, knowing, intending, and having reasonable cause to believe that those controlled substances would be unlawfully imported into the United States. Gutierrez-Ochoa is also charged with conspiracy to launder CJNG’s drug trafficking proceeds. If convicted, he faces a mandatory minimum penalty of ten years in prison and a maximum penalty of life in prison on the drug distribution conspiracy charge, and a maximum penalty of 20 years in prison on the money laundering conspiracy charge. A federal district court will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

The DEA Los Angeles Field Division is investigating the case.

Trial Attorneys Lernik Begian and Doug Meisel of the Criminal Division’s Narcotic and Dangerous Drug Section are prosecuting the case. The U.S. Attorney’s Office for the Central District of California provided valuable assistance.

This case is part of an Organized Crime Drug Enforcement Task Forces (OCDETF) operation. OCDETF identifies, disrupts, and dismantles the highest-level drug trafficking organizations and other criminal networks that threaten the United States using a prosecutor-led, intelligence-driven, multi-agency approach that leverages the strengths of federal, state, and local enforcement agencies. Additional information about the OCDETF Program can be found at www.justice.gov/OCDETF.

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

Defense News: USS Jefferson City Returns Home to Naval Base Guam Following Successful Indo-Pacific Deployment

Source: United States Navy

“USS Jefferson City exceeded all expectations on this short deployment,” said Capt. Neil Steinhagen, Commander, Submarine Squadron 15. “The crew’s unwavering dedication to theater security and operational excellence reflects the strength of our forward-deployed forces. Standing true to their motto, ‘When Any Exigence Calls,’ the crew met every challenge with distinction, directly supporting our mission in the Pacific. Job well done team – welcome home!”

During this deployment, Jefferson City undertook critical missions that strengthened national security, elevated operational maritime capabilities, and bolstered deterrence within the Indo-Pacific, underscoring the strategic importance of a forward-deployed submarine force.

“No matter the mission or task, my crew rose to every occasion,” said Cmdr. Alexander (AJ) Franz, commanding officer of USS Jefferson City. “Their focus, determination, and relentless pursuit of excellence shaped an extraordinary deployment. I couldn’t be prouder of their accomplishments, as each Sailor’s dedication and resilience shone brightly in our mission’s success.”

During the deployment, 38 Jefferson City Sailors earned their submarine warfare insignia, the distinguished ‘dolphins’ or ‘fish,’ symbolizing their qualification to operate at the highest standards. This emblem represents their mastery and commitment to the submarine force’s tradition of excellence.

“The strength of our Navy lies in its true source of power—our Sailors,” said Jefferson City Chief of the Boat Master Chief Machinist Mate (Auxiliary) Chris Halamoutis. “The dedication these Sailors have shown to achieve this honor is truly commendable. Their perseverance, hard work, and commitment to our mission reflect the spirit of those who came before them, as they join the ranks of a distinguished community with the privilege of wearing this insignia.”

As part of Jefferson City’s homecoming celebration, the Navy’s cherished “first kiss” and “first hug” traditions took place. The “first kiss” was awarded to Lt. j.g Jonathan Lopez and the “first hug” was awarded to Senior Chief Machinist Mate (Auxiliary) Timothy Murphy.

Commissioned on February 29, 1992, USS Jefferson City is the only U.S. Navy vessel named for Jefferson City, Missouri. Assigned to Commander, Submarine Squadron 15 at Polaris Point, Naval Base Guam, Jefferson City is one of four Los Angeles-class fast-attack submarines forward-deployed in the Pacific. Renowned for their unparalleled speed, endurance, stealth, and mobility, the Los Angeles-class submarine serves as the backbone of the Navy’s submarine force, ensuring readiness and agility in safeguarding maritime interests around the world.